The Asstt. Commissioner of Income Tax, Kheda Circle, Kheda V. ADF Foods Ltd., Kheda

ITA 2776/AHD/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2119 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 08-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Assessee Lawyers: BHAVIN J MARFATIA
• Keywords: Set aside
• Section: 143(3); 10B; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 2776/AHD/2017 (ASSESSMENT YEAR: 2011-12) THE ASSISTANT COMMISSIONER OF INCOME- TAX, KHEDA CIRCLE, NADIAD, DIST. KHEDA-387002 V/S ADF FOODS LIMITED, 83/86, GIDC, KAMLA ROAD, NADIAD, DIST. KHEDA- 387001 (APPELLANT) (RESPONDENT) PAN: AACCA 2270K APPELLANT BY : SHRI LALIT P. JAIN, SR. D .R. RESPONDENT BY : SHRI BHAVIN J. MARFATIA, A.R . ( )/ ORDER DATE OF HEARING : 25 -09-201 8 DATE OF PRONOUNCEMENT : 22 -10-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE LD. CIT(A)-2, VADODARA DATED 19.09.2017 PERTAINING TO A .Y. 2011-12 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO . 277 6/AHD/2017 . A.Y. 2011-1 2 2 1.1 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE ASSESSEE'S CLAIM FOR DEDUCTIO N UNDER SECTION 10B EVEN THOUGH THE REQUIRED CONDITIONS ARE NOT SATISFIED. 1.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING CLAIM FOR DEDUCTION UNDER SECTION 10B WITHOUT DULY CONSIDERING THE REMAND REPORT SUBMITTED BY THE: ASSESSING OFFIC ER, AND THE A.O.'S FINDING THAT THE ASSESSEE HAD FAILED TO DEMONSTRATE THAT IT HAD RECEIVED APPROVAL FROM THE BOARD APPOINTED IN THIS BEHALF BY THE CENTRAL GOVER NMENT, FOR THE PERIOD UNDER CONSIDERATION, AND WAS NOT ELIGIBLE FOR DEDUCTION U /S 10B CONSIDERING THE DECISION OF THE HON'BLE HIGH COURT IN REGENCY CREATIONS LTD. 353 ITR 326 (DELHI). 2. THE APPELLANT CRAVES LEAVE TO ADD, MODIFY, AMEND OR ALTER ANY GROUNDS OF APPEAL AT THE TIME OF, OR BEFORE, THE HEARING OF AP PEAL. RELIEF CLAIMED IN APPEAL IT IS PRAYED THAT THE ORDER OF THE CIT (APPEALS) BE SET ASIDE ON THE ABOVE ISSUE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. BRIEFLY STATING THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME ON 27.09.2011 DECLARING TOTAL INCO ME AT RS.6,52,36,611/- AFTER CLAIMING DEDUCTION U/S. 10B AT RS.13,48,60,19 5/-. THE ASSESSMENT U/S. 143(3) WAS ALSO COMPLETED ON 21.10.2013 AFTER ALLOW ING DEDUCTION CLAIMED U/S. 10B. SUBSEQUENTLY, PR. CIT-2, VADODARA NOTICED THAT 100% EXPORT ORIENTED UNIT OF THE ASSESSEE LOCATED AT NASIK ALTHOUGH WAS APPROVED BY THE DEVELOPMENT COMMISSIONER, SEEPZ SPECIAL ECONOMIC ZO NE, MUMBAI VIDE LETTER FILE NO. PER:82(2005)/SEEPZ/EOUT/75/2004-05/ 1411 DATED 09.02.2005, BUT THE APPROVAL WAS NOT RATIFIED BY TH E BOARD OF APPROVAL ON BEHALF OF CENTRAL GOVERNMENT. ACCORDINGLY, AFTER RE LYING UPON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. REG ENCY CREATIONS LTD. ITA NO . 277 6/AHD/2017 . A.Y. 2011-1 2 3 REPORTED IN 27 TAXMANN.COM 332 (DEL.), THE PR.CIT-2 , VADODARA PASSED AN ORDER U/S. 263 DATED 02.02.2016 DIRECTING THE ASSES SING OFFICER TO PASS ASSESSMENT ORDER A FRESH KEEPING IN VIEW THE FOLLOW ING OBSERVATIONS:- '11. EVEN THOUGH AMPLE OF OPPORTUNITY BEEN GIVEN THE ASSESSEE FAILED TO COMPLY WITH THE NOTICE/REQUIREMENT TO SUBSTANTIATE THE CLA IM OF EXEMPTION U/S.10B OF THE ACT OF RS.13,48,60,195/- IN RESPECT OF ITS UNIT AT NASIK. THE FACTS OF THE CASE HAVE BEEN CAREFULLY CONSIDERED. GIVEN THE FACTS OF THE CASE AS SAID HEREIN ABOVE, SPECIALLY WHEREIN THE AO ALLOWED THE CLAIM OF EXEMP TION SO PUT FORWARD BY ASSESSEE WITHOUT EXAMINING THE ALLOW-ABILITY, THE A SSESSMENT ORDER SO PASSED WAS ERRONEOUS IN SO FAR IT IS PREJUDICIAL TO THE IN TEREST OF REVENUE HENCE THE ASSESSMENT TO THE EXTENT THUS, IS ERRONEOUS IN SO F AR AS PREJUDICIAL TO THE INTEREST OF REVENUE AS IT STOOD AND IS CANCELLED. 12. THEREFORE, IT IS CLEAR THAT THE ASSESSMENT ORDE R MADE BY THE AO U/S 143(3) DTD. 21.10.2013 WAS WITHOUT MAKING PROPER VERIFICAT IONS, INVESTIGATION, EXAMINATION AND TAKING FACTS ON RECORD, THEREFORE T HE ASSESSMENT ORDER SO PASSED IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. AFTER CONSIDERING THE FACTS OF THE CASE, I AM OF TH E VIEW THAT ASSESSMENT ORDER U/S. 143(3) OF THE ACT DTD. 21.10.2013, IS THEREFOR E, HELD TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THE SAME IS SET ASIDE. THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE ABOVE ISSUES OF CLAIM OF EXEMPTION U/S. 10B OF THE ACT AND REFRAME THE 'ASSESSMENT AFRE SH IN VIEW OF AFORESAID AVERMENTS' IN THE LIGHT OF SHOW CAUSE AS IS IN PARAS ABOVE AND WHILE DOING SO ENSURE THAT REASONABLE AND SUFFICIENT OPPORTUNITY O F BEING HEARD IN THE MATTER IS AFFORDED TO THE ASSESSEE. THE ASSESSMENT IS SET-ASI DE FOR THE LIMITED PURPOSE ONLY' 3. IN VIEW OF THE ABOVE ORDER PASSED U/S. 263, THE ASS ESSING OFFICER ISSUED A SHOW CAUSE NOTICE DATED 22.03.2016 FIXING THE DATE OF COMPLIANCE ON 28.03.2016. THE SHOW CAUSE NOTICE HAS BEEN REPRODUC ED BY THE ASSESSING ITA NO . 277 6/AHD/2017 . A.Y. 2011-1 2 4 OFFICER IN PARA-2 OF THE ASSESSMENT ORDER. ON THE D ATE OF COMPLIANCE I.E. 28.03.2016, THE ASSESSEE FILED A LETTER IN THE DAK REQUESTING THE ASSESSING OFFICER TO ADJOURN HEARING TILL FIRST WEEK OF JUNE, 2016 SINCE THE DEVELOPMENT COMMISSIONER, THOUGH HAS BEEN REQUESTED, HAS NOT PR OVIDED COPY OF ORDER RATIFYING THE APPROVAL. HOWEVER, THE ASSESSING OFFI CER PASSED AN ORDER U/S. 143(3) R.W.S. 263 ON 31.03.2016 AFTER DISALLOWING T HE CLAIM MADE U/S. 10B OF THE ACT. THE FINDINGS RECORDED BY THE ASSESSING OFF ICER IN THIS REGARD IN PARA-5 OF THE ASSESSMENT ORDER, ARE REPRODUCED AS UNDER:- '5. IN NUTSHELL, THE ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM FOR DEDUCTION U/S. 10B DURING THE COURSE OF PROCEEDINGS U/S. 263 OF TH E ACT, BY PRODUCING THE RATIFICATION OF THE APPROVAL GRANTED BY THE DEVELOP MENT COMMISSIONER AT THE LEVEL OF BOARD OF APPROVAL FOR EOU SCHEME. FURTHER, BEFORE THE UNDERSIGNED ALSO, THE ASSESSEE COULD NOT PLACE ON RECORD, THE APPROVA L GRANTED BY THE DEVELOPMENT COMMISSIONER TO ITS NASIK UNIT, BEING RATIFIED BY T HE BOARD OF APPROVAL FOR EOU SCHEME. ON THE OTHER HAND, THE LAW IS VERY CLEAR IN SO FAR AS, ALLOWABILITY OF DEDUCTION U/S. 10B OF THE ACT WITH REGARDS TO FULFI LLMENT OF THE STIPULATED CONDITIONS. THE CBDT'S INSTRUCTION NO. 2 OF 2009 DA TED 09.03.2009, AS REFERRED TO ABOVE IN THE SHOW CAUSE NOTICE AS WELL AS THE DECIS ION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V/S. REGENCY CREATIONS LTD . 27 TAXMANN.COM 332, MAKES IT MANDATORY THAT, THE STIPULATED AND ENACTED PROCE DURE HAS TO BE FOLLOWED AS PER THE INTENTION OF THE PARLIAMENT. SECONDLY, THE CBDT INSTRUCTION HAS ALSO MADE IT MANDATORY THAT THE POWERS DELEGATED BY THE MINIS TRY OF COMMERCE AND INDUSTRIES TO THE DEVELOPMENT COMMISSIONER FOR APPR OVAL OF 100% EOU STATUS TO ANY UNIT SHALL HAVE TO BE RATIFIED BY THE BOARD OF APPROVALS. UNDER THE CIRCUMSTANCES, IT IS CRYSTAL CLEAR THAT ASSESSEE'S EOU APPROVAL OF NASIK UNIT HAS NOT BEEN RATIFIED BY THE BOARD OF APPROVAL. SECONDL Y, THE ASSESSEE HAS NOWHERE DENIED THE FACT THAT, IT WAS NOT OBLIGATORY ON IT T O OBTAIN SUCH RATIFICATIPN. THE ONLY CONTENTION RAISED BY THE ASSESSEE EVEN DURING THE COURSE OF PROCEEDINGS U/S. 263 OF THE ACT WAS THAT, THE RECORDS ARE VERY OLD A ND MORE TIME IS REQUIRED TO ITA NO . 277 6/AHD/2017 . A.Y. 2011-1 2 5 DEAL WITH THE ISSUE. NOW, IT IS CLEAR ON RECORD, TH AT THE ASSESSEE HAS GOT TIME OF ABOUT 14 TO 15 MONTHS AFTER THE PROCEEDINGS U/S. 26 3 OF THE ACT AND DESPITE THAT, THE ASSESSEE HAS NOT BEEN ABLE TO PLACE ON RECORD T HE RATIFICATION BEING GRANTED BY THE BOARD OF APPROVAL. UNDER THE CIRCUMSTANCES, I HOLD THAT, THE ASSESSEE HAS VIOLATED THE PRINCIPAL CONDITION COVERING THE INTEN TION OF THE LAW MAKERS THAT, THE APPROVAL BY DEVELOPMENT COMMISSIONER TO BE RATIFIED BY BOARD OF APPROVAL. UNDER THE CIRCUMSTANCES, I FURTHER HOLD THAT, THE A SSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S. 10B OF THE ACT FOR ITS NASIK UNIT AN D ACCORDINGLY, THE SAME IS DISALLOWED. ACCORDINGLY, AN AMOUNT OF RS.13,48,60,1 95/-BEING ATTRIBUTABLE TO SUCH NASIK EOU UNIT IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. I ALSO HOLD THAT, THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS O F ITS INCOME AND ACCORDINGLY, I INITIATE PENALTY PROCEEDINGS U/S. 271(L)(C) OF THE ACT.' 4. IN PURSUANT TO THE ORDER OF THE 263, LD. A.O. PASS ED AN ORDER U/S. 143(3) R.WS. 143 AND DISALLOWED AN AMOUNT OF RS. 134860195/-. 5. AGAINST THE SAID ORDER, ASSESSEE PREFERRED FIRST ST ATUTORY APPEAL BEFORE THE LD. CIT(A) WHO GRANTED RELIEF TO THE ASSESSEE BY HOLDIN G THAT DISALLOWANCE OF DEDUCTION CLAIMED U/S. 10B ON THE GROUND THAT RATIF ICATION OF APPROVAL GRANTED BY DEVELOPMENT COMMISSIONER WAS NOT OBTAINED FROM T HE BOARD OF APPROVALS. 6. AND FURTHER HELD THAT DURING THE COURSE OF APPELLAT E PROCEEDINGS AS WELL AS PREPARATION OF REMAND REPORT BY THE ASSESSING OFFIC ER, THE APPELLANT HAS FILED A LETTER DATED 24.05.2016 OF DY. DEVELOPMENT COMMIS SIONER, SEEPZ, SEZ COMMUNICATING TO THE APPELLATE APPROVAL OF BOARD OF APPROVALS AND COPY OF THE SAID LETTER WAS FILED AND SAME IS PART OF THE O RDER OF THE LD. CIT(A). ITA NO . 277 6/AHD/2017 . A.Y. 2011-1 2 6 7. NOW REVENUE HAS COME BEFORE US AND STATED THAT COMP LIANCE OF REQUIREMENT CONCERNED HAS DULY BEEN COMPLIED WITH AND NECESSARY APPROVAL OF THE BOARD WAS FILED BEFORE THE LOWER AUTHORITY. DATED 24.05.2 016. SINCE BOARD APPROVAL HAS BEEN FILED BY THE ASSESSEE BEFORE THE LOWER AUT HORITY SO NOTHING AGAINST THE ASSESSEE IS LEFT. THEREFORE IN OUR CONSIDERED OPINI ON RELIEF SHOULD BE GRANTED TO THE ASSESSEE. HENCE, WE DO NOT SEE ANY ERROR IN THE ORDER OF LD. CIT(A) GRANTING RELIEF TO THE ASSESSEE. WE THUS DECLINE TO INTERFER E. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN OPEN COURT ON 22 - 10- 2019 SD/- SD/- (PRADIP KUMAR KEDIA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 22/10/2019 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD