Appeal details
Counselvise Citation
[2016] 132 COUNSELVISE.COM (IT) 4581 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 2 month(s) 2 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
01-07-2016
Appeal Filed By
Assessee
Bench Allotted
C
Next Hearing Date
20-06-2016
Assessment Year
2011-2012
Appeal Filed On
29-04-2015
Judgement Text
1 ITA NO. 503/KOL/2015 AMBO EXPORTS LTD., AY 2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA [BEFORE SHRI M. BALAGANESH, AM & SHRI S. S. VISWAN ETHRA RAVI, JM] I.T.A NO.503/KOL/2015 ASSESSMENT YEAR: 2011-12 AMBO EXPORTS LTD. (PRESENTLY KNOWN VS. DEPUTY C OMMISSIONER OF INCOME-TAX, AS AMBO EXPORTS INDUSTRIES LTD.) CENTRAL CIRCLE-3 (4), KOLKATA. ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 20.06.2016 DATE OF PRONOUNCEMENT: 01.07.2016 FOR THE APPELLANT: SHRI SOUMITRA CHOUDHURY, AD VOCATE FOR THE RESPONDENT: SHRI ARINDAM BHATTACHARYA, JCIT ORDER PER SHRI M. BALAGANESH, AM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-21, KOLKATA VIDE APPEAL NO. 465/CC-3(4)/CIT(A)-21/14-15 DATED 17.02.2015. A SSESSMENT WAS FRAMED BY DCIT, CENTRAL CIRCLE-XXV, KOLKATA U/S. 143(3) OF THE INCO ME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2011-12 VIDE HIS ORDER DATE D 05.02.2014. 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CITA IS JUSTIFIED IN UPHOLDING THE DISALLOWANCE MADE U/S 10A OF THE A CT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASS ESSEE COMPANY WAS INCORPORATED IN 1992 AS A PRIVATE LIMITED COMPANY AND BECAME PUBLIC LIMI TED COMPANY W.E.F. 19.01. 2006. THE COMPANY IS RECOGNIZED AS EXPORT HOUSE BY THE G OVT. OF INDIA, AND WAS ENGAGED IN EXPORT OF TEA AND OTHER PRODUCTS E.G. IRON ORES, RI CE BRAN OIL, HDPE ETC. THE PRIMARY ACTIVITIES OF THE ASSESSEE WAS TO EXPORT TEA TO THE COUNTRIES LOCATED IN ASIA, THROUGH IT'S UNITS LOCATED IN COIMBATORE, TAMIL NADU, THROUGH IT 'S VARIOUS UNITS INCLUDING UNIT LOCATED IN SEZ IN COIMBATORE . DURING THE YEAR UNDER CONSID ERATION, THE ASSESSEE DISCLOSED PROFIT OF RS. 146,88,982/- FROM SEZ UNIT I.E. 10% EXPORT O RIENTED UNIT LOCATED IN MEPZ SPECIAL ECONOMIC ZONE UNIT IN COIMBATORE, VIDE GREEN CARD N O. 1257/MEPZ DATED 23/08/2004 2 ITA NO. 503/KOL/2015 AMBO EXPORTS LTD., AY 2011-12 AND CLAIMED EXEMPTION U/S. 10A TO THE EXTENT OF 50% OF SUCH PROFIT. THE TOTAL CLAIM OF EXEMPTION U/S. 10A WAS THUS RS. 73,44,491/-. IT IS PERTINENT HERE TO MENTION THAT THIS IS THE SEVENTH AND THE LAST YEAR OF AVAILABILITY OF EXEMPT ION U/S. 10A. THE LD. AO DISALLOWED THE SAID CLAIM OF EXEMPTION U/S 10A OF THE ACT ON THE G ROUND THAT NO ACTIVITY IN THE NATURE OF PROCESSING AND MANUFACTURE WAS CARRIED OUT IN THE S AID SEZ UNIT AND THAT THE PROFIT OF THE SAID SEZ UNIT WAS GROSSLY INFLATED TO CLAIM BENEFIT OF EXEMPTION U/S 10 A OF THE ACT. THIS ACTION OF THE LD. AO WAS UPHELD BY THE LD. CIT A. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS :- 2. FOR THAT ON THE FACTS OF THE CASE, THE LD. C.I .T.(A) WAS WRONG IN DITTOING THE ORDER OF THE A.O. AND CONFIRMING THE DISALLOWANCE U/S. 10A OF TH E INCOME TAX ACT AMOUNTING TO RS.73,44,491/- FOR ITS SPECIAL ECONOMIC ZONE (SEZ) UNIT WHICH IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 3. FOR THAT ON THE FACTS OF THE CASE, THE LD. C.LT. (A) WAS WRONG IN NOT ALLOWING DEDUCTION U/S.10A OF THE I.T. ACT AMOUNTING TO RS.73,44,491/- AGAINST PROFIT OF RS.146,88,982/- ARISING OUT OF ITS 100% EXPORT BUSINESS OF MANUFACTURING BL ENDED TEA FROM ITS SEZ UNIT SET UP AT COIMBATORE WHICH IS COMPLETELY ARBITRARY, UNJUSTIFI ED AND ILLEGAL. 4. FOR THAT ON THE FACTS OF THE CASE, THE LD. C.I.T .(A) SHOULD HAVE CONSIDERED THE FACT, THAT IN ASSESSEE'S OWN CASE IN EARLIER YEARS EXEMPTION U/S. 10A OF THE I.T. ACT WAS ALLOWED IN THE SAME SEZ UNIT, THEREFORE, THE ORDER PASSED BY THE L D. CIT(A) IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 5. FOR THAT ON THE FACTS OF THE CASE, THE LD. C.I.T .(A) HAS ARBITRARILY ACTED IN CONFIRMING THE A.O.'S OBSERVATION THAT THE ASSESSEE DID NOT CARRY OUT ANY ACTIVITY OF PROCESSING AND MANUFACTURING IN ITS SEZ UNIT AT COIMBATORE AND THE PROFIT IN THE SAID UNIT HAS GROSSLY BEEN INFLATED OR CREATED TO CLAIM BENEFIT OF EXEMPTION U /S. 10A OF THE I. T. ACT WHICH IS BASED ON MERE SURMISE AND CONJECTURE. 2.2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK FILED BY THE ASSESSEE. WE FIND THAT THE LD. CITA HAD ONLY REPRODUCED THE VERSION OF THE LD. AO AND HAD NOT GI VEN ANY INDEPENDENT FINDING. WE FIND THAT ONE OF THE MAIN ALLEGATIONS OF THE LD. AO IS T HAT THE GROSS PROFIT MARGIN IN SEZ UNIT WAS ABNORMALLY HIGH AS COMPARED TO THAT OF NON SEZ UNIT ESPECIALLY WHEN THERE IS NO MUCH QUALITATIVE DIFFERENCE OF PRODUCTS MANUFACTURE D IN BOTH THE UNITS AND ACCORDINGLY THE ASSESSEE HAD ONLY TRIED TO INFLATE THE PROFITS IN S EZ UNIT IN ORDER TO GET THE MAXIMUM BENEFIT OF EXEMPTION U/S 10A OF THE ACT. WE FIND THAT THE LD. AO HAVING MADE THIS OBSERVATION HAD NOT RESORTED TO DISTURB THE PROFITS DISCLOSED IN THE RESPECTIVE UNITS BY THE 3 ITA NO. 503/KOL/2015 AMBO EXPORTS LTD., AY 2011-12 ASSESSEE BY SHIFTING OF EXPENSES, INCOME, ALLOCATIO N OF COMMON EXPENSES ETC BY APPLYING THE PROVISIONS OF SECTION 80IA(8) AND 80IA (10) OF THE ACT AS MANDATED IN SECTION 10A(7) OF THE ACT. WE HOLD THAT IN THESE CIRCUMSTANCES, I N ORDER TO JUSTIFY HIS SUSPICION, THE LD. AO OUGHT TO HAVE REWORKED OUT THE PROFITS OF THE RE SPECTIVE UNITS AND THEN ACCORDINGLY DETERMINE THE ELIGIBILITY OF EXEMPTION U/S 10 A OF THE ACT. HE CANNOT SUMMARILY REJECT THE ENTIRE CLAIM OF EXEMPTION U/S 10 A OF THE ACT. 2.2.1. ANOTHER REASON FOR REJECTION OF CLAIM OF EXE MPTION U/S 10 A OF THE ACT WAS THAT NO MANUFACTURING ACTIVITY OR PROCESSING ACTIVITY WAS A CTUALLY CARRIED OUT BY THE ASSESSEE IN SEZ UNIT ACCORDING TO LD. AO. WE FIND THAT THE LD . AO HAD CATEGORICALLY RECORDED IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS MADE SALES T O THE EXTENT OF RS. 3,45,09,846/- IN THE SEZ UNIT COMPRISING OF 531593 KGS . WE FIND FROM THE ASSESSMENT ORDER WHEREIN THE ASSESSEE HAD PROCURED RAW TEA LEAVES FROM INDIA AND VIETNAM AND AFTER BLENDING AND PROCESSING, IT EXPORTED SUCH MANUFACTURED / PROCESS ED TEA TO AFGHANISTAN AND PAKISTAN FROM ITS SEZ UNIT. WE ALSO FIND FROM THE DETAILS FILED IN THE PAPER BOOK (PAGES 54 TO 200 OF PB) THAT THE ASSESSEE, DURING THE YEAR UNDER CON SIDERATION, HAD INCOME FROM MANUFACTURING ACTIVITIES I.E BLENDING, PROCESSING A ND PACKING OF TEA AND ITS EXPORT THEREAFTER. THE ASSESSEE BEFORE THE LD. AO VIDE LE TTER DATED 2.12.2013 HAD ALSO EXPLAINED THE MANUFACTURING PROCESS UNDERTAKEN FOR MANUFACTUR ING OF TEA AND SUBSEQUENT EXPORT THEREOF FROM THE SAID SEZ UNIT BY WAY OF A FLOWCHAR T WHICH IS REFLECTED IN PAGE 55 OF THE PAPER BOOK. WE FIND THAT THE ASSESSEE HAS CENTRAL EXCISE REGIS TRATION FOR BOTH ITS SEZ UNITS AND TEA IS EXCISABLE GOODS UNDER THE CENTRAL EXCISE A CT, 1944, WHICH IS A CENTRAL LEGISLATION. THE COMPANY IS REGISTERED WITH THE AS ST. COMMISSIONER OF CENTRAL EXCISE, COIMBATORE II DIVISION FOR MANUFACTURING OF EXCISAB LE GOODS. A COPY OF REGISTRATION CERTIFICATE BEARING NOS. AACCA5668BXM001 DTD. 24.11 .2004 AND AACCA5668BXM002 DATED 17.05.2004 ISSUED IN FAVOUR O F THE ASSESSEE WAS SUBMITTED BEFORE THE LD. AO. THE OTHER CERTIFICATIONS AND APPROVALS SECURED BY T HE COMPANY ARE AS UNDER: 4 ITA NO. 503/KOL/2015 AMBO EXPORTS LTD., AY 2011-12 (I) APPROVAL LETTER DATED 24.8.2004 FROM THE MINIST RY OF COMMERCE, GOVT. OF INDIA FOR MANUFACTURE OF LICENCED PRODUCT I.E. TEA AS 100 % EOU. (II) GREEN CARD- DATED 23.8.2004 ISSUED BY THE DEVE LOPMENT COMMISSIONER, MADRAS EXPORT PROCESSING ZONE, SEZ. IN THE SAID GREEN CARD THE PRODUCT MANUFACTURED HAS BEEN DULY MENTIONED AS 'TEA BLENDING OF IMPORTED AN D INDIGENOUS TEA'. (III) CERTIFICATE DATED 8TH AUGUST, 2008 FOR RECOGN ITION OF OUTSTANDING EXPORT PERFORMANCE BY MEPZ SEZ CHENNAI UNDER THE MINISTRY OF COMMERCE & INDUSTRY, GOVT. OF INDIA, AS EOU UNIT IN THE FOOD/AGRO & ALLI ED SECTOR [FOR FYS 2005-06 AND 2006-07 - COPY OF THE SAID CERTIFICATES WERE ENCLOS ED BEFORE THE LD. AO. IT MAY BE MENTIONED THAT IN A SEZ ONLY MANUFACTURING UNITS AR E REGISTERED. (IV) REGISTRATION UNDER THE TRADE MARKS REGISTRY WH ICH ALSO INCORPORATES THE TERM MANUFACTURERS, THE TRADEMARK NO. BEING 1468580 DATE D 10.7.06 ISSUED ON 4.3.08. COPY OF THE CERTIFICATE WAS ENCLOSED BEFORE THE LD. AO. IT IS SEEN THAT THE COMPANY IS NOT SIMPLY ENGAGED IN THE ACTIVITY OF PACKING OF TEA BUT IT INVOLVES PURCHASING OF LOOSE TEA AND PROCESS ING THE SAME (BY WAY OF CHANGE IN PHYSICAL AND CHEMICAL COMPOSITION WHICH INCLUDES US E OF MACHINES), BEING AN INTEGRAL AND INEXTRICABLE PART OF PRODUCTION OR MANUFACTURE RESU LTING IN THE 'MANUFACTURED' OR 'PRODUCED' TEA, WHICH IS MUCH DIFFERENT IN CHEMICAL COMPOSITION, TASTE, AROMA ETC. IN COMPARISON TO RAW TEA. BECAUSE OF THIS VERY FACT, T HE COMPANY IS ASSESSED UNDER THE CENTRAL EXCISE ACT, 1944. 2.2.2. ANOTHER REASON FOR THE LD. AO REJECTING THE CLAIM OF EXEMPTION U/S 10 A OF THE ACT IS THAT THE ASSESSEE HAD DEBITED ONLY A SUM OF RS. 29,21,000/- TOWARDS MANUFACTURING EXPENSES AS BELOW:- ITEM AMOUNT (RS.) I) CARRIAGE INWARD -- II) CLEARING & FORWARDING EXPENSES RS. 844518/ - III) DETENTION CHARGES RS.152,485/ - IV) ELECTRICITY RS.17,998/ - V) FREIGHT INCLUDING FREIGHT ON IMPORT RS.1101`,708/ - VI) INSPECTION CHARGES & SECURITY CHARGES RS.14300/ - VII) INSURANCE CHARGES RS. 32549/ - VIII) PACKATING AND HANDLING C HARGES RS. 434,212/ - IX) SERVICE CHARGES RS. 36,813/ - X) THC AND BHF RS. 286,417/ - XI) WEIGHMENT EXPENSES ---- TOTAL RS.29,21,000/ - 5 ITA NO. 503/KOL/2015 AMBO EXPORTS LTD., AY 2011-12 ACCORDING TO THE LD. AO, NONE OF THE ABOVE EXPENSES FALL UNDER THE CATEGORY OF MANUFACTURING EXPENSES AND ACCORDINGLY THE CLAIM OF ASSESSEE THAT IT WAS ENGAGED IN MANUFACTURING OF TEA HAS TO BE REJECTED. WE FIND F ROM THE DETAILS OF EXPENSES LISTED ABOVE, THE SAME ARE FOR THE PURPOSE OF MANUFACTURING OPERA TIONS ONLY AND HENCE THE ASSESSEE WAS ENGAGED IN MANUFACTURING OPERATIONS DURING THE YEAR UNDER APPEAL. WE FIND THAT THE LD. AO HAD ACCEPTED THE SALES MADE FROM SEZ UNIT AMOUNT ING TO RS. 3,45,09,846/- AS SALES. WE FIND THAT THE ASSESSEE HAD MERELY STATED THE EXP ORTS FROM SEZ UNIT HAD BEEN MADE TO AFGHANISTAN AND PAKISTAN. FROM THE DETAILS OF SALE S FILED, THE LD. AO FOUND THAT THE ASSESSEE HAD ALSO MADE EXPORTS TO AFGHANISTAN AND P AKISTAN FROM ITS NON SEZ UNIT. BASED ON THIS, HE REJECTED THE CLAIM OF THE ASSESSEE. I N THIS REGARD, WE HOLD THAT THE ASSESSEE NEVER STATED BEFORE THE LD. AO THAT NO EXPORTS WERE MADE TO AFGHANISTAN AND PAKISTAN FROM ITS NON SEZ UNIT, INSTEAD IT HAD ONLY STATED T HAT EXPORTS FROM SEZ UNIT WERE MADE TO AFGHANISTAN AND PAKISTAN. WE HOLD THAT DOUBTING TH E VERACITY OF THE TRANSACTIONS ON THIS FLIMSY GROUND IS NOT WARRANTED. WE HOLD THAT THE A SSESSEE INDEED HAD INDULGED IN MANUFACTURING ACTIVITIES IN ITS SEZ UNIT DURING THE YEAR UNDER APPEAL AND HAD ONLY CONTINUED THE SAME FROM THE EARLIER YEARS. THE PRE VIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2011-12 IS THE SEVENTH AND THE LAST YEAR OF AV AILABILITY OF EXEMPTION U/S. 10A OF THE ACT. THE ASSESSEE'S CLAIM FOR EXEMPTION UNDER SECTI ON 10A OF THE ACT HAD BEEN ALWAYS ALLOWED BY THE ASSESSING OFFICER IN THE PRECEDING F INANCIAL YEARS. IT IS A SETTLED PRINCIPLE OF LAW THAT A CLAIM MADE UNDER SECTION 10A FOR A PARTI CULAR YEAR CANNOT BE DISALLOWED UNLESS RELIEF GRANTED FOR THE FIRST ASSESSMENT YEAR IN WHI CH THE CLAIM WAS MADE AND ACCEPTED IS WITHDRAWN OR SET ASIDE. WHEN THERE IS NO CHANGE IN THE FACTS WHICH WERE IN EXISTENCE DURING THE EARLIER YEARS WITH THAT OF A SUBSEQUENT ASSESSMENT YEAR, THEN THE INCOME TAX OFFICER CANNOT WITHDRAW THE CLAIM FOR EXEMPTION UND ER SECTION 10A OF THE ACT FOR SUBSEQUENT YEARS. THEREFORE, IT IS NOT OPEN TO THE DEPARTMENT TO DENY THE BENEFIT OF SECTION 10A FOR SUBSEQUENT ASSESSMENT YEARS. THE RELIANCE I N THIS REGARD IS PLACED ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT RENDERED IN THE CA SE OF CIT V. WESTERN OUTDOOR INTERACTIVE (P.) LTD REPORTED IN (2012) 349 ITR 309 (BOM). 6 ITA NO. 503/KOL/2015 AMBO EXPORTS LTD., AY 2011-12 2.2.3. WE ALSO FIND THAT THE ISSUE AS TO WHETHER TH E BLENDING AND PROCESSING OF TEA AMOUNTS TO MANUFACTURING OF TEA HAS BEEN SETTLED IN FAVOUR OF THE ASSESSEE BY THE SPECIAL BENCH DECISION OF THIS KOLKATA TRIBUNAL IN THE CASE OF MA DHU JAYANTI INTERNATIONAL LTD VS DCIT REPORTED IN 137 ITD 377 (KOL) (SB) WHEREIN IT WAS HELD :- 37. ACCORDINGLY, WE ANSWER THE QUESTION REFERRED IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE ASSESSEES WHO ARE IN THE BUSINESS OF BLENDING A ND PROCESSING OF TEA AND EXPORT THEREOF, IN 100% EOUS ARE MANUFACTURER/ PRODUCER OF THE TEA FOR THE PURPOSE OF CLAIMING EXEMPTION U/S. 10B OF THE ACT. FURTHER, ASSESSEES WHO ARE IN THE BUSINESS OF BLENDING AND PROCESSING OF TEA IN RESPECT OF UNDERTAKINGS IN FREE TRADE ZONES ARE MANUFACTURER/PRODUCER OF TEA FOR THE PURPOSE OF CLAIMING EXEMPTION U/S. 10A OF THE ACT. WE HAVE EXAMINED AND DISCUSSED THE FACTS IN THE CASE OF MADHU JAYANTI INTERNATIONAL LT D. AND FOUND THAT THERE IS BLENDING OF TEA AND CONSEQUENTLY THE ASSESSEE IS ELIGIBLE FOR EXEMP TION U/S. 10B OF THE ACT AS PRAYED FOR. THEIR APPEAL FOR THE AY 2004-05 IS ALLOWED. AS REGA RDS OTHER APPEALS AND THAT OF THE INTERVENERS, THE MATTERS ARE RESTORED BACK TO THE D IVISION BENCH, WITH DIRECTIONS TO DECIDE THOSE APPEALS IN THE LIGHT OF PRINCIPLE LAID DOWN H EREIN, SO FAR AS THE CLAIM FOR RELIEF U/S. 10A OR 10B OF THE ACT IN ACCORDANCE WITH LAW. 2.2.4. WE ALSO FIND THAT THE TOTAL PROFIT AS PER PR OFIT AND LOSS ACCOUNT OF THE ASSESSEE FOR THE YEAR ENDED 31.3.2011 WAS RS. 4,04,55,228.57 (VIDE P AGE 207 OF THE PAPER BOOK) AND PROFIT OF SEZ UNIT WAS RS. 1,46,88,982.31 (VIDE PAG E 228 OF THE PAPER BOOK). WE ALSO FIND THAT THE LD. AO HIMSELF HAD GRANTED EXEMPTION U/S 10 A OF THE ACT FOR THE ASST YEARS 2005-06 ; 2006-07 AND 2007-08 BY FOLLOWING THE AFOR ESAID SPECIAL BENCH DECISION VIDE SEPARATE ORDERS PASSED U/S 254 / 143(3) OF THE ACT DATED 14.1.2015 WHICH ARE ENCLOSED IN PAGES 2 TO 3 ; PAGES 7 TO 8 AND PAGES 12 TO 13 OF T HE PAPER BOOK. WE FIND THAT SECTION 10A OF THE ACT IS A SPECIAL INCENTIVE INTRODUCED BY THE LEGISLATURE IN ORDER TO PROMOTE EXPORTS AND THEREFORE, THE SAME HAS TO BE CONSTRUED LIBERALLY. IT HAS BEEN HELD BY THE HONBLE SUPREME COURT IN THE CASE OF BAJAJ TEMPO LT D VS CIT REPORTED IN (1992) 196 ITR 188 (SC) - A PROVISION IN A TAXING STATUTE GRANTING INCENTI VES FOR PROMOTING GROWTH AND DEVELOPMENT SHOULD BE CONSTRUED LIBERALLY; AND SINC E A PROVISION FOR PROMOTING ECONOMIC GROWTH HAS TO BE INTERPRETED LIBERALLY, THE RESTRI CTION ON IT TOO HAS TO BE CONSTRUED SO AS TO ADVANCE THE OBJECTIVE OF THE PROVISION AND NOT TO F RUSTRATE IT. 2.2.5. AS STATED EARLIER, THE LD. AO HAD NOT REWORK ED THE PROFITS ATTRIBUTABLE TO SEZ AND NON SEZ UNIT TO JUSTIFY HIS SUSPICION. IN ANY CASE , THERE CANNOT BE ANY OUTRIGHT REJECTION OF THE CLAIM OF EXEMPTION U/S 10 A OF THE ACT. WE FIND THAT THE ENTIRE DISALLOWANCE OF 7 ITA NO. 503/KOL/2015 AMBO EXPORTS LTD., AY 2011-12 CLAIM OF EXEMPTION U/S 10A OF THE ACT WHICH HAS BEE N CONSISTENTLY CLAIMED BY THE ASSESSEE OVER THE YEARS HAVE BEEN MADE BY THE LD. A O ONLY ON SUSPICION , SURMISE AND CONJECTURE AND ACCORDINGLY WE HAVE NO HESITATION T O DELETE THE SAME. ACCORDINGLY THE GROUNDS RAISED BY THE ASSESSEE VIDE GROUND NOS. 2 T O 5 ARE ALLOWED. 3. THE NEXT GROUND TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT COULD BE MADE IN THE SUM OF RS . 5,22,000/- IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE LD. AO OBSERVED THAT THE ASSESSEE HAD MADE PAYMENT OF RS. 5,22,000/- TO M/S SREE BALAJI PLASTI CS TOWARDS JOB WORK CHARGES FOR WHICH NO DEDUCTION OF TAX AT SOURCE U/S 194C OF THE ACT W AS MADE. ACCORDINGLY, THE LD. AO MADE THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT. T HE ADDITION WAS CONFIRMED BY THE LD. CITA . AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- 6. FOR THAT ON THE FACTS OF THE CASE, THE LD. CIT (A) WAS WRONG IN CONFIRMING THE ADDITION U/S. 40(A)(IA) OF THE I. T. ACT AMOUNTING TO RS.522 ,000/- AS THE ASSESSEE WAS NOT LIABLE TO DEDUCT TDS ON PAYMENT MADE FOR JOB WORK CHARGES, TH EREFORE, THE SAID DISALLOWANCE U/S. 40(A)(IA) IS COMPLETELY ARBITRARY, UNJUSTIFIED AND ILLEGAL. 3.2. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD. AR PRAYED FOR SETTING ASIDE OF THIS ISSUE TO THE FILE OF THE LD. AO IN THE LIGHT OF THE DECIS ION RENDERED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS ANSAL LAND MARK TOWNSHI P P LTD REPORTED IN 377 ITR 635 (DEL) WHEREIN IT WAS HELD THAT THE SECOND PROVISO T O SECTION 40(A)(IA) OF THE ACT HAS BEEN HELD TO BE RETROSPECTIVE IN OPERATION AND ACCORDING LY NO DISALLOWANCE U/S 40(A)(IA) OF THE ACT COULD BE MADE IN THE HANDS OF THE PAYER (ASSESS EE HEREIN). IN RESPONSE TO THIS, THE LD. DR FAIRLY AGREED FOR THE SAME. WE FIND THAT THE IS SUE NEEDS TO BE SET ASIDE TO THE FILE OF THE LD.AO TO DECIDE THE ISSUE AFRESH IN THE LIGHT O F THE DECISION RENDERED IN ANSAL LAND MARK (SUPRA) AND THE ASSESSEE IS DIRECTED TO PRODUC E EVIDENCE OF THE PAYEE RECORDS TO PROVE THAT THE SAID JOB CHARGES HAVE BEEN DULY INCL UDED IN THE RETURNS FILED BY THE SAID JOB WORKER. IF THE SAME IS PROVED, THEN WE DIRECT THE LD. AO NOT TO MAKE ANY DISALLOWANCE U/S 40(A)(IA) OF THE ACT IN TERMS OF SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT. ACCORDINGLY, THE GROUND NO. 6 RAISED BY THE ASSESSE E IS ALLOWED FOR STATISTICAL PURPOSES. 8 ITA NO. 503/KOL/2015 AMBO EXPORTS LTD., AY 2011-12 4. THE GROUND NO. 7 RAISED BY THE ASSESSEE IS WITH REGARD TO CHARGEABILITY OF INTEREST U/S 234B, 234C AND 234D OF THE ACT WHICH ARE CONSEQ UENTIAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. 5. THE GROUND NOS. 1 & 8 RAISED BY THE ASSESSEE AR E GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 01.07.201 6 SD/- SD/- (S.S. VISWANETHRA RAVI) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED : 1 ST JULY, 2016 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT AMBO EXPORTS LTD. (PRESENTLY KNOWN AS A MBO EXPORTS INDUSTRIES LTD.), 3, PRETORIA STREET, 3 RD FLOOR, CHANDRAKUNJ, KOLKATA-700 071. 2 RESPONDENT DCIT, C.C. 3(4), KOLKATA. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .
Mehul