ACIT 15(3), MUMBAI V. H.K. DESINGNS(INDIA), MUMBAI

ITA 6993/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2837 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 14-11-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M RAJAN
• Assessee Lawyers: P P BHANDARI
• Keywords: Opportunity of being heard
• Section: 10AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI SANJAY ARORA , A M AND SHRI AMARJI T SINGH, JM ./ I.T.A. NO. 6993/MUM/2014 ( / ASSESSMENT YEAR: 2010 - 11 ) ASST. CIT - 15( 3 ), R. NO. 122, MATRU MANDIR, 1 ST FLOOR, TARDEO ROAD, MUMBAI - 400 007 / VS. H. K. DESI GNS (INDIA) UNIT NO. 113, SDF IV, SEEPZ SEZ ANDHERI (E), MUMBAI - 400 096 ./ ./ PAN/GIR NO. ( / APPELLANT ) : ( / RESPON DENT ) / APPELLANT BY : SHRI M. RAJAN / RESPONDENT BY : SHRI P. P. BHANDARI / DATE OF HEARING : 0 9 .6.2016 / DATE OF PRONOUNCEMENT : 22 .6.2016 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN A PPEAL BY THE REVENUE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 26, MUMBAI (CIT(A) FOR SHORT) DATED 30.09.2014 , ALLOWING THE A SSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A.Y.) 2010 - 11 VIDE ORDER DATED 15.3.2013 . 2. THE ONLY ISSUE IN APPEAL IS THE EXIGIBILITY OF THE ASSESSEES CLAIM FOR EXEMPTION OF T HE INCOME OF ITS U NDERTAKING U/S. 10AA OF THE ACT , CLAIMED AT RS.17,15,41,58 3/ - . THE REVENUE HAS RAISED SEVERAL OBJECTIONS WITH REGARD THERETO, THE PRINCIPAL BEING THAT 2 ITA NO. 6993/MUM/2014 (A.Y. 2010 - 11) ASST. CIT VS. H. K. DESIGNS (INDIA) THE SAID UNDERTAKING HAS BEEN FORMED BY THE RECONSTRUCTION OF THE BUSINESS ALREADY IN EXISTENCE (I.E., IN THE NAME AND STYLE H. K. JEWELS ). AT THE OUTSET, IT WAS CLARIFIED BY THE LD. AUTHORIZED REPRESENTATIVE (AR), THE ASSESSEES COUNSEL , THAT THIS IS A SUBSISTING ISSUE IN THE ASSESSEES CASE, BEGINNING A.Y. 2007 - 08, THE FIRST YEAR. THE MATTER HAD TRAVELLED TO THE TRIBUNAL , WHICH HAD DECIDED THE REVENUES APPEALS FOR A.YS. 2007 - 08 TO 2009 - 10 (IN ITA NOS. 5192/MUM/2010, 4058/MUM/2011 AND 3212/MUM/2012 DATED 04.11.2015), PLACING A COPY THEREOF ON RECORD AND ADVERTING TO RELEVANT PART/S THEREOF . T HE TRIBUNAL SET ASIDE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFIC ER (A.O.) FOR FRESH EXAMINATION. NO ORDERS HAVE SINCE BEEN PASSED BY THE A.O. , SO THAT A SIMILAR DIRECTION WOULD BE IN ORDER. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) DID NOT OBJECT TO THIS PROPOSITION BY THE LD. COUNSEL. 3. WE HAVE HEARD THE PARTIES, A ND PERUSED THE MATERIAL ON RECORD. THE LD. CIT(A) HAS, FOLLOWING THE APPELLATE ORDERS BY THE FIRST APPELLATE AUTHORITY FOR EARLIER YEARS, I.E., A.YS. 2007 - 08 TO 2009 - 10, ALLOWED THE ASSESSEES CLAIM, HOLDING ITS UNDERTAKING AS AN ELIGIBLE UNDERTAKING U/S .10AA. THE TRIBUNAL VIDE ITS ORDER DATED 04.11.2015 (SUPRA), AFTER EXAMINING THE ASSESSEES CLAIM IN ITS VARIOUS ASPECTS, HELD AS UNDER: 13. THE FOREGOING DISCUSSIONS WOULD SHOW THAT IT IS REQUIRED TO EXAMINE MANY FACTUAL ASPECTS RELATING TO THE CLAIM O F THE ASSESSEE BY DULY CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, BOOKS OF ACCOUNTS OF OLD AND NEW M/S H.K.JEWELS, THE BOOKS OF ACCOUNTS OF THE ASSESSEE, THE TERMS AND CONDITIONS RELATING TO LETTER OF PERMISSION ETC. WITH REGARD TO THE LABOUR CHARGES ALS O, WE NOTICE THAT THE LD CIT(A) HAS NOT EXAMINED THE CRUCIAL ASPECT, I.E., WHETHER THE CLAIM OF THE ASSESSEE THAT THE