ITO, New Delhi V. M/s Ramsons Organics Ltd., Gurgaon

ITA 5695/DEL/2012

• Counselvise Citation: 569520114 RSA 2012
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 27-11-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 08-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts
• Section: 10B; 6; 10

Judgement Text

N THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.5695 /DEL/2012 ASSESSMENT YEAR : 2009-10 ITO, RAMSONS ORGANIC LTD., WARD-15 (2), B-VILLA, CENTRAL PARK, NEW DELHI. V. SECTOR-42, GOLF COURSE ROAD, GURGAON. AND CROSS OBJECTION NO.32/DEL/2013 IN I.T.A. NO.5695 /DEL/2012 ASSESSMENT YEAR : 2009-10 RAMSONS ORGANIC LTD. ITO, SECTOR-42, GOLF COURSE RD., WARD-15 (2), GURGAON. V. NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AAACR AAACR AAACR AAACR- -- -6191 6191 6191 6191- -- -C CC C DEPARTMENT BY : SHRI NEEHAR RANJAN PANDEY, SR. DR. ASSESSEE BY : SHRI SANDEEP KUMAR, C.A. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORD ER OF LD CIT(A) DATED 14.9.2012. THE ASSESSEE HAS ALSO FILED CROSS O BJECTION CHALLENGING THE PART UPHOLDING OF DISALLOWANCE MADE BY ASSESSING OFFICER. THE GROUNDS OF APPEALS TAKEN BY THE REVENUE AS WELL AS IN THE CROSS OBJECTION BY THE ASSESSEE ARE AS UNDER:- ITA NO5695/DEL/2012 2 I.T.A. NO.5695 /DEL/2012 I.T.A. NO.5695 /DEL/2012 I.T.A. NO.5695 /DEL/2012 I.T.A. NO.5695 /DEL/2012 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD CIT(A) HAS ERRED IN RESTRICTING THE DEDUCTION U/S 1 0B TO ` .35,07,369/- AS AGAINST THE ADDITION MADE BY THE ASSESSI NG OFFICER OF ` .1,10,98,298/-. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD CIT(A) HAS ERRED IN MAKING PROPORTIONATE REDUCTI ON FROM EXPORT TURNOVER ON ACCOUNT OF EXPORT PROCEEDS WHICH WERE NOT RECEIVED WITHIN THE STIPULATED TIME. 3. THE APPELLANT CRAVES TO BE ALLOWED TO ADD ANY FRESH G ROUNDS OF APPEAL AND/OR DELETE OR AMEND ANY OF THE GROUNDS OF APPEAL. CROSS OBJECTION NO.32/DEL/2013 CROSS OBJECTION NO.32/DEL/2013 CROSS OBJECTION NO.32/DEL/2013 CROSS OBJECTION NO.32/DEL/2013 1. THE LOWER AUTHORITIES HAVE ERRED IN PASSING THE AS/CONF IRMING THE ADDITIONS WHICH ARE HYPOTHETICAL BAD IN LAW AGAINST THE PROVISIONS OF LAW AND IS NOT BASED UPON FACTS AND CIRCU MSTANCES AND SUBMISSIONS MADE. 2. THE LOWER AUTHORITIES HAVE GROSSLY ERRED IN RESTRICTING THE DEDUCTION U/S 10B OF THE INCOME TAX ACT, 1961 TO `.3 5,07,369/- OUT OF TOTAL CLAIMED DEDUCTION OF ` .40,02,897/- U/S 10B OF THE INCOME TAX ACT, 1961 DUE TO THE NON RECOVERY OF EX PORT PROCEEDS OF ` .1,01,98,298/- OUT OF TOTAL EXPORT PROCEEDS ` .8,23,82,389/-. 3. THE ASSESSEE RESERVES TO MAKE ANY ADDITION, DELETION OR ALTERATION TO THE GROUNDS OF APPEAL BEFORE ITS DISPOSAL . 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A 100% EXPORT ORIENTED UNIT AND DURING THE YEAR UNDER CONSIDERATIO N MADE AN EXPORT OF ` .8,23,82,389/- AND DECLARED NET PROFIT OF ` .38,06,827/-. THE CASE OF ITA NO5695/DEL/2012 3 THE ASSESSEE WAS SELECTED FOR SCRUTINY. DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED THAT ASSESSEE W AS NOT ABLE TO REALISES AN AMOUNT OF ` .1,10,98,289/- FROM ONE M/S KCC STONE LTD. ON ACCOUNT OF EXPORT PROCEEDS. THEREFORE, THE AMOUNT WAS WRITTEN OFF IN THE BOOKS OF ACCOUNTS AS BAD DEBTS AND MONEY WAS REC EIVED FROM ECGC IN SUBSEQUENT YEARS. THE ASSESSING OFFICER HELD THAT SINCE THE INCOME FROM EXPORT WAS LESS THAN THE AMOUNT NOT REALIZ ED, THEREFORE, THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S 10B AND T HEREFORE ITS CLAIM OF ` .40,02,897/- WAS REJECTED. 3. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE LD CIT(A) . THE LD CIT(A) ON THE BASIS OF WRITTEN SUBMISSIONS AND RELYING UP ON THE PROVISIONS OF SECTION 10B ALLOWED PARTIAL RELIEF ON TH E BASIS OF TOTAL EXPORT TURNOVER AND AMOUNT NOT REALIZED OUT OF SUCH EXPORT RECEIVABLES. THE OPERATIVE PART OF LD CIT(A)S ORDER CONTAINED IN PARA 5.1. WHICH IS REPRODUCED BELOW:- I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER AND TH E SUBMISSION FILED BY THE APPELLANT. THE FACTS OF THE CASE AS PER ASSESSMENT ORDER ARE THAT AS PER FORM 56G, THE ASSESSEE COMPANY HAD NOT RECEIVED THE PAYMENT WITHIN SIX MON THS OF THE EXTENDED PERIOD FROM KCC STONE LTD. AMOUNTING TO ` .1,01,98,299/-. THE ASSESSING OFFICER DISALLOWED THE TOT AL DEDUCTION U/S 10B BY HOLDING THAT SINCE THE ASSESSEE HAS N OT BEEN ABLE TO COLLECT EXPORT PROCEEDS OF KCC STONE LT D. TO THE EXTENT OF ` .1,01,98,299/-, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 10B AS INCOME FROM EXPORT IS LESS THAN AMO UNT NOT REALIZED IN THE CASE. THE APPELLANT COMPANY DURING APPELLATE PROCEEDINGS H AS SUBMITTED THAT IT HAD MADE EXPORT SALE OF ` .8,23,82,389/ AND COULD NOT COLLECT ` .1,10,98,289/-. IT HAS WRITTEN OFF THE SAME AS ITA NO5695/DEL/2012 4 BAD DEBTS AND HAD FOLLOWED THE PROCEDURE LAID DOWN B Y RBI IN RESPECT OF EXPORT COLLECTION. THE APPELLANT COMPANY HAS FURTHER SUBMITTED THAT EVEN IF THIS DEDUCTION WAS TO BE RESTRIC TED IT SHOULD HAVE BEEN RESTRICTED ONLY ON THE PROPORTIONATE BASIS ON THE MONEY NOT RECEIVED IN DUE PERIOD AGAINST TOTAL E XPORT PROCEED OF THE YEAR. AS PER PROVISIONS OF SECTION 10B(3), THE PROVISIONS OF T HE SECTION APPLIES TO THE UNDERTAKING, IF THE SALE PROCEE DS OF ARTICLES OR THINGS OR COMPUTER SOFTWARE EXPORTED OUT OF INDIA ARE RECEIVED IN OR BROUGHT INTO INDIA BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXCHANGE WITHIN A PERIOD OF SIX MONTHS FROM THE END O F THE PREVIOUS YEAR OR WITHIN SUCH FURTHER PERIOD AS THE CO MPETENT AUTHORITY MAY ALLOW IN THIS BEHALF. SINCE THE APPELL ANT COMPANY HAS NOT RECEIVED/BROUGHT INTO INDIA SALE PROCEEDS TO T HE EXTENT OF ` .1,01,98,299/- WITHIN THE PERIOD OF SIX MONTHS AND T HE EXTENDED PERIOD, THEREFORE, IT IS NOT ENTITLED TO CL AIM DEDUCTION U/S 10B OF THE ACT ON THIS AMOUNT. AS PER DEFINITION O F EXPORT TURNOVER GIVEN IN EXPLANATION-2 TO SEC. 10B EXPORT TURNOVER MEANS THE CONSIDERATION IN RESPECT OF EXPORT BY THE UN DERTAKING OF ARTICLES OR THINGS OR COMPUTER SOFTWARE RECEIVED IN , OR BROUGHT INTO INDIA BY THE ASSESSEE INCONVERTIBLE FOREIGN EXCHAN GE IN ACCORDANCE WITH SUB SECTION (3).THUS, FOR THE PURPOSE OF DEDUCTION U/S 10B THE EXPORT TURNOVER OF THE APPELL ANT COMPANY WOULD BE REDUCED BY THE AMOUNT OF PROCEEDS NOT RECEI VED IN CONVERTIBLE FOREIGN EXCHANGE IN ACCORDANCE WITH SUB SECTION (3). THUS THE APPELLANT COMPANY WOULD BE ELIGIBLE TO DEDU CTION UNDER SEC. 10B AFTER MAKING A PROPORTIONATE REDUCTION FRO M EXPORT TURNOVER ON ACCOUNT OF EXPORT PROCEEDS NOT RECEIVED WITHIN THE STIPULATED TIME. THIS GROUND OF APPEAL IS ACCORDINGLY DISPOSED OFF. ITA NO5695/DEL/2012 5 4. AGGRIEVED WITH THE ORDER BOTH REVENUE AND ASSESSEE A RE IN APPEAL. THE REVENUE IS IN APPEAL FOR PART DELETION O F DISALLOWANCE MADE BY LD CIT(A) WHEREAS THE ASSESSEE IN ITS CROSS OBJEC TIONS HAS OBJECTED TO UPHOLDING OF PART OF DISALLOWANCE. THE APPEAL WAS EARLIER HEARD ON 27.11.2013. HOWEVER, AT THE TIME OF DICTAT ION CERTAIN CLARIFICATIONS WERE REQUIRED AND THEREFORE THE CASE W AS RE-FIXED FOR CLARIFICATIONS AND FINALLY IT WAS HEARD ON 4.2.2014. 5. AT THE OUTSET, THE LD DR SUBMITTED THAT SINCE THE AMOUNT OF NET PROFIT DECLARED BY THE ASSESSEE FROM EXPORT BUSINESS WAS L ESS THAN THE AMOUNT WRITTEN OFF AS BAD DEBTS, THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE ENTIRE CLAIM OF SECTION 10B OF THE ACT. 6. THE LD AR, ON THE OTHER HAND, DEFENDED THE ORDER OF LD CIT(A) AND ARGUED THAT LD CIT(A) SHOULD HAVE IN FACT ALLOWE D WHOLE OF THE CLAIM OF ASSESSEE AS THE AMOUNTS COULD NOT BE REALIZED GE NUINEALLY IN REGULAR COURSE OF BUSINESS OF ASSESSEE AND EVEN RBI PERMIT S THE ASSESSEE TO WRITE OFF 10% OF EXPORT RECEIVABLE AS BAD DE BTS. THEREFORE, HE ARGUED THAT HIS CROSS OBJECTION SHOULD BE ALLOWED A ND ASSESSEE SHOULD BE GIVEN THE BENEFIT OF TOTAL DEDUCTION U/S 10 B.. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT LD CIT(A) HAS ELABORATELY DEALT WITH THE ISSUE AND AFTER GOING THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE, HAS APPROPRIATELY GIVEN RELIEF TO THE ASSESSEE. THE CLAIM OF THE ASSESSEE REGARDING FULL ALLO WANCE OF CLAIM OF SECTION 10B IS NOT TENABLE AS THE WORD EXPORT PROCEEDS INCLUDES THAT AMOUNT WHICH IS BROUGHT INTO INDIA BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXCHANGE IN ACCORDANCE WITH SUB SECTION (3) OF ITA NO5695/DEL/2012 6 SECTION 10B OF THE ACT. THEREFORE, WE DO NOT FIND A NY INFIRMITY IN THE ORDER OF LD CIT(A). 8. IN VIEW OF THE ABOVE, BOTH THE APPEALS OF REVENUE AND CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. 9. ORDER PRONOUNCED IN THE OPEN COURT ON 7TH DAY OF FEBRUARY, 2014. SD/- SD/- (DIVA SINGH) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT.07.02.2014. 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 DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 4.2.2014 DATE OF DICTATION 5.2.2014 DATE OF TYPING 5.2.2014 DATE OF ORDER SIGNED BY BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET ITA NO5695/DEL/2012 7 & SENT TO THE BENCH CONCERNED.