RAJDHANI CRAFTS, Jaipur V. ADD.CIT, Jaipur

ITA 249/JPR/2015

• Counselvise Citation: 24923114 RSA 2015
• Duration Of Justice: 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 16-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P BHATEJA CIT DHK
• Assessee Lawyers: SATISH GUPTA
• Keywords: Competent authority
• Section: 80HHC; 10B

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH IH-DS-CALY] YS[KK LNL; DS LE{K BEFORE: SHRI P.K. BANSAL, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 249/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10. M/S. RAJDHANI CRAFTS, 54-55, SHIV VIHAR COLONY, OPP. ROAD NO. 5, VKI AREA, JAIPUR. CUKE VS. THE ACIT, CIRCLE - 5, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AADFR 7865 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SATISH GUPTA, C.A. JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BHATEJA, ADDL. CIT LQUOKBZ DH RKJH[K@ DATE OF HEARING : 05/11/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 6/11/2015 VKNS'K@ ORDER PER P.K. BANSAL, A.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT (A) DATED 23.01.2015 BY TAKING THE FOLLOWING EFFECTIVE GROUND S OF APPEAL :- 1. ON THE FACTS & CIRCUMSTANCES OF THE CASE & IN LA W ALSO LD. LOWER AUTHORITIES GROSSLY ERRED IN NOT ALLOWING THE BENEF IT OF DEDUCTION U/S 10B ON THE EXPORT PAYMENTS OF RS. 37,76,774.59 NOT RECEIVED WITH IN 6 MONTH FROM THE END OF THE PREVIOUS YEAR I GNORING THE FACT THAT THE ASSESSEE HAS APPLIED FOR THE EXTENSION OF TIME. 2. ON THE FACTS & CIRCUMSTANCES OF THE CASE & IN LA W ALSO LD. LOWER AUTHORITIES GROSSLY ERRED IN MAKING ADDITION OF RS. 1,29,506/- ON INCOME FROM OTHER SOURCES AS AGAINST DECLARED UNDER INCOME FROM BUSINESS. 2 ITA NO. 249/JP/2015 A.Y. 2009-10. M/S. RAJDHANI CRAFTS VS. ACIT, JAIPUR. 3. ON THE FACTS & CIRCUMSTANCES OF THE CASE & IN LA W ALSO LD. LOWER AUTHORITIES GROSSLY ERRED IN NOT ALLOWING THE DEDUC TION U/S 10B ON THE ABOVE REFERRED AMOUNT OF RS. 1,29,506/-. 4. ON THE FACTS & CIRCUMSTANCES OF THE CASE & IN LA W ALSO LD. LOWER AUTHORITIES FURTHER ERRED IN CALCULATING DEDUCTION U/S 10B OF THE ACT OF ELIGIBLE UNITS AFTER ADJUSTING LOSS OF BASSI. 2. SO FAR THE FIRST GROUND OF APPEAL IS CONCERNED, AFTER HEARING THE RIVAL SUBMISSIONS, I NOTED THAT THE EXEMPTION HAS NOT BEE N ALLOWED IN RESPECT OF A SUM OF RS. 37,76,774/- AS THE SALE PROCEEDS FOR THE SAID A MOUNT HAS NOT BEEN RECEIVED WITHIN THE STATUTORY PERIOD OF 6 MONTHS AS PRESCRIBED UNDE R SECTION 10B(3) OF THE IT ACT. BEFORE ME ALSO, LD. A/R COULD NOT ADDUCE ANY EVIDEN CE EXCEPT THAT HE STATED THAT HE APPLIED FOR THE EXTENSION OF TIME BUT TILL TODAY TH E APPLICATION FOR EXTENSION OF TIME HAS NOT BEEN DISPOSED OFF. UNDER THESE FACTS AND CIRCU MSTANCES OF THE CASE, I SET ASIDE THIS ISSUE AND RESTORE THIS ISSUE TO THE FILE OF THE AO WITH THE DIRECTION THAT THE AO SHALL RE- DECIDE THIS ISSUE IN ACCORDANCE WITH THE LAW AND AL LOW THE EXEMPTION TO THE ASSESSEE IN RESPECT OF THE SALE PROCEEDS OF RS. 37,76,774/- UND ER SECTION 10B IN CASE THE ASSESSEE FILES BEFORE THE AO THE EXTENSION OF TIME GRANTED B Y THE COMPETENT AUTHORITY FOR BRINGING THE FOREIGN EXCHANGE INTO INDIA. THUS THIS GROUND IS STATISTICALLY ALLOWED. 3. SO FAR GROUND NOS. 2 & 3 ARE CONCERNED, THE ASSE SSEE CLAIMED EXEMPTION UNDER SECTION 10B IN RESPECT OF THE INTEREST INCOME ON FD R. 4. I HEARD RIVAL SUBMISSIONS AND CAREFULLY CONSIDER ED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. IN MY OPINION , THE PROVISIONS OF SECTION 10B ARE EXPLICITLY CLEAR. THE EXEMPTION UNDER SECTION 10B I S AVAILABLE IN RESPECT OF SUCH PROFITS AND GAINS AS DERIVED BY A 100% EOU FROM THE EXPORT O F ARTICLES, THINGS OR COMPUTER 3 ITA NO. 249/JP/2015 A.Y. 2009-10. M/S. RAJDHANI CRAFTS VS. ACIT, JAIPUR. SOFTWARE. THE INTEREST ON FDR CANNOT BE SAID TO HAV E BEEN DERIVED BY A 100% EOU UNDERTAKING FROM THE EXPORT OF ARTICLES, THINGS OR COMPUTER SOFTWARE. THE ISSUE IS DIRECTLY COVERED AGAINST THE ASSESSEE BY THE DECISI ON OF HONBLE SUPREME COURT IN THE CASE OF PANDIAN CHEMICALS LTD. VS. CIT, 262 ITR 278 (SC) IN WHICH IT WAS HELD THAT THE WORDS DERIVED FROM IN SECTION 80HHC MUST BE UND ERSTOOD AS SOMETHING WHICH HAS A DIRECT OR IMMEDIATE NEXUS WITH THE ASSESSEES INDUS TRIAL UNDERTAKING. IN THAT CASE THE ASSESSEE HAD MADE CERTAIN FIXED DEPOSITS AS REQUIRE D BY THE ELECTRICITY BOARD FOR THE SUPPLY OF ELECTRICITY. THE HONBLE SUPREME COURT T OOK THE VIEW THAT THE INTEREST DERIVED BY THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE ON DE POSIT MADE WITH THE ELECTRICITY BOARD CANNOT BE SAID TO FLOW DIRECTLY FROM THE INDUSTRIAL UNDERTAKING ITSELF AND WAS NOT PROFITS OR GAINS DERIVED FROM THE UNDERTAKING FOR THE PURPO SES OF SPECIAL DEDUCTION UNDER SECTION 80HH. IN MY VIEW, THE SAID RULING OF HONB LE SUPREME COURT WILL EQUALLY BE APPLICABLE IN RESPECT OF THE DEDUCTION CLAIMED UNDE R SECTION 10B. I HAVE ALSO GONE THROUGH THE DECISION OF HONBLE SUPREME COURT AS RE LIED ON BY THE LD. A/R IN THE CASE OF ACG ASSOCIATED CAPSULES PVT. LTD., 343 ITR 89 (SC). THIS DECISION, IN MY OPINION, WILL NOT HELP THE ASSESSEE. THIS DECISION RELATES TO TH E DEDUCTION CLAIMED UNDER SECTION 80HHC SUB SECTION (3). THE METHOD OF COMPUTATION OF DEDUCTION IS GIVEN UNDER SECTION 80HHC(3) AND EXPLANATION (BAA) SPECIFICALLY DEFINES THE PROFIT OF BUSINESS FOR THE PURPOSE OF SECTION 80HHC. THEREFORE, THIS DECISION WILL NOT APPLY. THUS THESE GROUNDS ARE DISMISSED. 4 ITA NO. 249/JP/2015 A.Y. 2009-10. M/S. RAJDHANI CRAFTS VS. ACIT, JAIPUR. 5. THE GROUND NO. 4 RELATES TO THE SETTING OFF OF L OSS OF ONE EOU AGAINST THE PROFIT OF ANOTHER 100% EOU FOR THE PURPOSE OF COMPUTING TH E DEDUCTION UNDER SECTION 10B OF THAT OTHER UNIT. 6. I HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONS IDERED THE SAME ALONG WITH THE PROVISIONS OF SECTION 10B. DEDUCTION UNDER SECTION 10B IS AVAILABLE TO AN UNDERTAKING IRRESPECTIVE OF THE ASSESSEE. THEREFORE, THE DEDUCT ION HAS TO BE COMPUTED WITH REFERENCE TO THAT ELIGIBLE UNDERTAKING AS IT COMPLI ED WITH ALL OTHER CONDITIONS. THE PROFIT OF THE UNDERTAKING FOR THE PURPOSE OF DEDUCTION UND ER SECTION 10B HAS TO BE COMPUTED AS AN INDEPENDENT UNIT. IN THIS CASE, I NOTED THAT THE AO HAS MERGED ALL THE ELIGIBLE UNITS FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U NDER SECTION 10B. EACH OF THE ELIGIBLE UNITS, IN MY OPINION, IS AN INDEPENDENT UN IT. THE LOSSES INCURRED IN ELIGIBLE UNIT WAS BROUGHT FORWARD FROM ONE ELIGIBLE UNIT CANNOT B E SET OFF AGAINST THE PROFIT EARNED BY ANOTHER ELIGIBLE UNIT. THE LD. D/R EVEN THOUGH V EHEMENTLY RELIED ON THE ORDER OF THE LD. CIT (A), BUT COULD NOT ADDUCE ANY EVIDENCE OR C ASE LAW WHICH MAY HAVE TAKEN A CONTRARY VIEW. IN VIEW OF THIS FACT, I DIRECT THE A O NOT TO MERGE THE PROFIT OF THE ELIGIBLE UNDERTAKING WITH THE LOSS OF THE OTHER ELIGIBLE UND ERTAKING WHILE COMPUTING THE DEDUCTION UNDER SECTION 10B. THUS THIS GROUND IS AL LOWED. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS P ARTLY STATISTICALLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 6/11/2015 . SD/- IH-DS-CALY ( P.K. BANSAL ) YS[KK LNL;@ ACCOUNTANT MEMBER 5 ITA NO. 249/JP/2015 A.Y. 2009-10. M/S. RAJDHANI CRAFTS VS. ACIT, JAIPUR. TK;IQJ@ JAIPUR FNUKAD@ DATED:- 6/11/ 2015 DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. RAJDHANI CRAFTS, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE-5, JAIPUR. 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 249/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR