M/s. Digital Hub India (P) Ltd., New Delhi V. ITO, New Delhi

ITA 673/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82004 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-11-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 04-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARMINDER KAUR
• Assessee Lawyers: M G ARORA
• Section: 10B; 10

Judgement Text

IN TH E INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : B : NEW DELHI BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K. , JUDICIAL MEMBER ITA NO . 673 / DEL / 201 3 ASSESSMENT YEAR : 200 7 - 08 M/S DIGITAL HUB INDIA (P) LTD. VS. INCOME TAX OFFICER A - 42, NARIANA INDUSTRIAL AREA WARD NO.10(3), CR BUILDING PHASE - II, NEW DELHI I.P. ESTATE, N EW DELHI. (PAN AABC D 8536 A ) (APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI M.G. ARORA, CA. RESPONDENT BY: SMT. PARMINDER KAUR, SR. D.R. ORDER PER SHRI GEORGE GEORGE K , J M : 1. TH IS APPEAL AT THE INSTANCE OF THE ASSESSEE IS DIRECTED AGAINST THE CIT(A) S ORDER DATED 08 .1 1 .2012 . THE RELEVANT ASSESSMENT YEAR IS 200 7 - 08 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN THIS APPEAL: 1. THAT ON THE POINTS OF FACTS AND ON THE POINT OF LAW THE ASSESSING OFFICER WAS WRONG IN M AKING AN ADDITION OF RS.5,600/ - ON ACCOUNT OF INTEREST ON FDR WHICH WAS RECEIVED AGAINST THE BANK GUARANTEE ON 100% MARGIN ISSUED IN FAVOUR OF CUSTOM AUTHORITIES. 2. THAT ON THE POINTS OF FACTS AND ON THE POINT OF LAW THE ASSESSING OFFICER WAS WRONG WHILE RESTRICTING THE DEDUCTION U/S 10B TO RS.50,86,003/ - AS AGAINST THE CLAIM OF THE ASSESSEE AMOUNTING TO ITA NO. 673 /DEL /201 3 ASSESSMENT YEAR : 200 7 - 20 08 2 RS.66,46,818/ - AND MADE AN ADDITION OF RS.15,60,815/ - IN RETURNED INCOME. 3. THE ADDITION TO THE RETURNED INCOME BE SET ASIDE AND RELIEF BE GRANTED TO TH E ASSESSEE BY CANCELLING THE DEMAND OF RS.7,01,249/ - 3 . BRIEF FACTS OF THE CASE ARE AS FOLLOWS. THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 31.10.2007 DECLARING NIL INCOME AFTER CLAIMING DEDUCTION U/S 10B OF THE I.T. ACT AMOUNTING TO RS.66,46,818 / - . THE CASE WAS SELECTED FOR SCRUTINY BY ISSUANCE OF NOTICE U/S 143(2) OF THE ACT AND SCRUTINY ASSESSMENT WAS COMPLETED VIDE ORDER DATED 30.12.2009. IN THE SCRUTINY ASSESSMENT , THE ASSESSING OFFICER HAS MADE THE FOLLOWING ADDITIONS: I) S UM OF RS.5,600/ - ON ACCOUNT OF INTEREST INCOME. II) REDUCING THE DEDUCTION U/S 10B OF THE ACT TO RS.50,86,810/ - AS AGAINST RS.66,46,818/ - CLAIMED BY THE ASSESSEE. 4 . ON FURTHER APPEAL, THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. THE RELEVANT FINDING OF T HE CIT(A) READS AS UNDER: - 3.1 THE VERSION OF THE APPELLANT HAVE BEEN CONSIDERED. THE AO IN ITS ASSESSMENT ORDER HAS REFERRED TO THE AUDIT REPORT INDICATING THAT THE APPELLANT WAS HAVING CUSTOM BONDED WAREHOUSE AT K - 15, GREEN PARK EXTN., NEW DELHI RELATIN G TO ITS BUSINESS IN EXPORT OF COMPUTER SOFTWARE AND CUSTOMIZED ELECTRONIC DATA SERVICES DURING THE YEAR 31 ST MARCH, 2007. THE AO HAS ALSO NOTED THAT AS PER A LETTER DATED 20.10.2009, THE APPELLANT HAS STATED THAT IT WAS OPERATING ITS BUSINESS ACTIVITY FRO M OFFICE AT A - 42, NARAINA INDL. AREA PHASE - II NEW DELHI. AS PER THE AO, NO EVIDENCE HAS BEEN BROUGHT ON RECORD THAT THE PREMISES AT NARAINA WAS WITHIN THE FREE TRADE ZONE OR EXPORT PROCESSING ZONE. IN VIEW OF THE AFORESAID THE AO RESTRICTED DEDUCTION 90% T O ELIGIBLE BUSINESS PROFITS AS PER SECTION 10 - B. IN VIEW OF THE VERSION OF THE AO, THE ACTION OF RESTRICTING THE ELIGIBLE PROFITS TO 90% IS CONFIRMED AND THE GROUND OF APPEAL PERTAINING TO THIS ITA NO. 673 /DEL /201 3 ASSESSMENT YEAR : 200 7 - 20 08 3 ITEM IS DISMISSED. FURTHER, IN VIEW OF EXPLANATION - 2(III) TO S EC.10 - B OF THE I.T. ACT, THE AO S ACTION OF EXCLUDING RS.34,90,780/ - AND RS.13,89,879/ - FROM THE EXPORT TURNOVER IS ALSO CONFIRMED. 5 . LD. A.R. SUBMITTED THAT ON THE LAST DATE OF HEARING BEFORE THE CIT(A) (07.11.2012) ASSESSEE S REPRESENTATIVE COULD NOT APPEAR AND EXPLAIN THE CASE. I T WAS SUBMITTED THAT THE FACTUAL FINDING OF THE CIT(A) IS ERRONEOUS , SINCE ASSESSEE WAS NOT PROPERLY HEARD AND SAME NEEDS TO BE SET ASIDE. THE LEARNED D.R. ON THE OTHER HAND, RELIED ON THE FINDING OF INCOME TAX AUTHORITIES. 6 . WE HAVE HEARD RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. THE AO HAD REDUCED THE CLAIM U/S 10A TO 90% OF THE ELIGIBLE BUSINESS PROFIT FOR THE REASON THAT THE ASSESSEE HAS NOT BROUGHT ON RECORD ANY EVIDENCE THAT ITS UNIT IS SITUATED WITHIN THE FR EE TRADE ZONE OR EXPORT PROCESSING ZONE. THIS FACTUAL FINDING OF THE AO HAS BEEN CONFIRMED BY THE CIT(A). THE ASSESSEE CLAIMS , ITS UNIT IS SITUATED IN THE FREE TRADE ZONE / EXPORT PROCESSING ZONE , T HEREFORE, IT IS ENTITLED TO 100% OF THE ELIGIBLE BUSINESS P ROFIT . WE NOTICE THAT THE CIT(A) HAS DECIDED THE ISSUE IN ABSENCE OF THE ASSESSEE ON THE DATE OF FINAL HEARING I.E. ON 07.11.2012. I N THE INTEREST OF JUSTICE AND EQUITY, WE ARE OF THE VIEW THAT THE ASSESSEE SHOULD BE GIVEN ONE MORE OPPORTUNITY TO EXPLAIN H IS CASE AND PLACE NECESSARY MATERIAL IF REQUIRED SO , TO ADVANCE ITS CASE. THEREFORE, THE ISSUE S RAISED IN THIS APPEAL ARE RESTORED TO THE CIT(A) F OR DE NOVO CONSIDERATION. THE CIT(A) SHALL DISPOSE OF THE MATTER AFTER AFFORDING REASONABLE OPPORTUNITY OF HEA RING TO ITA NO. 673 /DEL /201 3 ASSESSMENT YEAR : 200 7 - 20 08 4 THE ASSESSEE. NEEDLESS TO STATE , THE ASSESSEE SHALL COOPERATE WITH THE CIT(A) FOR THE EXPEDITIOUS DISPOSAL OF THE APPEAL. IT IS ORDERED ACCORDINGLY. 7 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. TH E DECISION WA S PRONOUNCED IN THE OPEN COURT ON 19 TH NOVEMBER , 201 4 . SD/ - SD/ - ( J.S. REDDY ) (GEORGE GEORGE K.) A CCOUNTANT MEMBER J UDICIAL MEMBE R DATED: 19 TH NOVEMBER , 201 4 . AKS/ - COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST . REGISTRAR, ITAT, NEW DELHI