ITO 3(2)(1), MUMBAI V. JEWELEX INTERANTIOANL P. LTD, MUMBAI

ITA 5886/MUM/2009

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7656 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 29-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 05-11-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 10B

Judgement Text

1 M/S JEWELEX INTERNATIONAL PVT LTD IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI MUMBAI MUMBAI MUMBAI I II I BENCH BENCH BENCH BENCH MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI T R SOOD T R SOOD T R SOOD T R SOOD, ,, , AM AM AM AM & SHRI & SHRI & SHRI & SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM ITA NO. ITA NO. ITA NO. ITA NO. 5886/MUM/2009 5886/MUM/2009 5886/MUM/2009 5886/MUM/2009 (ASST YEAR (ASST YEAR (ASST YEAR (ASST YEAR 2005 2005 2005 2005- -- -06 0606 06) )) ) THE INCOME TAX OFFICER WARD 3(2)(1), MUMBAI VS M/S JEWELEX INTERNATIONAL PVT LTD 124 12 TH FLOOR MITTAL COURT NARIMAN POINT MUMBAI 400 021 (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) PAN NO. PAN NO. PAN NO. PAN NO. AAACJ 7630C AAACJ 7630C AAACJ 7630C AAACJ 7630C ASSESSEE BY SH NIRAJ SHETH REVENUE BY SH A K NAYAK DT.OF HEARING 29 TH DEC 2011 DT OF PRONOUNCEMENT 6 TH , JAN 2012 ORDER ORDER ORDER ORDER PER PER PER PER VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO, , , , JM JMJM JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 17.8.2009 OF THE CIT(A) FOR THE AY 2005-06. 2 THE ONLY ISSUE RAISED BY THE REVENUE IN THIS APPE AL IS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO RECOMPUTED DEDUCTION U/S 10B OF THE ACT WITHOUT INCLUDING THE SALE OF RA W MATERIAL AMOUNTING TO ` 1,40,26,845/- IN TOTAL TURNOVER OF THE UNDERTA KING. 3 WE HAVE HEARD THE LD DR AS WELL AS THE LD AR OF T HE ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET, WE NOTE THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED AND ADJUDICATED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE AY 2006-07 VIDE ORDER D ATED 15.9.2010 IN ITA NO.3302/MUM/2009 AT PAGE 7 AND 12 AS UNDER; 7. THE SECOND GROUND IS THAT THE CIT(A) ERRED IN D IRECTING THE ASSESSING OFFICER TO RECOMPUTED THE DEDUCTION U/S 1 0B WITHOUT INCLUDING THE SALE OF RAW MATERIALS AMOUNTING TO ` 1,64,90,240/- IN THE TOTAL TURNOVER OF THE UNDERTAKING. 2 M/S JEWELEX INTERNATIONAL PVT LTD 12. ON A CAREFUL CONSIDERATION OF THE RIVAL CONTENT IONS, WE ARE OF THE VIEW THAT THE ACCOUNTING TREATMENT GIVEN BY THE ASS ESSEE WHILE EXPLAINING THE MATERIALS CONSUMED IN SCHEDULE L T O THE PROFIT AND LOSS ACCOUNT CANNOT BE CONCLUSIVE IN THE MATTER. AS POINTED OUT BY THE CIT(A) AND ALSO ACCEPTED BY THE ASSESSING OFFICER I N THE FIRST PAGE OF THE ASSESSMENT ORDER, THE ASSESSEE IS A 100% ECU. I T IS THEREFORE NOT LIKELY THAT IT COULD INDULGE IN INDEPENDENT SALE OF ROUGH DIAMONDS BY WAY OF EXPORT. WHAT HAS BEEN DESCRIBED AS SALE OF R AW MATERIALS IN SCHEDULE L APPEARS TO US TO BE IN REALITY PURCHAS E RETURNS ONLY, CONSIDERING THE EXPLANATION GIVEN BEFORE THE ASSESS ING OFFICER TO WHICH WE HAVE ALREADY REFERRED. THE CIT(A) HAS RIGHTLY ST ATED THAT THE ASSESSING OFFICER HAS BRUSHED ASIDE THE ASSESSEES EXPLANATION WITHOUT PROPER JUSTIFICATION. IT ONLY REMAINS TO BE VERIFIE D AS TO WHETHER THE IMPORTED ROUGHS WERE RETURNED TO THE SAME SUPPLIER ABROAD FROM WHOM THEY WERE IMPORTED, IN WHICH CASE IT CAN BE SAID TH AT IT WAS A CASE OF PURCHASE RETURNS AND NOT SALE OF RAW MATERIAL. THIS ASPECT NEEDS VERIFICATION IN THE HANDS OF THE ASSESSING OFFICER. WHILE THEREFORE UPHOLDING THE ASSESSEES CASE IN PRINCIPLE AND AGRE EING WITH THE DECISION OF THE CIT(A) ALSO IN PRINCIPLE, WE DIRECT THE ASSESSING OFFICER TO VERIFY THE ASSESSEES CLAIM THAT THE ROUGH DIAMONDS WHICH WERE EXPORTED BY THE ASSESSEE AND SHOWN AS SALE OF RAW MATERIAL WERE ACTUALLY PURCHASE RETURNS. THE ASSESSEE SHOULD BE G IVEN AN OPPORTUNITY TO PROVE THAT THE GOODS WERE RETURNED TO THE SAME S UPPLIER FROM WHOM THEY WERE IMPORTED. IN CASE SUCH PROOF IS ADDUCED, THE ASSESSEES CASE IS TO BE ACCEPTED. WE DISPOSE OF THE SECOND GROUND WITH THESE REMARKS. 4 THEREFORE, FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER YEARS, THIS ISSUE IS REMANDED BACK TO THE F ILE OF THE ASSESSING OFFICER TO VERIFY THE ASSESSEES CLAIM THAT THE ROUGH DIAMONDS WHICH WERE EXPORTED BY THE ASSESSEE AND SHOWN AS SALE OF RAW MATERIAL ARE ACTU ALLY PURCHASE RETURNS AND THE SAID GOODS WERE RETURNED TO THE SAME SUPPLIER F ROM WHOM THEY WERE IMPORTED. 4 IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THE 6 TH , DAY OF JAN 2012. SD/ SD/- ( T R SOOD ) ( T R SOOD ) ( T R SOOD ) ( T R SOOD ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) ( VIJAY PAL RAO ) ( VIJAY PAL RAO ) ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 6 TH , JAN 2012 3 M/S JEWELEX INTERNATIONAL PVT LTD RAJ* RAJ* RAJ* RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI