ACIT, Khanna V. M/s Little Bee Impex, Doraha

ITA 346/CHANDI/2014

• Counselvise Citation: 34621514 RSA 2014
• Duration Of Justice: 1 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 04-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: YOGESH MONGA
• Keywords: Wrong claim
• Section: 143(3); 10B; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.346/CHD/2014 (ASSESSMENT YEAR : 2007-08) AND ITA NO.347/CHD/2014 (ASSESSMENT YEAR : 2010-11) THE A.C.I.T., VS. M/S LITTLE BEE IMPEX, CIRCLE KHANNA. G.T. ROAD, DORAHA. LUDHIANA. LUDHIANA. PAN: AABFL9170D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANJIT SINGH, DR RESPONDENT BY : S/SHRI AJAY JAIN & YOGESH MONGA DATE OF HEARING : 10.09.2015 DATE OF PRONOUNCEMENT : 18.09.2015 O R D E R PER RANO JAIN, A.M . : THESE TWO APPEALS FILED BY THE REVENUE ARE DIR ECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, LUDHIANA DATED 10.01.2014 FOR ASSESSM ENT YEARS 2007-08 AND 2010-11. ITA NO.346/CHD/2014 : 2. THE DEPARTMENT HAS RAISED AS MANY AS NINE GROU NDS 2 OF APPEAL. GROUND NOS.8 AND 9 ARE GENERAL IN NATU RE, THEREFORE, NEED NO ADJUDICATION. 3. THE GROUND NOS. 1 TO 6 RELATE TO DELETION OF DISALLOWANCE OF RS.3,69,78,531/- MADE BY THE ASSESS ING OFFICER ON ACCOUNT OF DEDUCTION UNDER SECTION 10B O F THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) CLAIMED B Y THE ASSESSEE. 4. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS RUNNING THE BUSINESS OF EXPORT OF HONEY. THE RETU RN FOR THE RELEVANT ASSESSMENT YEAR DECLARING INCOME OF RS.1,2 0,726/- WAS FILED ON 30.10.2007, WHICH WAS LATER ON REVISED TO RS.42,29,452/-. THE ASSESSEE HAD CLAIMED DEDUCTIO N UNDER SECTION 10B OF THE ACT AMOUNTING TO RS.3,69,78,531/ -. THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMP LETED AT AN INCOME OF RS.42,83,550/-. HOWEVER, THE CIT-II, LUDHIANA VIDE HIS ORDER DATED 19.3.2012 SET ASIDE THE ORDER OF THE ASSESSING OFFICER INVOKING THE REVISIONARY POWER UN DER SECTION 263 OF THE ACT ON THE GROUND THAT DEDUCTION UNDER S ECTION 10B OF THE ACT WAS WRONGLY ALLOWED. A FRESH ASSES SMENT ORDER UNDER SECTION 143(3) R.W.S. 263 OF THE ACT WA S PASSED ON 6.3.2013. THE ASSESSEE HAD CLAIMED THAT IT WAS EN GAGED IN PRODUCTION OF FINISHED HONEY, WHICH IS FINAL EXPORT ABLE PRODUCT MANUFACTURED FROM RAW HONEY COLLECTED FROM BEE BOXES. IT WAS ALSO SUBMITTED THAT IT DOES A LOT O F MANUFACTURING ACTIVITIES TO CONVERT THE RAW HONEY I NTO FINISHED HONEY, WHICH IS ALL TOGETHER A NEW PRODUCT . HOWEVER, THE ASSESSING OFFICER DID NOT AGREE WITH T HE SAID 3 SUBMISSIONS AND DISALLOWED THE CLAIM OF DEDUCTION U NDER SECTION 10B OF THE ACT AMOUNTING TO RS.3,69,78,531/ -. 5. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER , THE ASSESSEE WENT IN APPEAL BEFORE THE LEARNED CIT (APP EALS) AND SUBMITTED THAT FOR ASSESSMENT YEARS 2006-07 AND 200 9-10, THE SAME ISSUE WAS RAISED IN ASSESSEES OWN CASE. HOWEVER, THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSE E BY THE CHANDIGARH BENCH OF THE ITAT. IT WAS PRAYED THAT S INCE THE FACTS OF THE CASE OF THE ASSESSEE IN THE YEAR UNDER CONSIDERATION ARE IDENTICAL, THE SAME MAY BE ALLOWE D IN FAVOUR OF THE ASSESSEE. 6. THE LEARNED CIT (APPEALS) ALLOWED THE GROUNDS O F APPEAL HOLDING AS FOLLOWS : 3.3 I HAVE CAREFULLY CONSIDERED THE APPELLANT'S SUB MISSIONS. SIMILAR ISSUE WAS DECIDED BY ME IN APPELLANT'S OWN CASE FOR A.Y. 2006-07 AND 2009-10 VIDE ORDER DATED 20.09.2012 IN APPEALS NO. 457/IT/CIT(A)-II/LDH/2011-12 AND 458/IT/CIT(A)- II/LDH/2011-12. IN THAT CASE, SIMILAR DISALLOWANCE MADE B Y THE AO HAD BEEN CONFIRMED BY ME. THE APPELLANT FILED AP PEALS BEFORE THE HON'BLE ITAT. THE HON'BLE ITAT VIDE ITS ORDER DA TED 03.01.2014 IN ITA NO. 1210-1211/CHD/2012 AS ALLOWED THE APPEAL OF THE APPELLANT AND HELD THAT THE APPELLAN T IS ENTITLED TO CLAIM OF DEDUCTION U/S 10B OF THE I.T. ACT. RESPE CTFULLY FOLLOWING THE DECISION OF THE HON'BLE ITAT, I HOLD THAT THE APPELLANT IS ENTITLED TO CLAIM OF DEDUCTION U/S 10B OF THE I.T. ACT. THE DISALLOWANCE MADE BY THE AO IS DELETED. TH ESE GROUNDS OF APPEAL ARE ACCORDINGLY ALLOWED. 7. NOW, THE DEPARTMENT HAS COME UP IN APPEAL AGAIN ST THE SAID ORDER OF THE LEARNED CIT (APPEALS). DURI NG THE 4 COURSE OF HEARING BEFORE US, THE LEARNED D.R. RELIE D UPON THE ORDER OF THE ASSESSING OFFICER AND PRAYED THAT THE ORDER OF THE LEARNED CIT (APPEALS) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE SUSTAINED. 8. THE LEARNED COUNSEL FOR THE ASSESSEE INVITED OU R ATTENTION TO THE ORDER OF THE CHANDIGARH BENCH OF T HE ITAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2006-07 AN D 2008- 09 IN ITA NO.553/CHD/2011 AND ITA NO.690/CHD/2011 D ATED 3.1.2014. IN THESE APPEALS ALSO, ONE OF THE ISSUE S WAS THE ELIGIBILITY OF THE ASSESSEE FOR DEDUCTION UNDER SEC TION 10B OF THE ACT. AFTER HEARING BOTH THE PARTIES AT LENGTH, THE CHANDIGARH BENCH OF THE ITAT DECIDED THE ISSUE AT P AGE 32, PARA 32 OF ITS ORDER, WHICH READS AS UNDER : 32. IN VIEW THEREOF, WE HOLD THAT THE ASSESSEE WAS ENGAGED IN THE PRODUCTION OF FINISHED HONEY AND THE PROFITS AND GAINS ARISING FROM SUCH ACTIVITY WERE ELIGIBLE FOR DEDUCTION UNDER SECTION 10B OF THE ACT AS THE ASSESSEE FULFILLS THE CONDITION OF BEING 100 % EXPORT ORIENTED UNIT AND TOTAL SALE PROCEEDS WERE RECEIVED IN FOREIGN EXCHANGE BY THE ASSESSEE. IN T HE TOTALITY OF THE FACTS AND CIRCUMSTANCES, WE ARE IN CONFORMITY WITH THE FINDING OF THE ASSESSING OFFICE R THAT THE ASSESSEE WAS ELIGIBLE FOR THE CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT. 9. SINCE NO DISTINGUISHING FACTS WERE BROUGHT TO O UR ATTENTION, RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINATE BENCH WE ALSO UPHOLD THE ORDER OF THE LEARNED CIT ( APPEALS) 5 AND ALLOW THE BENEFIT UNDER SECTION 10B OF THE ACT TO THE ASSESSEE. 8. THE GROUND NO.7 IS WITH REGARD TO ADDITION OF RS.2,97,382/- MADE BY THE ASSESSING OFFICER ON ACCO UNT OF DISALLOWANCE OF COMMISSION, WHICH WAS DELETED BY TH E LEARNED CIT (APPEALS). 9. BRIEFLY, THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER NOTED THAT THE ASSESSEE HAD PAID COMMISSION OF RS.19,82,5 57/- TO DIFFERENT PERSONS. THE ASSESSING OFFICER WAS OF T HE VIEW THAT THE CHANCES OF LEAKAGE REGARDING COMMISSION CANNOT BE RULED OUT AND IN THIS VIEW, HE MADE A DISALLOWANCE OF 15% OF THE TOTAL COMMISSION PAID AND ACCORDINGLY, MADE AN ADDI TION OF RS.2,97,382/-. 10. BEFORE THE LEARNED CIT (APPEALS), THE ASSESSEE CONTENDED THAT SIMILAR ISSUE WAS INVOLVED IN THE AS SESSMENT YEARS 2006-07 AND 2009-10 AND THE CHANDIGARH BENCH OF THE ITAT HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSE E. IN VIEW OF THE SAME, IT WAS PRAYED TO DELETE THE ADDITION. AFTER HEARING THE ARGUMENTS OF THE ASSESSEE, THE LEARNED CIT (APPEALS) DELETED THE SAID DISALLOWANCE. 11. NOW, THE DEPARTMENT HAS COME UP IN APPEAL AGAI NST THE SAID ACTION OF THE LEARNED CIT (APPEALS). 12. DURING THE COURSE OF HEARING BEFORE US, OUR ATTENTION WAS INVITED TO THE ORDER OF THE CHANDIGAR H BENCH OF 6 THE ITAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR S 2006-07 AND 2009-10. WE FIND THAT THE ISSUE OF COMMISSION DISCUSSED THERE WAS IN THE CONTEXT OF REVISIONARY P OWERS OF THE LEARNED COMMISSIONER OF INCOME TAX UNDER SECTIO N 263 OF THE ACT AND THE ITAT CHANDIGARH BENCH HAS FOUND NO MERIT IN EXERCISE OF JURISDICTION UNDER SECTION 263 OF THE A CT IN THIS REGARD. HOWEVER, WE FIND THAT NO FINDING ON THE M ERITS OF THE SAID DISALLOWANCE WAS GIVEN IN THIS ORDER. NO SUBM ISSIONS WERE EVEN MADE BEFORE US REGARDING THIS ISSUE. HOW EVER, THE LEARNED CIT (APPEALS) HAS DEALT WITH THE SAME IN HI S ORDER AT PAGE 4, PARA 4.3, WHICH READS AS UNDER : 4.3 I HAVE CAREFULLY CONSIDERED THE APPELLANT'S SU BMISSIONS. THE ADDITION HAS BEEN MADE PURELY ON AN ADHOC BASIS WITHOUT ANY COGENT REASONS. THE ADDITION HAS BEEN MADE ON CO NJECTURES AND SURMISES THAT POSSIBILITY OF LEAKAGE CANNOT BE RUL ED OUT. NO EVIDENCE OF ANY LEAKAGE OR ANY BOGUS CLAIM HAS BEEN ESTABLISHED BY THE AO. SUCH ADHOC ADDITION CANNOT BE SUSTAINED. THE ADDITION MADE BY THE AO IS ACCORDING LY DELETED. THIS GROUND OF APPEAL IS ALLOWED. 13. WE ARE IN AGREEMENT WITH THE FINDINGS OF THE L EARNED CIT (APPEALS), WHO HAS GIVEN A VERY REASONED EXPLAN ATION FOR DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON DISTINCT BASIS. THE ASSESSING OFFICER ACCEPTED THE CLAIM OF THE ASSESSEE OF COMMISSION PAID, HOWEVER, JUST TO A VOID THE LEAKAGE OF REVENUE HE HAS MADE THIS DISALLOWANCE OF 15% OF THE COMMISSION PAID. THERE IS NO BASIS BEFORE HIM FOR MAKING DISALLOWANCE @ 15% AND NOWHERE IN HIS ORDER HE HAS BEEN ABLE TO BRING ON RECORD ANY MATERIAL TO PROVE THAT THE EXPENSES ARE BOGUS OR NOT INCURRED WHOLLY AND EXCLU SIVELY FOR THE BUSINESS. IN VIEW OF THIS, WE UPHOLD THE ORDER OF THE 7 LEARNED CIT (APPEALS) ON THIS GROUND AND DISMISSED THE APPEAL OF THE REVENUE. 14. THE GROUND NOS.8 AND 9 ARE GENERAL IN NATURE A ND NEED NO ADJUDICATION. ITA NO.347/CHD/2014 : 16. IN THIS APPEAL OF THE REVENUE, THE GROUND NOS. 1 TO 6 FILED BY THE REVENUE RELATE TO DELETION OF DISALL OWANCE OF RS.14,03,85,746/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 10B OF THE ACT. SINCE THE ISSUE IS THE SAME AS HAS BEEN DISCU SSED IN ITA NO.346/CHD/2014, FOLLOWING THE SAME, WE UPHOLD THE FINDINGS OF THE LEARNED CIT (APPEALS) IN DISMISSING THE APPE AL OF THE REVENUE. THE GROUND NOS.1 TO 6 ARE DISMISSED. 17. GROUND NOS.7 AND 8 ARE GENERAL AND NEED NO ADJUDICATION. 18. IN THE RESULT, BOTH THE APPEALS OF THE REVENU E ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF SEPTEMBER, 2015. SD/- SD/- (BHAVNESH SAINI) (RANO JAIN) JUDICIAL MEMBER ACOUNTANT MEMBER DATED : 18 TH SEPTEMBER, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 8