Zigi Parangottu John, Kottayam V. ITO, Kottayam

ITA 252/COCH/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73937 (ITAT-COCHIN)
• Duration Of Justice: 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-03-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 06-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M ANIL KUMAR
• Keywords: Revision of order
• Section: 10B

Judgement Text

1 ITA NO. 252/COCH/2013 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 252/COCH/2013 (ASSESSMENT YEAR 2010-11) ZIGI PARANGOTTU JOHN VS CIT, KOTTAYAM WEBSIGHT TECHNOLOGIES VADAKKENADA ROAD MUTTAMBALAM PO KOTTAYAM 686 004 PAN : AFQPJ9674Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MATHEW JOSEPH RESPONDENT BY : SHRI M ANIL KUMAR, CIT(DR) DATE OF HEARING : 25-03-2014 DATE OF PRONOUNCEMENT : 28-03-2014 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE ADMINISTRATIVE COMMISSIONER DATED 06-03-2013 FOR TH E ASSESSMENT YEAR 2010-11. 2. SHRI MATHEW JOSEPH, THE LD.REPRESENTATIVE FOR TH E ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER ALLOWED THE CL AIM OF DEDUCTION U/S 10B OF THE ACT. HOWEVER, THE ADMINISTRATIVE COMMISSION ER FOUND THAT UNDER 2 ITA NO. 252/COCH/2013 THE SCHEME OF THE INCOME-TAX ACT, MORE PARTICULARLY , EXPLANATION 2(IV) BELOW SECTION 10B, AN UNDERTAKING HAS TO BE APPROVE D BY THE BOARD APPOINTED BY GOVERNMENT OF INDIA U/S 14 OF THE INDU STRIES (DEVELOPMENT AND REGULATIONS) ACT, 1951. IN THIS CASE, ACCORDIN G TO THE LD.REPRESENTATIVE, THE ASSESSING OFFICER ALLOWED TH E CLAIM OF THE ASSESSEE ON THE BASIS OF THE CLARIFICATION ISSUED BY DIRECTO R OF STPI IS ALSO A MATERIAL FACTOR TO BE CONSIDERED FOR THE PURPOSE OF DEDUCTIO N U/S 10B OF THE ACT. ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSEE HA S COMPLIED WITH ALL FORMALITIES FOR CLAIMING DEDUCTION U/S 10B OF THE A CT. AS FAR AS THE ASSESSEE IS CONCERNED, THE APPROVAL BY THE DIRECTOR OF STPI IS FINAL AND THE RATIFICATION BY THE SO-CALLED BOARD CONSTITUTED BY CENTRAL GOVERNMENT IS ONLY A FORMALITY. ACCORDING TO THE LD.REPRESENTATI VE, SUCH RATIFICATION IS BEYOND THE CONTROL OF THE ASSESSEE. THEREFORE, ACC ORDING TO THE LD.REPRESENTATIVE, THE ADMINISTRATIVE COMMISSIONER IS NOT CORRECT IN REVISING THE ORDER OF THE ASSESSING OFFICER. THE L D.REPRESENTATIVE FURTHER SUBMITTED THAT IN CASE THIS TRIBUNAL FOUND THAT THE APPROVAL / RATIFICATION BY THE BOARD CONSTITUTED BY GOVERNMENT OF INDIA IS A P RE-CONDITION FOR GRANT OF DEDUCTION U/S 10B, ASSESSEES CLAIM MAY BE CONSIDER ED U/S 10A OF THE ACT. 3. ON THE CONTRARY, SHRI M ANIL KUMAR, THE LD.DR SU BMITTED THAT THE CBDT BY CIRCULAR DATED 09-03-2009 CLARIFIED THAT FO R THE PURPOSE OF 3 ITA NO. 252/COCH/2013 DEDUCTION U/S 10B APPROVAL BY THE BOARD APPOINTED B Y GOVERNMENT OF INDIA U/S 14 OF THE INDUSTRIES (DEVELOPMENT AND REG ULATIONS) ACT, 1951 IS A MANDATORY CONDITION. ACCORDING TO THE LD.DR, SUB SEQUENT TO THE DELEGATION OF POWERS BY THE MINISTRY OF COMMERCE AN D INDUSTRIES TO THE DEVELOPMENT COMMISSIONERS, THE APPROVAL TO 100% EXP ORT ORIENTED UNITS IS TO BE RATIFIED BY THE BOARD OF APPROVAL. IN THI S CASE, ACCORDING TO THE LD.DR, THE BOARD OF APPROVAL HAS NOT RATIFIED THE A PPROVAL GRANTED BY THE DIRECTOR OF STPI, THEREFORE, THE ASSESSEE IS ALSO N OT ENTITLED FOR DEDUCTION U/S 80IA OF THE ACT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 10B OF THE ACT. EXPLANATION 2(IV) BELOW SECTION 10B READS AS FOLLOWS: EXPLANATION 2.- FOR THE PURPOSES OF THIS SECTION,- (I) TO (III) XXXXXXXXXXXXXXXXXXX (IV) HUNDRED PER CENT EXPORT-ORIENTED UNDERTAKING MEANS AN UNDERTAKING WHICH HAS BEEN APPROVED AS A HUNDRED PER CENT EXPORT-ORIENTED UNDERTAKING BY THE BOARD APPOI NTED IN THIS BEHALF BY THE CENTRAL GOVERNMENT IN EXERCISE O F THE POWERS CONFERRED BY SECTION 14 OF THE INDUSTRIES 4 ITA NO. 252/COCH/2013 (DEVELOPMENT AND REGULATION) ACT, 1951 (65 OF 1951) , AND THE RULES MADE UNDER THAT ACT; 5. THE CBDT BY INSTRUCTION NO.2/2009, DATED 09-03-2 009 HAS CLARIFIED AS FOLLOWS IN EXERCISE OF THEIR POWERS U/S 119 OF T HE ACT: SECTION 10B OF THE INCOME-TAX PROVIDES FOR EXEMPTI ON OF INCOME IN CASE OF HUNDRED PER CENT EXPORT ORIENTED UNDERTAKINGS SUBJECT TO PRESCRIBED CONDITIONS. EXP LANATION 2(IV) BELOW TO THE SAID SECTION DEFINES A HUNDRED P ER CENT EXPORT ORIENTED UNDERTAKING AS AN UNDERTAKING SO A PPROVED BY THE BOARD APPOINTED IN THIS BEHALF BY THE CENTRA L GOVERNMENT UNDER SECTION 14 OF THE INDUSTRIES DEVEL OPMENT AND REGULATION ACT, 1951 SUBSEQUENT TO THE DELEGATI ON OF THIS POWER BY THE MINISTRY OF COMMERCE AND INDUSTRIES TO THE DEVELOPMENT COMMISSIONERS, SUCH APPROVAL TO 100 PER CENT EOUS ARE NOW BEING GRANTED BY THE DEVELOPMENT COMMISSIONERS, WHICH ARE LATER RATIFIED BY THE BOAR D F APPROVALS. THE MATTER REGARDING VALIDITY OF APPROVALS GIVEN BY DEVELOPMENT COMMISSIONERS HAS BEEN EXAMINED IN THE BOARD. IT HAS BEEN DECIDED THAT AN APPROVAL GRANTE D BY THE DEVELOPMENT COMMISSIONER IN THE CASE OF AN EXPORT O RIENTED UNIT SET UP IN AN EXPORT PROCESSING ZONE WILL BE CO NSIDERED VALID, ONCE SUCH AN APPROVAL IS RATIFIED BY BOARD O F APPROVAL FOR EOU SCHEME. 5 ITA NO. 252/COCH/2013 10% EXPORT ORIENTED UNIT ELIGIBILITY FOR DEDUCTI ON UNDER SECTION 10B INSTRUCTION 2/2009 CORRIGENDUM REGARDING CORRIGENDUM TO INSTRUCTION NO.2/2009, DATED 8-5-200 9 [F.NO.178/19/2008-ITA-I] BOARD HAD ISSUED AN INSTRUCTION NO.2/2009, DATED 9 MARCH, 2009. THE SECOND PARA OF THAT INSTRUCTION MAY BE S UBSTITUTED WITH THE FOLLOWING PARA:- THE MATTER REGARDING VALIDITY OF APPROVALS GIVEN BY DEVELOPMENT COMMISSIONERS HAS BEEN EXAMINED IN THE BOARD. IT HAS BEEN DECIDED THAT AN APPROVAL GRANTE D BY DEVELOPMENT COMMISSIONER IN THE CASE OF A HUNDRED P ERCENT EXPORT ORIENTED UNIT WILL BE CONSIDERED VALID, ONCE SUCH AN APPROVAL IS RATIFIED BY THE BOARD OF APPROVAL FOR E OU SCHEME. THIS MAY KINDLY BE BROUGHT INTO THE NOTICE OF ALL O FFICERS UNDER YOUR CHARGE. 6. IN VIEW OF THE ABOVE RATIFICATION BY THE BOARD O F APPROVAL IS MANDATORY FOR GRANT OF DEDUCTION U/S 10B OF THE ACT . WE FIND THAT THE DELHI HIGH COURT IN CIT VS ENABLE EXPORTS PVT LTD (2011) 5 TAXCORP (DT) 49927 (DELHI) DATED 14-09-2011 FOUND THAT THE APPROVAL GR ANTED BY DEVELOPMENT COMMISSIONER WAS VALID FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 10B OF THE ACT. ANOTHER DIVISION BENCH OF THE DELHI HIGH COURT BY A JUDGMENT DATED 17-09-2012 IN THE CASE OF CIT VS REGENCY CREA TIONS LTD (2012) 353 ITR 326 (DELHI) FOUND THAT 100% EXPORT ORIENTED UNI T IS ONLY THAT WHICH IS 6 ITA NO. 252/COCH/2013 SO APPROVED BY THE BOARD APPOINTED BY CENTRAL GOVER NMENT IN EXERCISE OF POWERS CONFERRED UNDER SECTION 14 OF INDUSTRIES (DE VELOPMENT AND REGULATION) ACT, 1951. HOWEVER, THE SUBSEQUENT DIV ISION BENCH OF THE DELHI HIGH COURT, HAD NO OCCASION TO CONSIDER ITS E ARLIER DIVISION BENCH DECISION DATED 14-09-2011 IN THE CASE OF ENABLE EXP ORTS PVT LTD. WHEN THERE ARE TWO CONFLICTING JUDGMENTS OF SAME HIGH CO URTS AVAILABLE, THE JUDICIAL DISCIPLINE REQUIRES TO FOLLOW THE LATEST J UDGMENT OF THE HIGH COURT OR THE JUDGMENT WHICH GIVES MORE REASONS FOR THE CONCL USION REACHED THEREIN. IN THIS CASE, THE JUDGMENT OF THE DELHI H IGH COURT, IN THE CASE OF REGENCY CREATIONS LTD (SUPRA) IS NOT ONLY LATER IN POINT OF TIME BUT IT ALSO DISCUSSES VARIOUS CASE LAWS ON THE SUBJECT AND FOUN D THAT THE CARDINAL RULE WHICH BINDS THE COURT TO INTERPRET STATUTES IS THAT WHERE POWER IS GIVEN TO DO A CERTAIN THING IN A CERTAIN WAY, THE THING MUST BE DONE IN THAT WAY OR NOT AT ALL, AND OTHER METHODS OF PERFORMANCE ARE NE CESSARILY FORBIDDEN. SINCE THE LATEST JUDGMENT GIVES MORE REASONING FOR THE CONCLUSION REACHED AND IT IS ALSO LATER IN POINT OF TIME, THIS TRIBUNA L IS OF THE CONSIDERED OPINION THAT JUDICIAL DISCIPLINE REQUIRES TO FOLLOW THE LAT EST JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF REGENCY CREATIONS LTD. T HEREFORE, IN THE ABSENCE OF AN APPROVAL BY THE BOARD APPOINTED U/S 1 4 OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951, THE ASSESSE E IS NOT ENTITLED FOR DEDUCTION U/S 10B OF THE ACT. 7 ITA NO. 252/COCH/2013 7. AT THE VERY SAME TIME, THIS TRIBUNAL IS OF THE C ONSIDERED OPINION THAT THE ALTERNATIVE CLAIM OF THE ASSESSEE NEEDS TO BE A DJUDICATED BY THE ASSESSING OFFICER U/S 10A OF THE ACT. ACCORDINGLY, WHILE CONFIRMING THE ORDER OF THE ADMINISTRATIVE COMMISSIONER PASSED U/S 263, THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE CLAIM OF THE ASS ESSEE U/S 10A OF THE ACT. THE ASSESSING OFFICER SHALL EXAMINE THE ISSUE AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE AND THEREAFTER DECIDE T HE SAME IN ACCORDANCE WITH LAW BY A SPEAKING ORDER. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH MARCH, 2014. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 28 TH MARCH, 2014 PK/- COPY TO: 1. ZIGI PARANGOTTU JOHN, WEBSIGHT TECHNOLOGIES, VDA KKENADA ROAD, MUTTAMBALAM P.O., KOTTAYAM 686 004 2. CIT, KOTTAYAM 3. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH