ACIT 24(3), MUMBAI V. PRAYAS WRITING INSTRUMENTS, MUMBAI

ITA 2435/MUM/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8122 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 01-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Keywords: Reasonable cause
• Section: 80HHC; 234B; 80IB; 11

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - C BENCH. , ! , BEFORE S/SH.VIJAY PAL RAO, JUDICIAL MEM BER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.2435/MUM/2013, ' ' ' ' # # # # / ASSESSMENT YEAR-2008-09 AC IT 24(3) , R.NO. 701, C-11, 7TH FLOOR, BKC BANDRA (E), MUMBAI-400051 VS M/S PRAYAS WRITING INSTRUMENTS, 113, SATI INDUSTRIAL ESTATE, I.B.PATEL ROAD, GOREGAON(E) MUMBAI-400063 PAN:AAGFP6727P ( $% / APPELLANT) ( &'$% / RESPONDENT) &'( &'( &'( &'( /. C.O. NO.131/MUM/2014, ' ' ' ' # # # # / ASSESSMENT YEAR-2008-09 M/S PRAYAS WRITING INSTRUMENTS, 113, SATI INDUSTRIAL ESTATE, I.B.PATEL ROAD, GOREGAON(E) MUMBAI-400063 PAN:AAGFP6727P VS ACIT 24(3), R.NO. 701, C-11, 7TH FLOOR, BKC BANDRA (E), MUMBAI-400051 ( $% / APPELLANT) ( &'$% / RESPONDENT) ) * / REVENUE BY : SHRI PREMANAND J. '+, '+, '+, '+, * * * * / ASSESSEE BY : SHRI K.GOPAL & MISS NEHA PA RANJPE ' ' ' ' ) )) ) ,- ,- ,- ,- / DATE OF HEARING : 29-09-2014 ./# ) ,- / DATE OF PRONOUNCEMENT : 17-10-2014 ' ' ' ' , 1961 ) )) ) 254 )1( ,0, ,0, ,0, ,0, 1 1 1 1 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM ! ! ! ! ' ' ' ' : CHALLENGING THE ORDER DATED 15.01.2013,OF THE CIT(A )-34,MUMBAI, ASSESSING OFFICER (AO) HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) ERRED DIRECTING THE ASSESSING OFFICER TO CALCULATE DEDUCTION U/S.80HHC IGNORING THE FACT THAT THE ASSESSEE HAS NEITHER CLAIMED DEDUCTION U/S.80HHC NOR ALLOWED.; 2.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT ADJUDICATING THE ISSUE OF DISALLOWANCE OF EXPORT IN VENTIVE OF RS. 12,44,012/- FROM RECEIPTS FOR THE PURPOSE OF DEDUCTION U/S.80IB(4) & GIVING DIRECTION TO ALLOW 80HHC WHICH APPEARS TO BE A CUT AND PASTE ORDER. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE GROUNDS BE SET ASIDE AND MATTER MAY BE DECIDED ACCORDING TO LAW. THE APPELLANT CRAV ES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD NEW GROUND WHICH MAY BE NECESSARY. ASSESSEE HAS FILED BELOW MENTIONED GROUNDS IN THE C ROSS OBJECTION(CO): THE LD.COMMISSIONER OF INCOME TAX (APPEALS)-34, MU MBAI [HEREINAFTER REFERRED TO AS LD. CIT(A)} ERRED IN PASSING THE ORDER DATED 15.01.201 3 ALLOWING DEDUCTION UNDER SECTION 80HHC OF THE INCOME TAX ACT,1961(HEREINAFTER REFERRED TO AS THE ACT) ON DEPB/DUTY DRAW BACK BENEFITS AMOUNTING TO RS.12,44,012/- AS AGAINST DEDUCTION CL AIMED BY THE RESPONDENT UNDER SECTION 80IB(4) WITHOUT APPRECIATING THE FACTS AND CIRCUMST ANCES OF THE SAME. THE LD. CIT(A) FAILED TO APPRECIATE THAT THE RESPON DENT SATISFIES ALL CONDITION PRECEDENT TO CLAIM THE DEDUCTION UNDER SECTION 80IB(4) OF THE ACT WITH RESPECT TO THE DEPB/DUTY DRAW BACK BENEFIT UNDER SECTION 80IB (4) OF THE ACT.HENCE, THE LD.CIT (A) WRONGLY ALLOWED THE DEDUCTION UNDER