The ACIT, 3(1), Bhopal V. M/s. R.F. NETWORK PVT. LTD., Bhopal

ITA 608/IND/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5885 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 29-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R R MEENA
• Assessee Lawyers: AJAY K CHHAJED
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.A.NO S . 608 & 609/IND/2014 A.YS. : 2010-11 & 2011-12 ACIT, M/S.R.F.NETWORK PRIVATE LIMITED, 3(1), VS. BHOPAL BHOPAL APPELLANT RESPONDENT PAN NO.AABCR7253G APPELLANTS BY : SHRI R.R.MEENA, D. R. RESPONDENT BY : SHRI AJAY K. CHHAJED, ADV. O R D E R PER D. T. GARASIA, J.M. TH ESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST THE ORDER OF CIT(A)-II, BHOPAL, DATED 03.07.2014 FOR AS SESSMENT YEARS 2010-11 AND 2011-12. DATE OF HEARING : 04 . 1 1 .2015. DATE OF PRONOUNCEMENT : 05 . 01 .201 6 ACIT VS. M/S. R.F. NETWORK PRIVATE LIMITED, BHOPAL I.T.A.NO. 608 & 609/IND/2013- A.Y. 2010-11 & 2011-1 2 2 2 2. THE FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENUE IN RESPECTIVE ASSESSMENT YEARS:- A.Y. 2010-11 : 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN :- 1. DELETING DISALLOWANCE OF EXEMPTION OF RS. 67,54,940/- CLAIMED BY THE ASSESSEE U/S 10B AND ACCEPTING THAT MERELY ASSEMBLING OF DIFFERENT PARTS ON JOB WORK SENT BY THE 99.60 % SHARE HOLDING FOREIGN COMPANY TO WHOM. AFTER ASSEMBLY, THE KIT IS EXPORTE D BACK, IS SUFFICIENT BUSINESS ACTIVITY FOR CLAIMING DEDUCTION U/S 10B OF THE INCOME-TAX ACT, 1961. 2. RELYING ON THE ORDER OF THE HON'BLE I.T.A.T., INDO RE, IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2002-03 , 2004-05 AND 2007-08 INSPITE OF FACT THAT THE SAME ARE PENDING BEFORE HON'BLE M.P.HIGH COURT FOR ADJUDICATION. A.Y. 2011-12 : 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. ACIT VS. M/S. R.F. NETWORK PRIVATE LIMITED, BHOPAL I.T.A.NO. 608 & 609/IND/2013- A.Y. 2010-11 & 2011-1 2 3 3 CIT(A) HAS ERRED IN : - 1. DELETING DISALLOWANCE OF EXEMPTION OF RS. 53,86,372/- CLAIMED BY THE ASSESSEE U/S 10B AND ACCEPTING THAT MERELY ASSEMBLING OF DIFFERENT PARTS ON JOB WORK SENT BY THE 99.60 % SHARE HOLDING FOREIGN COMPANY TO WHOM. AFTER ASSEMBLY, THE KIT IS EXPORTE D BACK, IS SUFFICIENT BUSINESS ACTIVITY FOR CLAIMING DEDUCTION U/S 10B OF THE INCOME-TAX ACT, 1961. 2. RELYING ON THE ORDER OF THE HON'BLE I.T.A.T., INDO RE, IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2002-03 , 2004-05 AND 2007-08 INSPITE OF FACT THAT THE SAME ARE PENDING BEFORE HON'BLE M. P. HIGH COURT FOR ADJUDICATION. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IN ENGAGED IN THE BUSINESS OF MANUFACTURING OF ELECTRONIC FILTERS AND ELECTRONIC ASSEMBLIES AND EX PORT THEREOF. IT HAS DECLARED NET PROFIT OF RS. 91,70,680/- AND RS. 76,44,076/- FOR THESE TWO ASSESSMENT YEARS UNDER APPEAL I.E. AS SESSMENT ACIT VS. M/S. R.F. NETWORK PRIVATE LIMITED, BHOPAL I.T.A.NO. 608 & 609/IND/2013- A.Y. 2010-11 & 2011-1 2 4 4 YEARS 2010 - 11 AND 2011 - 12 FROM TURNOVER OF RS. 3,25,03,857/ - AND RS. 2,27,39,440/- RESPECTIVELY. IT HAS CLAIMED EXEMPTION U/S 10B OF THE INCOME-TAX ACT, 1961, AT RS. 67,54,9 40/- AND RS. 53,86,372/- RESPECTIVELY AS PER RETURNS FILED F OR THESE TWO YEARS. THE AO HAS DISALLOWED THE SAID EXEMPTION FOR BOTH THE YEARS UNDER CONSIDERATION. 6. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT(A) DELETED THE ADDITIONS FOLLOWING THE ORDER OF I.T.A. T. PASSED IN I.T.A.NOS. 283/IND/2011 AND C.O. NO.57/IND/2011 DAT ED 19.04.2012, WHICH IS REPRODUCED AS UNDER :- IN THE AFORESAID ORDER, THE TRIBUNAL HAS ALREADY CONSIDERED THE DIFFERENT PARTS, IN THE FORM OF KITS IMPORTED BY THE ASSESSEE AND THE LOOSE PARTS, SO RECEIVED ARE ASSEMBLED AND THEN THE MANUFACTURING PROCESS STARTS AFTER TAKING INSULATED WIRE OF REQUIRED GAUGE, COLOUR OF DIFFERENT SIZES AND DIAMETER WHICH MAKES THE COILS. THE WHOLE MANUFACTURING PROCESS HAS BEEN MENTIONED IN THE IMPUGNED ORDER. FOR QUALITY ACIT VS. M/S. R.F. NETWORK PRIVATE LIMITED, BHOPAL I.T.A.NO. 608 & 609/IND/2013- A.Y. 2010-11 & 2011-1 2 5 5 CHECK, THE MANUFACTURING PROCESS UNDERGOES VARIOUS TESTS AND ALL THE QUALITY TESTS ARE CARRIED OUT TO THE REQUIRED SPECIFICATIONS. THE ASSESSEE HAS ALSO RECEIVED ISO CERTIFICATION. VARIOUS DOCUMENTS, SUBMITTED BEFORE THE CIT(A) REGARDING THE MANUFACTURING PROCESSES WERE EXAMINED BY HIM WHICH WERE ALSO SUBMITTED DURING ASSESSMENT PROCEEDINGS. THE ASSESSEE HAS MADE ALL THESE DOCUMENTS AS PART OF THE PAPER BOOK WHICH HAVE BEEN PERUSED BY US. EVEN OTHERWISE, THE ASSESSEE COMPANY WAS GRANTED PERMISSION AS 100% EOU FOR MANUFACTURING AND EXPORT OF ELECTRIC FILTERS AND ELECTRONIC ASSEMBLIE S VIDE LETTER DATED 22.3.2011 BY THE MINISTRY OF COMMERCE. THE VARIOUS ASPECTS HAVE BEEN DULY CONSIDERED IN FAVOUR OF THE ASSESSEE BY THE LEARNED CIT(A). THE TRIBUNAL IN THE AFORESAID ORDER HAS ALREADY CONSIDERED VARIOUS JUDICIAL PRONOUNCEMENTS, THEREFORE, FOR THE SAKE OF ACIT VS. M/S. R.F. NETWORK PRIVATE LIMITED, BHOPAL I.T.A.NO. 608 & 609/IND/2013- A.Y. 2010-11 & 2011-1 2 6 6 BREVITY, THE SAME ARE NOT BEING REPEATED. THE DECISIONS FROM HONBLE APEX COURT IN THE CASE OF LUCKY MINMAT (P) LIMITED VS. CIT; 245 ITR 830 AND STAR PAPER MILLS LIMITED VS. COLLECTOR OF CENTRAL EXCISE; 185 ITR 575 FORTIFIES THE CASE OF THE ASSESSEE. IN THE CASE OF CIT V. ORACLE INDIA SOFTWARE INDIA LIMITED; 320 ITR 546, THE HONBLE APEX COURT HELD THAT DUPLICATE SET OF BLANK CD WITH MASTER MEDIA OF THE SOFTWARE IS A MANUFACTURING PROCESS. EVEN OTHERWISE, THE PROVISION IN THE TAXING STATUTE, GRANTING INCENTIVE , FOR PROMOTING GROWTH AND DEVELOPMENT, SHOULD BE CONSTRUED LIBERALLY AS WAS HELD IN BAJAJ TEMPO LIMITED VS. CIT; 62 TAXMAN 480 (SC). THE AFORESAID ORDER OF THE TRIBUNAL, ON IDENTICAL ISSUE, HAS ATTAINED FINALITY AS NO CONTRARY DECISION WAS BROUGHT TO OUR NOTICE, THEREFORE, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER. IT IS AFFIRMED, RESULTING INTO DISMISSAL OF APPEAL OF THE ACIT VS. M/S. R.F. NETWORK PRIVATE LIMITED, BHOPAL I.T.A.NO. 608 & 609/IND/2013- A.Y. 2010-11 & 2011-1 2 7 7 REVENUE. 4. SO FAR AS CROSS OBJECTIONS OF THE ASSESSEE ARE CONCERNED, SINCE WE HAVE DECIDED THE APPEAL OF THE REVENUE ON MERIT IN FAVOUR OF THE ASSESSEE, THEREFORE, THESE HAVE REMAINED FOR ACADEMIC INTEREST ONLY, THEREFORE, CROSS OBJECTION OF THE ASSESSEE IS ALSO DISMISSED. 7. THE LD. CIT(A) FURTHER HELD THAT KEEPING IN VIEW T HE PAST HISTORY OF THE ASSESSEE COUPLED WITH THE FACT THAT THERE HAS BEEN NO CHANGE IN FACTS DURING THE YEARS UNDER APPEAL, D ISALLOWANCE U/S 10B OF THE INCOME-TAX ACT, 1961,OF RS. 67,54,94 0/- AND RS. 53,86,372/- MADE FOR ASSESSMENT YEARS 2010-11 AND 2 011-12 RESPECTIVELY IS NOT FOUND SUSTAINABLE. THE LD. CIT( A) DELETED THE ADDITIONS. 8. THE LD. DR RELIED ON THE ORDER OF THE AO AND CONTEN DED THAT THE LD. CIT(A) ERRED IN RELYING ON THE ORDER OF THE HON'BLE I.T.A.T., INDORE BENCH, IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2002-03, 2004-05 AND 2007-08 INSPI TE OF THE ACIT VS. M/S. R.F. NETWORK PRIVATE LIMITED, BHOPAL I.T.A.NO. 608 & 609/IND/2013- A.Y. 2010-11 & 2011-1 2 8 8 FACT THAT THE SAME ARE PENDING BEFORE THE HON'BLE H IGH COURT FOR ADJUDICATION. 9. THE LD. LD. AUTHORIZED REPRESENTATIVE CONTENDED THA T THE ABOVE APPEALS ARE COVERED BY THE DECISION OF I. T.A.TS ORDER PASSED IN I.T.A.NOS. 283/IND/2011 AND C.O. NO.57/IN D/2011 DATED 19.04.2012. 10. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PAR TIES. WE HAVE GONE THROUGH THE ORDER OF THE LD. CIT(A) AN D ALSO PERUSED THE ORDER OF THE I.T.A.T., INDORE BENCH PAS SED IN I.T.A.NOS. 283/IND/2011 AND C.O. NO.57/IND/2011 DAT ED 19.04.2012 IN ASSESSEES OWN CASE . WE FIND THAT TH E FACTS OF THE CASE OF THE ASSESSEE ARE SIMILAR AND DECIDED IN FAV OUR OF THE ASSESSEE. THE LD. DR COULD NOT POINT OUT ANYTHING C ONTRARY TO THE FINDING OF THE LD. CIT(A), WE UPHOLD THE ACTI ON OF THE LD. CIT(A). OUR INTERFERENCE IS NOT CALLED FOR. ACIT VS. M/S. R.F. NETWORK PRIVATE LIMITED, BHOPAL I.T.A.NO. 608 & 609/IND/2013- A.Y. 2010-11 & 2011-1 2 9 9 11. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 5 TH JANUARY, 2016. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED :5 TH JANUARY, 2016. CPU* 9.11