ACIT 20(1), MUMBAI V. J.P. KHANDELWAL, MUMBAI

ITA 5046/MUM/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6167 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 21-10-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 04-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS REENA JHA TRIPATHI
• Assessee Lawyers: SAMEER G DALAL
• Keywords: Reassessment proceedings
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH J, MUMBAI BEFORE SHRI S.V. MEHROTRA , ACCOUNTANT MEMBER AND SMT. ASHA VIJAYA RAGHAVAN, JUDICIAL MEMBER I.T.A.NO. 5046/MUM/2009 ASSESSMENT YEAR : 2006-07 THE ASST. COMMISSIONER OF INCOME- TAX-20(1), ROOM NO. 603, 6 TH FLOOR, PIRAMAL CHAMBER, PAREL, MUMBAI 400 012 VS. SHRI J.P. KHANDELWAL, (PROP. M/S. AMRIT IMPEX) 13, KONARK EMPRESS, DR. E. MOSSES ROAD,, WORLI NAKA, MUMBAI 400 018. PAN: AABPK 1144 L (APPELLANT) (RESPONDENT) APPELLANT BY : MRS. REENA JHA TRIPATHI RESPONDENT BY : SHRI SAMEER G. DALAL O R D E R PER S.V. MEHROTRA, AM: THIS APPEAL BY THE REVENUE, IS DIRECTED AGAINST TH E IMPUGNED ORDER DATED 26.06.2009, PASSED BY THE LEARNED COMMISSIONER OF I NCOME-TAX (APPEALS)-XX, MUMBAI, FOR THE ASSESSMENT YEAR 2006-07 ON THE FOLL OWING GROUNDS: 1. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW AN D IN THE CIRCUMSTANCES OF THE CASE IN DIRECTING THE AO TO AL LOW THE APPELLANTS CLAIM UNDER SEC.10B OF THE I.T.ACT. 2. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW AN D IN THE CIRCUMSTANCES OF THE CASE IN NOT APPRECIATING THE F ACT THAT THE ASSESSEE HAS NOT COMPLIED WITH THE TERMS OF STIPULA TIONS CONTAINED IN SEC.10B IN ITS ENTIRETY. 3. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW AN D IN THE CIRCUMSTANCES OF THE CASE IN NOT APPRECIATING THE I NFERENCE DRAWN BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS JUST RE VIVED HIS OLD BUSINESS JUST CHANGING ITS NAME. 2. THE ASSESSEE, PARTNER OF M/S. AMRIT IMPEX, A 10 0% EOU, IN THE RELEVANT ASSESSMENT YEAR ENGAGED IN MANUFACTURING AND EXPOR TING OF CUT AND POLISHED DIAMONDS AND STUDDED JEWELLERY, FILED ITS RETURN DE CLARING TOTAL INCOME OF RS.10,77,543/-. THE ASSESSING OFFICER EXAMINED THE ASSESSEES CLAIM U/S.10B OF ITA NO.5046/M/2009 SHRI J.P. KHANDELWALA 2 THE ACT AND NOTED THAT THE ASSESSEE HAD ONLY EXPAND ED AND RE-ESTABLISHED HIS EXISTING BUSINESS OF EXPORTING CUT AND POLISHED DIA MONDS WITH A SMALL ADDITION TO VALUE THROUGH METAL STUDDED JEWELLERY. HE, THEREFOR E, CONCLUDED THAT THE ASSESSEE DID NOT FULFILL THE CONDITIONS LAID DOWN UNDER SUB- SECTION (2)(II) OF SECTION 10B OF THE ACT, AND THEREFORE, DEDUCTION UNDER SECTION 10B WAS NOT ALLOWABLE TO THE ASSESSEE. THE A.O. HAD, INTER ALIA, OBSERVED THAT IN THE REASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2002-03, THE ASSESSEES CLA IM FOR DEDUCTION U/S.10B WAS DISALLOWED SINCE THE ASSESSEE DID NOT COMPLY WITH A LL THE CONDITIONS U/S.10B(2)(II) OF THE ACT. HE FURTHER OBSERVED THAT THE PROVISIO NS OF SUB-SECTION 8 TO SECTION 10B ALSO APPLIED IN VIEW OF THE BASIC FACT THAT ON THE SAME CONTINUED BUSINESS THE ASSESSEE HAS CLAIMED DEDUCTION U/S.80HHC IN THE EARLIER YEARS BY FILING RETURN U/S.139(1) AND THEREBY EXPRESSING HIS INTENTION TO CLAIM DEDUCTION UNDER THE SAID SECTION. THUS, THE ASSESSEE COULD BE CONSTRUED AS A DECLARATION MADE BEFORE THE A.O. TO THE EFFECT THE PROVISIONS OF SECTION 10B MA Y NOT BE MADE APPLICABLE TO HIS CASE IN THE SUBSEQUENT YEAR. 3. BEFORE THE CIT(A) IT WAS POINTED OUT THAT THE IS SUE WAS COVERED IN FAVOUR OF THE ASSESSEE AS PER THE ORDERS OF HIS PREDECESSO R FOR THE ASSESSMENT YEAR 2002- 03, 2004-05 AND 2005-06. ALL THE ISSUES RAISED BY T HE A.O. HAVE ELABORATELY BEEN DEALT WITH IN THE ABOVE CIT(APPEALS) ORDERS. THE L EARNED CIT(A) FOLLOWING THE ORDERS FOR THE ASSESSMENT YEARS 2002-03, 2004-05 AN D 2005-06, THE CONTENTS FROM WHICH HAVE BEEN REPRODUCED FROM PARA 2.3 OF HIS ORD ER, ALLOWED THE ASSESSEES APPEAL. 4. BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE FILED BEFORE US A COPY OF THE TRIBUNALS ORDER FOR THE ASSESSMEN T YEARS 2002-03, 2004-05 AND 2005-06 IN ITA NOS. 4975/M/2007, 4976/M/2007 AND 44 00/M/2008 DECIDED ON ITA NO.5046/M/2009 SHRI J.P. KHANDELWALA 3 10.12.2009, WHEREIN THE TRIBUNAL HAS ALLOWED THE AS SESSEES CLAIM UNDER SEC.10B OF THE ACT. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE PERUSED THE RECORDS OF THE CASE. WE FIND THAT IN TH E ASSESSMENT YEAR 2003-04 THE ASSESSEES CLAIM UNDER SECTION 10B WAS DISPUTED ON THE GROUND THAT THE ASSESSEE WAS NOT CARRYING ON ANY MANUFACTURING ACTIVITY AND ON THAT COUNT THE ASSESSEES CLAIM WAS DENIED. IN THE PRESENT ASSESSMENT YEAR, THE ASSESSEES CLAIM HAS BEEN DENIED ON THE SAME COUNTS FOR WHICH IT WAS DENIED F OR THE ASSESSMENT YEARS 2002- 03 AND 2004-05. THE TRIBUNAL ALLOWED THE ASSESSEE S CLAIM BY OBSERVING IN PARA 10 & 11 OF THE TRIBUNAL ORDER DATED 10.12.2009 AS U NDER: 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE C ONSIDERED THEM CAREFULLY. AFTER CONSIDERING THE SUBMISSIONS AND PE RUSING OTHER MATERIALS ON RECORD, WE FIND THAT THERE IS NO SUBSTANCE IN TH E APPEALS OF THE DEPARTMENT. WE NOTE THAT THE AO FIRSTLY HELD THAT D EDUCTION U/S.10B IS NOT ALLOWABLE. THEREAFTER, WITHOUT PREJUDICE, THE AO HE LD THAT THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION ON CUT AND POLISHED DIAM ONDS AND THEREAFTER WITHOUT PREJUDICE THE AO HELD THAT THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION ON STUDDED JEWELLERY WITH GOLD. WE NOTICE THAT THE CIT(A) HAS DECIDED THE ISSUE THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S.10B ONLY BECAUSE OF THE REASON THAT BEFORE THE CIT(A) THE AS SESSEE HAS RAISED A GROUND THAT THE AO WAS NOT JUSTIFIED IN NOT ALLOWIN G DEDUCTION U/S.10B. ALTERNATE FINDINGS OF THE AO IN RESPECT OF CUT AND POLISHED DIAMOND JEWELLERY AND STUDDED JEWELLERY WITH GOLD WERE NOT CHALLENGED BEFORE THE CIT(A) BY THE ASSESSEE. REGARDING THE ISSUE IN RESP ECT OF DEDUCTION ALLOWABLE U/S.10B, IT HAS ALREADY BEEN DECIDED BY T HE TRIBUNAL WHILE DECIDING THE APPEAL FOR THE ASST. YEAR 2003-04, IN ITA NO. 6102/M/06 AND C.O. NO. 92/M.07 VIDE ORDER DATED 16.12.2008. COPY OF THE ORDER OF THE TRIBUNAL IS PLACED AT PAGES 57 TO 66 OF THE PAPER B OOK FILED BY THE ASSESSEE. THEREFORE, WE HOLD THAT THE ASSESSEE IS E LIGIBLE FOR DEDUCTION U/S.10B. FOR THE SAKE OF CLARIFICATION, WE MAY MENT ION THAT NEITHER THE ISSUE IN RESPECT OF CUT AND POLISHED DIAMOND JEWELL ERY WAS DECIDED BY THE CIT(A) NOR ANY GROUND HAS BEEN TAKEN BEFORE THE TRI BUNAL BY THE DEPARTMENT. THEREFORE, THE CONTENTIONS OF THE LD.D. R. THAT THE DEDUCTION IS NOT ALLOWABLE ON CUT AND POLISHED DIAMOND JEWELLERY ARE NOT LIABLE TO BE CONSIDERED. THEREFORE THE SAME ARE NOT CONSIDERED. 11. REGARDING ALLOWABILITY OF DEDUCTIONU/S.10B, WE HAVE ALREADY STATED ABOVE THAT THE TRIBUNAL HAS ALREADY HELD THAT DEDUC TION U/S.10B IS ALLOWABLE TO THE ASSESSEE. MOREOVER, THE DETAILED R EASONING GIVEN BY THE LD. CIT(A) COULD NOT BE CONTROVERTED BY THE LD. D.R . THEREFORE, WE HOLD THAT THERE IS NO INFIRMITY IN THE FINDING OF CIT(A) IN HOLDING THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S.10B. ACCORDI NGLY, THE GROUNDS OF THE DEPARTMENT IN ALL ITS APPEALS ARE DISMISSED. ITA NO.5046/M/2009 SHRI J.P. KHANDELWALA 4 7. THUS, DEDUCTION U/S.10B HAS BEEN ALLOWED TO THE ASSESSEE IN EARLIER YEARS. UNDER SUCH CIRCUMSTANCES VARIOUS OBJECTIONS RAISED BY THE ASSESSING OFFICER, AS NOTED ABOVE, DO NOT SURVIVE. RESPECTFU LLY, FOLLOWING THE ABOVE DECISION, WE UPHOLD THE ORDER OF THE CIT(A). 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30TH DAY OF NOVEMBER, 2010 SD. SD. (ASHA VIJAYARAGHAVAN) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED THE 30 TH NOVEMBER, 2010. KN COPY TO: 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT-20, MUMBAI 4. THE CIT(A)-XX, MUMBAI 5. THE DR J BENCH, MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR, ITAT, MUMBAI