SECTION 80HHC OF THE ACT INSTEAD OF CLAIM MADE BY T HE RESPONDENT UNDER SECTION 80IB (4) OF THE 2 ITA NO. 2435/M/2013 & C.O.131/M/2014 M/S PRAYAS WRIT ING INSTRUMENT ACT. THE LD.CIT(A) FURTHER FAILED TO APPRECIATE THAT DEP B/DUTY DRAW BACK RECEIVED BY THE RESPONDENT IS INEXTRICABLY LINKED TO THE MANUFACTURING ACTIVIT Y OF THE RESPONDENT AND THE SAME IS GOING TO REDUCE THE MANUFACTURING COST OF THE RESPONDENT.THU S,THE DEPB/DUTY DRAW BACK BENEFITS ARE DERIVING FROM INDUSTRIAL UNDERTAKING FOR THE PURPOS ES OF CLAIMING THE BENEFITS UNDER SECTION 80IB(4) OF THE ACT, THE RESPONDENT, THEREFORE, PRAY S THAT DEPB/ DUTY DRAW BACK BENEFITS AMOUNTING TO RS. 12,44,012/- MAY BE ALLOWED UNDER S ECTION 80IB(4) OF THE ACT. THE RESPONDENT DENIES ANY LIABILITY TO PAY INTEREST 234C OF THE ACT. HENCE, THE SAME IS NOT LEVIABLE, UNDER SECTION 234B AND SECTION ALTER ANY OF THE ABOVE GROUND THE RESPONDENT CRAVES LEAVE TO ADD, AMEND OR MENTI ONED IN THE MEMO OF CROSS OBJECTION. THE ASSESSEE HAS FILED AN APPLICATION FOR CONDONATI ON OF DELAY OF FIVE DAYS IN FILING THE CO.IT WAS STATED THAT THE MANAGING PARTNER WAS OUT OF STATION FOR SOME BUSINESS RELATED WORK WHEN THE TAX CONSULTANT OF THE ASSESSEE HAD SENT HIM THE APPEAL MEMO FOR SIGNATURE,THAT THERE WAS REASONABLE CAUSE FOR DELAY.THE APPLICATION IS ACCOMPANIED BY A N AFFIDAVIT OF THE MANAGING PARTNER.WE HAVE CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND ARE OF THE VIEW THAT DELAY OF 5 DAYS IN FILING THE CO SHOULD BE CONDONED AS THE ASSESSEE WAS PREVENTED BY A REASONABLE CAUSE IN NOT FILING THE CO ON DUE DATE. 2. ASSESSEE-FIRM,ENGAGED IN THE BUSINESS OF MANUFACTUR ING OF BALL PENS AND OTHER WRITING INSTRUMENTS,FILED ITS RETURN OF INCOME ON 30.09.200 8,DECLARING TOTAL INCOME AT RS.NIL.THE AO FINALISED THE ASSESSMENT U/S.143(3) OF THE ACT,ON 0 5.10.2010DETERMINING THE TOTAL INCOME AT RS.20,60,460/-. 2.1. FIRST GROUND OF APPEAL DEALS WITH THE DIRECTION GIV EN BY THE FIRST APPELLATE AUTHORITY (FAA) TO THE AO TO CALCULATE DEDUCTION U/S.80HHC,IGNORING THE FACT THAT THE ASSESSEE HAD NOT CLAIMED DEDUCTION U/S.80HHC. DURING THE COURSE OF HEARING BEFORE US,DEPARTMENTAL REPRESENTATIVE(DR)AND THE AUTHORISED REPRESENTATIVE(AR)AGREED THAT THE FAA HAD NOT DIREC TED THE AO TO CALCULATE DEDUCTION U/S. 80HHC OF THE ACT.WE FIND THAT WHILE DISCUSSING THE ISSUE OF ALLOWABILITY OF DEDUCTION U/S. 80 HHC IN RESPECT OF INTEREST RECEIPTS,THE FAA HAD HEL D THAT THE INTEREST INCOME HAD TO BE TREATED AS INCOME FROM OTHER SOURCES.HE HAD UPHELD THE ORDER O F THE AO AND HELD THAT INTEREST INCOME WAS NOT DERIVED FROM MANUFACTURING ACTIVITY. IN LIGHT OF THE ABOVE FACTS,WE ARE UNABLE TO UNDERS TAND THE LOGIC BEHIND RAISING GROUND OF APPEAL NO.1.IT IT CLEAR THAT THE AO AND THE SENIOR OFFICER PROCESSING AND APPROVING THE FILING OF SECOND APPEAL HAVE NOT EVEN READ THE ORDER OF THE FAA AND HAVE FILED THE APPEAL BEFORE THE TRIBUNAL.THEY HAVE ACCUSED THE FAA OF AN ERROR,THAT HE HAS NOT COMMITTED.FILING OF SECOND APPEAL BY THE DEPARTMENT IS NOT THE JOB OF A ONE PE RSON OR AUTHORITY IT INVOLVES THE AO,HIS SUPERVISORY OFFICER AND THE ADMINISTRATIVE CIT.AFTE R THE AO PREPARES A SCRUTINY REPORT WITH REGARD TO THE ORDER OF THE FAA TO THE JCIT/ADDL.CIT,THE JC IT/ADDL.CIT MAKES COMMENT ON IT.AFTER THE SCRUTINY REPORT IS RECEIVED IN THE OFFICE OF THE CI T SAME IS PROCESSED BY HIS STAFF AND IS PUT UP BEFORE HIM TO AUTHORISE OR NOT TO AUTHORISE THE AO TO FILE SECOND APPEAL.THE ELABORATE PROCEDURE LAID DOWN BY THE DEPARTMENT IS TO ENSURE THAT APPEA LS AGAINST THE ORDERS OF THE FAA ARE FILED ONLY IN DESERVING CASES AND NOT IN A ROUTINE MATTER.IT I S NOT TO BE FORGOTTEN THAT THE FAA IS VERY SENIOR OFFICER OF THE DEPARTMENTAL HIERARCHY AND PERFORMS QUASI JUDICIAL FUNCTION.HIS ORDERS DESERVES TO BE GIVEN DUE RESPECT.IN THE CASE UNDER CONSIDERATIO N,IT IS VERY CLEAR THAT NONE OF THE AUTHORITIES HAD BOTHERED TO GO THROUGH THE ORDER OF THE FAABEFO RE FILING THE APPEAL. IN OUR OPINION,GROUND NO.1 IS MISCONCEIVED AND HENC E DESERVES TO BE REJECTED OUT RIGHTLY. 3. GROUND NO.2 IS ABOUT NOT ADJUDICATING THE ISSUE OF DISALLOWANCE OF EXPORT INCENTIVE OF RS. 12,44,012/- FROM RECEIPTS FOR THE PURPOSE OF DEDUCT ION U/S.80IB(4).DURING THE COURSE OF HEARING 3 ITA NO. 2435/M/2013 & C.O.131/M/2014 M/S PRAYAS WRIT ING INSTRUMENT REPRESENTATIVES OF BOTH THE SIDES AGREED THAT THE I SSUE RAISED BY THE AO REMAINED UN -ADJUDICATED AND HAD TO BE SENT BACK TO THE FILE OF THE FAA.WE F IND THAT THE FAA HAS NOT DECIDED THE ISSUE.THEREFORE,IN THE INTEREST OF JUSTICE,WE ARE R EMITTING BACK THE MATTER TO THE FILE OF THE FAA FOR FRESH ADJUDICATION.HE WILL AFFORD REASONABLE OPPORT UNITY OF HEARING TO THE ASSESSEE,BEFORE PASSING ORDER. GROUND NO.2 IS ALLOWED IN FAVOUR OF THE AO,IN PART. CO/131/MUM/2014: 4.FIRST GROUND OF THE CO IS ABOUT DRAW BACK BENEFIT S AMOUNTING TO RS.12,44,012/-.DURING THE COURSE OF HEARING BEFORE US,AR FAIRLY CONCEDED THAT ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE INC OME TAX APPEAL NO.1415 OF 2011 DATED 08.02.2013.WE, ACCORDINGLY,DECIDE EFFECTIVE GROUND OF APPEAL AGAINST THE ASSESSEE. NEXT GROUND I.E.GROUND RELATED WITH LEVY OF INTEREST U/S.234 OF THE ACT IS CONSEQUENTIAL IN NATURE AND DOES NOT REQUIRE ADJUDICATION. AS A RESULT,APPEAL FILED BY THE AO STANDS PARTLY AL LOWED AND THE CO FILED BY THE ASSESSEE STANDS DISMISSED. 2,3 '+, VF/KDKJH VF/KDKJH VF/KDKJH VF/KDKJH ) 1,3 4 VKSJ VKSJVKSJ VKSJ '+, ) &'( UK UKUK UK 4 FD;K FD;K FD;K FD;K , K KK K 56. ORDER PRONOUNCED IN T HE OPEN COURT ON 17TH OCTOBER,2014 . 1 ) ./# 8 9' 17 VDVW VDVW VDVW VDVWCJ CJCJ CJ , 201 4 / ) 0 : SD/- SD/- ( / VIJAY PAL RAO) ( ! ! ! ! / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 9' /DATE: 17.10 . 2014. SK 1 1 1 1 ) )) ) &, &, &, &, ; #, ; #, ; #, ; #, / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / $% 2. RESPONDENT / &'$% 3. THE CONCERNED CIT(A)/ < = , 4. THE CONCERNED CIT / < = 5. DR C BENCH, ITAT, MUMBAI / >0 &,' LH LHLH LH , . . . 6. GUARD FILE/ 0 2 ', ', ', ', &, &,&, &, //TRUE COPY// 1' / BY ORDER, ? / 5 DY./ASST. REGISTRAR , /ITAT, MUMBAI