The ACIT,GNR Circle, Gandhinagar V. ECI Technologies (I) Ltd., Gandhinagar

ITA 2066/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94403 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 16-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 13-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VASUNDHARA UPMANYU
• Assessee Lawyers: SAUMYA SHETH
• Keywords: Additional evidence; Question of law
• Section: 143(3); 10B; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER) I.T. A. N O. 2066 /AHD/2012 (ASSESSME NT YEAR: 2008-09) THE A.C.I.T GNR CIRCLE- GANDHINAGAR V/S ECI TECHNOLOGIES PVT. LTD., E-3/1,2,3, GIDC ELECTRONICS ESTATE, SECTOR-26, GANDHINAGDAR (APPELLANT) (RESPONDENT) PAN: AACCG 1850 F APPELLANT BY : SMT. VASUNDHARA UPMANYU, CIT/D R RESPONDENT BY : SMT. SAUMYA SHETH, A.R. ( )/ ORDER DATE OF HEARING : 16-09-2015 DATE OF PRONOUNCEMENT : 18 -09-2015 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF CIT(A), GANDHINAGAR, AHMEDABAD DATED 08.06.2012 FOR A.Y. 20 08-09. ITA NO 2066/ AHD/2012 . A.Y. 2008-0 9 2 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE B USINESS OF MANUFACTURING OF WIRING HARNESS. ASSESSEE FILED ITS RETURN OF INC OME FOR A.Y. 2008-09 ON 30.09.2008 DECLARING TOTAL INCOME OF RS. 26,18,464/ -. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAM ED UNDER SECTION 143(3) VIDE ORDER DATED 23.12.2011 AND THE TOTAL INCOME WA S DETERMINED AT RS. 12,19,83,120/-. AGGRIEVED BY THE ORDER OF A.O., AS SESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 08.06.2012 A LLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF LD. C IT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING EFFEC TIVE GROUND:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE BY THE A.O ON ACCOUNT OF DISALLOWANCE U/S. 10B AMOUNTI NG TO RS. 11,98,93,310/-. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O N OTICED THAT ASSESSEE HAS CLAIMED DEDUCTION OF RS. 12,17,93,964/- U/S. 10B OF THE ACT. A.O WAS OF THE VIEW THAT ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U /S. 10B OF THE ACT FOR THE REASON THAT AS PER CLAUSE (IV) OF EXPLANATION 2 TO SECTION 10B OF THE ACT, THE UNDERTAKING SHOULD BE APPROVED BY THE BOARD OF APP ROVAL FOR CLAIMING EXEMPTION U/S. 10B OF THE ACT AND AS PER CBDT INSTR UCTION DATED 09.03.2009, THE APPROVAL GRANTED BY THE DEVELOPMENT COMMISSIONER WILL BE CONSIDERED VALID ONLY WHEN SUCH APPROVAL IS RATIFIE D BY BOARD OF APPROVAL. HE WAS OF THE VIEW THAT SINCE THE APPRO VAL OF ASSESSEE AS 100% EXPORT ORIENTED UNIT (EOU) WAS BY THE DEVELOPMENT C OMMISSIONER, KANDLA, THE APPROVED BY DEVELOPMENT COMMISSIONER CA NNOT BE EQUATED WITH THE APPROVAL BY BOARD OF APPROVAL U/S. 14 OF INDUSTRIES DEVELOPMENT AND REGULATION ACT, 1951. HE ACCORDINGLY DENIED THE CLAIM OF DEDUCTION U/S. ITA NO 2066/ AHD/2012 . A.Y. 2008-0 9 3 10B OF THE ACT. AGGRIEVED BY THE ORDER OF A.O., ASS ESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO FOLLOWING THE DECISION IN ASS ESSEES OWN CASE FOR A.Y. 2007-08, ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER:- 4.THE FIRST AND ITS SUB-GROUNDS OF APPEAL ARE AGAIN ST REJECTION OF THE CLAIM OF THE ASSESSEE OF RS. 11,98,93,310/- U/S.10B OF THE ACT B Y THE AO. THE AO HAS DISALLOWED THE CLAIM ON THE FOLLOWING COUNTS:- (I)THERE IS EXPRESSED PROVISIONS AS PER IN CLAUSE ( IV) OF EXPLANATION -2 TO SECTION 10B OF THE ACT THAT THE UNDERTAKING SHOULD BE APPRO VED BY THE BOARD OF APPROVAL (BOA) FOR CLAIMING EXEMPTION U/S.10B OF THE IT ACT. (II)THE CBDT VIDE ITS INSTRUCTION DATED 09/03/2009 HAS MADE IT AMPLY CLEAR THAT THE APPROVAL GRANTED BY THE DEVELOPMENT COMMISSIONE R IN THE CASE OF AN EXPORT ORIENTED UNIT WILL BE CONSIDERED VALID, ONCE SUCH A N APPROVAL IS RATIFIED BY THE BOARD OF APPROVAL. SINCE THE BOARD'S INSTRUCTIONS A RE CLARIFICATORY IN NATURE, THE SAME IS RETROSPECTIVE IN NATURE. (III)THERE IS COVERING JUDGMENT OF HON'BLE ITAT HYD ERABAD BENCH DEALING WITH THE SAME ISSUE IN THE CASE OF M/S. INFOTECH ENTERPR ISE LTD VS JCIT (2003) AS REPORTED IN 85 ITD 325 (HYD). 4.1 IDENTICAL ISSUE HAD COME UP BEFORE ME FOR AY 20 07-08 WHEREIN THE MATTER WAS DECIDED AS UNDER: '4.3 I HAVE CONSIDERED THE FACTS OF THE CASE, THE S UBMISSIONS OF THE ASSESSEE AND THE COMMENTS OF THE AO AND THE ADDL. C IT IN THE REMAND REPORT. THE POSITION OF THE LAW READ WITH INSTRUCTI ONS OF THE CBDT ARE UNAMBIGUOUS. IN FACT THE AO HAS HIMSELF SPELT THEM OUT IN PARA.10 OF THE ASSESSMENT ORDER. THE POSITION OF LAW ON THIS ISSUE IS AS UNDER: I) AS PER CLAUSE (IV) OF EXPLANATION -2 TO SECTION 10B OF THE ACT, THE UNDERTAKING SHOULD BE APPROVED BY THE BOARD OF APPR OVAL (BOA) FOR CLAIMING EXEMPTION U/S.10B OF THE IT ACT. II)THE CBDT VIDE ITS INSTRUCTION DATED 09/03/2009 H AS MADE IT AMPLY CLEAR THAT THE APPROVAL GRANTED BY THE DEVELOPMENT COMMISSIONER IN THE CASE OF AN EXPORT ORIENTED UNIT WILL BE CONSIDERED VALID, ONCE SUCH AN APPROVAL IS RATIFIED BY THE BOARD OF APPROVAL. ITA NO 2066/ AHD/2012 . A.Y. 2008-0 9 4 THE ASSESSEE HAS SHOWN BY FILING THE ADDITIONAL EVI DENCE, THAT THE APPROVAL GRANTED BY THE DEVELOPMENT COMMISSIONER HA S BEEN RATIFIED BY THE BOARD OF APPROVAL. THE AO AND THE ADDL. CIT BOT H IN THEIR REMAND REPORT HAVE STATED THAT THE CLAIM OF THE ASSESSEE F OR DEDUCTION U/S.10B WAS DISALLOWED ONLY FOR THE REASON THAT THE RATIFIC ATION OF THE BOARD OF APPROVAL WAS NOT THERE TILL THE DATE OF ASSESSMENT ORDER. THEY HAVE NOT RAISED ANY OBJECTION AGAINST THE ASSESSEE'S CLAIM F OR DEDUCTION U/S. 10B, SUBSEQUENT TO THE FILING OF ADDITIONAL EVIDENCE. TH E RATIFICATION IS NO DOUBT OF THE APPROVAL ORIGINALLY GRANTED. IT MEANS THAT THE APPROVAL GRANTED WOULD BE CONSIDERED VALID WITH EFFECT FROM THE DATE APPROVAL WAS GIVEN BY THE DEVELOPMENT COMMISSIONER. THE OBJECTIO N OF THE AO SPELT OUT IN THE ASSESSMENT ORDER HAS BEEN MET. IN THE CI RCUMSTANCES, THE ASSESSEE IS ELIGIBLE FOR THE CLAIM OF DEDUCTION U/S . 10B.THE GROUND OF APPEAL OF THE ASSESSEE IS ACCORDINGLY, ALLOWED.' SINCE THE FACTS OF THE CASE AND THE SUBMISSIONS ARE ON THE LINES AS IN AY 2007-08, I DO NOT FIND ANY REASON TO DEVIATE FROM T HE DECISION TAKEN FOR THE AY 2007-08. IN VIEW OF THE SAME THE GROUND OF APPEAL I S ALLOWED. 5. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), REV ENUE IS NOW IN APPEAL BEFORE US. 6. BEFORE US, LD. D.R. STRONGLY SUPPORTED THE ORDER OF A.O. ON THE OTHER HAND LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A) AND FURT HER SUBMITTED THAT AGAINST THE ORDER OF LD. CIT(A) FOR A.Y. 2007-08, THE MATTE R WAS CARRIED BY REVENUE BEFORE TRIBUNAL. TRIBUNAL VIDE ORDER DATED 30.09.20 14 (IN ITA NO. 1581/A/2011) DISMISSED THE APPEAL OF THE REVENUE. A GAINST THE ORDER OF TRIBUNAL, REVENUE PREFERRED APPEAL BEFORE HONBLE G UJARAT HIGH COURT. HONBLE GUJARAT HIGH COURT IN TAX APPEAL NO. 203 OF 2015 ORDER DATED 22.04.2015 DISMISSED THE APPEAL OF THE REVENUE. HE ALSO PLACED ON RECORD ITA NO 2066/ AHD/2012 . A.Y. 2008-0 9 5 THE COPY OF DECISION OF HONBLE HIGH COURT. HE THER EFORE SUBMITTED THAT SINCE THE FACTS OF THE CASE IN THE YEAR UNDER APPEA L ARE IDENTICAL TO THAT OF A.Y. 2007-08 WHICH IS ALSO ACKNOWLEDGED BY LD. CIT( A), THE APPEAL OF REVENUE NEEDS TO BE DISMISSED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE, THE A.O HAD DENIED THE CLAIM OF D EDUCTION U/S. 10B OF THE ACT TO THE ASSESSEE MAINLY FOR THE REASON THAT THE APPROVAL OF THE UNDERTAKING WAS BY DEVELOPMENT COMMISSIONER AND ACCORDING TO HIM THE APPROVAL BY DEVELOPMENT COMMISSIONER COULD NOT BE EQUATED WITH THE APPROVAL OF BOARD OF APPROVAL. WE FIND THAT ON ID ENTICAL FACTS IN ASSESSEES OWN CASE FOR A.Y. 2007-08, THE APPEAL OF REVENUE WAS DISMISSED AND THE ISSUE WAS DECIDED IN FAVOUR OF TH E ASSESSEE BY THE CO- ORDINATE BENCH OF TRIBUNAL VIDE ORDER DATED 30.09.2 014. THE AFORESAID ORDER WAS CHALLENGED BY REVENUE BEFORE HONBLE GUJARAT HI GH COURT AND THE HONBLE GUJARAT HIGH COURT DISMISSED THE APPEAL OF THE REVENUE BY HOLDING AS UNDER:- 5.HEARD THE LEARNED ADVOCATES APPEARING ON BEHALF O F THE RESPECTIVE PARTIES AT LENGTH. AT THE OUTSET, IT IS REQUIRED THAT THE ASSE SSES CLAIMED THE DEDUCTION UNDER SECTION 10B OF THE ACT CLAIMING 100% EOU. IT IS AN ADMITTED POSITION THERE IS ALREADY A PERMISSION / APPROVAL GRANTED BY THE DEVE LOPMENT COMMISSIONER DECLARING / APPROVING THE ASSESSEE AS 100% EOU. HOW EVER, ON CONSIDERING THE WORD, APPROVED BY THE BOARD OF APPROVAL AS MENTIONE D IN SECTION 10B OF THE ACT AND AT THE RELEVANT TIME THERE WAS NO RATIFICATION OF THE DECISION OF THE DEVELOPMENT