ITO, New Delhi V. M/s. AAR ESS Exim Pvt. Ltd., New Delhi

ITA 5145/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74301 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 09-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: ASHWANI TANEJA
• Section: 10B

Judgement Text

ITA NO. 5145/DEL/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A, NEW DELHI BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 5145/DEL/2013 A.Y. : 2009-10 INCOME TAX OFFICER, WARD 1(1), ROOM NO. 398B, CR BUILDING, NEW DELHI VS. M/S AAR ESS EXIM P LTD., C/O M/S RRA TAX INDIA, D-28, SOUTH EXTN., PART-I, NEW DELHI (PAN: AAACA0807G) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) DEPARTMENT BY : MS. Y. KAKKAR, SR. D.R. ASSESSEE BY : SH. ASHWANI TANEJA, ADV. & SOMIL AGARWAL, CA ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS-IV), NEW DE LHI DATED 25.6.2013 PERTAINING TO ASSESSMENT YEAR 2009-10. 2. THE GROUNDS RAISED READ AS UNDER:- (A) IN ALLOWING DEDUCTION OF RS. 20,83,365/- U/S. 1 0B OF THE ACT DESPITE THE FACT THAT THE ASSESSEE IS MERELY EN GAGED IN TESTING OF EQUIPMENT TO BE EXPORTED. THE ASSEMBL ING IS DONE FOR TESTING THE EQUIPMENT OF THE PARTS PROD UCED FROM OUT SIDE AND DISASSEMBLED FOR EXPORTS. MERE TE STING OF EQUIPMENT DOES NOT TANTAMOUNT TO MANUFACTURING FOR THE PURPOSE OF DEDUCTION U/S. 10B OF THE ACT. ITA NO. 5145/DEL/2013 2 (B) IN NOT APPRECIATING THAT THE EXPENSES INCURRED BY THE ASSESSEE CLEARLY SHOW THAT HARDLY ANY MANUFACTURING ACTIVITY IS BEING CONDUCTED AT THE PREMISES LOCATED AT NSEZ NOIDA. (C) IN IGNORING THE GROUND THAT DESIGN AND DEVELOPM ENT ACTIVITIES CLAIMED TO HAVE BEEN CARRIED OUT BY THE ASSESSEE WERE DONE AT A DESIGN CELL LOCATED AT NON SEZ UNIT, NOT ELIGIBLE FOR DEDUCTION U/S. 10B OF THE AC T. (D) IN NOT APPRECIATING THE ERECTION AND COMMISSION ING INCOME OF RS. 23,18,760/- RELATED TO THE ACTIVITIE S CARRIED OUT ABROAD AND NOT IN THE SEZ UNIT TO BE ELIGIBLE F OR DEDUCTION U/S. 10B OF THE ACT. (E) IN HOLDING THAT EVEN IF THE MANUFACTURING IS OU TSOURCED AND DONE IN AN AREA OUTSIDE SEZ THEN ALSO IT SHALL BE ELIGIBLE FOR DEDUCTION U/S. 10B OF THE I.T. ACT, 19 61. 3. AT THE OUTSET, LD. COUNSEL OF THE ASSESSEE SUBMI TTED THAT THE ISSUE IS COVERED IN FAVOR OF THE ASSESSEE BY THE DE CISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSTT. YEAR 2007-08 AND 2008-09 VIDE ORDER DATED 18.3.2013. LD. DR ON THE O THER HAND SOUGHT TO MAKE OBJECTION TO THE AFORESAID PROPOSIT ION. SHE SUBMITTED THAT LD. CIT(A) HAS NOT EXAMINED THE FACT S OF THE CASE PROPERLY. HOWEVER, SHE COULD NOT MAKE ANY COGENT D ISTINCTION BETWEEN THE ASSESSEES OWN CASE DECIDED BY THE TRIB UNAL IN EARLIER YEARS AND THE PRESENT ASSESSMENT YEAR. 4. WE HAVE CAREFULLY CONSIDERED HEARD THE SUBMISSIO NS AND PERUSED THE RECORDS. WE FIND THAT CONSEQUENT UPON THE AOS REJECTION OF THE CLAIM U/S. 10B BY THE ASSESSEE, LD . CIT(A) HAS DECIDED THE ISSUE IN FAVOR OF THE ASSESSEE BY HOLDI NG AS UNDER:- ITA NO. 5145/DEL/2013 3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD. AR FOR THE APPELLANT, ORDER OF THE AO FOR THE Y EAR UNDER APPEAL AS WELL AS ORDERS FOR A.Y. 2007-08 AND A.Y. 2008-09, WRITTEN SUBMISSIONS OF THE APPELLANT FOR A.Y. 2007-08 AND 2008-09, ORDERS OF THE LD. CIT(A) FOR A.Y. 2007-08 AND 2008-09, AND OTHER OF THE ITAT FOR A.Y. 2007-08 AND 2008-09. ERECTION AND COMMISSIONING INCOME HAS ALSO BEEN SHOWN BY THE APPELLANT COMPANY FOR A.Y. 2008-09 AND WAS DULY CONSIDERED FOR PURPOSE OF ALLOWING DEDUCTION U/S. 10B OF THE ACT. I DO NOT FIND ANY DIFFERENCE I N THE FACTS FOR A.Y. 2008-09 AND FOR THE YEAR UNDER CONSIDERATION. A PLAIN READING OF THE ORDER PASSED BY THE ITAT FOR A.Y. 2007-08 AND 2008-09, ANSWER ALL ADVERSE OBSERVATIONS OF THE AO, AND THEREFORE, THERE REMAINS NO ROOM TO ARRIVE AT ANY ADVERSE CONCLUSION THAT THE APPELLANT COMPANY WAS NOT MANUFACTURING THE CEMENT MILL AND STEEL ROLLING PLANTS IN INDIA, WHICH WERE ERECTED AND COMMISSIONED ABROAD. THE APPELLANT COMPANY MANUFACTURERS VARIOUS COMPONENTS AND SUBASSEMBLIES FOR THE ULTIMATE FINISHED PRODUCT OF CEMENT MILL AND STEEL ROLLING PLANTS AND THIS IS NO LESS THAN ANY MANUFACTURING O F GOODS / THINGS AS CONTEMPLATED U/S. 10B OF THE ACT. RESPECTFULLY FOLLOWING THE JUDGEMENT OF THE ITAT FO R A.Y. 2007-08 AND 2008-09 IN ASSESSEES OWN CASE WHEN THERE IS NO CHANGE IN THE WORKING PROCESS OF ITA NO. 5145/DEL/2013 4 THE ASSESSEE COMPANY FOR THE YEAR UNDER CONSIDERATION, AND THE AO HAS ALSO PASSED THE ORDER RELYING ON OBSERVATIONS MADE IN AY 2008-09, I HAVE NO REASON TO DIFFER WITH THE OBSERVATIONS MADE BY MY LD. PREDECESSOR CIT(A) IN EARLIER YEARS I.E. A.Y . 2007-08 AND 2008-09. SINCE ITAT HAS ALLOWED THE CLAIM OF THE APPELLANT COMPANY FOR AY 2007-08 AND AY 2008-09, CONFIRMING THE DECISION OF THE LD. CIT(A), THE CLAIM OF THE APPELLANT FOR THE YEAR UND ER CONSIDERATION IS ALSO ALLOWED AS THERE IS NO CHANGE IN FACTS AND CIRCUMSTANCES FOR THE YEAR UNDER APPEAL. IN VIEW OF THE ABOVE FACTS OF THE CASE, THESE GROUNDS OF APPEAL ARE DECIDED IN FAVOR OF THE APPELLANT, AND AO IS DIRECTED TO ALLOW DEDUCTION U/ S. 10B OF THE ACT FOR CLAIM MADE BY THE APPELLANT FOR AN AMOUNT OF RS. 20,83,365/-. 5. WE FIND THAT THE TRIBUNAL IN THE AFORESAID ORDER AS REFERRED BY THE LD. CIT(A) HAS ELABORATE REFERRED TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND HAS CONCLUDED THAT ASSESSEE WAS ENG AGED IN THE MANUFACTURING OF ASSEMBLING THE PLANTS WHICH ARE DI SASSEMBLED FOR EXPORTS. CONSIDERING THESE FACTS, THE TRIBUNAL AFF IRMED THE LD. ITA NO. 5145/DEL/2013 5 CIT(A)S ORDER. WE FIND THAT THE AFORESAID DECISIO N OF THE TRIBUNAL IS ALSO APPLICABLE IN THIS ASSESSMENT YEAR. ACCORDINGL Y, RESPECTFULLY FOLLOWING THE PRECEDENT AS ABOVE, WE AFFIRM THE ORD ER OF THE LD. CIT(A). 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/3/2014. SD/- SD/- [ [[ [R.P. TOLANI R.P. TOLANI R.P. TOLANI R.P. TOLANI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 14/3/2014 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO. 5145/DEL/2013 6