DCIT, Circle -7, Kolkata, Kolkata V. M/s Eco Wheels Pvt. Ltd., Kolkata

ITA 625/KOL/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5053 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 18-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: D S DAMLE
• Keywords: Deemed export; Tax effect
• Section: 143(3); 80HHC; 10B; 10

Judgement Text

I.T.A. NO. 625/KOL./2012 ASSESSMENT YEAR: 2008-2009 & ITA NOS. 720 & 721/KOL/2012 ASSESSMENT YEARS: 2008-2009 & 2007-2008 PAGE 1 OF 14 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 625/KOL/2012 ASSESSMENT YEAR: 2008-2009 DEPUTY COMMISSIONER OF INCOME TAX,................. .............................APPELLANT CIRCLE-7, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -VS.- M/S. ECO WHEELS PRIVATE LIMITED,................... .............................RESPONDENT 25A, CAMAC STREET, 4 TH FLOOR, ROOM NO. 410, VARDAN BUILDING, KOLKATA-700 016 [PAN : AABCT 8246 K] & I.T.A. NOS. 720 & 721/KOL/ 2012 ASSESSMENT YEARS : 2008-2009 & 2007-2008 M/S. ECO WHEELS PRIVATE LIMITED,................... .............................APPELLANT 25A, CAMAC STREET, 4 TH FLOOR, ROOM NO. 410, VARDAN BUILDING, KOLKATA-700 016 [PAN : AABCT 8246 K] -VS.- ASSISTANT COMMISSIONER OF INCOME TAX,.............. ........................RESPONDENT CIRCLE-7, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 APPEARANCES BY: SHRI ASHOK KUMAR, ADDL. CIT, SR. D.R., FOR THE DEPARTMENT SHRI D.S. DAMLE, FCA, FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : JANUARY 11, 2016 DATE OF PRONOUNCING THE ORDER : FEBRUARY 24, 2016 I.T.A. NO. 625/KOL./2012 ASSESSMENT YEAR: 2008-2009 & ITA NOS. 720 & 721/KOL/2012 ASSESSMENT YEARS: 2008-2009 & 2007-2008 PAGE 2 OF 14 O R D E R PER SHRI P.M. JAGTAP :- OUT OF THESE THREE APPEALS, ONE APPEAL BEING I.T.A. NO. 721/KOL/2012 IS THE APPEAL FILED BY THE ASSESSEE FO R ASSESSMENT YEAR 2007-08, WHILE THE REMAINING TWO APPEALS BEING I.T. A. NO. 720/KOL/2012 (ASSESSEES APPEAL) AND I.T.A. NO. 625/KOL/2012 (RE VENUES APPEAL) ARE CROSS APPEALS FOR ASSESSMENT YEAR 2008-09. SINCE TH E ISSUES INVOLVED IN ALL THESE APPEALS ARE COMMON AND INTER-LINKED, THE SAME HAVE BEEN HEARD TOGETHER AND ARE BEING DISPOSED OF BY A SINGLE CONS OLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE SHALL TAKE UP THE APPEAL OF THE ASSESSE E FOR A.Y. 2007-08 BEING ITA NO. 721/KOL/2012 , WHICH IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-VIII, KOLK ATA DATED 201.01.2012. 3. THE RELEVANT FACTS OF THE CASE GIVING RISE TO TH IS APPEAL ARE AS FOLLOWS:- THE ASSESSEE IS A COMPANY, WHICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING, TRADING AND EXPORT OF TUBELESS TYRES , PLASTIC RIMS, WHEEL CHAIRS, WHEEL CHAIRS PARTS, HAND RIMS, CRUTCHES, R OLLATORS, WALKERS, ETC. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATI ON, I.E. A.Y. 2007-08 WAS FILED BY IT ON 31.10.2007 DECLARING TOTAL INCOM E AT NIL AFTER CLAIMING DEDUCTION OF RS.1,91,28,966/- UNDER SECTION 10A OF THE INCOME TAX ACT, 1961. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 10A WAS EXAMIN ED BY THE ASSESSING OFFICER. ON SUCH EXAMINATION, HE, INTER ALIA , FOUND THAT THE EXPORT TURNOVER TAKEN BY THE ASSESSEE FOR THE PURPOSE OF C OMPUTING DEDUCTION UNDER SECTION 10A WAS INCLUSIVE OF EXPORT OF TRADIN G GOODS OF RS.34,70,997/-AND DOMESTIC SALES OF RS.28,96,357/-. ACCORDING TO HIM, I.T.A. NO. 625/KOL./2012 ASSESSMENT YEAR: 2008-2009 & ITA NOS. 720 & 721/KOL/2012 ASSESSMENT YEARS: 2008-2009 & 2007-2008 PAGE 3 OF 14 THESE TWO FIGURES WERE LIABLE TO BE EXCLUDED FROM T HE EXPORT TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 10 A AND ACCORDINGLY HE RECOMPUTED AND RESTRICTED THE CLAIM OF THE ASSES ESE FOR DEDUCTION UNDER SECTION 10A IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 30.12.2009. 4. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEF ORE THE LD. CIT(APPEALS) CHALLENGING THE VALIDITY OF THE SAID A SSESSMENT MADE BY THE ASSESSING OFFICER AS WELL AS DISPUTING, INTER ALIA, THE ACTION OF THE ASSESSING OFFICER IN REDUCING THE EXPORT OF TRADING GOODS AMOUNTING TO RS.34,70,997/- AND DOMESTIC SALES AMOUNTING TO RS.2 8,96,357/- FROM THE EXPORT TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCT ION UNDER SECTION 10A. 5. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE AS SESSEE AND PERUSING THE RELEVANT MATERIAL AVAILABLE ON RECORD, THE LD. CIT(APPEALS) DID NOT FIND MERIT IN THE PRELIMINARY ISSUE RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY OF THE ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER SECTION 143(3) AND UPHOLDING THE VALIDITY OF THE SAID ASSESSMENT, HE DECIDED THIS ISSUE AGAINST THE ASSESSEE. HE ALSO DID NOT FIND MERIT IN THE CONTENTION OF THE ASSESSEE THAT THE EXPORT OF T RADING GOODS OF RS.34,70,997/- AND DOMESTIC SALES OF RS.28,96,357/- WERE LIABLE TO BE INCLUDED IN THE EXPORT TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 10A AND REJECTING THE SAME, HE UPHELD THE ORDER OF THE ASSESSING OFFICER ON THESE ISSUES ON MERIT. AGGRIEV ED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS A PPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSE L FOR THE ASSESSEE HAS NOT RAISED GROUNDS NO. 1 TO 5 RAISED BY THE ASSESSE E IN THIS APPEAL I.T.A. NO. 625/KOL./2012 ASSESSMENT YEAR: 2008-2009 & ITA NOS. 720 & 721/KOL/2012 ASSESSMENT YEARS: 2008-2009 & 2007-2008 PAGE 4 OF 14 INVOLVING THE COMMON ISSUE RELATING TO THE VALIDITY OF THE ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER SECTION 143(3). THE SAME ARE ACCORDINGLY DISMISSED AS NOT PRESSED. 7. THE ISSUE INVOLVED IN GROUND NO. 6 RELATES TO TH E ASSESSEES CLAIM FOR INCLUSION OF THE EXPORT OF TRADING GOODS WORTH RS.34,70,997/- IN THE EXPORT TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCT ION UNDER SECTION 10A. 8. WHILE EXAMINING THE CLAIM OF THE ASSESSEE FOR DE DUCTION UNDER SECTION 10A, IT WAS NOTICED BY THE ASSESSING OFFICE R THAT THE EXPORT TURNOVER TAKEN BY THE ASSESSEE WAS INCLUSIVE OF EXP ORT OF GOODS WORTH RS.34,70,997/-, WHICH WERE IN THE NATURE OF TRADING GOODS. HE FOUND THT THE SAID GOODS WERE NOT MANUFACTURED BY THE ASSESSE E BUT WERE SIMPLY BOUGHT FROM OTHER PARTY AND THEY WERE EXPORTED. ACC ORDING TO HIM, DEDUCTION UNDER SECTION 10A WAS AVAILABLE ONLY FOR THE ARTICLES OR THINGS MANUFACTURED BY THE ASSESSEE AND EXPORTED AND NOT O N THE GOODS PURCHASED FROM OTHER PARTIES AND SUBSEQUENTLY EXPOR TED. HE, THEREFORE, EXCLUDED THE AMOUNT OF RS.34,70,997/- FROM THE TOTA L EXPORT TURNOVER OF THE ASSESSEE FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 10A. 9. BEFORE THE LD. CIT(APPEALS), IT WAS EXPLAINED BY THE ASSESSEE THAT THE GOODS, WHICH HAD BEEN SHOWN AS TRADING GOODS, W ERE, IN FACT, TYRES PURCHASED BY IT FROM THE HOLDING COMPANY, M/S. KRYP TON INDUSTRIES LIMITED AND THE SAME WERE ASSEMBLED IN ITS FACTORY WITH RIM AND BUSH TO PRODUCE THE WHEELS, WHICH WERE SUBSEQUENTLY EXPORTE D. IT WAS CONTENDED THAT THIS WAS NOT SIMPLY A CASE OF EXPORT OF THE SA ME GOODS, I.E. TYRES PURCHASED BY THE ASSESSEE FROM ITS HOLDING COMPANY BUT WHEELS WERE PRODUCED OUT OF THE SAID GOODS AS WELL AS OTHER GOO DS BY WAY OF ASSEMBLING BEFORE THE SAME WERE EXPORTED. IT WAS CO NTENDED THAT THE GOODS PURCHASED BY THE ASSESSEE-COMPANY FROM ITS HO LDING COMPANY, I.E. I.T.A. NO. 625/KOL./2012 ASSESSMENT YEAR: 2008-2009 & ITA NOS. 720 & 721/KOL/2012 ASSESSMENT YEARS: 2008-2009 & 2007-2008 PAGE 5 OF 14 TYRES THUS WERE ONLY IN THE NATURE OF MATERIAL, WHI CH WAS USED BY THE ASSESSEE TO PRODUCE THE WHEELS IN ITS FACTORY FOR E XPORT. IT WAS CLAIMED THAT THERE WAS THUS NO CASE OF EXPORT OF TRADING GO ODS BUT IT WAS A CASE OF EXPORT OF GOODS MANUFACTURED BY THE ASSESSEE-COMPAN Y, WHICH COULD NOT BE EXCLUDED FROM THE TOTAL EXPORT TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 10A. THIS CLAIM OF THE ASSE SSEE WAS NOT FOUND ACCEPTABLE BY THE LD. CIT(APPEALS) AND HE UPHELD TH E ACTION OF THE ASSESSING OFFICER IN EXCLUDING THE AMOUNT OF RS.34, 09,997/- FROM THE EXPORT TURNOVER OF THE ASSESSEE FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 10A FOR THE FOLLOWING REASONS GIVEN I N HIS IMPUGNED ORDER:- I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT, PERUSED THE ASSESSMENT ORDER, OTHER MATERIALS AVAILABLE ON RECO RDS AND CAREFULLY GONE THROUGH THE DECISIONS CITED CASE LAW S INCLUDING THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS.- CONTINENTAL ENGINEERS LIMITED (2011) 338 ITR 2 90 (DEL) BUT I AM NOT IN AGREEMENT WITH THE CONTENTION OF TH E A/R OF THE APPELLANT AS EVEN IN THE INSTANT CASE THE PURCHASES OF RAW MATERIALS ARE MADE FROM THE HOLDING COMPANY BY THE APPELLANT COMPANY FOR THE PURPOSE OF MANUFACTURING, THERE IS NO EVIDENCE IN THE FORM OF AGREEMENT ETC. WHICH WOULD SUPPORT T HE ARGUMENT AND THEREFORE THE SAME CANNOT BE CONSIDERE D AS EXPORT AND MAKES THE APPELLANT COMPANY ELIGIBLE TO GET THE DEDUCTION U/S. 10A. THE FACTS OF THE CASES RELIED U PON INCLUDING THE CASE OF CIT V CONTINENTAL ENGINEERS LIMITED, BY THE APPELLANT ARE DISTINGUISHABLE FROM THE FACTS OF THE APPELLANT'S CASE. IN THE INSTANT CASE THE MANUFACTURING/ PRODUC TION ACTIVITY WAS CLAIMED TO BE TAKEN UP BY THE APPELLAN T COMPANY AT THE INSTANCE OF THE HOLDING COMPANY AND CLAIMING DEDUCTION U/S.10A OF THE IT ACT, WHEREAS IN THE REFERRED CASE , THE HOLDING COMPANY GOT ITS JOB WORK DONE THROUGH THE SISTER CO NCERN AND IT ITSELF CLAIMED THE DEDUCTION U/S. 10A OF THE I.T . ACT. MOREOVER, AS SUCH THERE WAS NO AGREEMENT WITH THE H OLDING COMPANY REGARDING THE PURCHASE OF RAW MATERIALS FOR MANUFACTURING THE ITEMS TO BE EXPORTED AND IT IS AL SO NOT EXPLAINED WHETHER THE HOLDING COMPANY HAS ALSO CLAI MED THE SIMILAR DEDUCTION U/S. 10A OR NOT FOR EXPORT OF THE SAME ITEM AS CONFIRMATION OF THE HOLDING COMPANY IS NOT AVAILABL E IN THIS EFFECT. IN THE LIGHT OF THE ABOVE DISCUSSION, THE A CTION OF THE AO IN DENYING THE BENEFIT OF SECTION 10A ON SUCH SALES OF RS.34,09,997/-. 10. THE LD. COUNSEL FOR THE ASSESSEE REITERATED BEF ORE US THE SUBMISSIONS MADE ON BEHALF OF THE ASSESESE BEFORE T HE LD. CIT(APPEALS). I.T.A. NO. 625/KOL./2012 ASSESSMENT YEAR: 2008-2009 & ITA NOS. 720 & 721/KOL/2012 ASSESSMENT YEARS: 2008-2009 & 2007-2008 PAGE 6 OF 14 HE ALSO INVITED OUR ATTENTION TO THE SAMPLE COPY OF RELEVANT BILL RAISED BY M/S. KRYPTON INDUSTRIES LIMITED PLACED AT PAGE NO. 65 OF THE PAPER BOOK TO SHOW THAT THE GOODS PURCHASED BY THE ASSESSEE FR OM THE SAID PARTY WERE TUBELESS TYRES, WHILE THE GOODS EXPORTED BY TH E ASSESSEE WERE WHEELS AS PER THE COPY OF INVOICE PLACED AT PAGE NO . 66 OF THE PAPER BOOK, MANUFACTURED BY USING THE SAID TYRES AS WELL AS OTH ER PRODUCTS. HE CONTENDED THAT IT WAS THUS NOT A CASE OF EXPORT OF TRADING GOODS AS WRONGLY PRESUMED BY THE ASSESSING OFFICER, BUT WAS A CASE OF EXPORT OF GOODS MANUFACTURED BY THE ASSESSEE BY USING THE TYR ES PURCHASED FROM ITS HOLDING COMPANY AS RAW MATERIAL. HE CONTENDED THAT THE LD. CIT(APPEALS), HOWEVER, COULD NOT APPRECIATE THIS PO SITION CLEARLY SUPPORTED BY THE DOCUMENTARY EVIDENCE IN THE FORM O F BILLS AND REJECTED THE CLAIM OF THE ASSESSEE FOR THE REASONS NOT GERMA NE TO THE ISSUE. 11. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDERS OF THE AUTHORITIES BELOW IN SUPPORT OF THE REVENUES CASE ON THIS ISSUE AND SUBMITTED THAT THE REASONS GIVEN BY THE LD. CIT(APP EALS) IN HIS IMPUGNED ORDER WHILE REJECTING THE CLAIM OF THE ASSESSEE ON THIS ISSUE MAY BE TAKEN INTO CONSIDERATION. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT THE STAND OF THE ASSESSEE ON THIS ISSUE RIGHT FROM THE BEGINNING WAS THAT THERE WAS NO EXPORT OF TRADING GOODS BUT THE GOODS, I.E. TYRES P URCHASED BY IT FROM THE HOLDING COMPANY WERE USED FOR MANUFACTURING OF WHEE LS, WHICH WERE ULTIMATELY EXPORTED BY THE ASSESSEE. THIS STAND OF THE ASSESSEE IS DULY SUPPORTED BY THE DOCUMENTARY EVIDENCE IN THE FORM O F BILL RAISED BY M/S. KRYPTON INDUSTRIES LIMITED ON THE ASSESSEE AS WELL AS THE CORRESPONDING EXPORT BILLS RAISED BY THE ASSESSEE SHOWING SPECIFI CALLY THE DESCRIPTION OF GOODS PURCHASED AS TYRES AND THE GOODS EXPORTED AS WHEELS BY USING THE SAID TYRES AS RAW MATERIAL. IT APPEARS THAT THE LD. CIT(APPEALS), HOWEVER, I.T.A. NO. 625/KOL./2012 ASSESSMENT YEAR: 2008-2009 & ITA NOS. 720 & 721/KOL/2012 ASSESSMENT YEARS: 2008-2009 & 2007-2008 PAGE 7 OF 14 DID NOT APPRECIATE THE STAND OF THE ASSESSEE ON THI S ISSUE, WHICH WAS DULY SUPPORTED BY THE RELEVANT EVIDENCE IN THE FORM OF B ILLS FOR CORRESPONDING PURCHASE AND EXPORT AND REJECTED THE SAME ON THE GR OUNDS, WHICH AS RIGHTLY CONTENDED BY THE LD. COUNSEL FOR THE ASSESE SE, ARE NOT GERMANE TO THE ISSUE. WE, THEREFORE, SET ASIDE THE DECISION OF THE LD. CIT(APPEALS) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO INCL UDE THE AMOUNT OF RS.34,70,997/- IN THE EXPORT TURNOVER OF THE ASSESS EE FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 10A. GROUND NO. 6 OF THE ASSESSEES APPEAL FOR A.Y. 2007-08 IS ACCORDINGLY ALLOWED. 13. THE ISSUE INVOLVED IN GROUND NO. 7 RELATES TO T HE ASSESSEES CLAIM FOR INCLUSION OF DOMESTIC TURNOVER OF RS.28,96,357/ - IN THE EXPORT TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCTION UND ER SECTION 10A. 14. DURING THE YEAR UNDER CONSIDERATION, THE ASSESS EE-COMPANY HAD SOLD GOODS AMOUNTING TO RS.28,96,357/- TO ITS HOLDI NG COMPANY M/S. KRYPTON INDUSTRIES LIMITED AND THE SAID AMOUNT WAS INCLUDED IN THE TOTAL EXPORT TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCT ION UNDER SECTION 10A ON THE GROUND THAT M/S. KRYPTON INDUSTRIES LIMI TED WAS ALSO LOCATED WITHIN THE SPECIAL ECONOMIC ZONE AND THE GOODS SOLD BY THE ASSESSEE TO THEM WERE SUBSEQUENTLY EXPORTED. THIS STAND OF THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER. ACCORDING TO HIM , EXPORT OUGHT TO BE OUTSIDE INDIA AND THE SALE MADE TO OTHER SEZ UNIT W ITHIN INDIA COULD NOT BE REGARDED AS EXPORT. HE, THEREFORE, EXCLUDED THE AMOUNT OF RS.28,96,357/- FROM THE EXPORT TURNOVER OF THE ASSE SSEE AND RECOMPUTED AND RESTRICTED ITS CLAIM FOR DEDUCTION UNDER SECTIO N 10A. 15. BEFORE THE LD. CIT(APPEALS), THE FOLLOWING SUBM ISSIONS WERE MADE ON BEHALF OF THE ASSESSEE IN SUPPORT OF ITS CLAIM T HAT THE SALE OF GOODS BY ONE UNIT TO ANOTHER UNIT IN THE SAME SEZ CONSTITUTE D EXPORT TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 10 A:- I.T.A. NO. 625/KOL./2012 ASSESSMENT YEAR: 2008-2009 & ITA NOS. 720 & 721/KOL/2012 ASSESSMENT YEARS: 2008-2009 & 2007-2008 PAGE 8 OF 14 THE ABOVE SALES IS TRANSFER OF GOOD BY ONE UNIT 10 ANOTHER UNIT IN THE SAME SPECIAL ECONOMIC ZONE AND THE SAME IS REGA RDED AS EXPORT WITHIN THE MEANING OF DEFINITION OF EXPORT UNDER SE CTION 2(M) OF SPECIAL ECONOMIC ZONE ACT, 2005 AND SECTION 51 OF T HE SAID ACT PROVIDES THAT THIS ACT WOULD PREVAIL OVER ALL OTHER ACT AND OVERRIDING SECTION AND THIS SALE WITHIN THE EXPORT ZONE BE REGARDED AS EXPORT WITHIN THE MEANING OF THE SAID ENACTMENT. 2. THE GOODS TRANSFERRED TO KRYPTON INDUSTRIES LIMI TED WAS MEANT FOR EXPORT AND IN FACT, THE GOODS MANUFACTURE D AT THE FACTORY OF THE APPELLANT HAS BEEN EXPORTED BY THE HOLDING C OMPANY AND PARTICULARS OF SUCH GOODS EXPORTED BY THE SAID HOLD ING COMPANY AGAINST THE GOODS TRANSFERRED WITHIN THE MEANING OF THE SPECIAL ECONOMIC ZONE ACT, 1961 ARE ANNEXED HEREWITH. FURTH ER SIR, YOUR APPELLANT CITE THE FOLLOWING JUDGMENTS IN THEIR FAV OUR: (A) THERE IS A JUDGMENT IN CASE OF ACIT V KHODAY IN DIA LTD. (2009) 33 SOT 178 (BANG) WHERE THE ASSESSEE CONTENDED THAT THE SECTION 10A OF THE ACT DID NOT CONTAIN THE DEFINITION OF TO TAL TURNOVER PROVIDED IN SECTION 80HHC SHOULD BE ADOPTED AND IT WAS HELD THAT FOR CALCULATING WHETHER EXPORT IS LESS THAT 75% OR MORE ONE CANNOT USE DIFFERENT YARDSTICK FOR TOTAL TURNOVER FOR THE PURPOSE OF SECTION 10A AND 80HHC. HENCE THE DEPARTMENT SUBMISSION THAT DEFINITION OF SECTION 80HHC COULD NOT BE IMPORTED WAS NOT ACCEPTA BLE VIEW. (B) IN CASE OF ITO V E-LNFROCHIPS LTD. (2009) 124 T TJ (AHD) 176, IT WAS DECIDED THAT THE BUSINESS OF THE ASSESSEE IS CO VERED BY SECTION 10B AND UNDERTAKING FULFIL ALL THE CONDITION OF SUB SECTION (2). FOR DEFAULT IN MAKING DECLARATION TO STPI FOR LOCAL SAL ES, 100% EOU DID NOT LOOSE REGISTRATION WITH STPI OR DID NOT GET DIS QUALIFIED AS 100% EOU. IN VIEW IN SECTION 80HHC THAT IN CASE OF DOMES TIC SALES ARE LESS THAN 25% OF TOTAL SALES, IT MAY BE DEEMED TO HAVE E XPORT SALES. (C) IN CASE OF CIT V MOSER BEAR LTD ( 2009) 177 TAX MAN 42 (DEL) IT WAS HELD BY DELHI HIGH COURT THAT SINCE THE GOODS E XCEEDS MORE THAN 75% OF EXPORT TURNOVER OUT OF TOTAL TURNOVER, THE B ENEFIT UNDER SECTION 10A/10B COULD NOT BE DENIED TO ASSESSEE. (D) IN CASE OF T TWO INTERNATIONAL P. LTD. V ITO (2 010) 3 ITR (TRI) 355 (MUM) IT WAS DECIDED THAT WHEN DOMESTIC SALE/TU RNOVER DID NOT EXCEED 75% OF TOTAL TURNOVER, THE BENEFIT UNDER SEC TION CANNOT BE DENIED. (E) THEREFORE IN ANOTHER JUDGMENT. IN CASE OF TUBE INVESTMENTS OF INDIA LTD V ACIT (2009) 117 ITD 239 (CHENNAI) TM, W HERE IT WAS HELD THAT WHEN THE DOMESTIC SALES IS MORE THAT 25% OF TOTAL TURNOVER OF AN ASSESSEE, THE PROPORTIONATE BENEFIT SHOULD BE CONFERRED UPON THE ASSESSEE. THEREFORE IT IS CRYSTAL CLEARED FROM THE ABOVE FACT AND CITATIONS THAT THE PROVISIONS OF SECTIONS 10A/10B BE READ TOGETHER WITH SECTION I.T.A. NO. 625/KOL./2012 ASSESSMENT YEAR: 2008-2009 & ITA NOS. 720 & 721/KOL/2012 ASSESSMENT YEARS: 2008-2009 & 2007-2008 PAGE 9 OF 14 80HHC OF THE ACT FROM THE PURPOSE OF TOTAL TURNOVER AS THERE IS NO DEFINITION OF WORD 'TOTAL INCOME' AND DOMESTIC INCO ME! TURNOVER BELOW 15% OF TOTAL TURNOVER SHALL DEEMED TO BE EXPO RT SALES OF AN ASSESSEE. THE FACTORY OF THE APPELLANT IS GOVERNED BY THE SPE CIAL ECONOMIC ACT, 2005 AND ACCORDING TO THE ACT, THE MEANING OF EXPORT IS DEFINED IN THE SAID ACT IN ITS SUB-SECTION M OF SECTION 2 A S THE SAME IS AS UNDER:- EXPORT MEAN (I) TAKING OF GOODS. OR PROVIDING SERVICES, OUT OF INDIA, FROM SPECIAL ECONOMIC ZONE, BY LAND, SEA OR AIR OR ANY OTHER MOD E, WHETHER PHYSICAL OR OTHERWISE, OR (II) SUPPLYING GOODS OR PROVIDING SERVICES, FROM TH E DOMESTIC TARIFF AREA TO A UNIT OR DEVELOPED IN THE SAME OR DIFFEREN T SPECIAL ECONOMIC ZONE; OR (III) SUPPLYING GOODS OR PROVIDING SERVICES, FROM O NE UNIT TO ANOTHER UNIT OR DEVELOPERS, IN THE SAME OR DIFFERENT SPECIA L ECONOMIC ZONE. IT IS CLEAR FROM THE ABOVE DEFINITION IS VIDE ENOUG H TO COVER THE MEANING OF EXPORT UNDER THE SAID WHEREIN SUPPLY OF GOOD OR SERVICES FROM ONE UNIT TO ANOTHER UNIT WITHIN THE SAME SPECI AL ECONOMIC ZONE OR IN DIFFERENT ECONOMIC ZONE OR THE SALE WITH IN THE ZONE BY ONE UNIT TO ANOTHER WILL BE REGARDED AS EXPORT UNDE R THE SAID ACT. FURTHER SIR, SECTION 51 OF THE SAID ACT OVER RIDE T HE INCOME TAX ACT OR ANY OTHER LAW AND THIS WIDE DEFINITION UNDER THE SPECIAL ACT ENACTED FOR THE SPECIAL PURPOSE WILL BE PREVAIL OVE R THE INCOME TAX ACT, 1961 AS APPARENT FROM THE ABOVE POSITION OF LA W. THEREFORE IT IS PRAYED BEFORE YOU IN CONSIDER THE S AME AS EXPORT TURNOVER OF THE APPELLANT AND ALLOW THE BENEFIT OF SECTION 10A OF THE ACT. 16. THE ABOVE SUBMISSIONS MADE BY THE ASSESSEE DID NOT FIND FAVOUR WITH THE LD. CIT(APPEALS) AND HE PROCEEDED TO UPHOL D THE ACTION OF THE ASSESSING OFFICER IN EXCLUDING THE SALE OF THE ASSE SSEE MADE TO ANOTHER UNIT IN THE SEZ AMOUNTING TO RS.28,96,357/- FROM TH E EXPORT TURNOVER OF THE ASSESSEE FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 10A FOR THE FOLLOWING REASONS GIVEN IN HIS IMPUGNED ORD ER:- I HAVE GONE THROUGH THE SUBMISSION OF THE APPELLAN T CAREFULLY CONSIDERED THE DECISIONS OF THE HON'BLE DELHI HIGH COURT AND THE ITAT AHMEDABAD, CHENNAI, BANGALORE AND MUMBAI R ELIED UPON BY THE APPELLANT PERUSED THE IMPUGNED ASSESSME NT ORDER AND THE AVAILABLE MATERIALS ON RECORD. HOWEVER, I A M NOT IN I.T.A. NO. 625/KOL./2012 ASSESSMENT YEAR: 2008-2009 & ITA NOS. 720 & 721/KOL/2012 ASSESSMENT YEARS: 2008-2009 & 2007-2008 PAGE 10 OF 14 AGREEMENT WITH THE CONTENTION OF THE A/R OF THE APP ELLANT AS IN THE INSTANT CASE THE SALE MADE TO THE HOLDING COMPA NY BY THE APPELLANT COMPANY WHICH CANNOT BE CONSIDERED AS EXP ORTS SINCE THE SALE EFFECTED WITHIN THE COUNTRY. THE FACTS OF THE CASES RELIED UPON BY THE APPELLANT ARE DISTINGUISHABLE FR OM THE FACTS OF THE APPELLANT'S CASE. IN THE CASE OR THE TATA EL XSI LTD. VS.- CIT 208 REPORTED IN 115 TTJ 423 THE HON'BLE BANGALO RE TRIBUNAL, IT IS HELD THAT SALES OF SOFTWARE TO ONE STP TO ANOTHER STP WITHIN THE COUNTRY CANNOT BE TREATED AS DEEMED EXPORT FOR THE PURPOSE OF EXEMPTION IS 10A OF THE IT ACT, 1961 . MOREOVER, AS SUCH THERE WAS NO AGREEMENT WITH THE HOLDING COM PANY TO MANUFACTURE THE ITEMS TO BE EXPORTED AND IT IS ALSO EXPLAINED WHETHER THE HOLDING COMPANY HAS ALSO CLAIMED THE SI MILAR DEDUCTION U/S. 10A OR NOT FOR EXPORT OF THE SAME IT EM AS NO CONFIRMATION OF THE HOLDING COMPANY IS AVAILABLE IN THIS EFFECT, KEEPING IN VIEW THE ENTIRETY OF THE FACTS OF THE AP PELLANT'S CASE CONSIDERING THE LEGAL POSITION AND RESPECTFULLY FOL LOWING THE DECISION OF HON'BLE BANGALORE TRIBUNAL IN THE CASE OF TATA ELXSI LTD VS. CIT 208 (SUPRA), I AM OF THE OPINION THAT THE SALES EFFECTED TO THE HOLDING CONCERN FROM THE APPELLANT COMPANY CANNOT HE CONSIDERED AS EXPORT TURNOVER OF THE APPE LLANT COMPANY AND THE APPELLANT IS ALSO NOT ENTITLED TO G ET THE BENEFIT OF SECTION 10A OF THE ACT. THEREFORE, THE D ISALLOWANCE MADE BY THE AO ON THIS ACCOUNT IS UPHELD. 17. THE LD. COUNSEL FOR THE ASSESSEE REITERATED BEF ORE US THE SUBMISSIONS ON BEHALF OF THE ASSESSEE BEFORE THE LD . CIT(APPEALS) ON THIS ISSUE. HE SUBMITTED THAT THE SALE OF GOODS IN QUEST ION WAS MADE BY THE ASSESEE TO ANOTHER UNIT OF ITS HOLDING COMPANY SITU ATED IN THE SAME SEZ AND THE BILL FOR THE SAME WAS ALSO RAISED IN U.S. D OLLARS. HE CONTENDED THAT SUCH SALE IS COVERED BY THE DEFINITION OF EXPO RT GIVEN IN SECTION 2(M) OF THE SPECIAL ECONOMIC ZONE ACT, 2005, WHICH HAVE OVERRIDING EFFECT AS PER SECTION 51 OF THE SPECIAL ECONOMIC ZONE ACT. AS REGARDS THE DECISION OF BANGALORE BENCH OF ITAT IN THE CASE OF TATA ELXS I LIMITED (SUPRA) RELIED UPON BY THE LD. CIT(APPALS) IN HIS IMPUGNED ORDER, HE CONTENDED THAT THE DECISION OF THE KOLKATA SPECIAL BENCH OF I TAT IN THE CASE OF MADHU JAYANTI INTERNATIONAL LIMITED VS.- DCIT REPO RTED IN 137 ITD 377 RENDERED IS IN FAVOUR OF THE ASSESSEE ON THIS ISSUE , BUT THE BENEFIT OF THE SAID DECISION OF SPECIAL BENCH RENDERED SUBSEQUENTL Y WAS NOT AVAILABLE TO I.T.A. NO. 625/KOL./2012 ASSESSMENT YEAR: 2008-2009 & ITA NOS. 720 & 721/KOL/2012 ASSESSMENT YEARS: 2008-2009 & 2007-2008 PAGE 11 OF 14 THE BANGALORE BENCH OF ITAT WHILE DECIDING THE CASE OF TATA ELXSI LIMITED (SUPRA). 18. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDERS OF THE AUTHORITIES BELOW IN SUPPORT OF THE REVENUES CASE ON THIS ISSUE. 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT THE SUPPLY OF GOODS FROM ONE UNIT TO ANOTHER UNIT IN THE SAME OR DIFFERENT SPECIAL ECONOMIC ZONE IS TREATED AS EXPORT AS PER THE DEFIN ITION GIVEN IN SECTION 2(M) OF THE SPECIAL ECONOMIC ZONE ACT, 2005 AND AS PER THE SPECIFIC PROVISIONS CONTAINED IN SECTION 51 OF THE SEZ ACT, 2005, THE PROVISIONS OF THE SAID ACT SHALL HAVE EFFECT NOTWITHSTANDING ANYT HING IN CONSISTENT THEREWITH CONTAINED IN ANY OTHER LAW FOR THE TIME B EING IN FORCE. SECTION 2(M) OF THE SEZ ACT, 2005 DEFINING EXPORT THUS HA S OVERRIDING EFFECT AND SINCE THE SUPPLY OF GOODS BY THE ASSESSEE-COMPANY F ROM ITS UNIT IN SEZ TO ANOTHER UNIT BELONGING TO ITS HOLDING COMPANY IN TH E SAME SEZ IS COVERED BY THE SAID DEFINITION, WE ARE OF THE VIEW THAT THE SAME CANNOT BE EXCLUDED FROM THE EXPORT TURNOVER OF THE ASSESSEE F OR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 10A. IN THAT VIEW OF THE MATTER, WE SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(APPEALS ) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO INCLUDE THE SALE MA DE BY THE ASSESESE TO THE UNIT OF ITS HOLDING COMPANY IN THE SAME SEZ IN THE EXPORT TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTIO N 10A. GROUND NO. 7 OF THE ASSESSEES APPEAL FOR A.Y. 2007-08 IS ACCORD INGLY ALLOWED. 20. NOW WE TAKE UP THE APPEAL OF THE ASSESESE FOR A .Y. 2008-09 BEING ITA NO. 720/KOL/2012 , WHICH IS DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-VIII, KOLKATA DATED 19.01.2012. I.T.A. NO. 625/KOL./2012 ASSESSMENT YEAR: 2008-2009 & ITA NOS. 720 & 721/KOL/2012 ASSESSMENT YEARS: 2008-2009 & 2007-2008 PAGE 12 OF 14 21. AT THE TIME OF HEARING BEFORE US, THE LD. COUNS EL FOR THE ASSESEE HAS NOT PRESSED GROUNDS NO. 1 TO 5 RAISED BY THE ASSESS EE IN THIS APPEAL INVOLVING THE COMMON ISSUE RELATING TO THE VALIDITY OF THE ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER SECTION 143(3). THE SAME ARE ACCORDINGLY DISMISSED AS NOT PRESSED. 22. AS REGARDS GROUND NO. 6 OF THE ASSESSEES APPEA L FOR A.Y. 2008-09, IT IS OBSERVED THAT THE ISSUE INVOLVED THEREIN RELA TING TO THE ASSESSEES CLAIM FOR INCLUSION OF THE EXPORT OF TRADING GOODS WORTH RS.29,69,050/- IN THE EXPORT TURNOVER FOR THE PURPOSE OF COMPUTING DE DUCTION UNDER SECTION 10A IS SIMILAR TO THE ONE INVOLVED IN THE A PPEAL FILED BY THE ASSESSEE FOR A.Y. 2007-08, WHICH HAS ALREADY BEEN D ECIDED BY US IN THE FOREGOING PORTION OF THIS ORDER. SINCE ALL THE MATE RIAL FACTS RELEVANT TO THIS ISSUE AS INVOLVED FOR A.Y. 2008-09 ARE SIMILAR TO THE ONE INVOLVED FOR A.Y. 2007-08, WE FOLLOW THE CONCLUSION DRAWN IN A.Y . 2007-08 AND DIRECT THE ASSESSING OFFICER TO INCLUDE THE EXPORT OF TRAD ING GOODS IN THE EXPORT TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCTION UND ER SECTION 10A. GROUND NO. 6 OF THE ASSESSEES APPEAL FOR A.Y. 2008 -09 IS ACCORDINGLY ALLOWED. 23. AS REGARDS GROUND NO. 7 OF THE ASSESSEES APPEA L FOR A.Y. 2008-09, IT IS OBSERVED THAT THE ISSUE INVOLVED THEREIN RELA TING TO THE ASSESSEES CLAIM FOR INCLUSION OF DOMESTIC TURNOVER OF RS.47,9 9,800/- IN THE EXPORT TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCTION UND ER SECTION 10A IS ALSO SIMILAR TO THE ONE INVOLVED IN THE APPEAL FILE D BY THE ASSESSEE FOR A.Y. 2007-08, WHICH HAS ALREADY BEEN DECIDED BY US IN THE FOREGOING PORTION OF THIS ORDER. SINCE ALL THE MATERIAL FACTS RELEVANT TO THIS ISSUE AS INVOLVED FOR A.Y. 2008-09 ARE SIMILAR TO THE ONE IN VOLVED FOR A.Y. 2007- 08, WE FOLLOW THE CONCLUSION DRAWN IN A.Y. 2007-08 AND DIRECT THE ASSESSING OFFICER TO INCLUDE THE TURNOVER OF RS.47, 99,800/- IN THE EXPORT TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCTION UND ER SECTION 10A. I.T.A. NO. 625/KOL./2012 ASSESSMENT YEAR: 2008-2009 & ITA NOS. 720 & 721/KOL/2012 ASSESSMENT YEARS: 2008-2009 & 2007-2008 PAGE 13 OF 14 GROUND NO. 7 OF THE ASSESSEES APPEAL FOR A.Y. 2008 -09 IS ACCORDINGLY ALLOWED. 24. AS REGARDS THE REVENUES APPEAL BEING ITA NO. 625/KOL/2012 FOR A.Y. 2008-09, THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, HAS POINTED OUT THAT THE TAX EFFECT INVOLVED IN THIS APPEAL OF THE REVENUE IS LESS THAN THE REVISED MONETARY LIMIT RECENTLY FIXED BY THE CB DT VIDE CIRCULAR NO. 21/2015 DATED 10 TH DECEMBER, 2015 AT RS.10,00,000/- FOR FILING THE APPEAL BY THE REVENUE BEFORE THE TRIBUNAL AND THIS POSITION CLEARLY EVIDENT FROM THE GROUNDS RAISED BY THE REVENUE IN T HIS APPEAL IS NOT DISPUTED EVEN BY THE LD. D.R. IN CIRCULAR NO. 21/20 15 (SUPRA) RECENTLY ISSUED BY THE CBDT, THE MONETARY LIMIT FOR FILING T HE APPEALS BY THE REVENUE BEFORE THE TRIBUNAL HAS BEEN INCREASED TO R S.10,00,000/- AND AS CLARIFIED IN THE SAID CIRCULAR, THE SAID MONETARY L IMIT IS APPLICABLE RETROSPECTIVELY EVEN TO THE APPEALS PENDING BEFORE THE TRIBUNAL. THE CBDT HAS ALSO INSTRUCTED THAT SUCH PENDING APPEALS BELOW THIS SPECIFIED TAX LIMIT OF RS.10,00,000/- MAY BE WITHDRAWN/ NOT P RESSED. KEEPING IN VIEW THE INSTRUCTION GIVEN BY THE CBDT VIDE CIRCULA R NO. 21/2015 DATED 10.12.2015, WHICH IS SQUARELY APPLICABLE IN THE PRE SENT CASE, THE APPEAL FILED BY THE REVENUE IN THIS CASE IS TREATED AS WIT HDRAWN/NOT PRESSED AND DISMISSED ACCORDINGLY. 25. IN THE RESULT, BOTH THE APPEALS BEING ITA NOS. 720 & 721/KOL/2012 FILED BY THE ASSESSEE ARE PARTLY ALLOW ED, WHEREAS THE REVENUES APPEAL BEING ITA NO. 625/KOL/2012 IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 24, 2016. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 24 TH DAY OF FEBRUARY, 2016 I.T.A. NO. 625/KOL./2012 ASSESSMENT YEAR: 2008-2009 & ITA NOS. 720 & 721/KOL/2012 ASSESSMENT YEARS: 2008-2009 & 2007-2008 PAGE 14 OF 14 COPIES TO : (1) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-7, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (2) M/S. ECO WHEELS PRIVATE LIMITED, 25A, CAMAC STREET, 4 TH FLOOR, ROOM NO. 410, VARDAN BUILDING, KOLKATA-700 016 (3) COMMISSIONER OF INCOME-TAX (APPEALS)- VIII, K OLKATA (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.