COMMISSIONER BY THE BOARD OF APPROVAL, THE ASSESSING OFFICER DENIED, THE DEDUCTION UNDER SECTION 10B OF THE ACT. HOWEVER, IT IS REQUIRED TO BE NOTED AND IT IS NOT IN DISPUTE THAT CIRCULAR / INST RUCTION OF THE CBDT DATED 09/03/2009 IT WAS CLARIFIED THAT THE APPROVAL GRANT ED, BY THE DEVELOPMENT ITA NO 2066/ AHD/2012 . A.Y. 2008-0 9 6 COMMISSIONER IN THE CASE OF EXPORT ORIENTED UNIT SE T UP IN AN EXPORT PROCESSING ZONE WILL BE CONSIDERED VALID, ONCE SUCH AN APPROVA L IS RATIFIED BY THE BOARD OF APPROVAL FOR EOU SCHEME. IN THE PRESENT CASE, IT IS NOT IN DISPUTE THAT THE PERMISSION/APPROVAL GRANTED BY THE DEVELOPMENT COMM ISSIONER HAS BEEN RATIFIED BY THE BOARD OF APPROVAL, MAY BE SUBSEQUEN TLY, THE MOMENT THE DECISION / APPROVAL OF THE DEVELOPMENT COMMISSIONER IS RATIFIED BY THE BOARD OF APPROVAL IT WILL RELATE BACK TO THE DATE ON WHICH T HE APPROVAL GRANTED BY THE DEVELOPMENT COMMISSIONER. IF THAT BE SO. IT CANNOT BE SAID, THAT THE ASSESSEE WAS NOT A EXPORT ORIENTED UNIT, WHICH WAS ENTITLED TO THE DEDUCTION UNDER SECTION 10B OF THE ACT. INCIDENTALLY IT IS TO BE NO TED THAT IN THE SUBSEQUENT CIRCULAR .NO.68, ISSUED' BY THE EXPORT PROMOTION CO UNCIL FOR EOUS & SEZS DATED 14.05.2009 IT MENTIONS THAT FROM 1990 ONWARDS BOARD OF APPROVAL HAD DELEGATED THE POWER OF APPROVAL OF 100% TO THE DEVELOPMENT CO MMISSIONER AND, THEREFORE IT CAN BE VERY WELL ARGUED AND SAID THAT THE DEVELO PMENT COMMISSIONER WHILE GRANTING THE APPROVAL OF 100% EOU EXERCISES DELEGAT ED POWERS, IN ANY CASE AND APART FROM THE ABOVE WHEN IT IS FOUND AT THE RE LEVANT TIME THE DEVELOPMENT COMMISSIONER GRANTED THE APPROVAL OF 100% EOU IN F AVOUR OF THE ASSESSEE- COMPANY, WHICH CAME TO BE SUBSEQUENTLY RATIFIED BY THE BOARD OF APPROVAL AND AS OBSERVED HEREINABOVE AS SUCH THE RATIFICATIO N SHALL BE FROM THE DATE ON WHICH THE DEVELOPMENT COMMISSIONER GRANTED THE APPROVAL BOTH THE LEARNED CIT(A) AS WELL AS THE LEARNED TRIBUNAL HAVE RIGHTLY HELD THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION UNDER SECTION 10 B OF THE ACT AS CLAIMED. WE CONFIRM THE VIEW TAKEN BY BOTH THE AUTHORITIES B ELOW HOLDING THAT THE ASSESSEE-WAS ENTITLED TO 100% EOU AS CLAIMED. NO SUBSTANTIAL QUESTION OF LAW ARISE IN THE PRESENT TAX APPEAL. HENCE, THE PRESENT TAX APPEAL DESERVES TO BE DISMISSED AND IS ACCORDINGLY DISMISSED. 8. BEFORE US, REVENUE HAS NOT BROUGHT OUT ANY DISTINGU ISHING FEATURE OF THE CASE AS COMPARED TO THAT OF A.Y. 2007-08 NOR HAS BR OUGHT ON RECORD ANY CONTRARY BINDING DECISION. IN VIEW OF THE AFORESAID FACTS, WE FIND NO REASON ITA NO 2066/ AHD/2012 . A.Y. 2008-0 9 7 TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THE GROUND OF REVENUE IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 18 - 09 - 2015 . SD/- SD/- (S.S. GODARA) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHM EDABAD