LABOUR CHARGES WERE RECEIVED IN FOREIGN EXCHANGE IS CORRECT OR NOT. FURTHER, WE NOTICE THAT THE VARIOUS CASE LAWS REFERRED TO BY LD CIT(A) RELATE TO THE GOODS MANUFACTURED BY THE ASSESSEE BY OUTSOURCING, WHERE AS, IN THE INSTANT CASE, M/S VAIBHAV GEMS LTD HAS OUTSOURCED THE PRODUCTION ACTIVITIES TO THE ASSESSEE. HENCE THOSE CASE LAWS WOULD APPLY TO M/S VAIBHAV GEMS LTD AND NOT TO THE ASSESSE E. TO THIS EXTENT, IN OUR VIEW, 3 ITA NO. 6993/MUM/2014 (A.Y. 2010 - 11) ASST. CIT VS. H. K. DESIGNS (INDIA) LD CIT(A) HAS MISDIRECTED HIMSELF. HENCE, THIS ISSUE ALSO REQUIRES FRESH EXAMINATION. THERE SHOULD NOT BE ANY DISPUTE THAT THE LAW CAN BE APPLIED CORRECTLY ONLY IF THE RELEVANT FACTS ARE VERY MUCH CLEAR. THE FOREGOING DISCUS SIONS SHOW THAT THERE IS NO CLARITY ON FACTS OF THE PRESENT CASE AND HENCE THEY NEED TO BE BROUGHT ON RECORD CORRECTLY. 14. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDERS PASSED BY LD CIT(A) FOR ALL THE THREE YEARS UNDER CONSIDERATION AND RESTORE ALL THE ISSUES TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE THE ISSUE AFRESH FROM ALL THE ANGLES THAT MAY BE REQUIRED. AFTER AFFORDING NECESSARY OPPORTUNITY OF BEING HEARD, THE ASSESSING OFFICER MAY TAKE APPROPRIATE DECISION IN ACCORDANCE WI TH THE LAW. THE ASSESSEE IS ALSO DIRECTED TO EXTEND FULL COOPERATION TO THE ASSESSING OFFICER BY FURNISHING ALL THE DETAILS THAT MAY BE CALLED FOR BY HIM FOR EXPEDITIOUS COMPLETION OF THE ASSESSMENTS. WE FIND NO REASON WHATSOEVER TO TAKE ANY DIFFERENT VI EW OF THE MATTER, WITH IT BEING RATHER THE COMMON CONTENTION OF BOTH THE PARTIES BEFORE US. WE WOULD FURTHER ADD THAT THE A.O. SHALL IN ADDITION ALSO EXAMINE THE ASSESSEES CLAIM WITH REFERENCE TO EACH OF THE SPECIFIC GROUNDS RAISED BY THE REVENUE PER ITS APPEAL. WE MAKE THIS OBSERVATION BY WAY OF ABUNDANT CAUTION IN - AS - MUCH AS WE HAVE NOT GONE INTO THE MERITS OF THE CASE, SO THAT IT IS NOT CLEAR IF THE OBJECTIONS RAISED BY THE REVENUE WOULD STAND TO BE ADDRESSED BY THE EXAMINATION ON THE VARIOUS ASPE CTS A S DIRECTED BY THE TRIBUNAL. A LSO, AS IS GENERALL Y THE CASE, WHERE THE ASSESSEE S TANDS DENIED EXEMPTION ON THE GROUND OF NOT QUALIFYING THEREFOR, THERE IS NO EXAMINATION ON THE QUANTUM OF THE EXEMPTION, WHICH THUS GETS OVERLOOKED, RESULTING IN A SET ASIDE F OR THE PURPOSE, LEADING TO A FRESH ROUND OF PROCEEDINGS . AS SUCH, WHATEVER BE THE A.O.S CONCLUSION ON THE MERITS OF THE PRINCIPAL ISSUE, I.E., WITH REGARD TO THE ELIGIBILITY OF THE ASSESSEES CLAIM, HE SHALL ALSO EXAMINE THE SAME WITH REFERENCE TO THE QUA NTUM OF DEDUCTION, ISSUING DEFINITE FINDINGS OF FACT, WHERE AND TO THE EXTENT HE IS IN DISAGREEMENT WITH THE ASSESSEES WORKING THEREOF. THIS, AS WOULD BE APPARENT, IS ONLY TO ENSURE PROPER AND TIMELY DISPOSAL OF THE MATTER, AT LEAST IN THE SECOND ROUND, C OMPLETE IN ALL RESPECTS, WHICH MAY OTHERWISE TEND TO OR GET INADVERTENTLY OVERLOOKED , AND DOES NOT CAUSE ANY 4 ITA NO. 6993/MUM/2014 (A.Y. 2010 - 11) ASST. CIT VS. H. K. DESIGNS (INDIA) PREJUDICE TO EITHER SIDE . WE DECIDE ACCORDINGLY. THE REVENUES APPEAL IS ACCORDINGLY DISPOSED OF ON THE AFORE - SAID TERMS. 4. I N THE RESULT, THE R EVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 22 , 201 6 SD/ - SD/ - (AMARJIT SINGH ) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 22 . 06 .201 6 . . ./ ROSHANI , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI