The ITO, Ward-5(1), Ahmedabad V. Naval Overseas Pvt.Ltd., Ahmedabad

ITA 22/AHD/2006

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9244 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-07-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 04-01-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Business income; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE SHRI P.K.BANSAL, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.22/AHD/2006 ASSESSMENT YEAR: 2001-02 DATE OF HEARING:7.7,09 DRAFTED:7,7..09 INCOME TAX OFFICER, WARD5(1), AHMEDABAD V/S. NAVAL OVERSEAS PVT. LTD., 3901 A GIDC PHASE IV, VATVA, AHMEDABAD PAN NO.AABCN1085A (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI GOVIND SINGH, DR RESPONDENT BY:- SHRI S.N.SOPARKAR, AR O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE IS ARISING OUT OF THE O RDER OF COMMISSIONER OF INCOME-TAX(APPEALS)-XI, AHMEDABAD IN APPEAL NO. CIT(A)-XI/89/2004-05 DATED 10-10-2005. THE ASSESSMENT WAS FRAMED BY THE ITO, WARD-5(1) AHMEDABAD U/S.143(3) OF THE INCOME-TAX ACT, 1961 (H EREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 16-02-2004 FOR THE ASSESSMENT YEAR 2001-02. 2. THE ONLY ISSUE IN THIS APPEAL OF THE REVENUE IS AGAINST THE ORDER OF CIT(A) IN ALLOWING DEDUCTION OF 25% OF THE PROFITS U/S.10B(1) OF THE ACT. FOR THIS, THE REVENUE HAS RAISED THE FOLLOWING EFFECTIV E GROUND NO.1:- 1. THE LD. CIT(A)-XI ABAD HAS ERRED ON FACTS AND IN LAW IN DIRECTING THE A.O. TO ALLOW DEDUCTION OF 25% OF THE PROFIT U/ S.10B(1) OF THE ACT THOUGH THE ASSESSEE HAS NOT MAINTAINED ANY SEPARATE PROFIT AND LOSS ACCOUNTS IN RESPECT OF EXPORT SALES AND DOMESTIC SA LES. ITA NO.22/AHD/2006 A.Y. 2001-02 ITO WD-5(1), ABD V. NAVAL OVERSEAS P.LTD. PAGE 2 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE HAVE ALSO PERUSED THE CASE RECORDS INCLUDING THE ASSESSMENT ORDER AS WELL AS THE ORDER OF CIT(A) . THE BRIEF FACTS ARE THAT THIS APPELLATE ORDER WAS PASSED BY THE CIT(A) TO TH E ORDER GIVING EFFECT TO THE ASSESSING OFFICERS ORDER U/S.143(3) OF THE ACT. WE FIND THAT THE ORDER GIVING EFFECT WAS PASSED BY THE INCOME-TAX OFFICER, WARD-5 (1), AHMEDABAD DATED 22-09-2004, WHICH WAS PASSED CONSEQUENT TO THE DIRE CTIONS GIVEN BY THE CIT(A)-XI, AHMEDABAD DATED 23-07-2004. THE ASSESSI NG OFFICER PASSED THE ORDER DATED 22-09-2004 BY WHICH REJECTED THE ASSESS EES CLAIM FOR DEDUCTION OF 25% OF THE PROFIT U/S.10B(1) OF THE ACT. WE FIND THAT ASSESSEE FILED APPEAL AGAINST THE AO'S ORDER U/S.143(3) OF THE ACT DATED1 6-02-2004 DETERMINING THE ASSESSEES TOTAL INCOME AT RS.26,00,725/-, WHEREIN THE AO HAS DISALLOWED THE ASSESSEES CLAIM OF EXEMPTION U/S.10B OF THE ACT A ND IN THE SAID APPEAL THE ASSESSEE HAD TAKEN TWO GROUNDS OF APPEAL I.E. (I) A GAINST REJECTION OF CLAIM OF ASSESSEE U/S.10B(1) OF THE ACT IN RESPECT OF SALES MADE BY IT TO THE EOU AND (II) AN ALTERNATIVE GROUND TO THE FIRST GROUND TO A LLOW THE FURTHER DEDUCTION OF 25% OF THE PROFIT UNDER PROVISO TO SECTION 10B(1) O F THE ACT. WE FURTHER FIND THAT CIT(A) HAS GONE THROUGH THE PREDECESSORS APPE LLATE ORDER IN APPEAL NO. CIT(A)-XI/176/03-04 DATED 23-07-2004, WHEREIN THE CIT(A) HAS DIRECTED AS UNDER:- WITH REGARD TO THE APPELLANTS ALTERNATE GROUND TH AT THE ASSESSING OFFICE ERRED IN NOT ALLOWING THE FURTHER DEDUCTION OF 25% OF THE PROFIT UNDER SECTION PROVISO TO SECTION 10B(1) OF THE ACT, IT IS TO BE SAID THAT THE APPELLANT HAS NOT PRODUCED ANY SUPPORTING EVIDENCE IN THIS REGARD. THE ASSESSING OFFICER HAS ALSO NOT STATED ANYTHING IN T HIS REGARD IN HIS ASSESSMENT ORDER. THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE APPELLATE CLAIM FROM HIS RECORD IN VIE W OF THE SECOND PROVISO OF THE SECTION 10B(1) AND ALLOW THE CLAIMS AS PER THE PROVISIONS OF ACT, IF FOUND ELIGIBLE. HOWEVER, ASSESSING OFFICER VIDE ORDER DATED 20-09-2 004 HAS REJECTED THE CLAIM OF THE ASSESSEE FOR DEDUCTION 25% OF THE PROF IT SECTION 10B(1) OF THE ACT BY STATING AS UNDER:- ITA NO.22/AHD/2006 A.Y. 2001-02 ITO WD-5(1), ABD V. NAVAL OVERSEAS P.LTD. PAGE 3 3. AS DIRECTED BY THE CIT(A)-XI, AHMEDABAD, THIS P OINT HAS BEEN VERIFIED FROM THE RECORDS. THE DETAILS SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAVE BEEN RE-E XAMINED. THE ASSESSEES CLAIM OF FURTHER DEDUCTION OF 25% THE PR OFIT U/S.10B(1) OF THE I.T. ACT WAS NOT CONSIDERED AT THE ASSESSMENT STAGE ONLY AFTER VERIFICATIONS OF THE DOCUMENTS AND DETAILS FURNISHE D BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 4. NOW THE ASSESSEE BY HIS LETTER DATED 19-08-2004 HAS FILED SOME DOCUMENTS IN SUPPORT OF HIS CLAIM FOR THE DEDUCTION OF 25% OF THE PROFIT U/S.10B(1) OF THE I.T. ACT. THESE DOCUMENTS WERE NE ITHER PRODUCED OR SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, NOR SUBMITTED BEFORE HONOURABLE CIT(A) -XI, AHMEDABAD DURING THE COURSE OF APPEAL PROCEEDINGS. HENCE THE CLAIM OF THE ASSESSEE IS NOT CONSIDERED. THE CIT(A) AFTER GOING THROUGH THE PROVISION OF THE ACT ALLOWED THE CLAIM OF THE ASSESSEE BY GIVING FOLLOWING FINDING IN PARA-4 TO 4.2 OF HIS APPELLATE ORDER:- 4. I HAVE PERUSED THE SUBMISSIONS AND THE COMPUTAT ION GIVEN BY THE A.R. WITH REGARD TO THE APPELLANTS CLAIM FOR DEDUC TION OF PROFIT AND GAINS DERIVED FROM THE DOMESTIC SALES TO THE EXTENT OF 25 % OF SALES. THE SECTION 10B(1) LAYS DOWN AS UNDER:- SUBJECT TO THE PROVISIONS OF THIS SECTION, A DEDUCT ION OF SUCH PROFITS AND GAINS ARE DERIVED BY A HUNDRED PER CENT EXPORT ORIENTED UNDERTAKING FROM THE EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE FOR A PERIOD OF TEN CONSECUTIVE A SSESSMENT YEAR BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR COMPUTER SOFTWARE, AS THE CAS E MAY BE, SHALL BE ALLOWED FROM THE TOTAL INCOME OF THE ASSESSEE ; PROVIDED THAT WHERE IN COMPUTING THE TOTAL INCOME O F THE UNDERTAKING FOR ANY ASSESSMENT YEAR, ITS PROFITS AN D GAINS HAD NOT BEEN INCLUDED BY APPLICATION OF THE PROVISIONS OF T HIS SECTION AS IT STOOD IMMEDIATELY BEFORE ITS SUBSTITUTION BY THE FI NANCE ACT, 2000 THE UNDERTAKING SHALL BE ENTITLED TO THE DEDUCTION REFERRED TO IN THIS SUB-SECTION ONLY FOR THE UNEXPIRED PERIOD OF A FORESAID TEN CONSECUTIVE ASSESSMENT YEAR. 4.1 IN THIS CONTEXT THE A.R ALSO SUBMITTED THE COPY OF THE CIRCULAR ISSUED BY THE CBDT NO.794 DATED 9-8-2000. THE RELEVANT PAR AS PERTAINS THE ABOVE SAID CIRCULAR ARE EXTRACTED AS UNDER:- ITA NO.22/AHD/2006 A.Y. 2001-02 ITO WD-5(1), ABD V. NAVAL OVERSEAS P.LTD. PAGE 4 15.7. PROVISO TO SUB-SECTION (1) FURTHER PROVIDES THAT PROFITS ON DOMESTIC SALES TO THE EXTENT OF 25% OF TOTAL SALES SHALL BE DEEMED TO BE THE PROFITS GAINS DERIVED FROM EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE. THE PROFITS ON SUCH DO MESTIC SALES SHALL BE SEPARATELY WORKED OUT PROPORTIONATELY AND FURTHER ADDED TO THE AMOUNT OF EXPORT PROFITS FOR THE PURPOSES OF DEDUCTION UNDER THIS PROVISIONS. 4.2 THEREFORE, HAVING CONSIDERED THE FACTS OF THE C ASE, THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE APPELLANTS CLAIM, AFTER PROPER VERIFICATION OF THE DOCUMENTS FILED BEFORE HIM VIDE APPELLANTS LETTER DATED 19-08- 2004, FOR THE DEDUCTION OF 25% OF THE PROFIT U/S./1 0B(1) OF THE ACT AS PER THE COMPUTATION, REFERRED TO ABOVE. 4. NOW BEFORE US THE LD. COUNSEL FOR THE ASSESSEE R EFERRED TO THE SECOND PROVISO TO SECTION 10B(1) OF THE ACT WHICH OMITTED BY THE FINANCE ACT, 2000 WITH EFFECT FROM 01-04-2002 AND THE PRIOR TO ITS OM ISSION, THE SAME READS AS UNDER:- PROVIDED FURTHER THAT THE PROFITS AND GAINS DERIVED FROM SUCH DOMES TIC SALES OF ARTICLES OR THINGS OR COMPUTER SOFTWARE AS DO NOT EXCEED TWENTY-FIVE PER CENT OF THE TOTAL SALES SHALL BE DE EMED TO BE THE PROFITS AND GAINS DERIVED FROM THE EXPORT OF ARTICLES OR TH INGS OR COMPUTER SOFTWARE. IN VIEW OF THE ABOVE, LD. COUNSEL FOR THE ASSESSEE FURTHER STATED THAT THERE IS NO FAULT IN THE ORDER OF CIT(A) AND THE CIT(A) HAS STRICTLY FOLLOWED THE ACT, EVEN OTHERWISE, WE FIND THAT ASSESSING OFFICER AFTE R EXAMINING THE CLAIM OF THE ASSESSEE HAS STATED IN THE ORDER GIVING EFFECT TO T HE ORDER OF CIT(A)-XI, AHMEDABAD THAT DETAILS FILED BY THE ASSESSEE FOR TH E CLAIM EXEMPT @ 25% OF THE DOMESTIC SALE IS CORRECT IN VIEW OF THE PROVISI ONS OF THE ACT AND THE RELEVANT PARA-2 OF THE A.OS ORDER READS AS UNDER:- 2. TO CARRY OUT THE DIRECTIONS OF THE LD. CIT(A) X I, AHMEDABAD A LETTER DATED 16/11/2005 HAS BEEN ISSUED AND DULY SERVED ON THE ASSESSEE. IN RESPONSE TO THIS LETTER, SHRI S.M. SARFF, CA ATTEND ED THE HEARING FIXED ON 29/11/2005 AND FILED LETTER DATED 26/11/2005 FURNIS HING VOLUMINOUS DETAILS SUCH AS DETAILS OF DOMESTIC SALES, COPIES O F SALES INVOICES OF DOMESTIC SALES, STATEMENT SHOWING REALIZATION OF TH E AMOUNTS REALIZED ETC. I HAVE PERUSED THESE DETAILS AND FOUND THAT TH E ASSESSEES CLAIM FOR EXEMPTION @ 25% OF THE DOMESTIC SALES IS CORREC T IN VIEW OF THE ITA NO.22/AHD/2006 A.Y. 2001-02 ITO WD-5(1), ABD V. NAVAL OVERSEAS P.LTD. PAGE 5 PROVISION OF THE ACT READ WITH BOARDS CIRCULAR NO. 794 DATED 9/8/2000. THE CLAIM OF THE ASSESSEE IS REWORKED OUT AS UNDER. ASSESSING OFFICER THEN REWORKED THE ENTIRE COMPUTAT ION AND WE FIND NO INFIRMITY IN THE SAME. ACCORDINGLY, WE CONFIRM THE ORDER OF CIT(A) AND THE ISSUE OF THE REVENUES APPEAL IS DISMISSED. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 28/08/2009 SD/- SD/- (P.K. BANSAL) (MAHAVIR SINGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 28/08/2009 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-XI, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD