Hritnik Export Pvt. Ltd., New Delhi V. ITO, Ward- 12(4), New Delhi

ITA 5359/DEL/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9628 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 13-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Keywords: Rule of consistency; Set aside
• Section: 10B; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER ITA NO.5359/DEL/2018 ASSESSMENT YEAR: 2011-12 HRITNIK EXPORT PVT. LTD. 225, KRISHNA APARTMENTS, 27, I. P. EXTENSION, NEW DELHI PAN NO. AAACH9458A VS ITO, WARD- 12 (4) NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY SH. SATYAJEET GOEL, CA RESPONDENT BY SH. S. L. ANURAGI, SR. DR DATE OF HEARING: 30/07/2019 DATE OF PRONOUNCEMENT: 26/09/2019 ORDER PER R.K. PANDA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 16.05.2018 OF THE CIT(A)-42, NEW DELHI RELATING TO A.Y. 2011-12. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COMPANY AND ENGAGED IN THE BUSINESS OF MANUFACTURER AND EXPORTER OF READYMADE GARMENTS. IT FILED ITS RETUR N OF INCOME ON 29.09.2011 DECLARING TOTAL INCOME OF RS.2,95,330/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFI CER NOTED THAT THE ASSESSEE COMPANY HAS CLAIMED DEDUCTION OF RS.46,22,783/- U/S. 10 B OF THE IT ACT. HE OBSERVE D THAT AN PAGE | 2 ORDER DATED 27.09.2013 WAS RECEIVED FROM THE DEVELO PMENT COMMISSIONER, NOIDA, SPECIAL ECONOMIC ZONE THAT A P ENALTY OF RS.40 LACS WAS IMPOSED ON THE ASSESSEE UNDER THE PR OVISION OF SECTION 11 OF THE FTDR ACT 1992 READ WITH PARA 6.6. 1 (C) OF FOREIGN TRADE POLICY 2009 TO 2014 FOR MISUSE OF LOP AND OTHER DEEDS DUE TO UNPRECEDENTED ECONOMIC OFFENCE COMMITT ED BY THE UNIT IN THE STATE OF WILLFUL AND INTENTIONAL ACT TO DEFRAUD THE GOVERNMENT. HE, THEREFORE, CONFRONTED THE SAME TO THE ASSESSEE AS TO WHY THE CLAIM OF RS.46,22,783/- SHOULD NOT BE DISALLOWED. REJECTING THE VARIOUS EXPLANATION GIVEN BY THE ASSE SSEE THE ASSESSING OFFICER MADE DISALLOWANCE OF RS.46,22,783 /- BY OBSERVING AS UNDER :- LT IS CLEAR FROM ABOVE SUBMISSION DATED 13.03.2014 THAT ASSESSEE COMPANY ALSO IS NOT INTERESTED TO RECOGNIZE ITSELF AS AN EOU AND HAS ALSO NOT CLAIMED DEDUCTION U/S 10B FOR A.Y. 2012-13 ONWARDS. THE ASSESSEE COMPANY HAS NOT REFERRED THE RE ASONS FOR NOT CLAIMING DEDUCTION U/S 10B FROM A.Y. 2012-13 ONWARDS . IN ABSENCE OF ANY REASONS, IT IS OBVIOUS THAT ASSESSEE HAVE COMMI TTED THE OFFENCES WHICH ARE HIGHLIGHTED AND ENUMERATED IN THE DEVELOPMEN T COMMISSIONER, NOIDA ORDER DATED 27.09.2013. IN THE L IGHT OF ABOVE DISCUSSION AND FOLLOWING OFFENCES EXPLAINED/REFERRED I N THE ORDER DATED 27.09.2013, THE SUBMISSION MADE BY THE ASSESSE E COMPANY REGARDING THE CLAIM FOR DEDUCTION U/S 10B IS NOT ACCE PTABLE. A) CLAIMING DRAWBACK BY CONCEALING THEIR STATUS AS EOU TO CUSTOMS AUTHORITIES W.E.F. 03.10.2007 AND ALSO BY NO T COMPLYING MANDATOR PAGE | 3 REQUIREMENTS OF CUSTOMS BOND AND WAREHOUSING LICENCE UNDER SECTION 58 AND 65 OF CUSTOMS ACT, 1962 EXCEPT FOR THE PERIOD FROM 24.09.2010 TO 02 . 10 . 2010 . B) CLAIMING 100% EXEMPTION U/S 10B OF THE I.T. ACT, 1 961 AS EOU FROM THE DATE OF ISSUE OF LOP (03.10.2007) AND SIMULTANEOUSLY CLAIMED DUTY DRAWBACK AS PER THE NOTI FIED SCHEDULE OF DRAWBACK AGAINST THE SAME EXPORTS DURING T HE SAME PERIOD, WHICH WAS PROHIBITED TO EOU VIDE PARA 7 (C) OF NOTIFICATION NOS. 81/2006-CUS (NT) DATED 13.07.2006 (AS SUPERCEDED). C) THE UNIT FAILED IN DISCHARGE OF THEIR OBLIGATIONS AS AN EOU AFTER ISSUE OF THE LOP, AS ARE ENUMERATED UNDER CHAP TER 6 OF THE FTP READ WITH CHAPTER 6 OF THE HBP; THAT THEY F AILED TO MAINTAIN PROPER ACCOUNT AND SUBMIT QUARTERLY (QPR) A ND ANNUAL REPORT (APR) IN THE PRESCRIBED ANNEXURE TO AP PENDIX 14- I-F DURING THE PERIOD STARTING FROM 03.10.2007 TO 02.10.2012. D) THEY FAILED TO SUBMIT AND SATISFY THE COMPETENT AUTH ORITY FOR ACHIEVEMENT OF POSITIVE NET FOREIGN EXCHANGE (N FE) IN TERMS OF THE PROVISIONS OF PARA OF THE FTP; THAT TH EY FAILED TO DRAW ENTITLEMENT FOR DTA SALE; IF ANY, OF FINISH PRODUCTS/SCRAPS/WASTE PRODUCTS/BY-PRODUCTS IN TERMS O F THE PROVISIONS OF PARA 6.8 OF FTP. IN VIEW OF ABOVE, SINCE THE ASSESSEE COMPANY HAS NO T FOLLOWED THE RULES & REGULATIONS MEANT FOR 100% EXPORT ORIEN TED UNIT (EOU), THEREFORE, DEDUCTION OF RS.46,22,783/- CLAIME D U/S.10B OF THE IT ACT IS DISALLOWED. PAGE | 4 3. SIMILARLY THE ASSESSING OFFICER MADE ADDITION OF RS.46,82,369/- ON ACCOUNT OF DUTY DRAWBACK ON THE G ROUND THAT (A) IT IS ONLY THE PROFIT AND GAINS DERIVED BY 100% EXPORT ORIENTED UNDER TAKING ELIGIBLE FOR DEDUCTION U/S. 1 0B. (B) RECEIPT OF DUTY DRAWBACK IS ATTRIBUTABLE TO BUT IS NO WAY DERIVED FROM THE EXPORT OF ARTICLE OR THINGS. (C) IT IS AN ANCILLARY PROFIT OF THE EXPORTER AND IT IS NOT DERIVED FROM E XPORT BUSINESS WITHIN THE ORDINARY MEANING IN THE COURSE OF A BUSI NESS. (D) THE DUTY DRAWBACK INCOME IS NOT EARNED ON ACCOU NT OF EXPORT OF ARTICLES OR THINGS AND FURTHER NO FOREIGN EXCHANGE CAN BE BROUGHT INTO INDIA BY EARNING SAID INCOME. 4. IN APPEAL THE LD. CIT(A) UPHELD BOTH THE ADDITIO NS BY OBSERVING AS UNDER :- 5.2 THE ISSUE INVOLVED IN THIS CASE IS WHETHER THE AO IS CORRECT IN MAKING DISALLOWANCE OF RS. 46,22,783 OF DEDUCTION CLAIMED U/S 10B OF THE INCOME TAX ACT OR NOT? 5.3 AT THE OUTSET, THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURER A ND EXPORTER OF READYMADE GARMENTS. DURING THE YEAR, TH E ASSESSEE COMPANY HAS CLAIMED DEDUCTION OF RS. 46,22,78 3/- U/S 10B OF THE INCOME TAX ACT. DURING THE YEAR, THE AO RECEIVED COPY OF THE ORDER DATED 27.09.2013 OF SH. JAYA NT MISHRA, DEVELOPMENT COMMISSIONER, NOIDA SPECIAL ECO NOMIC ZONE, NOIDA. VIDE THIS ORDER, A PENALTY OF RS. 40,00 ,000/- WAS IMPOSED UNDER THE PROVISIONS OF SECTION 11 OF THE FTD R ACT, 1992 READ WITH PARA 6.6.1(C) OF FOREIGN TRADE POLIC Y FOR PAGE | 5 MISUSING OF LETTER OF PERMISSION (LOP) BY THE ASSES SEE UNIT. THE AO HAS REPRODUCED THE GIST OF THE ORDER IN THE ASSES SMENT ORDER ITSELF. 5.4 THE AO OBSERVED IN THE ASSESSMENT ORDER THAT THE DEVELOPMENT COMMISSIONER IN ITS ORDER DATED 27.09.201 3 HAS EMPHASIZED THAT THE ASSESSEE COMPANY HAS NOT FOLLOW ED ALL THE TERMS AND CONDITIONS LAID DOWN UNDER EOU STATUS T O CLAIM TAX EXEMPTION NOTIFICATION. THE CONCLUSION DRAWN BY DEVELOPMENT COMMISSIONER IN ITS ORDER DATED 27.09.2013 IS RE-PRO DUCED AS UNDER FOR READY REFERENCE:- (I) I HOLD THAT THE UNIT WAS AN EOU AGAINST THE LOP DATED 03.10.2007 TO 02.10.2012 ISSUED TO THEM. THE SAID L OP IS NOT RENEWED THEREAFTER AND STANDS CANCELLED IN TERMS OF THE RULE 10 OF THE FOREIGN TRADE(REGULATION) RULES, 1993 REA D WITH SECTION 9(4) OF THE FTDR ACT, 1994 AND IN TERMS OF PA RA6 OF THE LUT EXECUTED BY THE UNIT, READ WITH PARA 6.6.1(C) OF THE FTP. (II) I HOLD THAT ALL PROVISIONS OF CHAPTER 6 OF FTP READ WITH CHAPTER 6 OF HBP AND THE APPENDIX MADE THERE UNDER IN THE HBP VOL.L ARE APPLICABLE W.E.F. 03.10.2007 AND THE O BLIGATIONS UNDER THE SAID PROVISIONS FOR AN EOU SHOULD BE ARRIVED AT FOR ITS DISCHARGE. (III) THE UNIT IS DIRECTED TO FURNISH APRS/QPRS FOR THE PERIOD W.E.F. 03.10.2007 TO 02.10.2012; (IV) I SUSPEND THE IMPORTER AND EXPORTER CODE (IEC) IN TERM S OF SECTION 8 OF THE FTDR ACT, 1992 FOR A PERIOD OF SEC MONTH FROM THE DATE OF ISSUE OF THIS ORDER; (V) THE DUTY DRAWBACK AGAINST THE EXPORTS AS WELL AS DUT Y PAGE | 6 ON D.T.A CLEARANCES AND ANY OTHER BENEFITS AVAILED DUR ING THE PERIOD OF OPERATION AS ON EOU MAY BE LOOKED INTO BY T HE APPROPRIATE JURISDICTIONAL AUTHORITIES; AND (VI) I IMPOSE OF PENALTY OF RS. 40,00,000/-(RUPEES FORT Y LAKHS ONLY) UNDER THE PROVISIONS OF SECTION 11 OF T HE FTDR ACT, 1992 READ WITH THE PARA 6.6.1(C) OF FOREIGN TRADE POL ICY 2009- 14 FOR THE MISUSE OF THE LOP AND OTHER DEEDS DISCUSSED ABOVE. THE UNIT SHOULD PAY THIS PENALTY IMMEDIATELY ON RECE IPT OF THIS ORDER.' 