M/s British Scaffolding International Ltd., V. ITO,

ITA 4635/DEL/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5628 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-02-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 26-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HK LA
• Keywords: Opportunity of being heard; Deemed export
• Section: 10B

Judgement Text

I.T.A. NO.4635 /DEL/09 1/5 7* IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE SHRI R.P. TOLANI JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.4635 /DEL/2009 ASSESSMENT YEAR : 2005-06 BRITISH SCAFFOLDING INTERNATIONAL ITO, LTD., 605-606, SAMARPAN COMPLEX, WARD-8(1), 131A/444, NEW LINK ROAD, NEW DELHI. NEW DELHI. V. (APPELLANT) (RESPONDENT) PAN /GIR/NO.AABCB-2784-L APPELLANT BY : SHRI RAMESH GOYAL, C.A. RESPONDENT BY : SHRI HK LA, SR. DR. ORDER PER A.K. GARODIA, AM: THIS IS AN ASSESSEE'S APPEAL DIRECTED AGAINST THE O RDER OF LD CIT(A)-III, NEW DELHI DATED 17.9.2009 FOR ASSESSMENT YEAR 2005 -06. 2. THE ONLY GROUND RAISED BY THE ASSESSEE READS AS UNDER:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS, LD CIT(A) HAS ERRED IN DISALLOWING THE CLAIM FOR THE EXEMPTION U/S 10B OF THE INCOME TAX ACT, 19 61 ON PRO RATA BASIS ON THE DEEMED EXPORT SALES THROUGH EXPORT HOUSE AMO UNTING TO RS.284.72 LAKHS MADE BY THE APPELLANT ON WHICH THE APPELLANT WAS ENTITLED TO GET EXEMPTION AS PER LAW. . I.T.A. NO.4635/DEL/09 2/5 3. BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS FILED RETURN OF INCOME ON 29.10.2005 D ECLARING NIL INCOME. THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE PRO OF OF DIRECT EXPORT SALES AND JUSTIFICATION FOR EXEMPTION CLAIMED BY THE ASSESSEE U/.S 10B OF THE ACT. IN REPLY, IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSI NG OFFICER THAT THERE WAS THIRD PARTY EXPORT SALE OF RS.284.72 LAKHS AND THE SALE OF SCRAP WAS RS.48.53 LAKHS AND THE BALANCE AMOUNT OF SALE OF RS.1739.35 LAKHS WAS DIRECT EXPORT AND THE SAME WAS REALIZED IN CONVERTIBLE FOREIGN EXCHAN GE. IT WAS ALSO SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT AS P ER PARA 6.19 OF HAND BOOK OF PROCEDURES (FOREIGN TRADE POLICY), EOU UNIT MAY EXP ORT GOODS MANUFACTURED BY IT THROUGH OTHER EXPORTERS AND SUCH EXPORT SHALL BE INCLUDED TOWARDS FULFILLMENT OF OBLIGATION UNDER EOU SCHEME. THE ASSESSING OFFICER WAS NOT SATISFIED. IT WAS OBSERVED BY HIM THAT PROVISION OF FOREIGN TRADE POL ICY COULD NOT OVER RULE THE PROVISIONS AS CONTAINED IN SECTION 10B OF INCOME TA X ACT, 1961 AND SINCE THE ASSESSEE HAS NOT MADE 100% DIRECT EXPORT SALES, THE ASSESSEE HAS NOT FULFILLED THE CONDITIONS MENTIONED IN SECTION 10B OF THE ACT AND THEREFORE THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S 10B. ON THIS BASIS, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE REGARDING EXEM PTION/DEDUCTION U/S 10B AND ASSESSED THE INCOME OF THE ASSESSEE AT RS.63.21 LAK HS AS AGAINST NIL INCOME DECLARED BY THE ASSESSEE. BEING AGGRIEVED, THE ASSE SSEE CARRIED THE MATTER IN APPEAL BEFORE LD CIT(A) . IT WAS HELD BY THE LD CIT (A) THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 10B ON PRO RATE BASIS IN VIEW OF THE PROVISION OF SECTION 10B(4) OF THE INCOME TAX ACT, 1961. HE DIRECTED TH E ASSESSING OFFICER TO RECOMPUTE THE DEDUCTION U/S 10B IN THE LIGHT OF PRO VISIONS OF SECTION 10B(4) AFTER SATISFYING HIMSELF ABOUT THE GENUINENESS OF THE DIR ECT EXPORT MADE AND AFTER SPECIFYING THE FULFILLMENT OF THE CONDITIONS AS MEN TIONED IN CLAUSE (2) &(3) OF SECTION 10B OF THE ACT. NOW, THE ASSESSEE IS IN FUR THER APPEAL BEFORE US AGAINST THIS DIRECTION OF LD CIT(A) THAT DEDUCTION SHOULD B E ALLOWED TO THE ASSESSEE ON PRO RATA BASIS AND THEREBY DISALLOWING THE CLAIM FO R DEDUCTION U/S 10B IN RESPECT OF EXPORT SALES THROUGH EXPORT HOUSES OF RS.284.72 LAKHS. . I.T.A. NO.4635/DEL/09 3/5 4. IT WAS SUBMITTED BY THE LD AR OF THE ASSESSEE TH AT THIS ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL D ECISION RENDERED IN THE CASE OF THE ASSESSEE ITSELF FOR ASSESSMENT YEAR 2001-02 AND 2004-05 AS PER I.T.A. NO. 1296 & 1859/DEL/2008 DATED 29.5.2009. IT IS ALS O SUBMITTED THAT IN THIS TRIBUNAL ORDER, THE TRIBUNAL HAS FOLLOWED ANOTHER T RIBUNAL DECISION IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2003-04 IN I.T.A. NO.3 998/DEL/.2006 DATED 17.10.2008 AND HE SUBMITTED A COPY OF BOTH THESE TR IBUNAL DECISIONS. 5. LD DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GON E THROUGH THE MATERIAL AVAILABLE ON RECORD AND THE TRIBUNAL DECISIONS CITE D BY LD AR OF THE ASSESSEE. WE FIND THAT THE FACTS IN THE PRESENT YEAR ARE IDEN TICAL WITH THE FACTS IN THE PRECEDING YEARS FOR WHICH THE TRIBUNAL DECISIONS IN ASSESSEES OWN CASE HAS BEEN RELIED UPON BEFORE US. IN THOSE YEARS, THE TR IBUNAL HAS RESTORED BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR A F RESH DECISION AFTER EXAMINING THE FACTS AS TO WHETHER THE EXPORT THROUGH OTHER EXPORT HOUSES IS AFTER FULFILLING THE CONDITIONS PRESCRIBED IN 100% EOU GUIDELINES ISSUED BY THE MINISTRY OF COMMERCE AND INDUSTRIES, GOVT. OF INDIA. THE RELEV ANT PARA OF THE TRIBUNAL DECISION IN ASSESSMENT YEAR 2003-04 IS PARA NO.9, W HICH READS AS UNDER:- WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND HAVE GONE THROUGH THE ORDERS OF THE A UTHORITIES BELOW. WE FIND THAT THIS ASPECT OF THE MATTER THAT EXPORT MAD E BY THE ASSESSEE COMPANY SHOULD ALSO INCLUDE THE EXPORTS THROUGH MER CHANT EXPORTER WAS NOT CONSIDERED BY THE ASSESSING OFFICER OR BY THE L D CIT(A) ALTHOUGH THIS ISSUE WAS VERY MUCH RAISED BEFORE THE ASSESSING OFF ICER AS PER LETTER DATED 20.3.2006 AS APPEARING ON PAGE NO.9 TO 11 OF THE PAPER BOOK. A CERTIFICATE FROM M/S BRITISH SCAFFOLDING PVT. LTD. IS APPEARING ON PAGE NO.15 OF THE PAPER BOOK AS PER WHICH, THE ASSESSEE COMPANY HAS MADE . I.T.A. NO.4635/DEL/09 4/5 SALES OF RS.7,63,62,52/- TO THAT COMPANY FOR WHICH GOODS WERE DIRECTLY TRANSFERRED FROM THE ASSESSEES EOU UNIT AT NASIK T O THE PORT OF SHIPMENT DURING FINANCIAL YEAR 2002-03 AND THE EXPORT REALIZ ATION OF THE SAME WAS RECEIVED BY THAT COMPANY IN CONVERTIBLE FOREIGN EXC HANGE. THESE ASPECTS OF THE MATTER WERE NEITHER EXAMINED BY THE ASSESSIN G OFFICER NOR BY THE LD CIT(A) AND UNDER THESE FACTS, WE FEEL THAT THIS ISSUE SHOULD BE DECIDED AFRESH BY THE ASSESSING OFFICER AFTER EXAMINING THE SE CONTENTIONS OF THE ASSESSEE AND BY PASSING SPEAKING ORDER WITH REGARD TO THESE CONTENTIONS. WE WOULD LIKE TO MENTION THAT AS PER THE GUIDELINES FOR EOU, THESE EOU UNITS ARE PERMITTED TO EXPORT GOODS THROUGH OTHER E XPORTERS IF THE PRESCRIBED CONDITION ONLY ARE FULFILLED. AS PER SEC TION10B, PROFIT OF EOU DERIVED FROM EXPORT IS EXEMPT SUBJECT TO FULFILLMEN T OF PRESCRIBED CONDITIONS. SINCE, EXPORT THROUGH MERCHANT EXPORTER S IS ALSO PERMITTED TO EOU SUBJECT TO FULFILLMENT OF CONDITIONS PRESCRIBED IN GUIDELINES, SUCH EXPORT SHOULD ALSO BE CONSIDERED IF IT IS FOUND THA T THOSE PRESCRIBED CONDITIONS ARE FULFILLED BY THE ASSESSEE WE, THEREF ORE, SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND RESTORE THE MATTER B ACK TO THE FILE OF ASSESSING OFFICER FOR A FRESH DECISION AS PER ABOVE DISCUSSION AFTER CONSIDERING ALL THE CONTENTIONS BEING RAISED BY THE ASSESSEE AND AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. THE ASSESSING OFFICER SHOULD PASS SPEAKING ORDER IN THI S REGARD. THIS GROUND OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURP OSES. 7. SINCE, THE FACTS IN THE PRESENT YEAR ARE IDENTIC AL, WE ARE IN AGREEMENT WITH LD AR OF THE ASSESSEE THAT IN THE PRESENT YEAR ALSO , THIS ISSUE SHOULD GO BACK TO THE FILE OF THE ASSESSING OFFICER FOR A FRESH DECIS ION AS PER THE DIRECTIONS GIVEN BY THE TRIBUNAL IN ASSESSMENT YEAR 2003-04 AS PER PAR A NO.9 REPRODUCED ABOVE. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD CIT(A) ON THIS ISSUE AND RESTORE THIS MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FO R A FRESH DECISION IN TERMS OF THE DIRECTIONS ISSUED BY THE TRIBUNAL IN ITS ORDER FOR ASSESSMENT YEAR 2003-04 AS PER . I.T.A. NO.4635/DEL/09 5/5 PARA NO.,9 REPRODUCED ABOVE. THIS GROUND OF THE ASS ESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. 9. ORDER PRONOUNCED IN THE OPEN COURT ON 19TH FEBR UARY, 2010. SD/- SD/- (R.P. TOLANI) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 19..2.2010. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER (ITAT, NEW DELHI).