ACIT, UDAIPUR V. M/s. Advaiya Solutions Pvt. Ltd., UDAIPUR

ITA 64/JODH/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5213 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 03-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L MOURYA
• Assessee Lawyers: HITESH BHADADA
• Keywords: Competent authority
• Section: 143(3); 10B; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 64 / JODH /201 5 (ASST. YEAR : 20 1 0 - 11 ) AC IT, CIRCLE - 1, UDAIPUR . VS. M/S. ADVAIYA SOLUTIONS PVT. LTD., G - 14 - 17 , I . T . PARK, MIA (EXTN.) , UDAIPUR. PAN NO. AAFCA 1137 J (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI HITESH BHADADA - CA . DEPARTMENT BY : S HRI S.L. MOURYA - DR DATE OF HEARING : 1 4 / 0 3 /201 6 . DATE OF PRONOUNCEMENT : 1 4 / 03 /201 6 . O R D E R PER N.S. SAINI , ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 1 , UDAIPUR , DATED 17 / 12 /201 4 . 2. IN GROUND NO.1 OF THE APPEAL, THE GRIEVANCE OF THE REVENUE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE DISALLOWANCE OF DEDUCTION UNDER SEC. 10B OF THE ACT ON THE GROUND THAT IN PRECEDING YEARS, THE ISSUE OF ALLOWABILITY OF CLAIM UND ER SEC. 10B OF THE ACT WAS ALLOWED THEREIN IGNORING THAT IN INCOME TAX PROCEEDINGS EVERY ASSESSMENT YEAR IS SEPARATE AND DISTINCT FROM OTHER ASSESSMENT YEARS , HENCE, THE PRINCIPLE OF RES - JUDICAT A DOES NOT APPLY. 3 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS THE HUNDRED PER CENT EXPORT ORIENTED UNIT AND H AS CLAIMED DEDUCTION UNDER SEC. 10B OF 2 ITA NO. 64/JODH/2015 THE ACT , WHICH RESULTED IN FILING NIL TAXABLE INCOME . THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE DECLARED TOTAL PROFIT OF RS. 84,52,249/ - ON GROSS TURNOVER OF RS. 5,02,75,500/ - AND ASSESSEE CLAIMED DEDUCTION OF RS. 66,79,007/ - UNDER SEC. 10B OF THE ACT. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE COMPANY DID NOT FULFIL THE CONDITIONS LAID DOWN IN THE ACT FOR CLAIMING EXEMPTION UNDER SEC. 10B OF THE ACT , AS THE ASSESSEE COMPANY FAILED TO GIVE GENERIC NAMES OF THREE PRINCIPAL PRODUCTS DONE BY IT WITH ITEM CODE NUMBER . HE, THEREFORE, DISALLOWED DEDUCTION UNDER SEC. 10B OF THE ACT AMOUNTING TO RS. 66,79,007/ - AND ADDED TO THE TOTAL INCOME OF T HE ASSESSEE. 4 . ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED THE APPEAL OF THE ASSESSEE , AND IN DOING SO , HE HELD AS UNDER: - 2.4. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT VIS - A - VIS THE FINDINGS OF THE A.O. GIVEN IN THE ASSESSMENT ORDER ALONGWITH THE MATERIALS PLACED ON RECORD. THE REPORT OF THE A.O. OBTAINED U/S.250(4) OF THE ACT AND THE SUBMISSIONS MADE BY THE APPELLANT ON THE SAID REPORT HAS ALSO BEEN GONE THROUGH CAREFULLY. FROM THE REPORT OF THE A.O., IT SEEMS THAT IN PRINCIPLE , HE IS IN AGREEMENT THAT THE APPELLANT IS EL IGIBLE FOR CLAIMING DEDUCTION U/ S.10B OF THE ACT. UNDISPUTEDLY, THE APPELLANT COMPANY CAME INTO EXISTENCE DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2006 - 07 AS 100% EXPORT ORIENTED UNIT AND FILED ITS FIRST RETURN FOR THE ASSESSMENT YEAR 2006 - 07 WHERE DEDUCTION U/S.10B OF THE ACT WAS CLAIMED FOR THE FIRST TIME. THE ASSESSMENT FOR THIS YEAR WAS COMPLETED U/S. 143(3) OF THE ACT AND WHILE COMPLETING THE ASSESSMENT, THE A.O. EXAMINED THE ELIGIBILITY AND ALLOWABILITY OF THE CLAIM FOR DEDUCTION U/S. 10B OF THE ACT WITH REFERENCE TO THE DETAILS REQUIRED AND FILED BY THE APPELLANT AND HELD THAT THE APPELLANT COMPANY BEING FULFILLED ALL THE CONDITIONS LAID DOWN U/S10B OF THE ACT, IS ELIGIBLE FOR DEDUCTION U/S .10B OF THE ACT AND ALLOWED THE DEDUCTION CLAIMED IN THE RETURN. NOT ONLY IN THIS ASSESSMENT YEAR, BUT ALSO IN ALL THE SUBSEQUENT YEARS I.E. UPTO THE ASSESSMENT YEAR 2009 - 10, THE ISSUE OF ALLOWABILITY OF CLAIM U/S.10B OF THE ACT WAS EXAMINED BY THE A.O. WH ILE COMPLETING THE ASSESSMENTS U/S.. 143(3) FOR ALL THE YEARS. FROM THE ASSESSMENT ORDER IT IS SEEN THAT THE STATUS OF THE APPELLANT IS 100% EOU AND THE PROFIT HAS BEEN EARNED ON THE SAME ACTIVITIES CARRIED OUT BY THE APPELLANT DURING THE EARLIER 3 ITA NO. 64/JODH/2015 ASSESSME NT I.E. SINCE ITS INCORPORATION. FURTHER, THE REASONS GIVEN BY THE A.O. FOR NOT ALLOWING THE DEDUCTION U/S.10B WERE ALREADY EXAMINED BY THE A.O. DURING THE FIRST ASSESSMENT YEAR IN WHICH THE CLAIM FOR DEDUCTION WAS CLAIMED FOR THE FIRST TIME. NOT ONLY THIS , BUT THE SAME WERE ALSO CONSIDERED IN THE SUBSEQUENT ASSESSMENT YEARS. THE A.O. HAS NOT BROUGHT ANY NEW MATERIAL, ON RECORD TO SUGGEST THAT THERE IS A CHANGE IN THE ACTIVITY OF THE APPELLANT COMPANY AND THEREFORE IT DID NOT FULL FILL THE CONDITIONS LAID D OWN FOR CLAIMING DEDUCTION U/S. 10B OF THE ACT. IN VIEW OF ABOVE DISCUSSIONS AND THE ISSUE INVOLVED DURING THE ASSESSMENT YEAR UNDER APPEAL IS IDENTICAL AS THAT OF EARLIER ASSESSMENT YEARS, IT IS HELD THAT THE APPELLANT COMPANY IS ELIGIBLE FOR DEDUCTION U /S. 10B OF THE ACT AND THEREFORE, THE DISALLOWANCE MADE BY THE A.O. DESERVES TO BE DELETED AND I ORDER ACCORDINGLY. THUS, THIS GROUND OF APPEAL IS ALLOWED. 5. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE ASSESSING OFFICER, WHEREAS THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE RELIED O N THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 6 . WE FIND THAT THE DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY SPECIFIC MISTAKE IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). FURTHER, NO MATERIAL WAS BROUGHT ON RECORD BY THE REVENUE TO CONTROVERT THE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT DEDUCTION UNDER SEC. 10B WAS ALL ALONG ALLOWED TO THE ASSESSEE SINCE ASSESSMENT YEAR 2006 - 07 IN AN ASSESSMENT COMPLETED UNDER SEC. 143(3) OF THE ACT. WE ARE ALIVE TO THE FACT THAT IN INCOME TAX ASSESSMENT, PRINCIPLES OF RES - JUDICATA ARE NOT APPLICABLE, BUT IN THE INCOME TAX PROCEEDINGS CONSISTENCY MAINTAINED ON ANY ISSUE , WHICH HAS BEEN DECIDED AND THE DECISION SHOULD NOT BE ALTERED WITHOUT THERE B E ING CHANGE IN THE FACTS REQUIRING IT TO DO SO . HENCE , WE FIND NO INFIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) , WHICH IS CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 7. IN GROUND NO.2 OF THE APPEAL, THE GRIEVANCE OF THE REVENUE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELE T ING THE 4 ITA NO. 64/JODH/2015 DISALLOWANCE OF DEDUCTION UNDER SEC. 10B OF THE ACT AMOUNTING TO RS. 40,18,276/ - WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE DID NOT FULFIL THE CONDITIONS LAID DOWN IN THE PROVISIONS OF SEC. 10B(2)(I) & 10B(3) OF THE ACT. 8. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE FAILED TO BRING THE SALE PROCEEDS OF RS. 49,90,065/ - OF COMPUTE R SOFTWARE EXPORTED WITHIN THE PERIOD OF SIX MONTHS FROM THE END OF THE PREVIOUS YEAR AS PRESCRIBED IN THE PROVISIONS OF SEC. 10B(3) OF THE ACT OR WITHIN SUCH FURTHER PERIOD AS THE COMPETENT AUTHORITY MAY ALL OW IN THIS BEHALF. SINCE, THE ASSESSING OFFICER HA D HELD THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SEC. 10B AND THE ENTIRE DEDUCTION CLAIMED UNDER SEC. 10B WAS DISALLOWED. THE ASSESSING OFFICER DID NOT MAKE ANY SEPARATE ADDITION , BUT H E LD THAT NO ADDITION UNDER SEC. 10B IS ALLOWABLE TO THE EXTENT OF RS. 49,90,065/ - ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO BRING THE SALE PROCEEDS INCONVERTIBLE FOREIGN EXCHANGE WITH I N THE PERIOD MENTIONED ABOVE . 9. ON APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE SUBMITTED AS UNDER: - AS PER SECTION 10B(3) OF THE INCOME TAX ACT, 1961, THE SALE PROCEEDS OF THE COMPUTER SOFTWARE EXPORTED OUT OF INDIA ARE TO BE RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE WITHIN 6 MONTHS FROM THE END OF THE PREVIOUS YEAR OR WITHIN SUCH FURTHER PERIOD AS THE COMPETENT AUTHORITY MAY PRESCRIBE IN THIS BEHALF. SECTION 10B(3) IS HEREUNDER REPRODUCED FOR READY REFERENCE: (3) THIS SECTION APPLIES TO THE UNDERTAKING, IF THE SALE PROCEEDS 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 OF THE PREVIOUS YEAR OR, WITHIN SUCH FURTHER PERIOD AS THE COM PETENT AUTHORITY MAY ALLOW IN THIS BEHALF. EXPLANATION 1 FOR THE PURPOSES OF THIS SUB - SECTION, THE EXPRESSION 'COMPETENT AUTHORITY' MEANS THE RESERVE BANK OF INDIA OR SUC H OTHER AUTHORITY AS IS AUTHORIZ ED UNDER ANY LAW FOR THE TIME BEING IN FORCE FOR REGUL ATING PAYMENTS AND DEALINGS IN FOREIGN EXCHANGE. 5 ITA NO. 64/JODH/2015 IN THIS REGARD THE ASSESSEE HEREBY SUBMITS THAT THE TIME LIMIT FOR THE REMITTANCE OF CONVERTIBLE FOREIGN EXCHANGE OF THE SALE PROCEEDS OF COMPUTER SOFTWARE EXPORTED OUT OF INDIA HAS BEEN EXTENDED TO 12 MONT HS INSTEAD OF 6 MONTHS BY THE RESERVE BANK OF INDIA IN THE FOREIGN TRADE POLICY 2009 - 2014. IN THE PARAGRAPH NO. 6.12 IT HAS BEEN CLEARLY SPECIFIED THAT THE TIME LIMIT HAS BEEN EXTENDED TO 12 MONTHS. BRIEF EXTRACT OF THE POLICY IS HEREUNDER: OTHER ENTITLEM ENTS 6.12 OTHER ENTITLEMENTS OF EOU I EHTP I STP I BTP UNITS ARE AS UNDER: (A) EXEMPTION FROM INCOME TAX AS PER SECTION 1 0A AND 10B OF INCOME TAX ACT. (B) EXEMPTION FROM INDUSTRIAL LICENSING FOR MANUFACTURE OF ITEMS RESERVED FOR SSI SECTOR. (C) EXPORT PROCEEDS WILL BE REALIZED WITHIN 12 MONTHS. (D) UNITS WILL BE ALLOWED TO RETAIN 1 00% OF ITS EXPORT EARNING IN THE EEFC ACCOUNT. COPY OF THE FOREIGN TRADE POLICY 2009 - 2014 ISSUED BY THE RESERVE BANK OF INDIA IS ENCLOSED AND MARKED HEREWITH AS ANNEXURE 7. FURTHER, THE CHARTERED ACCOUNTANT SHASHI KANT MEHTA & CO., IN ITS FORM NO. 56G DATED 04/09/2010 IN ITS REMARKS AT POINT NO. 18 SPECIFIED THAT THE TIME LIMIT FOR REALIZATION AND REPATRIATION OF CONVERTIBLE FOREIGN EXCHANGE IN CASE OF EXPORTS OF COMPUTER SOFTWARE HAS BEEN EXTENDED TO 12 MONTHS IN THE FOREIGN TRADE POLICY 2009 - 2014 ISSUED BY THE RESERVE BANK OF INDIA. COPY FORM NO. 56G DATED 04/09/2010 ISSUED BY CHARTERED ACCOUNTANT SHASHI KANT MEHTA & CO. IS ENCLOSE AND MARKED HEREWITH AS ANNEXURE 8. THAT THE CONVERTIBLE FOREIGN EXCHANGE HAS BEEN DULY REALIZED AND REPATRIATED IN TIME PRESCRIBED IN RESPECT OF THE FOLLOWING INVOICES AS UNDER: S. NO. INVOICE DATE INVOICE AMOUNT DATE OF REPATRIATION. 1. 26/02/2010 11,78,865/ - 08/11/2010 (BALANCE AMOUNT) 2. 31/03/2010 15,54,200/ - 08/11/2010 3. 31/03/2010 22,57,000/ - 08/11/2010 (PARTIAL) 05/01/2011 (BALANCE) TOTAL AMOUNT 49,90,065/ - 6 ITA NO. 64/JODH/2015 AS DEPICTED IN THE ABOVE TABLE, THE CONVERTIBLE FOREIGN EXCHANGE IN RESPECT OF THE 3 INVOICES HAS DULY BEEN RECEIVED BY THE ASSESSEE WITHIN A PERIOD OF 12 MONTHS FROM THE END OF THE FINANCIAL YEAR. IN VIEW OF THE ABOVE, SINCE THE CONDITIONS LAID DOWN UNDER SECTION 10B(3) IN RESPECT OF RS. 49,90,065/ - HAS BEEN DULY FULFILLED AND THE SUM HAS BEEN BROUGHT IN CONVER TIBLE FOREIGN EXCHANGE WITHIN THE TIME STIPULATED BY THE RESERVE BANK OF INDIA, SUCH SUM SHALL BE ALLOWED AS DEDUCTION UNDER SECTION 10B AND OBLIGE. 10 . AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER: - 4.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT, FINDINGS OF THE A.O. GIVEN IN THE ASSESSMENT ORDER, THE REPORT OF THE A.O. RECEIVED US 250(4) AND THE SUBMISSIONS OF THE APPELLANT MADE ON THE SAID REPORT. IT IS SEEN THAT DURING THE PERIOD OF REPORTING U/S.250(4), THE A.O. HAS VERIFIED THE DATE OF RECEIPTS AND OPINED THAT THE SALES PROCEEDS OF COMPUTER SOFTWARE HAS BEEN BROUGHT BY THE APPELLANT WITHIN THE EXTENDED PERIOD OF 12 MONTH S BY THE RESERVE BANK OF INDIA AND HENCE IS INCLUDIBLE IN THE DEDUCTION ALLOWABLE U/S. 10B OF THE ACT. IN VIEW OF THIS, IT IS HELD THAT THERE IS NO CASE FOR MAKING ANY DISALLOWANCE ON ACCOUNT OF DELAY IN BRING THE SALE PROCEEDS IN CONVERTIBLE FOREIGN EXCH ANGE. HENCE, THIS GROUND OF APPEAL IS ALLOWED. 11. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE ASSESSING OFFICER, WHEREAS AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUPPORTED THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 12 WE FIND THAT THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AS WELL AS REMAND REPORT RECEIVED FR O M THE ASSESSING OFFICER UNDER SEC. 250(4) OF THE ACT WHEREIN THE ASSESSING OFFICER VERIFIED THE DATE OF RECEIPT S AN D OPINED THAT THE SALE PROCEEDS OF THE COMPUTER SOFTWARE HAS BEEN BROUGHT BY THE ASSESSEE WITHIN THE EXTENDED PERIOD OF 12 MONTHS BY THE R ESERVE BANK OF INDIA AND HENCE, IS INCLUDIBLE IN THE DEDUCTION ALLOWABLE UNDER SEC. 10B OF THE ACT , ALLOWED THE APPEAL OF THE ASSESSEE. NO ERROR COULD BE POINTED OUT IN THE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) BY THE DEPARTMENTAL REPRESENTATIVE , THEREFORE, WE FIND NO GOOD REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME 7 ITA NO. 64/JODH/2015 TAX (APPEALS) , WHICH IS CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 13 IN THE R ESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON MONDAY , THE 1 4 TH DAY OF MARCH , 201 6 AT JODHPUR . S D / - S D / - (GEORGE MATHAN) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER D ATED : 1 4 TH MARCH , 201 6 . VR/ - COPY TO: 1. THE ASSESS E E. 2. THE REVENUE. 3. THE CIT 4. THE CIT(A) 5. THE D.R . 6. GUARD FILE. BY ORDER