5.5 THE APPELLANT TOOK A POSITION THAT THE AFORESAID O RDER OF DEVELOPMENT COMMISSIONER WAS ISSUED BEYOND THE JURISDICTIONAL POWER OF THE SAID AUTHORITY. THE APPE LLANT CLARIFIED THAT THE DUTY DRAWBACK IS ALLOWABLE AS EXPO RT INCOME U/S 10B OF THE ACT AS DECIDED BY CIT(A)/HON'BLE ITAT F OR FY 2008-09 & 2009-10. FURTHER, THE APPELLANT EMPHASIZE D THAT THE LETTER OF PERMISSION IS SUFFICIENT TO CLAIM DEDU CTION U/S 10B OF THE ACT. THE ASSESSEE COMPANY REITERATED THAT IT HAS NOT TAKEN ANY DIRECT/ I INDIRECT BENEFIT IN THE SCHEME UNDER REFERENCE EXCEPT FOR CLAIMING THE EXEMPTION U/S 10B OF THE ACT. FURTHER, THE ASSESSEE COMPANY INFORMED THE ASSESSING OFFICER THAT IT HAS ALREADY APPLIED FOR THE DE-BOUNDING OF T HE UNIT TO STOP TO AVAIL THE STATUS OF EOU FOR THE A.Y. 2012-1 3 AND ONWARDS. 5.6 THE AO OBSERVED THAT THE COMPANY HAS NOT GIVEN ANY REASONS FOR DISCONTINUATION OF EOU STATUS AS WELL A S OF CLAIM OF DEDUCTION U/S 10B FROM A.Y. 2012-13 ONWARDS. THE AO L AID EMPHASIS ON THE FACT THAT THE ASSESSEE CLAIMED DRAWBA CK BY CONCEALING ITS STATUS AS EOU TO CUSTOMS AUTHORITIES W.E.F. 03.10.2007 I AND ALSO DID NOT COMPLY WITH THE MANDAT ORY PAGE | 7 REQUIREMENTS OF CUSTOMS BOND AND WAREHOUSING LICENSE UNDER SECTION 58 AND 65 OF THE CUSTOMS ACT 1962. 5.7 THE AO ALSO HELD THAT THE UNIT FAILED IN DISCHARG E OF ITS OBLIGATIONS AS AN EOU AFTER THE ISSUANCE OF THE LET TER OF PERMISSION (LOP) AS ENUMERATED UNDER CHAPTER 6 OF THE FOREIGN TRADE POLICY (FTP) READ WITH CHAPTER 6 OF TH E FOREIGN TRADE POLICY (FTP) READ WITH CHAPTER 6 OF HANDBOOK OF PROCEDURE (HBP). IT IS ALSO HELD BY THE AO THAT THE ASSESSEE COMPANY FAILED TO SUBMIT AND SATISFY THE COMPETENT AU THORITY FOR ACHIEVEMENT OF POSITIVE NET FOREIGN EXCHANGE IN TERMS OF PROVISIONS OF FTP. ACCORDINGLY, THE AO DISALLOWED TH E CLAIM OF EXEMPTION U/S 10B OF THE ACT. DURING THE APPELLATE PROCEEDINGS, THE APPELLANT RELIED UPON THE DECISION OF HON'BLE DELHI HIGH COURT IN ITS OWN CASE WHERE THE HON'BLE HIGH COURT HAS ACCEPTED THE CLAIM OF EXEMPTION U/S 10B OF THE A CT. THE APPELLANT REITERATED THAT ITS CLAIM IS IN CONFORMITY WITH THE APPROVAL GRANTED BY NSEZ. THE APPELLANT, FURTHER, POI NTED OUT THAT LETTER OF PERMISSION (LOP) GRANTED BY THE NSEZ I S STILL RELEVANT AND OPERATIVE. 5.8 I FIND THAT THE MAIN REQUIREMENT OF EXEMPTION U NDER SECTION 10B OF THE ACT IS THAT THE APPELLANT MUST B E 100% EOU. A CERTIFICATE IN THIS REGARD IS ISSUED BY DEVELOPMENT COMMISSIONER. I FIND THAT THE STATUS OF EOU IS DEPEN DENT ON THE SATISFACTORY COMPLETION OF RULES AND REGULATIONS WHICH ARE INTER-LINKED. IT IS A SCHEME COVERED UNDER THE FOREIG N TRADE POLICY UNDER THE FOREIGN TRADE (DEVELOPMENT AND REGU LATION ACT 1992) AND PROVIDES FOR DIRECT TAXES AND INDIRECT TAXES BENEFITS. PAGE | 8 THE FACT THAT THE DEVELOPMENT COMMISSIONER HAS FOUN D THAT THE ASSESSEE COMPANY WAS MISUSING THE LETTER OF PER MISSION (LOP) ISSUED BY IT. HENCE, THE ASSESSEE HAS BEEN FOU ND TO BE NOT COMPLIANT TO THE PROVISIONS OF FOREIGN TRADE PP LICY. ACCORDINGLY, AS PER THE ORDER OF THE DEVELOPMENT COMMISSIONER, NOIDA SPECIAL ECONOMIC ZONE, NOIDA, T HE EOU STATUS IS IN DISPUTE IN VIEW OF THE CANCELLATION OF LOP IN TERMS OF RULE 10 OF FOREIGN TRADE(REGULATION RULES 1993 R EAD WITH SECTION 9(4) OF FTDR ACT 1994 AND IN TERMS OF PARA 6 OF LUT EXECUTED BY THE UNIT READ WITH PARA 6.6.1(C) OF THE FOREIGN TRADE POLICY. 5.9 IN THE BACKDROP OF THE DISCUSSION ABOVE, I FIND THAT THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF THE ASSESSEE IS DISTINGUISHABLE ON FACTS AS THE FINDINGS OF DEVEL OPMENT COMMISSIONER WERE NOT ON RECORD AT THE TIME OF DECIS ION OF HON'BLE DELHI HIGH COURT. ACCORDINGLY, I HOLD THAT T HE AO HAS RIGHTLY DISALLOWED EXEMPTION UNDER SECTION 10B OF I. T. ACT BY RELYING UPON THE ORDER OF DEVELOPMENT COMMISSIONER DATED 27.09.2013 IN THIS CASE. HENCE, THE GROUND OF APPEAL IS DISMISSED. 6. STATISTICALLY, THE APPEAL STANDS, DISMISSED. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASS ESSEE IS IN PAGE | 9 APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL :- 1. (I) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING DISALLOWANCE OF STATUTORY DEDUCTION U/S.10B AMOUNTING TO RS. 46,22,783/- WITH OUT APPRECIATING THE FACTS OF THE CASE. (II) THAT THE CLAIM OF STATUTORY BENEFIT U/S. 10B IS IN CONFORMITY WITH STATUTORY PROVISIONS AND PAST HISTO RY OF THE CASE AND AS SUCH IT IS NOT OPEN TO REEXAMINE THE CL AIM IN THE YEAR UNDER REFERENCE IN TOTAL DISREGARD TO PAST HIS TORY OF THE CASE AND RULE OF CONSISTENCY. 2(I) THAT THE LD. CIT(A) HAS ERRED IN PLACING RELIA NCE ON PROVISIONAL ORDER OF DEVELOPMENT COMMISSIONER WHICH IS IN RESPECT OF PROVISIONS OF CUSTOMS ACT AND HAS NO REL EVANCE OR BEARING TO THE ISSUE OF CLAIM OF DEDUCTION U/S 10B OF THE INCOME TAX ACT, 1961. (II) THAT THE ORDER OF DEVELOPMENT COMMISSIONER HAVING BEEN PASSED WITHOUT JURISDICTION AND BEING UNDER CH ALLENGE, THE LD. CIT(A) & AO HAVE GROSSLY ERRED IN DRAWING A DVERSE INFERENCE ON THE BASIS OF SAME. (III) THAT EVEN OTHERWISE, THE APPELLANT HAVING COM PLIED ALL THE PRE-CONDITIONS AS MANDATED U/S. 10B OF THE ACT, THE DISALLOWANCE OF STATUTORY DEDUCTION U/S 10B ON EXTR ANEOUS GROUNDS IS ILLEGAL AND NOT SUSTAINABLE UNDER THE LA W. 3. THAT ON FACTS AND CIRCUMSTANCE OF THE CASE, THE ID. CIT(A) WAS NOT JUSTIFIED IN ENDORSING THE FINDING OF THE A SSESSING OFFICER AND CONFIRMING CONSEQUENTIAL DISALLOWANCE OF CLAIM OF DEDUCTION PAGE | 10 TO THE EXTENT OF RS. 42,80,369/- U/S 10B IN RESPECT OF DUTY DRAW BACK EVEN THOUGH SAME IS PART OF ELIGIBLE PROFIT FO R THE PURPOSE OF DEDUCTION U/S. 10B AS HELD BY HONBLE HIGH COURT IN ASSESSEES OWN CASE FOR AY 2008-09 AND 2009-10. 4. THAT THE ORDERS OF LOWER AUTHORITIES ARE NOT JUSTIF IED ON FACTS AND SAME ARE BAD IN LAW. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEN D, SUBSTITUTE, WITHDRAW AND/OR VARY ANY GROUNDS OF APP EAL AT OR BEFORE THE TIME OF HEARING. 6. SO FAR AS THE FIRST ISSUE IS CONCERNED THE LD. C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CLAIM OF STATUTORY DEDUCTION U/S. 10B HAS BEEN ACCEPTED AND ALLOWED BY HONBLE D ELHI HIGH COURT IN ASSESSEES OWN CASE FOR A.Y.2008-09 AND 20 09-10 VIDE ORDER DATED 13.11.2014 AND BY THE TRIBUNAL FOR A.Y. 2010-11 VIDE ORDER DATED 10.07.2017. HE SUBMITTED THAT THE ASSESSING OFFICER IN THE INSTANT CASE HAS DISALLOWED THE CLAI M OF DEDUCTION SOLELY ON THE BASIS OF THE ORDER DATED 27.09.2013 P ASSED BY THE DEVELOPMENT COMMISSIONER, NOIDA SPECIAL ECONOMIC ZO NE AS PER WHICH THE ASSESSEE WAS ALLEGEDLY FOUND TO BE VI OLATING PROVISIONS OF THE CUSTOMS ACT. 1962. HOWEVER, THE A SSESSING OFFICER HAS NEVER DISPUTED THE MANUFACTURING AND EX PORT ACTIVITY OF THE ASSESSEE COMPANY WHICH IS THE PRE-R EQUISITE CONDITION FOR CLAIMING DEDUCTION U/S.10B OF THE IT ACT. HE SUBMITTED THAT THE CONCLUSION OF THE ASSESSING OFFI CER IS BASED MAINLY ON THE ORDER OF DEVELOPMENT COMMISSIONER. HE SUBMITTED THAT THE ASSESSEE HAS BEEN DULY GRANTED T HE LOP WHICH WAS OPERATIVE DURING THE YEAR UNDER REFERENCE . RELYING PAGE | 11 ON VARIOUS DECISIONS HE SUBMITTED THAT IN THE CASE OF SPECIAL DEDUCTIONS, PRINCIPLE OF CONSISTENCY MUST BE APPLIE D AND FOLLOWED. FURTHER HE SUBMITTED THAT THE ORDER OF TH E DEVELOPMENT COMMISSIONER, SEZ NOIDA IS IN THE CONTE XT OF VIOLATION OF CUSTOMS ACT 1962 AND THE SAME HAS NO R ELEVANCE OR BEARING TO THE ISSUE OF CLAIM OF DEDUCTION U/S.10B OF THE IT ACT. RELYING ON VARIOUS DECISIONS HE SUBMITTED THAT THE PROVISIONS OF INCOME TAX ACT 1961 AND CUSTOMS ACT ARE INDEPENDENT OF EACH OTHER AND ANY VIOLATION OF CUSTOMS ACT SHALL HAVE N O EFFECT ON OPERATION OF PROVISIONS OF INCOME TAX ACT, 1961. FO R THE ABOVE PROPOSITION OF LAW HE RELIED ON THE DECISION OF HON BLE KARNATAKA HIGH COURT IN THE CASE OF PCIT VS. LAXMI NARAYAN MINING COMPANY REPORTED IN 404 ITR 522 AND CIT VS. CARITOR (INDIA) PVT. LTD. REPORTED IN 369 ITR 463. HE ACCOR DINGLY SUBMITTED THAT MERELY BECAUSE THE CUSTOMS AUTHORITI ES HAVE ISSUED CERTAIN NOTICE AND RAISED CERTAIN OBJECTIONS WHICH IS UNDER CHALLENGE BEFORE THE APPELLATE FORUM, THEREFO RE, THE ASSESSING OFFICER AND THE CIT(A) ARE NOT JUSTIFIED IN PLACING RELIANCE ON THE SAME. 7. SO FAR AS THE SECOND ISSUE IS CONCERNED I.E. THE DENIAL OF CLAIM OF DEDUCTION U/S. 10B ON DUTY DRAWBACK TO THE EXTENT OF RS.42,80,369/- ON THE GROUND THAT THE DUTY DRAWBACK IS NOT DERIVED FROM EXPORT OF ARTICLE OR THING AND NO FORE IGN EXCHANGE CAN BE BROUGHT INTO INDIA BY EARNING SAID INCOME. H E SUBMITTED THAT THE ISSUE STANDS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE DELHI HIGH COURT IN ASSE SSEES OWN CASE FOR A.Y.2008-09 AND 2009-10 WHICH HAS BEEN FOL LOWED BY PAGE | 12 THE TRIBUNAL FOR A. Y. 2010-11. THEREFORE, THE SEC OND ISSUE BEING A COVERED ONE IN FAVOUR OF THE ASSESSEE, THE ORDER OF THE CIT(A) SHOULD BE SET ASIDE ON THIS ISSUE AND THE GR OUND RAISED BY THE ASSESSEE SHOULD BE ALLOWED. 8. THE LD. DR ON THE OTHER HAND HEAVILY RELIED ON T HE ORDER OF THE AO AND THE CIT(A). HE SUBMITTED THAT THE ASSES SEE HAS CLAIMED THE DEDUCTION CONCEALING THEIR STATUS AS EO U TO CUSTOMS AUTHORITIES W.E.F. 03.10.2007 AND HAS NOT C OMPLIED WITH THE MANDATORY REQUIREMENTS OF CUSTOMS AND WARE HOUSING LICENSE. THE ASSESSEE HAS CLAIMED 100% EXEMPTION U /S. 10B OF THE IT ACT AS AN EOU FROM THE DATE OF ISSUE OF LOP AND SIMULTANEOUSLY CLAIMED THE DUTY DRAWBACK IN VIOLATI ON OF THE PROVISIONS OF THE ACT. HE SUBMITTED THAT THE AO AND THE CIT(A) HAVE GIVEN JUSTIFIABLE REASONS AS TO HOW AND WHY TH E ASSESSEE IS NOT ENTITLED TO CLAIM THE DEDUCTION U/S. 10B OF THE IT ACT. 9. THE LD. DR ALSO DISTINGUISHED THE DECISION OF HO NBLE DELHI HIGH COURT ON FACT AND SUBMITTED THAT THE ORDER OF THE CIT(A) BEING IN ACCORDANCE WITH LAW SHOULD BE UPHELD. 10. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. I HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE ME. I FIND THE ASSESSING OFFICER IN THE INSTANT CASE DISALLOWED TH E CLAIM OF DEDUCTION U/S.10B OF THE ACT ON THE GROUND THAT THE ASSESSEE HAS NOT FOLLOWED RULES AND REGULATIONS FOR 100% EXP ORT ORIENTED UNIT (EOU). SIMILARLY HE ALSO REJECTED THE CLAIM OF DEDUCTION OF DUTY DRAWBACK AMOUNTING TO RS.42,80,369/- ON THE GR OUND THAT PAGE | 13 SUCH DUTY DRAWBACK ARE NOT ELIGIBLE FOR DEDUCTION U /S. 10B OF THE IT ACT. I FIND THE LD. CIT(A) UPHELD THE ACTIO N OF THE AO, THE REASONS OF WHICH ARE ALREADY REPRODUCED IN THE PREC EDING PARAGRAPH. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE PROVISIONS OF CUSTOMS ACT AND INC OME TAX ACT ARE DIFFERENT AND VIOLATION OF THE PROVISIONS OF TH E CUSTOMS ACT WILL NOT DISENTITLE THE ASSESSEE TO CLAIM THE DEDUC TION U/S. 10B OF THE IT ACT. IT IS ALSO THE SUBMISSION OF THE LD . COUNSEL FOR THE ASSESSEE THAT THE ORDER OF THE DEVELOPMENT COMM ISSIONER, NOIDA SEZ IS UNDER CHALLENGE AND IT HAS NOT ATTAINE D FINALITY. IT IS ALSO THE SUBMISSION OF THE LD. COUNSEL FOR THE A SSESSEE THAT THE ORDERS OF THE TRIBUNAL FOR THE PRECEDING ASSESS MENT YEARS HAS BEEN UPHELD BY THE HONBLE HIGH COURT IN ASSESS EES OWN CASE FOR A. Y. 2008-09 AND 2009-10 AND THE TRIBUNAL HAS FOLLOWED THE SAME FOR A.Y.2010-11. HOWEVER, IN MY OPINION THE ORDER OF THE DEVELOPMENT COMMISSIONER, SEZ NOIDA RA ISING CERTAIN SERIOUS OBJECTIONS WERE NOT BEFORE THE AO O R THE CIT(A) OR THE TRIBUNAL AND, THEREFORE, SUBMISSION OF THE L D. COUNSEL FOR THE ASSESSEE THAT IT IS A COVERED MATTER IN FAV OUR OF THE ASSESSEE CANNOT BE ACCEPTED AT THIS STAGE. HOWEVER , CONSIDERING THE FACT THAT THE ASSESSEE HAS CHALLENG ED THE ORDER OF THE DEVELOPMENT COMMISSIONER SEZ WHICH IS SUB-JU DICE AND HAS NOT ATTAINED FINALITY, THEREFORE, CONSIDERING T HE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTIC E, I DEEM IT PROPER TO RESTORE THE ISSUE TO THE FILE OF THE AO W ITH A DIRECTION TO GIVE AN OPPORTUNITY TO THE ASSESSEE TO SUBSTANTI ATE AS TO WHAT HAS HAPPENED TO THE OUTCOME OF THE ISSUES RAISED BY THE PAGE | 14 DEVELOPMENT COMMISSIONER, NOIDA SEZ AND DECIDE BOTH THE ISSUES AS PER FACT AND LAW. WHILE DECIDING THE ISS UES HE SHALL ALSO KEEP IN MIND THE DECISION OF THE TRIBUNAL AND THE HONBLE HIGH COURT IN ASSESSEES OWN CASE. 11. SO FAR AS THE VARIOUS DECISIONS RELIED ON BY TH E LD. COUNSEL FOR THE ASSESSEE ARE CONCERNED, THE SAME IN MY OPIN ION ARE NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE SINCE I N NONE OF THE CASES PENALTY WAS IMPOSED FOR VIOLATION OF VARIOUS PROVISIONS OF THE CUSTOMS ACT. I HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 26.09.2019. SD/- (R.K PANDA) ACCOUNTANT MEMBER *NEHA* DATE:- 26.09.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI PAGE | 15 DATE OF DICTATION 12.09.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13.09.2019 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 26.09.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 26.09.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER