ACIT-I, Kanpur V. M/S Model Exim,C/O SULTAN TANNERS, Kanpur

ITA 260/LKW/2011

• Counselvise Citation: 26023714 RSA 2011
• Duration Of Justice: 3 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-06-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 06-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K RAM
• Keywords: Earning of tax free income; Tangible material; Difference of opinion; Non compliance; Change of opinion
• Section: 143(3); 80HHC; 80IB; 10B; 147; 148; 28; 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NOS.357 TO 359/LKW/2011 A. YRS:200 5 - 0 6 TO 2007 - 08 M/S MODEL EXIMS, JAJMAU, KANPUR. PAN:AADFM6163H VS. DY.C.I.T. - 1, KANPUR. (APPELLANT) (RESPONDENT) ITA NO.260/LKW/2011 ASSESSMENT YEAR:2005 - 06 DY.C.I.T. - 1, KANPUR. VS. M/S MODEL EXIMS, JAJMAU, KANPUR. PAN:AADFM6163H (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI RAKESH GARG, ADVOCATE REVENUE BY SHRI R. K. RAM, D.R. DATE OF HEARING 26/06/2014 DATE OF PRONOUNCEMENT 1 7 /07/2014 O R D E R PER A. K. GARODIA, A.M. OUT OF THIS BUNCH OF FOUR APPEALS, THERE ARE TWO CROSS APPEALS BY THE ASSESSEE AND THE REVENUE FOR THE ASSESSMENT YEAR 2005 - 06 AND REMAINING TWO APPEALS ARE FILED BY THE ASSESSEE FOR ASSESSMENT YEARS 2006 - 07 & 2007 - 08. FOR THE SAKE OF CONVENIENCE, ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER. 2 2. FIRST WE TAKE UP THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2005 - 06 IN I.T.A. NO.357/LKW/2011. GROUND NO. 1 TO 4 ARE REGARDING VALIDITY OF REOPENING AND THESE GROUNDS ARE AS UNDER: 1. BECAUSE THE RE - ASSESSMENT FRAMED U/S 147/143(3) OF TH E ACT IS CONTRARY TO FACTS, BAD IN LAW, WITHOUT JURISDICTION AND BE QUASHED. 2. BECAUSE THERE BEING NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT, THE RE - ASSESSMENT PROCEEDINGS ARE VOID AB I NITIO. 3. BECAUSE THE 'DEEMED' RETURN FILED PURSUANT TO NOTICE U/S.147 BEING BELATED THE CIT(A) HAS ERRED ON FACT AND IN LAW IN UPHOLDING THE REASSESSMENT FRAMED U/S. 147/143(3), THE REASSESSMENT FRAMED IS VOID ABINITO AND BE QUASHED. 4. BECAUSE THE CIT( A) HAS WRONGLY INTERPRETED THE GROUNDS OF APPEAL REGARDING 263 AND REOPENING U/S.147 (BOTH BEING INDEPENDENT) AND HAS ARBITRARILY HELD THAT THE APPELLANT HIMSELF HAS CONCEDED THAT THE REASSESSMENT FRAMED IS VALID. 3. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT REOPENING IS ON THE BASIS OF S A ME OLD MATERIAL AND NO NEW MATERIAL HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER FOR THE PURPOSE OF REOPENING, THEREFORE, REOPENING IS NOT JUSTIFIED. IN SUPPORT OF HIS CONTENTION, RELIANCE WAS PLACED BY HIM ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: ( I ) RATNA TRAJI REALITY SERVICES PVT. LTD. VS. INCOME TAX OFFICER [2013] 356 ITR 493 (GUJ.) ( II ) CIT VS. ORIENT CRAFT LTD. [2013] 215 TAXMAN 28/29 TAXMANN.COM 392 (DELHI) ( III ) HV TRANSMISSIONS LTD. VS. INCOME TAX OFFICER , I.T.A. NO.2230/MUM/2010 ASSESSMENT YEAR 2001 - 02 ( IV ) ACIT VS. STAR FERRO ALLOYS (P) LTD. [2004] 90 ITD 63 (DELHI) (TM) ( V ) BALKRISHNA HIRALAL WANI VS. INCOME TAX OFFICER & OTHERS [2010] 321 ITR 519 (BOM) 3 ( VI ) CIT VS. BATRA BHATTA COMPANY [2010] 321 ITR 526 (DELHI) ( VII ) ACIT VS. O.P. CHAWLA [2006] 8 SOT 242 (DELHI) (TM) ( VIII ) AIPITA MARKETING P. LTD. VS. INCOME TAX OFFICER, I.T.A.T. MUMBAI ( IX ) DCIT VS. TELCO DADAJEE DHACKJEE LTD. ( X ) PRASHANT S. JOSHI, DATTARAM SHRIDHAR BHOSALE VS INCOME TAX OFFICER & OTHERS [2010] 324 ITR 154 (BOM) ( XI ) CI T VS. KELVINATOR OF INDIA LTD., EICHER LTD. [2010] 320 ITR 561 (SC) 3.1 HE ALSO SUBMITTED THAT IT IS NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT NO COMPLIANCE WAS MADE TO THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S 148 ON 08/03/2007 BUT STILL THE ASSESSING OFFICER HAS ISSUED NOTICE U/S 143(2) ON 31/10/2007 AND PASSED ASSESSMENT ORDER U/S 143(3) OF THE ACT ALTHOUGH IN CASE OF NON COMPLIANCE OF THE NOTICE, HE SHOULD HAVE PASSED ASSESSMENT ORDER U/S 14 4 BECAUSE NO RETURN WAS FILED BY THE ASS ESSEE. 4. AS AGAINST THIS, LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. HE PLACED RELIANCE ON THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF ASSISTANT COMMISSIONER OF INCOME - TAX VS RAJESH JHAVERI STOCK BROKERS P. LTD. AS REPORTED IN [2007] 291 ITR 500 (SC). HE ALSO SUBMITTED THAT AS PER THE PROVISION OF SECTION 292B OF THE ACT, THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER CANNOT BE DEEMED TO BE INVALID FOR THE REASON OF CERTAIN MISTAKE, DEFECT OR OMISSION IN THE ASSESSM ENT BECAUSE THE ASSESSMENT IS OTHERWISE IN CONFORMITY AND ACCORDING TO THE INTENT AND PURPOSE OF THIS ACT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IT IS ADMITTED POSITION OF FACT THAT THE ORIGINAL ASSESSMENT WAS COMPLETED BY THE ASSESSIN G OFFICER U/S 143(1) OF THE ACT AND NOT U/S 143 (3) OF THE ACT. IN THE LIGHT OF THIS FACT, WE EXAMINE THE APPLICABILITY OF VARIOUS JUDGMENTS CITED BY LEARNED A.R. OF THE ASSESSEE. 4 5.1 THE FIRST JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMEN T OF HON'BLE GUJARAT HIGH COURT RENDERED IN THE CASE OF RATNA TRAYI REALITY SERVICES PVT. LTD. (SUPRA). IN THIS CASE, IT WAS HELD THAT TANGIBLE MATERIAL TO SHOW ESCAPEMENT OF INCOME IS MUST. IN THE PRESENT CASE, IT IS ADMITTED POSITION THAT THE INCOME HA S ESCAPED ASSESSMENT BECAUSE THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IB IN THE RETURN OF INCOME IS NOT ALLOWABLE TO THE ASSESSEE AND THEREFORE, ESCAPEMENT OF INCOME IS THERE AND REOPENING IS MADE BY THE ASSESSING OFFICER AFTER RECORDING VALID REASONS A ND HENCE, THE ASSESSEE DOES NOT GET ANY HELP FROM THIS JUDGMENT. 5.2 THE SECOND JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT OF HON'BLE DELHI HIGH COURT RENDERED IN THE CASE OF ORIENT CRAFT LTD. (SUPRA). IN THIS CASE, THE FACTS ARE THAT RETURN OF INCOME WAS FILED BY THE ASSESSEE CLAIMING DEDUCTION U/S 80HHC AND 10B OF THE ACT. IT IS ALSO NOTED THAT THE ASSESSING OFFICER ISSUED INTIMATION ACCEPTING RETURN U/S 143(1) AND LATER ON , HE SOUGHT TO REOPEN PROCEEDINGS ON THE GROUND THAT THERE WA S ESCAPEMENT OF INCOME. IT IS ALSO NOTED THAT THE ASSESSING OFFICER REACHED THIS BELIEF MERELY ON GOING THROUGH THE RETURN OF INCOME AND NOTHING MORE. IN THE PRESENT CASE, AS PER THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE BEFORE CIT(A), COPY OF WHICH IS AVAILABLE ON PAGE 1 TO 7 OF THE PAPER BOOK, IT IS STATED BY THE ASSESSEE ON PAGE NO. 2 THAT THE NOTICE U/S 147 HAS BEEN ISSUED BY THE ASSESSING OFFICER ON THE BASIS OF S A ME REASON THAT HE HAS COME ACROSS IN THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2004 - 05 AND MADE ADDITION THEREIN . THE RETURN FOR ASSESSMENT YEAR 2004 - 05 WAS FILED ON 01/11/2004 AND THE SAME WAS SELECTED FOR SCRUTINY U/S 143(3) OF THE ACT. THE ASS ESSMEN T FOR THAT YEAR WAS COMPLETED U/S 143(3) ON 21/12/2006 WHEREAS THE RETURN OF INCOME FO R PRESENT YEAR WAS FILED ON 31/10/2005. HENCE, IT IS SEEN THAT IN THE PRESENT CASE, APART FROM LOOKING INTO THE RETURN OF INCOME FILED BY THE ASSESSEE FOR THE PRESENT YEAR, THE REASON RECORDED BY THE ASSESSING OFFICER ARE ON THE BASIS OF SCRUTINY ASSESSME NT PROCEEDINGS FOR 5 ASSESSMENT YEAR 2004 - 05 WHICH WERE CONCLUDED AFTER FILING THE RETURN OF INCOME BY TH E ASSESSEE FOR THE PRESENT YEAR . IN OUR CONSIDERED OPINION, IN THE FACTS OF THE PRESENT CASE, THIS JUDGMENT IS NOT APPLICABLE. 5.3 THE NEXT JUDGMENT CIT ED BY LEARNED A.R. OF THE ASSESSEE IS THE TRIBUNAL DECISION RENDERED IN THE CASE OF HV TRANSMISSIONS LTD. (SUPRA) IN I.T.A. NO.2230/MUM/2010 AND 2476/MUM/2010 DATED 07/10/2011. AS PER PARA 8 OF THIS DECISION, WE FIND THAT THE REASONS RECORDED BY THE ASSESS ING OFFICER WERE REPRODUCED BY THE TRIBUNAL AND IN THE SAME , IT IS NOTED BY THE ASSESSING OFFICER THAT HE HAS NOTICED THAT INCOME HAS ESCAPED ASSESSMENT FROM ANNEXURE 11 TO THE BALANCE SHEET AND THERE IS NO MENTION OF ANY OTHER MATERIAL IN THE POSSESSION O F THE ASSESSING OFFICER. SINCE IN THE PRESENT CASE, THE SCRUTINY ASSESSMENT OF PRECEDING YEAR IS BASIS FOR FORMATION OF BELIEF OF THE ASSESSING OFFICER REGARDING ESCAPEMENT OF INCOME, IN OUR CONSIDERED OPINION, THIS TRIBUNAL DECISION IS NOT RENDERING ANY HELP TO THE ASSESSEE. 5.4 THE NEXT JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS ALSO A TRIBUNAL DECISION RENDERED IN THE CASE OF STAR FERRO ALLOYS (SUPRA). IN THIS CASE, IT WAS HELD BY THE TRIBUNAL THAT WHERE THE REASONS RECORDED BY THE ASSESSING OFFICER DID NOT INDICATE ANY MATERIAL ON THE BASIS OF WHICH IT WOULD BE SAID THAT THERE WAS ESCAPEMENT OF INCOME, PROCEEDING U/S 147 COULD NOT BE RESORTED TO FOR MAKING ROVING ENQUIRIES OR MAKING INVESTIGATION. IN THAT CASE, THE REASONS RECORDED BY THE ASSESSING OFFICER INDICATED THAT THE ASSESSING OFFICER HAS REASONS TO BELIEF THAT THERE WAS ESCAPEMENT OF INCOME AND THE ASSESSING OFFICER ONLY WANTED TO MAKE INVESTIGATIONS INTO THE CLAIM OF THE ASSESSEE REGARDIN G SOME EXPENSES AS WELL AS DONATION AND UNDER THESE FACTS, IT WAS HELD THAT INITIATION OF PROCEEDINGS U/S 147 WAS BAD IN LAW. IN THE PRESENT CASE, THE FACTS ARE DIFFERENT. IN THE PRESENT CASE, THERE WAS CONCRETE BASIS BEING THE SCRUTINY ASSESSMENT FOR AS SESSMENT YEAR 2004 - 05 ON THE BASIS OF WHICH THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THERE WAS 6 ESCAPEMENT OF INCOME AND THE PURPOSE WAS NOT TO MAKE ROVING ENQUIRY AND THEREFORE, THIS TRIBUNAL DECISION IS NOT RELEVANT IN THE FACTS OF THE PRESENT CA SE. 5.5 THE NEXT JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT RENDERED IN THE CASE OF BALKRISHNA HIRA L AL W ANI (SUPRA) . IN THIS CASE , IT WAS HELD THAT CLAUSE NO. 35 OF THE PARTNERSHIP DEED ON THE BASIS OF WHIC H THE ASSESSING OFFICER FORMED THE BELIEF THAT THERE IS ESCAPEMENT OF INCOME HAS NO APPLICATION WHATSOEVER TO A SITUATION WHERE A PARTNER RETIRED MANDATORILY UPON ATTAINING THE AGE OF SUPERANNUATION OF SEVENTY YEARS AND UNDER THESE FACTS, IT WAS HELD THAT THERE WAS NO TANGIBLE MATERIAL BEFORE THE ASSESSING OFFICER TO FORM A CONCLUSION THAT INCOME HAD ESCAPED ASSESSMENT. IN THE PRESENT CASE, THE FACTS ARE DIFFERENT AND THE FORMATION OF BELIEF BY THE ASSESSING OFFICER IS NOT DEFECTIVE AS IN THAT CASE AND THER EFORE, THIS JUDGMENT IS ALSO NOT RENDERING ANY HELP TO THE ASSESSEE. 5.6 THE NEXT JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT OF HON'BLE DELHI HIGH COURT RENDERED IN THE CASE OF BATRA BHATTA COMPANY (SUPRA). IN THIS CASE ALSO , THE REOP ENING WAS HELD TO BE INVALID FOR THE REASON THAT REOPENING WAS MADE BY THE ASSESSING OFFICER ON THE GROUND THAT MATERIAL REQUIRES MUCH DEEPER SCRUTINY WHEREAS IN THE PRESENT CASE , THERE IS DEFINITE BASIS FOR ALLEGING ESCAPEMENT OF INCOME ON THE BASIS OF SC RUTINY ASSESSMENT FOR ASSESSMENT YEAR 2004 - 05 AND THEREFORE, IN THE FACTS OF THE PRESENT CASE, THIS JUDGMENT OF HON'BLE DELHI HIGH COURT IS NOT RENDERING ANY HELP TO THE ASSESSEE. 5.7 THE NEXT JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE THIRD MEMBER DECISION OF THE TRIBUNAL IN THE CASE OF O. P. CHAWLA (SUPRA). IN THIS CASE, IT WAS HELD BY THE TRIBUNAL THAT EVEN AFTER THE AMENDMENT , IT IS MUST THAT ASSESSING OFFICER COULD REOPEN ASSESSMENT ONLY IF HE HAS REASON TO 7 BELIE VE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND NOT MERELY REASON TO SUSPECT. IN THE PRESENT CASE, THE FACTS ARE DIFFERENT AND THEREFORE, THIS JUDGMENT IS NOT APPLICABLE IN THE PRESENT CASE BECAUSE IN THE PRESENT CASE, THE BASIS OF REOPENING IS NOT A REASON TO SUSPECT BUT ON THE BASIS OF SCRUTINY ASSESSMENT FOR ASSESSMENT YEAR 2004 - 05. 5.8 THE NEXT JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE TRIBUNAL DECISION IN THE CASE OF AIPITA MARKETING P. LTD. (SUPRA). IN THIS CASE ALSO , THE BASIS OF DECISION WAS THAT NO FRESH MATERIAL WAS BROUGHT ON RECORD BY THE ASSESSING OFFICER FOR FORMING THE BELIEF ABOUT THE ESCAPEMENT OF INCOME. IN THE PRESENT CASE, WE HAVE SEEN THAT THE BASIS OF FORMING BELIEF REGARDING ESCAPEMENT OF INCOME IS SUBSEQUENT SCRUTINY ASSESSMENT FOR ASSESSMENT YEAR 2004 - 05 AND THEREFORE, THIS TRIBUNAL DECISION IS ALSO NOT RENDERING ANY HELP TO THE ASSESSEE. 5.9 THE NEXT JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE TRIBUNAL DECISION IN THE CASE OF TELCO DADAJEE DHACKJEE LTD. (SUPRA). THIS TR IBUNAL DECISION IS NOT AT ALL RELEVANT BECAUSE IN THIS CASE , IT WAS HELD THAT THE DECISION OF THIRD MEMBER IS NOT A FINAL ORDER DISPOSING OF FINAL APPEAL AS CONTEMPLATED BY 254(1) AND IT IS DIFFICULT TO APPRECIATE HOW AN APPLICATION WOULD LIE U/S 254(2) AG AINST HIS DECISION AND ON THIS BASIS, THE MISC. APPLICATION FILED BY THE REVENUE WAS HELD TO BE NOT MAINTAINABLE. RELIANCE HAS BEEN PLACED BY LEARNED A.R. OF THE ASSESSEE ON THIS DECISION ON TOTAL MISUNDERSTANDING OF THE RATIO OF THIS DECISION. 5.10 THE N EXT JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT RENDERED IN THE CASE OF PRASHANT S. JOSHI & DATTARAM SHRIDHAR BHOSALE (SUPRA). IN THIS CASE , IT WAS HELD BY HON'BLE BOMBAY HIGH COURT THAT THE REASONS RECORDED BY ASSESSING OFFICER FOR REOPENING COULD NOT BE SUPPLEMENTED BY AFFIDAVIT. IT IS NOTED THAT PAYMENT MADE TO A PARTNER IN REALIZATION OF HIS SHARE IN THE NET VALUE OF THE ASSETS 8 UPON HIS RETIREMENT FROM A FIRM, DOES NOT FALL UNDER CLAUSE (V) OF SECTION 28 AND HENCE, THERE WAS ABSOLUTELY NO BASIS FOR THE ASSESSING OFFICER TO FORM A BELIEF THAT ANY INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT WITHIN THE MEANING OF THE SUBSTANTIVE PROVISIONS OF SECTION 147 OF THE ACT. IN THE PRESENT CASE, THE FACTS ARE DI FFERENT. IN THE PRESENT CASE, THE REASONS ARE RECORDED BY THE ASSESSING OFFICER ON THE BASIS OF SUBSEQUENT SCRUTINY ASSESSMENT FOR ASSESSMENT YEAR 2004 - 05 AND THEREFORE, THIS JUDGMENT IS NOT APPLICABLE. 5.11 THE LAST JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT OF HON'BLE SUPREME COURT RENDERED IN THE CASE OF KELVINATOR OF INDIA (SUPRA). IN THIS CASE , IT WAS HELD BY HON'BLE APEX COURT THAT REASSESSMENT CANNOT BE ON THE BASIS OF MERE CHANGE OF OPINION. IN THE PRESENT CASE, THE REOPEN ING IS NOT ON THE BASIS OF MERE CHANGE OF OPINION BUT ON THE BASIS OF SUBSEQUENT SCRUTINY ASSESSMENT FOR ASSESSMENT YEAR 2004 - 2005 AND THERE WAS TANGIBLE MATERIAL BEFORE THE ASSESSING OFFICER THAT THERE WAS ESCAPEMENT OF INCOME AND THIS REASON IS HAVING A LIVE LINK FOR FORMING BELIEF AND THEREFORE, THIS JUDGMENT IS NOT RENDERING ANY HELP TO THE ASSESSEE. 5.12 AS PER THE ABOVE DISCUSSION, WE HAVE SEEN THAT NONE OF THE JUDGMENTS CITED BY LEARNED A.R. OF THE ASSESSEE IS RENDERING ANY HELP TO THE ASSESSEE IN THE PRESENT CASE. MOREOVER, THE ISSUE ON MERIT IS ADMITTEDLY COVERED AGAINST THE ASSESSEE AND THUS IT GOES TO SHOW THAT THE BELIEF FORMED BY THE ASSESSING OFFICER REGARDING ESCAPEMENT OF INCOME IS REAL AND ON THE BASIS OF TANGIBLE MATERIAL. HENCE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE. ACCORDINGLY, GROUND NO. 1 TO 4 ARE REJECTED. 6. GROUND NO. 5, 6 & 7 ON MERIT ARE AS UNDER: 5. B ECAUSE THE CIT (A) HAS ERRED ON FACTS AND IN LAW IN ARBITRARILY HOLDING THAT THE ASSESSEE APPELLANT IS NOT ENTITLED TO DEDUCTION U/S 80 - IB. 9 6. BECAUSE THE DUTY DRAW BACK OF RS.38,68,850/ - BEING PART OF THE COST OF THE GOODS EXPORTED IS SELF CONSUMED BY THE APPELLANT (FOR IT IS NOT TRANSFERABLE), DEDUCTION U/S.80IB SHOULD NOT HAVE BEEN DENIED ON THE SAME TREATING INTO BE AN INCENTIVE. 7. BECAUSE DUTY DRAW BACK IS A REFUND OF THE COST OF GOODS MANUFACTURED AND IS NOT AN AMOUNT PROVIDED TO THE APPELLANT OVER AND ABOVE THE COST, IT IS NEITHER AN 'INCENTIVE' NOR EX - GRATIA HENCE CANNOT BE EXC LUDED FOR PURPOSES OF DEDUCTION U/S.80IB. 7. REGARDING MERIT OF THE ISSUE INVOLVED, IT WAS FAIRLY CONCEDED BY LEARNED A.R. OF THE ASSESSEE THAT THE ISSUE IS COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF LIBERTY INDIA VS COMMISSIONER OF INCOME - TAX AS REPORTED IN [2009] 317 ITR 218 (SC) . RESPECTFULLY FOLLOWING THIS JUDGMENT OF HON'BLE APEX COURT , WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). THESE GROUNDS ARE REJECTED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. 9. NOW WE TAKE UP THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2005 - 06 I.E. I.T.A. NO.260/LKW/2011. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - I , KANPUR HAS ERRE D IN LAW AND ON FACTS IN DIRECTING TO DEDUCT TOTAL INTEREST OF RS.15,92,727/ - PAID TO BANK FROM JAJMAU UNIT IN PLACE OF RS.7,66,170/ - FROM JAJMAU UNIT AND RS. 8,26,557/ IN BANTHAR UNIT AS REALLOCATED BY THE ASSESSING OFFICER WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - I KANPUR HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO ALLOW REMUNERATION OF RS.4,80,000/ - FROM JAJMAU UNIT IN PLACE OF RS.1,87,073/ - AND RS.2,40,000/ - FROM BANTHAR UNIT IN PLACE OF RS.5,32,927/ - AS REALLOCATED BY THE ASSESSING OFFICER WITHOUT APPRECIATING THE FACTS BROUGHT ON 10 RECORD BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. 3. THA T THE ORDER OF THE LD. CIT (A) - I, KANPUR DATED 14.02.2011 NEEDS TO BE QUASHED AND THE ORDER PASSED BY THE ASSESSING OFFICER DATED 20.12.2007 BE RESTORED. 4. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL MENTIONED ABOVE AND/OR TO A DD ANY FRESH GROUNDS AS AND WHEN IT IS REQUIRED TO DO SO . 10. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS IT IS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT IF IT IS HELD THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB, THE ISSUE REGARDING CHARGEABILITY OF INTEREST EXPENDITURE FROM THE INCOME OF JAJMAU UNIT OR BANTHAR UNIT WILL BE IRRELEVANT AND ACADEMIC BECAUSE THE SAME IS ONLY RELEVANT FOR COMPUTING DEDUCTION ALLOWABLE TO THE ASSESSEE U/S 80IB OF THE ACT. 11. WE HAVE C ONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IT IS DECIDED BY US WHILE DECIDING THE APPEAL OF THE ASSESSEE THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT. WE ALSO FIND THAT THIS DISPUTE THAT INTEREST EXPENDITURE IN DISPUTE IS DEDUCT IBLE FROM THE PROFIT OF JAJMAU UNIT OR BANTHAR UNIT IS ACADEMIC ONLY BECAUSE THE SAME IS RELEVANT ONLY FOR COMPUTING DEDUCTION ALLOWABLE TO THE ASSESSEE U/S 80IB OF THE ACT AND IN THE PRESENT CASE, THE ASSESSEE IS ADMITTEDLY NOT ELIGIBLE FOR SUCH DEDUCTION U/S 80IB . WE, THEREFORE, DO NOT GO INTO THE MERIT OF THIS ISSUE AND CONFIRM THE ORDER OF CIT(A) BECAUSE THIS ISSUE HAS BECOME ACADEMIC. 12. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. 13. NOW WE TAKE UP THE APPEAL OF THE ASSESSEE FOR A SSESSMENT YEAR 2006 - 07 I.E. I.T.A. NO.358/LKW/2011. IN THIS APPEAL , THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 11 1. BECAUSE THE CIT(A) HAS FAILED TO APPRECIATE THAT THE ENTIRE ASSESSMENT FRAMED U/S 143(3) IS CONTRARY TO THE PROVISIONS OF LAW VOID ABINITO, WITHOUT JURISDICTION IN AS MUCH AS THE NOTICE U/S 143(2) HAS BEEN ISSUED IN A MECHANICAL MANNER BY THE ASSESSING OFFICER WITHOUT GOING INTO THE NECESSITY OR EXPEDIENCY OF ISSUING THE SAME. 2. BECAUSE THE CIT (A) HAS ERRED ON FACTS AND IN LAW IN A RBITRARILY HOLDING THAT THE ASSESSEE APPELLANT IS NOT ENTITLED TO DEDUCTION U/S 80 - IB. 3. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN DISALLOWING THE APPELLANT'S CLAIM OF EXEMPTION U/S 80IB ON DUTY DRAW BACK RECEIPTS OF RS.72,39,881/ - AND SALE OF LICENSE RECEIPTS OF RS.40,08,735/ - CREDITED HIS BUSINESS PROFIT IN THE BOOKS OF BANTHAR UNIT OF THE ASSESSEE. 4. BECAUSE THE DUTY DRAW BACK OF RS.72,29,881/ - BEING PART OF THE COST OF THE GOODS EXPORTED IS SELF CONSUMED BY THE APPELLANT (FOR IT IS NOT TRA NSFERABLE), DEDUCTION U/S.801B SHALL NOT BE DENIED ON THE SAME TREATING INTO BE AN INCENTIVE. 5. BECAUSE DUTY DRAW BACK IS A REFUND OF THE COST OF GOODS MANUFACTURED AND IS NOT AN AMOUNT PROVIDED TO THE APPELLANT OVER AND ABOVE .THE COST. IT IS NOT EX - G RATIA ALSO. 6. BECAUSE THE CIT(A) HAS FAILED TO APPRECIATE THE FACTS AND CIRCUMSTANCES OF THE CASE AND HAS ARBITRARILY HELD THAT THE DUTY DRAWBACK IS AN INCENTIVE AND NOT INCOME DERIVED FROM THE ACTIVITY OF INDUSTRIAL UNDERTAKING. 7. B ECAUSE THE CIT(A) HAS FAILED TO APPRECIATE THAT THE DISALLOWANCE OF RS.8,76,376/ - BEING INTEREST ON UNSECURED LOANS AND RS.26,49,521/ - BEING BANK INTEREST AGGREGATING TO RS.35,25,897/ - AND REALLOCATING THE SAME, (WHICH REALLOCATION IS CONTRARY TO THE PROVISIONS OF LAW) IN T HE RATIO OF VALUE OF FIXED ASSETS, BETWEEN THE TWO UNITS, THEREBY HAS EFFECTED THE DEDUCTION CLAIMED U/S 80 - IB OF THE ACT. 8. BECAUSE THE CIT(A) HAS FAILED TO APPRECIATE THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REALLOCATING THE SUM OF RS.3,40,000/ - AND RS.2,40,000/ - CLAIMED AS PARTNERS 12 REMUNERATION IN JAJMAU UNIT AND BANTHAR UNIT RESPECTIVELY, AND - REALLOCATING IT IN BOTH UNITS IN THE RATIO OF EACH UNIT REDUCING THE CLAIM OF EXEMPT INCOME U/S 80 - IB OF BANTHAR UNIT. 14. IT WAS FAIRLY CONCEDED BY LEARNED A.R. OF THE ASSESSEE THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE SAME JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA (SUPRA). RESPECTFULLY FOLLOWING THE SAME , THE ISSUE IS DECIDED AGAINST THE ASSESSEE. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. 16. NOW WE TAKE UP THE REMAINING APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2007 - 08 I.E. I.T.A. NO.359/LKW/2011. IN THIS APPEAL , THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. BECAUSE THE CIT(A) HAS FAILE D TO APPRECIATE THAT THE ENTIRE ASSESSMENT FRAMED U/S 143(3) IS CONTRARY TO THE PROVISIONS OF LAW VOID ABINITO, WITHOUT JURISDICTION, IN AS MUCH AS THE NOTICE U/S 143(2) HAS BEEN ISSUED IN A MECHANICAL MANNER BY THE ASSESSING OFFICER WITHOUT GOING INTO THE NECESSITY OR EXPEDIENCY OF ISSUING THE SAME. 2. BECAUSE THE CIT (A) HAS ERRED ON FACTS AND IN LAW IN ARBITRARILY HOLDING THAT THE ASSESSEE APPELLANT IS NOT ENTITLED TO DEDUCTION U/S 80 - IB. 3. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN DISALLO WING THE APPELLANT'S CLAIM OF EXEMPTION U/S 80IB ON DUTY DRAW BACK RECEIPTS OF RS. 20,97,115/ - AND SALE OF LICENSE RECEIPTS OF RS. 11,44,344/ - CREDITED HIS BUSINESS PROFIT IN THE BOOKS OF BANTHAR UNIT OF THE ASSESSEE. 4. BECAUSE THE DUTY DRAW BACK OF RS.2 0,97,115/ - BEING PART OF THE COST OF THE GOODS EXPORTED IS SELF CONSUMED BY THE APPELLANT (FOR IT IS NOT TRANSFERABLE), DEDUCTION U/S.80IB SHALL NOT BE DENIED ON THE SAME TREATING INTO BE AN INCENTIVE. 13 5. BECAUSE DUTY DRAW BACK IS A REFUND OF THE COST OF GOODS MANUFACTURED AND IS NOT AN AMOUNT PROVIDED TO THE APPELLANT OVER AND ABOVE THE COST. IT IS NOT EX - GRATIA ALSO. 6. BECAUSE THE CI(T(A) HAS FAILED TO APPRECIATE THE FACTS AND CIRCUMSTANCES OF THE CASE AND HAS ARBITRARILY HELD THAT THE DUTY DRAWBACK IS AN INCENTIVE AND NOT INCOME DERIVED FROM THE ACTIVITY OF INDUSTRIAL UNDERTAKING. 17. IN T HIS YEAR ALSO , IT WAS FAIRLY CONCEDED BY LEARNED A.R. OF THE ASSESSEE THAT THE ISSUE INVOLVED IS COVERED AGAINST THE ASSESSEE BY THE SAME JUDGMENT OF HON'BLE SUPR EME COURT IN THE CASE OF LIBERTY INDIA (SUPRA). RESPECTFULLY FOLLOWING THE SAME , THE ISSUE IS DECIDED AGAINST THE ASSESSEE. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. 19. IN THE COMBINED RESULT, ALL THE THREE APPEALS OF THE ASSESSEE AND THE ONLY ONE APPEAL OF THE REVENUE ARE DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE D: 1 7 /07/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR