ACIT, Kanpur V. M/s. Calico Trends, Kanpur

ITA 753/LKW/2010

• Counselvise Citation: 75323714 RSA 2010
• Duration Of Justice: 3 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-05-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 16-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Opportunity of being heard; Retrospective amendment; Validity of assessment
• Section: 143(3); 142(1); 80HHC; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 753/LKW/2010 ASSESSMENT YEAR: 2007 - 08 ASSTT. CIT - 1 KANPUR V. M/S CALICO TRENDS 60A, JA JMAU, KANPUR PAN: AABFC1787H (APP ELL ANT) (RESPONDENT) ITA NO. 757 & 758/LKW/2010 ASSESSMENT YEAR: 2004 - 05 & 2006 - 07 M/S CALICO TRENDS 60A, JAJMAU, KANPUR V. DY. CIT RANGE 1, KANPUR PAN: AABFC1787H (APP ELL ANT) (RESPONDENT) ITA NO. 759/LKW/201 0 ASSESSMENT YEAR: 2007 - 08 M/S CALICO TRENDS 60A, JAJMAU, KANPUR V. JOINT. CIT RANGE 1, KANPUR PAN: AABFC1787H (APP ELL ANT) (RESPONDENT) ITA NO. 156/LKW/2012 ASSESSMENT YEAR: 2008 - 09 M/S CALICO TRENDS 60A, JAJMAU, KANPUR V. ASSTT. CIT - 1, K ANPUR PAN: AABFC1787H (APP ELL ANT) (RESPONDENT) ITA NO. 189/LKW/2012 ASSESSMENT YEAR: 2008 - 09 ASSTT. CIT - 1, KANPUR V. M/S CALICO TRENDS 60A, JAJMAU, KANPUR PAN: AABFC1787H (APP ELL ANT) (RESPONDENT) PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : DEPARTMENT BY: SHRI. R. K. RAM, D.R. ASS ESSEE BY: SHRI. RAKESH GARG, ADVOCATE DATE OF HEARING: 15 05 2014 DATE OF PRONOUNCEMENT: 23 05 2014 O R D E R PER SUNIL KUMAR YADAV: THESE APPEALS ARE FILED ON BEHALF OF THE ASSESSEE AS WELL AS THE REVENUE AGAINST THE RESPECTIVE ORDER OF THE LD. CIT (A). SINCE COMMON ISSUES ARE INVOLVED IN THESE APPEALS, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER. WE, HOWEVER, PREFER TO ADJUDICATE THEM ONE AFTER THE OTHER. ITA NO.753/LKW/2010 A.Y. 2007 - 08: 2 . IN THIS APPEAL, T HE REVENUE HAS ASSAILED THE ORDER OF THE LD. CIT(A) MAINLY ON TWO GROUNDS, WHICH ARE AS UNDER: - 1 . THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2,05,44,563 / - ON ACCOUNT OF NON - DEDUCTION O F TDS UNDER SECTION 40A(IA) WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE AND MATERIAL BROUGHT ON RECORD BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 2 . THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE ADDITION RS.4,50,000 / - (2,00,000 / - JAJMAU UNIT + RS.2,50,000 / - BANTHAR UNIT) MADE ON ACCOUNT OF MANUFACTURING EXPENSES TO RS. 1,00,000 / - WITHOUT ASSIGNING ANY REASON FOR DOING SO. WHEREAS THE A.O. HAS PASSED THE ORDER AFTER TAKING INTO CONSIDERATION THE FACTS AND MATERIAL OF THE CASE. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : 3 . APROPOS GROUND NO.1, IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT THIS GROUND IS SQUARELY COVERED BY VARIOUS ORDERS OF THE TRIBUNAL AND THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE FOLLOWING CASES: - ( I ) ACIT - III VS. M/S INDIAN LEATHER INDUSTRIES , KANPUR ITA NO. 170/LKW/2012. ( II ) ACIT - 1, KANPUR VS. ASFAND AKHTAR, KANPUR ITA NO.684/LKW/2013. ( III ) DCIT VS. SANJIV GUPTA, 135 TTJ 641. ( IV ) CIT & ANOTHER VS. M/S MODEL EXIMS, KANPUR IN INCOME TAX APPEAL DEFECTIVE NO.164 OF 2011. 4 . IT WAS FURTHER CONTENDED THAT THE ASSESSMENT YEAR INVOLVED IS 2007 - 08 AND THE CIRCULAR INITIALLY ISSUED WAS WITHDRAWN VIDE CIRCULAR NO.7 OF 2009 DATED 20.10.2009. THEREFORE, NO TDS IS REQUIRED TO BE DEDUCTED ON THE COMMISSION PA ID TO THE FOREIGN AGENTS. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO PLACED RELIANCE UPON THE ORDER OF THE LD. CIT(A). 5 . THE LD. D.R., ON THE OTHER HAND, HAS PLACED RELIANCE UPON THE ORDER OF THE ASSESSING OFFICER. 6 . HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDER OF THE LD. CIT(A), WE FIND THAT THE FINDINGS OF THE LD. CIT(A) IS IN CONSONANCE WITH THE VARIOUS ORDERS OF THE TRIBUNAL. FOR THE SAKE OF REFERENCE, WE EXTRACT THE OBSERVATION OF THE LUCKNOW BEN CH OF THE TRIBUNAL IN THE CASE OF ACIT - 1, KANPUR VS. ASFAND AKHTAR, KANPUR ITA NO.684/LKW/2013 AS UNDER: - 5. WE, HOWEVER, CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THIS REGARD AND THE AFORESAID ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2008 - 09 AND WE FIND THAT THE TRIBUNAL HAS EXAMINED THE IDENTICAL ISSUE IN DETAIL IN ASSESSMENT YEAR 2008 - 09 IN THE CASE ACIT - 1, KANPUR VS. M/S NORTHERN TANNERY, KANPUR IN ITA NO.55/LKW/2012 AND FINALLY CONCLUDED THAT THE ASSESSEE WAS NOT PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : REQUIRED TO DEDUC T TDS ON THE PAYMENT OF COMMISSION TO NON - RESIDENT AND ACCORDINGLY THE ORDER OF THE LD. CIT(A) DELETING THE ADDITION MADE IN THIS REGARD WAS CONFIRMED FOLLOWING THE EARLIER ORDER OF THE TRIBUNAL. FOR THE SAKE OF REFERENCE, WE EXTRACT THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL DATED 7.8.2013 IN ITA NO.55/LKW/2012 AS UNDER: - 5. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS PLACED RELIANCE UPON THE ORDER OF THE LUCKNOW BENCH OF THE TRIBUNAL IN THE CASE OF DCIT V. SANJIV GUPTA [2011] 135 TTJ (LUCKNOW) 641 IN WHICH IT HAS BEEN HELD THAT CIRCULAR NO.7/2009 DATED 22.10.2009 WOULD HAVE PROSPECTIVE EFFECT AND WILL NOT APPLY TO THE ASSESSMENT YEAR 2008 - 09. THE LD. CIT(A) HAS ALSO ADJUDICATED THE ISSUE FOLLOWING THE AFORESAID ORDER OF THE TRIBUNAL AND ALSO THE JUDGMENT OF THE APEX COURT IN THE CASE OF CIT VS. TOSHOKA LTD. (SUPRA). THE IDENTICAL ISSUE WAS EXAMINED BY THE TRIBUNAL IN THE CASE OF ACIT VS. INDIAN LEATHER INDUSTRIES, I.T.A. NO.170/LKW/2012 IN DETAIL AND IT WAS HELD THAT CIRCULAR NO.7/2 009 DATED 20/10/2009 WITHDRAWING THE EARLIER CIRCULAR NOS.786 DATED 7/2/2000 AND 23 DATED 23/7./969 WILL BE OPERATIVE ONLY FROM THE DATE OF ISSUE AND HAD NO RETROSPECTIVE EFFECT I.E. W.E.F. ASSESSMENT YEAR 2009 - 10. THE RELEVANT OBSERVATIONS OF THE TRIBUNA L ARE EXTRACTED AS UNDER: 7. HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF RECORD, WE FIND THAT THE LD. CIT(A) HAS ADJUDICATED THE ISSUE IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS AND ALSO THE ORDER OF THE LUCKNOW BENCH OF THE TRIBUNAL IN THE CASE OF DCIT V. SANJIV GUPTA (SUPRA) IN WHICH THE TRIBUNAL HAS HELD THAT DISALLOWANCE UNDER SECTION 40(A)(I) ON PAYMENT OF COMMISSION TO NON - RESIDENT CANNOT BE MADE IN THE LIGHT OF OLD CIRCULAR NO.23 DATED 23.7.196 9 AND CIRCULAR NO.786 DATED 7.2.2000 AS THE ASSESSEE WAS NOT OBLIGED TO DEDUCT TDS UNDER SECTION 195 OF THE ACT WITH REGARD TO PAYMENT OF COMMISSION TO FOREIGN AGENT. CIRCULAR NO.7/2009 DATED 20.10.2009 WITHDRAWING THE EARLIER CIRCULAR NOS.786 DATED 7.2.2 000 AND 23 DATED 23.7.1969 WILL BE OPERATIVE ONLY FROM THE DATE OF ISSUE AND HAD NO RETROSPECTIVE EFFECT I.E. W.E.F. ASSESSMENT YEAR 2009 - 10. SINCE THE IMPUGNED ISSUE IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL OF THIS BENCH, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS ADJUDICATED THE ISSUE FOLLOWING THE ORDER OF THE TRIBUNAL. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL IN THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 5 - : CASE OF DCIT V. SANJIV GUPTA (SUPRA) ARE EXTRACTED HEREUNDER: - AS PER THE CBDT CIRCULAR NO. 23, DT. 23RD JULY , 1969 AND CIRCULAR NO. 786, DT. 7TH FEB., 2000, THE ASSESSEE WAS NOT REQUIRED TO DEDUCT THE TAX AT SOURCE UNDER S. 195 WITH REGARD TO PAYMENT OF COMMISSION TO FOREIGN AGENT. IN THE INSTANT CASE, THE ASSESSMENT YEAR INVOLVED IS 2007 - 08 AND THE RELEVANT PRE VIOUS YEAR IS 2006 - 07. ADMITTEDLY, RETURN OF INCOME WAS FILED ON 30TH OCT., 2007. AT THE TIME OF FILING OF THE RETURN, CIRCULAR NO. 7 OF 2009, DT. 22ND OCT., 2009 WAS NOT IN FORCE BY WHICH THE CBDT WITHDREW CIRCULAR NO. 23, DT. 23RD JULY, 1969 WITH IMMEDIA TE EFFECT. WHERE A CIRCULAR ISSUED EARLIER CREATED A VESTED RIGHT IN THE TAXPAYER AND SUCH RIGHT IS SOUGHT TO BE CURTAILED OR WITHDRAWN BY A SUBSEQUENT CIRCULAR, THEN SUCH SUBSEQUENT CIRCULAR WILL NOT HAVE A RETROSPECTIVE EFFECT. NO INFIRMITY IS FOUND IN T HE ORDER OF THE CIT(A) ON THIS ISSUE AND ACCORDINGLY THE SAME IS UPHELD. 8. SINCE THE IMPUGNED ISSUE IS SQUARELY COVERED BY THE AFORESAID ORDER OF THE TRIBUNAL, WE FIND NO JUSTIFICATION TO TAKE A CONTRARY VIEW IN THIS APPEAL. ACCORDINGLY, WE CONFIRM THE ORDER OF THE LD. CIT(A) WHO HAS RIGHTLY ADJUDICATED THE ISSUE FOLLOWING THE ORDER OF THE TRIBUNAL. 6. SINCE THE IMPUGNED ISSUE IS SQUARELY COVERED BY THE AFORESAID ORDER OF THE TRIBUNAL, WE FIND NO VALID REASON TO TAKE A CONTRARY VIEW. ACCORDINGLY, WE C ONFIRM THE ORDER OF CIT(A) WHO HAS RIGHTLY ADJUDICATED THE ISSUE FOLLOWING THE ORDER OF THE TRIBUNAL. 6. ACCORDINGLY, FOLLOWING THE AFORESAID ORDER OF THE TRIBUNAL, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND CONFIRM THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION. 7 . THIS VIEW IS ALSO APPROVED BY THE HON'BLE HIGH COURT OF ALLAHABAD IN THE CASE OF CIT & ANOTHER VS. M/S MODEL EXIMS, KANPUR IN INCOME TAX APPEAL DEFECTIVE NO.164 OF 2011. IN THE LIGHT OF THESE FACTS, THE IMPUGNED ISSUE IS SQUARELY C OVERED BY THE AFORESAID JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN FAVOUR OF THE ASSESSEE. SINCE THE LD. CIT(A) HAS DECIDED THE ISSUE IN CONSONANCE WITH THE FINDINGS OF THE TRIBUNAL IN THE AFORESAID CASES AS WELL AS THE HON'BLE HIGH COURT OF ALLAHABAD I N THE CASE OF CIT & ANOTHER PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 6 - : VS. M/S MODEL EXIMS, KANPUR (SUPRA), WE FIND NO INFIRMITY THEREIN. ACCORDINGLY, WE CONFIRM THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND REJECT GROUND NO.1 OF THE APPEAL OF THE REVENUE . 8 . APROPOS GROUND NO.2, IT IS NOTICED THAT T HE ASSESSING OFFICER HAS MADE AD HOC DISALLOWANCE OF RS.2 LAKHS IN JAJMAU UNIT AND RS.2.50 LAKHS IN BANTHAR UNIT HAVING OBSERVED THAT SOME OF THE PAYMENTS WERE MADE IN CASH , WHICH ARE NOT OPEN TO VERIFICATION. 9 . THE LD. CIT(A) RESTRICTED THE DISALLOWANCE FRO M RS.4.50 LAKHS TO RS.1 LAKH HAVING OBSERVED THAT THE DISALLOWANCES WERE MADE ON AD HOC BASIS WITHOUT POINTING OUT ANY SPECIFIC DEFECT. 10 . WE HAVE CAREFULLY EXAMINED THE ORDER OF THE LD. CIT(A) AS WELL AS THE ASSESSING OFFICER AND WE FIND THAT THE ASSESSING O FFICER HAS MADE DISALLOWANCE ON AD HOC BASIS WITHOUT POINTING OUT ANY DEFECT IN PARTICULAR EXPENSE AND THIS TYPE OF AD HOC DISALLOWANCE IS NOT PERMISSIBLE UNDER THE LAW. THE LD. CIT(A), HOWEVER, RESTRICTED THE DISALLOWANCE TO RS.1 LAKH WITHOUT ANY BASIS. SINCE THE AD HOC DISALLOWANCES ARE NOT PERMISSIBLE U NDER THE LAW, WE FIND NO MERIT THEREIN AND REJECT GROUND NO.2 OF THE APPEAL OF THE REVENUE . 11 . THE SUSTENANCE OF DISALLOWANCE OF RS.1 LAKH BY THE LD. CIT(A) WAS ALSO CHALLENGED BY THE ASSESSEE THROUGH ITS APPEAL IN ITA NO.759/LKW/2010. SINCE THE DISALLOWANCE ON AD HOC BASIS IS NOT PERMISSIBLE, WE DELETE THE AD HOC DISALLOWANCE OF RS.1 LAKH ALSO. ITA NO.75 9 /LKW/2010 A.Y. 2007 - 08: 12 . IN THIS APPEAL, THE ASSESSEE HAS ASSAILED THE ORDER OF THE LD. CIT(A), INTE R ALIA, ON VARIOUS GROUNDS, WHICH ARE AS UNDER: - 1 . BECAUSE THE CIT (APPEALS) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE ORDER PASSED U/S 143(3) OF THE IT. ACT, 1961, PASSED BY THE J CIT - 1, KANPUR WHEREIN THE JCIT DID NOT HAVE THE JURISDICTION TO PASS THE ORDER, MOREOVER, THE JCIT DID NOT PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 7 - : ISSUE ANY NOTICE U/ S 143(2) OF THE ACT, 1961 2 . BECAUSE THE RETURN HAVING BEEN FILED WITH THE DCIT, IT WAS FOR DCIT TO COMPLETE THE ASSESSMENT, THERE BEING NO ORDER TRANSFERRING THE FILE OR CHALLENGING THE JURISDICTION FROM DCIT TO JCIT, THE ORDER PASSED BY JCIT IS CONTRARY TO THE PROVISIONS OF LAW AND WITHOUT JURISDICTION. 3 . BECAUSE THE CIT(APPEALS) HAS ERRED ON FACTS AND IN LAW IN WRONGLY DENYING THE DEDUCTION CLAIMED U/ S 80 - I B IN RESPECT OF BANTHER UNIT. 4 . BECAUSE THE CIT(APP EALS) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE DUTY DRAW BACK AMOUNT IS TO BE EXCLUDED FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80IB. 5 . BECAUSE THE CIT(APPEALS) HAS FAILED TO APPRECIATE THAT THE MATTER IS STILL SUBJUDICED BEFORE THE HON'BLE SUPREM E COURT IN THE CASE OF VIJAYA SILKS WHEREIN THE HON'BLE SUPREME COURT HAS GRANTED STAY WITH RESPECT TO DFRC AND DEPB MATTERS. 6 . BECAUSE THE CIT(APPEALS) HAS ERRED IN MAKING AND UPHOLDING THE ADDITION OF 1 LAKH ON ACCOUNT OF MANUFACTURING EXPENSES BEING RS.50 ,000/ - FOR EACH UNIT ON ACCOUNT OF POSSIBLE LEAKAGES. 13 . APROPOS GROUNDS NO.1 AND 2, THE ASSESSEE HAS CHALLENGED THE JURISDICTION OF THE ASSESSING OFFICER TO FRAME THE IMPUGNED ASSESSMENT ON THE GROUND THAT NOTICES UNDER SECTION 142(1) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT') AND 143(2) OF THE ACT WERE ISSUED BY THE ASSTT. COMMISSIONER OF INCOME - TAX (ACIT) AND DY. COMMISSIONER OF INCOME - TAX (DCIT), BUT THE ASSESSMENT WAS COMPLETED BY THE JOINT COMMISSIONER OF INCOME - TAX (JCIT). THE REFORE, THE ASSESSMENT IS BAD, AS THE ASSESSING OFFICER WHO ASSUMED JURISDICTION HAS NOT COMPLETED THE ASSESSMENT. IN SUPPORT OF HIS CONTENTION, THE LD. COUNSEL FOR THE ASSESSEE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 8 - : HAS INVITED OUR ATTENTION TO THE PROVISIONS OF SECTIONS 2(7A) AND 120 OF THE ACT, IN WHICH THE ASSESSING OFFICER AND THE INCOME - TAX AUTHORITIES ARE DEFINED. IN SUPPORT OF HIS CONTENTION, THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO PLACED RELIANCE UPON THE FOLLOWING JUDGMENTS: - ( I ) VALVOLINE CUMMINS LTD. VS. DY. CIT [2008] 307 ITR 103 (D ELHI) ( II ) BERGER PAINTS INDIA LTD. VS. ASSTT. CIT, 246 ITR 133. ( III ) KUSUM GOYAL VS. ITO [2010] 329 ITR 283 (GUJ) ( IV ) CIT VS. M.I. BUILDERS PVT. LTD. [2012] 349 ITR 271 (ALL) ( V ) CITY GARDEN VS. INCOME TAX OFFICER [2012] 52 SOT 195 (JODHPUR) ( VI ) PRACHI LEATHERS PVT. LTD. VS. A DDL. CIT, KANPUR (ITA NO.26/LKW/2010), ORDER DATED 8.12.2010. ( VII ) PRACHI LEATHERS PVT. LTD. VS. CIT - VI, KANPUR (ITA NO.744/LKW/2004), ORDER DATED 29.3.2010. 14 . THE LD. D.R., ON THE OTHER HAND, HAS PLACED RELIANCE UPON THE ORDER OF THE TRIBUNAL IN THE CASE OF ALLA HADAD TANNERY VS. JCIT IN ITA NO.196 /LKW/2011, IN WHICH THE TRIBUNAL HAS GIVEN A CATEGORICAL FINDING THAT ONCE THE PROCEEDINGS ARE INITIATED BY A SUBORDINATE AUTHORIT Y, WHO IS ALSO HAVING CONCURRENT JURISDICTION, THE ASSESSMENT CAN BE FRAMED BY AN AUTHORIT Y HIGHER IN RANK. THE LD. D.R. FURTHER CONTENDED THAT THE CASE LAWS RELIED UPON BY THE ASSESSEE ARE NOT RELEVANT TO THE PRESENT CONTROVERSY , AS IN THOSE CASES THE PROCESS WAS INITIATED BY AN AUTHORITY HIGHER IN RANK AND IT WAS COMPLETED BY AN AUTHORITY LO WER IN RANK. BUT IN THE INSTANT CASE, NOTICES UNDER SECTION 142(1) AND 143(2) OF THE ACT WERE ISSUED BY THE ACIT AND DCIT AND THE ASSESSMENT WAS COMPLETED BY THE JCIT. THEREFORE, THE ASSESSMENT FRAMED BY THE J CIT IS VALID IN THE EYES OF LAW AND THIS ASPE CT WAS EXAMINED BY THE TRIBUNAL IN THE CASE OF ALLAHADAD TANNERY VS. JCIT (SUPRA) IN DETAIL. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 9 - : 15 . HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW AND THE JUDGMENTS REFERRED BY TH E ASSESSEE, WE FIND THAT THE IMPUGNED ISSUE WAS EXAMINED BY THE TRIBUNAL IN THE CASE OF ALLAHADAD TANNERY VS. JCIT (SUPRA). IN THAT CASE , THE ASSESSMENT UNDER SECTION 143(2) WAS INITIATED BY THE DCIT AND COMPLETED BY THE JCIT. IN ANY CASE, THE TRIBUNAL HAS ALSO OBSERVED IN THAT ORDER THAT THE ASSESSMENT BY THE HIGHER AUTHORITIES MAY BE POSSIBLE EVEN IF THE PROCEEDINGS WERE INITIATED BY THE SUBORDINATE AUTHORITIES , HAVING CONCURRENT JURISDICTION. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL IN THE CASE OF ALLAHADAD TANNERY VS. JCIT (SUPRA) ARE EXTRACTED HEREUNDER: - 5. HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE RELEVANT PROVISIONS OF THE ACT AND THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT DCIT, RANGE - 1 HAS PROCESSED THE RETURN OF INCOME U/S 143(1) OF THE ACT BY MAKING ADJUSTMENTS AND ISSUED THE REFUND. NOTICE U/S 143(2) WAS ISSUED AND ASSESSMENT WAS FRAMED U/S 143(3) BY THE JT.CIT, RANGE - 1. DURING THE COURSE OF HEARING OF THE APPEAL, NO CONTRO VERSY WAS RAISED WITH REGARD TO THE CONCURRENT JURISDICTION OF THE DCIT AND JT.CIT OVER THE APPELLANT. MEANING THEREBY BOTH THE OFFICERS ARE QUITE COMPETENT TO FRAME AN ASSESSMENT OF THE RETURNS FILED BY THE ASSESSEE. THE MOOT QUESTION ARISES BEFORE US I S WHETHER THE JT.CIT, WHO IS ADMITTEDLY SENIOR OFFICER HAVING SUPERVISORY POWER/JURISDICTION OVER THE DCIT, CAN FRAME THE ASSESSMENT U/S 143(3) OF THE ACT WHERE RETURN OF INCOME WAS PROCESSED U/S 143(1) BY THE DCIT? 5.1 BEFORE DWELLING UPON THE ISSUE, WE HAVE TO LOOK TOWARDS THE OBJECT AND PURPOSE OF CONFERRING THE CONCURRENT JURISDICTION TO THE AUTHORITY HIGHER IN RANK OF THE INCOME - TAX AUTHORITY/ASSESSING OFFICER WHO WAS SUPPOSE TO FRAME THE ASSESSMENT IN NORMAL COURSE. OUR ATTENTION WAS INVITED TO THE PROVISIONS OF SECTION 120 OF THE ACT WITH THE SUBMISSION THAT THROUGH THE EXPLANATION BELOW SUB SECTION (1) INSERTED BY FINANCE ACT, 2006 WITH RETROSPECTIVE EFFECT FROM 01/04/88 CLARIFYING THAT ANY INCOME - TAX AUTHORITY BEING A HIGHER AUTHORITY IN RANK, MAY , IF SO DIRECTED BY THE BOARD, EXERCISE THE POWERS OR PERFORM THE FUNCTION OF THE INCOME - TAX AUTHORITY LOWER IN RANK AND ANY SUCH DIRECTION ISSUED BY THE BOARD SHALL BE DEEMED TO BE A DIRECTION ISSUED UNDER SUB SECTION (1). MEANING THEREBY THE INCOME - TAX AUTHORITY BEING AN AUTHORITY HIGHER IN RANK WHILE EXERCISING ITS SUPERVISORY POWERS, MAY SEIZE THE MATTER PENDING WITH THE ASSESSING PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 10 - : OFFICER WHO IS JUNIOR IN RANK AND EXERCISE THE POWERS AND PERFORM THE FUNCTIONS OF THAT ASSESSING OFFICER AT ANY POINT OF T IME WHEREVER THE INTERVENTION IS CALLED FOR. IF WE LOOK THE OBJECT AND PURPOSE OF THIS EXPLANATION, WE FIND THAT THE CONCURRENT JURISDICTION ARE PROVIDED TO AUTHORITIES HIGHER IN RANK IN ORDER TO HAVE BETTER SUPERVISION OVER ITS SUBORDINATES AND IF THEY F EEL NECESSARY, THEY MAY SEIZE WITH THE MATTER AND COMPLETE THE REMAINING ACT OR FUNCTION, WHICH WAS TO BE EXERCISED BY THE ASSESSING OFFICER WHO IS JUNIOR TO HIM. 5.2 WE HAVE EXAMINED THE MATERIAL REFERRED TO BY THE ASSESSEE WITH REGARD TO CONCURRENT JURI SDICTION AND WE FIND THAT IN EXERCISE OF POWER CONFERRED BY SECTION 120(4)(B) OF THE ACT, THE CENTRAL BOARD OF DIRECT TAXES (IN SHORT CBDT) ISSUED A NOTIFICATION DATED 17 TH SEPTEMBER, 2001 CONFERRING THE POWERS AND FUNCTIONS OF AN ASSESSING OFFICER ON JT. COMMISSIONER OF INCOME TAX WHICH BY VIRTUE OF SECTION 2(28C) OF THE ACT INCLUDES THE ADDL. COMMISSIONER OF INCOME TAX. SUBSEQUENT TO THE NOTIFICATION DATED 17 TH SEPTEMBER 2001, THE CBDT ISSUED AN ORDER DATED 16 TH MAY 2007 TO THE EFFECT THAT IN VIEW OF THE INCREASING GAP BETWEEN THE WORKLOAD AND SCRUTINY ASSESSMENT, IT HAS BEEN DECIDED TO ENTRUST THE RANGE HEADS WITH THE RESPONSIBILITY OF MAKING ASSESSMENTS IN TOP REVENUE POTENTIAL CASES OF THE RANGE TO BE SELECTED ON THE BASIS OF THE RETURNED INCOME. 5.3 ON THE ISSUE OF CONCURRENT JURISDICTION, THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF BERGER PAINTS INDIA LTD. (SUPRA) HAD EXPLAINED THE MEANING OF EXPRESSION CONCURRENT TO MEAN TWO AUTHORITIES HAVING EQUAL POWERS TO DEAL WITH THE SITUATION, BUT THE S AME WORK CANNOT BE DIVIDED BETWEEN THEM. THE RELEVANT OBSERVATIONS OF HON'BLE CALCUTTA HIGH COURT ARE EXTRACTED HEREUNDER: CONCURRENT JURISDICTION MEANS A SUBORDINATE AUTHORITY CAN DEAL WITH THE MATTER EQUALLY WITH ANY SUPERIOR AUTHORITY IN ITS ENT IRETY SO THAT EITHER ONE OF SUCH JURISDICTIONS CAN BE INVOKED. IT CANNOT BE CONSTRUED AS CONCURRENT JURISDICTION WHEN ONE PART OF THE ASSESSMENT WILL BE DEALT WITH BY ONE SUPERIOR OFFICER AND THE OTHER PART WILL BE DEALT WITH BY ONE SUBORDINATE OFFICER. 5.4 THE DISTINCTION BETWEEN CONCURRENT EXERCISE AND JOINT EXERCISE OF JURISDICTION WAS ALSO EXAMINED BY HON'BLE DELHI HIGH COURT IN THE CASE OF VALVOLINE CUMMINS LIMITED (SUPRA) IN WHICH IT HAS BEEN OBSERVED AS UNDER: PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 11 - : IT APPEARS TO US QUITE CLEARLY TH AT THERE IS A DISTINCTION BETWEEN CONCURRENT EXERCISE OF POWER AND JOINT EXERCISE OF POWER. WHEN POWER HAS BEEN CONFERRED UPON TWO AUTHORITIES CONCURRENTLY, EITHER ONE OF THEM CAN EXERCISE THAT POWER AND ONCE A DECISION IS TAKEN TO EXERCISE THE POWER BY ANY ONE OF THOSE AUTHORITIES, THAT EXERCISE MUST BE TERMINATED BY THAT AUTHORITY ONLY. IT IS NOT THAT ONE AUTHORITY CAN START EXERCISING A POWER AND THE OTHER AUTHORITY HAVING CONCURRENT JURISDICTION CAN CONCLUDE THE EXERCISE OF THAT POWER. THIS PERHAP S MAY BE PERMISSIBLE IN A SITUATION WHERE BOTH THE AUTHORITIES JOINTLY EXERCISE POWER BUT IT CERTAINLY IS NOT PERMISSIBLE WHERE BOTH THE AUTHORITIES CONCURRENTLY EXERCISE POWER. ONE EXAMPLE THAT IMMEDIATELY COMES TO THE MIND IS THAT OF GRANT OF ANTICIPA TORY BAIL. BOTH THE SESSIONS JUDGE AND THE HIGH COURT HAVE CONCURRENT POWER. IT IS NOT AS IF A PART OF THAT POWER CAN BE EXERCISED BY THE HIGH COURT AND THE BALANCE POWER CAN BE EXERCISED BY THE SESSIONS JUDGE. IF THE HIGH COURT IS SEIZED OF AN APPLICA TION FOR ANTICIPATORY BAIL IT MUST DEAL WITH IT AND SIMILARLY IF THE SESSIONS JUDGE IS SEIZED OF AN ANTICIPATORY BAIL, HE MUST DEAL WITH IT. THERE CAN BE NO JOINT EXERCISE OF POWER BOTH BY THE HIGH COURT AS WELL AS BY THE SESSIONS JUDGE IN RESPECT OF TH E SAME APPLICATION FOR ANTICIPATORY BAIL. 5.5 WE HAVE EXAMINED THE FACTS OF BOTH THE CASES. WE FIND THAT IN THIS CASE THE PROCESS WAS INITIATED BY THE AUTHORITY HIGHER IN RANK BUT THE SUBSEQUENT ACTION WAS TAKEN BY THE AUTHORITY JUNIOR IN RANK. THE SIT UATION WHERE THE PROCESS WAS INITIATED BY THE JUNIOR OFFICER AND SUBSEQUENT ACTION WAS TAKEN BY THE AUTHORITY HIGHER IN RANK, WAS NEITHER EXAMINED BY THEIR LORDSHIPS IN THIS CASE NOR CONCEPTUALIZED. 6. WE HAVE ALSO EXAMINED THE THEORY OF MODE OF ASSESSM ENT AS PROPOUNDED BY THE LEARNED D.R. AND WE FIND FORCE THEREIN. THERE ARE TWO MODE OF ASSESSMENTS. ONE IS CALLED PRELIMINARY/SUMMARY ASSESSMENT OR THE ASSESSMENT FRAMED U/S 143(1) AND THE OTHER IS CALLED REGULAR ASSESSMENT FRAMED U/S 143(3) OF THE ACT. THE CBDT TIME TO TIME ISSUES THE GUIDELINE FOR FRAMING THE REGULAR ASSESSMENT U/S 143(3) AFTER ISSUING NOTICE U/S 143(2) OF THE ACT. REST OF THE ASSESSMENTS ARE PROCESSED U/S 143(1) OF THE ACT. UNDISPUTEDLY, MAXIMUM ASSESSMENTS ARE FRAMED U/S 143(1) WHE RE THE ASSESSING OFFICER HAS ISSUED THE INTIMATION AFTER MAKING A PRIMA FACIE ADJUSTMENT. ALONG WITH THE INTIMATION THE ASSESSING OFFICER EITHER RAISES THE DEMAND OR ISSUES THE REFUND BUT WHENEVER CASE FALLS PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 12 - : WITHIN THE GUIDELINES ISSUED BY CBDT, IT IS TO BE TAKEN FOR SCRUTINY AND THE ASSESSMENT IS REQUIRED TO BE COMPLETED U/S 143(3) OF THE ACT AND FOR COMPLETING THE ASSESSMENT U/S 143(3), THE ASSESSING OFFICER IS REQUIRED TO ISSUE A NOTICE U/S 143(2) WITHIN A PERIOD PRESCRIBED U/S 143(2) OF THE ACT. THERE AFTER THE ASSESSMENT IS FRAMED U/S 143(3) AFTER PROVIDING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THEREFORE, THERE ARE TWO MODE OF ASSESSMENT AND THEY ARE INDEPENDENT TO EACH OTHER. 7. WE HAVE ALSO CAREFULLY EXAMINED THE OTHER JUDGMENTS REFER RED TO BY THE ASSESSEE. IN ALL THOSE JUDGMENTS, THE PROCEEDINGS FOR ASSESSMENT WAS INITIATED BY THE AUTHORITY HIGHER IN RANK AND REST OF THE ASSESSMENT IS COMPLETED BY THE ASSESSING OFFICER WHO IS JUNIOR TO THE OFFICER WHO HAS INITIATED THE PROCESS FOR AS SESSMENT. IN THOSE CASES, IT WAS REPEATEDLY HELD THAT ONCE THE AUTHORITY HIGHER IN RANK HAS SEIZED WITH THE MATTER, THE AUTHORITY LOWER IN RANK FORFEITS ITS JURISDICTION TO PROCEED WITH THE MATTER IN ANY MANNER AND TO COMPLETE THE REMAINING ASSESSMENT. THE OBJECT/BASIS FOR GIVING THAT FINDING, ACCORDING TO US, ARE THAT ONCE THE AUTHORITY HIGHER IN RANK SEIZED WITH THE MATTER PENDING BEFORE THE SUBORDINATE AUTHORITY FOR ADJUDICATION, THE SUBORDINATE AUTHORITY IS CEASED WITH THE JURISDICTION TO PROCEED FU RTHER IN THAT MATTER. THE REASON FOR DOING SO IS QUITE OBVIOUS AS ONCE THE HIGHER AUTHORITY HAS STARTED APPLYING HIS MIND TO THE ISSUE IN DISPUTE, THE SUBORDINATE AUTHORITY CANNOT PROCEED WITH THE MATTER. IF IT IS NOT DONE, THERE WOULD BE CHAOS IN THE AD MINISTRATION OF JUSTICE. BUT IN THE INSTANT CASE, THE DCIT HAS COMPLETED THE ONE MODE OF ASSESSMENT BY ISSUING INTIMATION U/S 143(1) OF THE ACT AND THE JT.CIT HAS INITIATED AND COMPLETED THE SECOND MODE OF ASSESSMENT. THEREFORE, WE DO NOT FIND ANY ILLEGA LITY IN THE ASSESSMENT AS THE FINAL ASSESSMENT WAS COMPLETED BY JT.CIT, RANGE - 1, WHO IS ADMITTEDLY SENIOR AND SUPERVISORY AUTHORITY OF DCIT, RANGE - 1. WE HASTEN TO ADD THAT ASSESSMENT BY THE HIGHER AUTHORITY MAY BE POSSIBLE EVEN IF THE PROCEEDINGS WERE INI TIATED BY THE SUBORDINATE AUTHORITY WHO IS ALSO HAVING CONCURRENT JURISDICTION BUT IN ANY CASE THIS ISSUE IS NOT BEFORE US AND WE RESTRICT OURSELVES TO THE CONTROVERSY INVOLVED. WE, THEREFORE, DO NOT FIND ANY INFIRMITY AND ILLEGALITY IN THE ASSESSMENT ORD ER FRAMED BY THE JT.CIT, RANGE - 1. ACCORDINGLY, WE CONFIRM THE ORDER OF CIT(A) IN THIS REGARD. 16 . THE OBJECT OF CONFERRING CONCURRENT JURISDICTION UPON VARIOUS OFFICERS OF THE INCOME - TAX DEPARTMENT WAS EXAMINED BY THE TRIBUNAL IN THE AFORESAID CASE B EFORE H OLDING THAT THE ASSESSMENT BY THE HIGHER AUTHORITY MAY BE POSSIBLE EVEN IF THE PROCEEDINGS WERE INITIATED BY THE SUBORDINATE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 13 - : AUTHORITY , WHO IS ALSO HAVING CONCURRENT JURISDICTION. SINCE THE IMPUGNED ISSUE HAS ALREADY BEEN ADJUDICATED BY THE TRIBUNAL AND H AS TAKEN A PARTICULAR VIEW, WE FIND NO JUSTIFICATION TO TAKE A CONTRARY VIEW IN THE INSTANT CASE. 17 . WE ALSO FIND FORCE IN THE CONTENTIONS OF THE DEPARTMENT WITH REGARD TO THE JUDGMENTS REFERRED TO BY THE LD. COUNSEL FOR THE ASSESSEE A S IN ALL THOSE CASES , THE PROCESS WAS INITIATED BY THE AUTHORITIES HIGHER IN RANK AND IT WAS COMPLETED BY THE AUTHORITIES LOWER IN RANK, WHEREAS THE FACTS IN THE INSTANT CASE ARE OTHERWISE. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT IF THE PROCESS OF ASSESSMENT IS INITIATED BY AN AUTHORIT Y LOWER IN RANK AND ASSESSMENT WAS COMPLETED BY AN AUTHORITY HIGHER IN RANK, THE ASSESSMENT WOULD BE VALID IN THE EYES OF LAW, AS THE OBJECT OF CONFERRING CONCURRENT JURISDICTION IS TO EMPOWER THE SENIOR OFFICER TO SUPERVISE THE FUNCTIONING OF THE JUNIOR OFFICERS EFFECTIVELY AND WHENEVER THEY FEEL THAT THE INTERVENTION IN THE ASSESSMENT BEING FRAMED BY THE JUNIOR OFFICER IS CALLED FOR, THEY CAN SEIZE WITH THE MATTER AND COMPLETE THE ASSESSMENT. IN THE INSTANT CASE ALSO , THE ASSESSMENT PROCEE DINGS WERE INITIATED BY ISSUING NOTICE UNDER SECTION 142(1) AND 143(2) OF THE ACT BY THE ACIT AND DCIT AND ASSESSMENT WAS COMPLETED BY THE JCIT , HAVING CONCURRENT JURISDICTION AND WE FIND NO ILLEGALITY THEREIN. WE, THEREFORE, FIND OURSELVES IN AGREEMENT W ITH THE FINDINGS OF THE LD. CIT(A) IN THIS REGARD AND WE CONFIRM THE SAME AND REJECT GROUNDS NO.1 & 2 OF THE APPEAL OF THE ASSESSEE . 18 . APROPOS GROUNDS NO. 3 TO 5, THE ISSUE INVOLVED IN THESE GROUNDS IS COVERED BY THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF LIBERTY INDIA VS. CIT [2009] 317 ITR 218 AND THE LD. CIT(A) HAS DECIDED THE ISSUE FOLLOWING THE SAID JUDGMENT BY HOLDING THAT DEDUCTION UNDER SECTION 80IB OF THE ACT ON DUTY DRAWBACK RECEIPTS ARE NOT PERMISSIBLE AS THEY ARE NOT THE INCOME DERIVED FROM INDUSTRIAL UNDERTAKING. ACCORDINGLY, WE CONFIRM THE ORDER OF THE LD. CIT(A) IN THIS REGARD AND REJECT GROUNDS NO.3 TO 5 OF THE APPEAL OF THE ASSESSEE . PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 14 - : 19 . APROPOS GROUND NO.6, THE ISSUE RAISED IN THIS GROUND HAS ALREADY BEEN DEALT WITH IN THE REVENUES A PPEAL IN ITA NO.753/LKW/2010 , IN WHICH ADDITION OF RS.1 LAKH SUSTAINED BY THE LD. CIT(A) WAS DELETED. ACCORDINGLY, THIS GROUND IS ALSO DISPOSED OF. ITA NO.75 7 /LKW/2010 A.Y. 200 4 - 0 5 : 20 . IN THIS APPEAL, THE ASSESSEE HAS ASSAILED THE ORDER OF THE LD. CIT(A), INTER ALIA, ON VARIOUS GROUNDS, WHICH ARE AS UNDER: - 1 . BECAUSE THE ORDER OF THE CIT(APPEALS) UPHOLDING THE ORDER PASSED UNDER SECTION 143(3) BY THE ASSESSING OFFICER IS CONTRARY TO FACTS, BAD IN LAW, WITHOUT JURISDICTION AND BE QUASHED. 2 . BECAUSE THE CIT(APPEA LS) HAS ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THE FACTS THAT ONCE THE FILE WAS TRANSFERRED FROM DCIT - 1, KANPUR TO JCIT - 1, KANPUR, AND THE JCIT HAVING ISSUED NOTICE U/S 143(2) DATED 31.12.2007, THEREAFTER, THE ORDER PASSED BY THE DCIT - 1 WITHOUT ANY ORDER TRANSFERRING THE FILE, IS CONTRARY TO THE PROVISIONS O F LAW AND B E QUASHED. 3 . BECAUSE THE CIT(APPEALS) HAS ERRED ON FACTS AND IN LAW IN NOT ALLOWING DEDUCTION U/S 80HHC OF THE INCOME TAX ACT, 1961. 4 . BECAUSE ON A PROPER CONSIDERATION OF FACTS AND CIRCUMS TANCES OF THE CASE, IT WOULD BE FOUND THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80HHC AND THE CIT(APPEALS) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE ENTIRE RECEIPTS ON ACCOUNT OF DFRC & DEPB FROM BOTH UNITS ARE TO BE EXCLUDED FOR THE PURPOSES OF COMPUTATION OF DEDUCTION U/S 80HHC OF THE ACT. 5 . BECAUSE ON A PROPER CONSIDERATION OF FACTS AND CIRCUMSTANCES OF THE CASE, THE RELIANCE PLACED BY THE CIT(APPEALS) ON THE DECISION OF KALPATRU CHEMICALS 233 I TR 313 (BOMBAY) IS MISPLACED. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 15 - : 6 . BECAUSE THE CIT(A PPEALS) HAS FAILED TO APPRECIATE THAT THE MATTER IS STILL SUB JU DICED BEFORE THE HON'BLE SUPREME COURT IN THE CASE OF VIJAYA SILKS WHEREIN THE HON'BLE SUPREME COURT HAS GRANTED STAY WITH RESPECT TO DFRC AND DEPB MATTERS. 7 . BECAUSE THE CIT(APPEALS) HAS ERRED ON FACTS AND IN LAW IN WRONGLY DENYING THE DEDUCTION CLAIMED U/S 80 - IB IN RESPECT OF BANTHER UNIT. 8 . BECAUSE THE CIT(APPEALS) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE DUTY DRAW BACK AMOUNT IS TO BE EXCLUDED FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80IB. 9 . BECAUSE THE CIT(APPEALS) HAS ERRED ON FACTS AND IN LAW IN WRONGLY RESTRICTING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER THE HEAD VEHICLE RUNNING EXPENSES, TELEPHONE EXPENSES AND DEPRECIATION ON VEHICLES AT 10% OF THE TOTAL CLAIM. 10 . BECAUSE THE ENTIRE EXPENSES HAVING BEEN INCURRED FOR THE PURPOSE OF BUSINESS AND THERE BEING NO ERROR POINTED OUT BY THE ASSESSING OFFICER, THE DISALLOWANCE TO THE EXTENT OF 1/10 TH IS MISPLACED. 21 . APROPOS GROUNDS NO.1 & 2, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMI TTED THAT NOTICE UNDER SECTION 142(1) OF THE ACT DATED 22.9.2006 WAS ISSUED BY THE ACIT INITIATING THE PROCESS OF ASSESSMENT UNDER SECTION 143(3) OF THE ACT, BUT THE ASSESSMENT WAS COMPLETED BY THE DCIT VIDE HIS ORDER DATED 30.11.2006. THEREFORE, THE ASSE SSMENT ORDER WAS NOT PASSED BY AN OFFICER WHO ASSUMED JURISDICTION TO FRAME THE ASSESSMENT. 22 . THIS ASPECT WAS EXAMINED BY US IN THE FOREGOING APPEAL IN THE LIGHT OF THE ORDER OF THE TRIBUNAL IN THE CASE OF ALLAHADAD TANNERY VS. JCIT (SUPRA), IN WHICH IT HA S BEEN CATEGORICALLY HELD THAT ASSESSMENT BY AN AUTHORIT Y SENIOR IN RANK IS POSSIBLE EVEN IF IT IS INITIATED BY AN AUTHORITY PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 16 - : JUNIOR IN RANK. ADMITTEDLY , NOTICE UNDER SECTION 142(1) OF THE ACT WAS ISSUED BY THE ACIT AND ASSESSMENT WAS COMPLETED BY THE DCIT . THEREFORE, WE FIND NO INFIRMITY/ILLEGALITY IN THE ASSESSMENT ORDER. FOR THE REASONS GIVEN IN THE FOREGOING PARAS ON THIS ISSUE, WE APPROVE THE ORDER OF THE LD. CIT(A) , WHO HAS RIGHTLY UPHELD THE VALIDITY OF ASSESSMENT. ACCORDINGLY GROUNDS NO.1 AND 2 O F THE APPEAL OF THE ASSESSEE ARE REJECTED. 23 . APROPOS GROUNDS NO.3 TO 6 RELATING TO COMPUTATION OF DEDUCTION UNDER SECTION 80HHC OF THE ACT, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THIS ISSUE MAY BE SEND BACK TO THE ASSESSING OFFICER TO RE - ADJUDIC ATE IT IN THE LIGHT OF THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF TOPMAN EXPORT VS. CIT [2012] 342 ITR 49 (SC), TO WHICH THE REVENUE HAS NO OBJECTION. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THE ISSUE OF COMPUTATION OF DEDUCTIO N UNDER SECTION 80HHC OF THE ACT AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO RE - COMPUTE THE DEDUCTION UNDER SECTION 80HHC OF THE ACT IN THE LIGHT OF THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF TOPMAN EXPORT VS. CIT (SUPRA). ACCORDINGLY GROUNDS NO.3 TO 6 OF THE APPEAL OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 24 . APROPOS GROUNDS NO. 7 & 8 RELATING TO DEDUCTION CLAIMED UNDER SECTION 80IB OF THE ACT, THE LD. COUNSEL FOR THE ASSESSEE HAS CANDIDLY ADMITTED T HAT THIS ISSUE IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF LIBERTY INDIA VS. CIT (SUPRA) AND THE LD. CIT(A) REJECTED THE CLAIM OF THE ASSESSEE FOLLOWING THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CAS E OF LIBERTY INDIA VS. CIT (SUPRA). WE, THEREFORE, FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND CONFIRM THE SAME. ACCORDINGLY GROUNDS NO.7 & 8 OF THE APPEAL OF THE ASSESSEE ARE REJECTED. 25 . GROUNDS NO. 9 AND 10 RELATE TO THE AD HOC DIS ALLOWANCE UNDER THE HEAD VEHICLE RUNNING EXPENSES, TELEPHONE EXPENSES AND DEPRECIATION ON VEHICLE AT 10% OF THE TOTAL CLAIM. SINCE PERSONAL USE OF VEHICLE AND PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 17 - : TELEPHONE CANNOT BE RULED OUT IN THE CASE OF FIRM, AD HOC DISALLOWANCES ARE REQUIRED TO BE MAD E. ACCORDINGLY WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) CONFIRMING THE AD HOC DISALLOWANCE AT 10% OF THE TOTAL CLAIM AND HENCE WE CONFIRM THE SAME. ACCORDINGLY GROUNDS NO.9 & 10 OF THE APPEAL OF THE ASSESSEE ARE REJECTED. ITA NO.75 8 /LKW/2010 A.Y. 200 6 - 0 7 : 26 . IN THIS APPEAL, THE ASSESSEE HAS ASSAILED THE ORDER OF THE LD. CIT(A), INTER ALIA, ON VARIOUS GROUNDS, WHICH ARE AS UNDER: - 1 . BECAUSE THE ORDER OF THE CIT(APPEALS) UPHOLDING THE ORDER PASSED UNDER SECTION 143(3) BY THE ASSESSING OFFICER IS CON TRARY TO FACTS, BAD IN LAW, WITHOUT JURISDICTION AND BE QUASHED. 2 . BECAUSE THE CIT(APPEALS) HAS ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THE FACTS THAT ONCE THE FILE WAS TRANSFERRED FROM DCIT - 1, KANPUR TO JCIT - 1, KANPUR, AND THE JCIT HAVING ISSUED NOTIC E U/S 143(2) DATED 31.12.2007, THEREAFTER, THE ORDER PASSED BY THE DCIT - 1 WITHOUT ANY ORDER TRANSFERRING THE FILE, IS CONTRARY TO THE PROVISIONS OF LAW AND BE QUASHED. 3 . BECAUSE THE CIT(APPEALS) HAS ERRED ON FACTS AND IN LAW IN WRONGLY DENYING THE DEDUCTION CLAIMED U/S 80 - IB IN RESPECT OF BANTHER UNIT. 4 . BECAUSE THE CIT(APPEALS) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE DUTY DRAW BACK AMOUNT IS TO BE EXCLUDED FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80IB. 5 . BECAUSE THE CIT(APPEALS) HAS FAILED TO APPRECI ATE THAT THE MATTER IS STILL SUB JUDICED BEFORE THE HON'BLE SUPREME COURT IN THE CASE O F VIJAYA SILKS WHEREIN THE HON'BLE SUPREME COUR T HAS GRANTED STAY WITH RESPECT TO DFRC AND DEPB MATTERS. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 18 - : 27 . APROPOS GROUNDS NO.1 AND 2, THE LD. COUNSEL FOR THE ASSESSEE HA S SUBMITTED THAT NOTICE UNDER SECTION 142(1) INITIATING PROCESSING OF ASSESSMENT UNDER SECTION 143(3) OF THE ACT ALONG WITH QUESTIONNAIRE WAS ISSUED BY THE JCIT, BUT THE ASSESSMENT WAS FRAMED BY THE DCIT. ONCE JURISDICTION WAS ASSUMED BY AN AUTHORITY SENI OR IN RANK, THE ASSESSMENT SHOULD HAVE BEEN COMPLETED BY HIM ALONE AND NOT BY AN AUTHORITY JUNIOR IN RANK. IN SUPPORT OF HIS CONTENTION, THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE FOLLOWING JUDGMENTS: - ( I ) VALVOLINE CUMMINS LTD. VS. DY. CIT [2008] 3 07 ITR 103 (DELHI) ( II ) BERGER PAINTS INDIA LTD. VS. ASSTT. CIT, 246 ITR 133. ( III ) KUSUM GOYAL VS. ITO [2010] 329 ITR 283 (GUJ) ( IV ) CIT VS. M.I. BUILDERS PVT. LTD. [2012] 349 ITR 271 (ALL) ( V ) CITY GARDEN VS. INCOME TAX OFFICER [2012] 52 SOT 195 (JODHPUR) ( VI ) PRACHI LEATHERS PV T. LTD. VS. ADDL. CIT, KANPUR (ITA NO.26/LKW/2010), ORDER DATED 8.12.2010. ( VII ) PRACHI LEATHERS PVT. LTD. VS. CIT - VI, KANPUR (ITA NO.744/LKW/2004), ORDER DATED 29.3.2010. 28 . THE LD. D.R., ON THE OTHER HAND, HAS PLACED RELIANCE UPON THE ORDER OF THE TRIBUNAL IN THE CASE OF ALLAHADAD TANNERY VS. JCIT (SUPRA). IT WAS ALSO CONTENDED ON BEHALF OF THE DEPARTMENT THAT THE DCIT AND JCIT WERE HAVING CONCURRENT JURISDICTION. THEREFORE, IT MAKES NO DIFFERENCE IF THE PROCESS OF ASSESSMENT IS INITIATED BY ONE OFFICER AND IS C OMPLETED BY ANOTHER OFFICER. 29 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE ORDER OF THE TRIBUNAL IN THE CASE OF ALLAHADAD TANNERY VS. JCIT (SUPRA) , IN WHICH THE TRIBUNAL HAS GIVEN A PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 19 - : CATEGORICAL FINDI NG THAT IF THE PROCESS OF ASSESSMENT WAS INITIATED BY AN AUTHORITY JUNIOR IN RANK AND WAS COMPLETED BY AN AUTHORITY HIGHER IN RANK , HAVING CONCURRENT JURISDICTION, THE ASSESSMENT WOULD BE VALID IN THE LIGHT OF THE FACT THAT CONCURRENT JURISDICTION WAS CONF ERRED BY THE AUTHORITY SENIOR IN RANK TO HAVE A BETTER SUPERVISION OVER THE JUNIOR OFFICER FRAMING THE ASSESSMENT. BUT VICE - VERSA IS NOT POSSIBLE. IT HAS BEEN HELD BY VARIOUS HIGH COURTS THAT ONCE AN AUTHORITY HIGHER IN RANK IS SEIZED WITH THE MATTER, TH E PROCESS OF ASSESSMENT SHOULD BE COMPLETED BY THE SAME AUTHORITY AND NOT AN AUTHORITY JUNIOR IN RANK. SIMILAR FINDING WAS GIVEN BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF VALVOLINE CUMMINS LTD. VS. DY. CIT (SUPRA). IN THE LIGHT OF VARIOUS JUDICIAL P RONOUNCEMENTS, WE ARE OF THE CONSIDERED VIEW THAT IF THE ASSESSMENT PROCEEDINGS ARE INITIATED BY AN AUTHORITY HIGHER IN RANK, THE ASSESSMENT HAS TO BE COMPLETED BY THE SAME AUTHORITY ALONE AND NOT BY AN AUTHORITY JUNIOR IN RANK , THOUGH HE IS HAVING CONCURR ENT JURISDICTION. 30 . TURNING TO THE FACTS OF THE CASE, WE FIND THAT NOTICE DATED 31.12.2007 UNDER SECTION 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE WAS ISSUED BY THE JCIT, BUT THE ASSESSMENT ORDER DATED 15.11.2008 WAS PASSED BY THE DCIT. THEREFORE, ONCE THE JCIT IS SEIZED WITH THE MATTER, THE ASSESSMENT SHOULD HAVE BEEN COMPLETED BY HIM ALONE AND NOT BY DCIT WHO IS JUNIOR IN RANK . THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSMENT IS NOT FRAMED BY A COMPETENT OFFICER AND WE ACCORDINGLY QUASH THE SAME. ACCOR DINGLY WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND ALLOW GROUNDS NO.1 AND 2 OF THE APPEAL OF THE ASSESSEE . 31 . GROUNDS NO.3 TO 5 RELATE TO DEDUCTION UNDER SECTION 80IB OF THE ACT. THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF TH E HON'BLE APEX COURT IN THE CASE OF LIBERTY INDIA VS. CIT (SUPRA), BUT WHEN THE ASSESSMENT IS ANNULLED, NO DISALLOWANCE CAN BE MADE. ACCORDINGLY GROUNDS NO.3 TO 5 OF THE APPEAL OF THE ASSESSEE ARE REJECTED. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 20 - : ITA NO. 156 /LKW/201 2 A.Y. 200 8 - 0 9 : 32 . IN THIS APP EAL, THE ASSESSEE HAS ASSAILED THE ORDER OF THE LD. CIT(A) DENYING DEDUCTION UNDER SECTION 80IB OF THE ACT. THIS ISSUE IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF LIBERTY INDIA VS. CIT (SUPRA) AND THE LD. CIT(A) HAS ALSO DENIED BENEFIT OF DEDUCTION UNDER SECTION 80IB OF THE ACT WITH REGARD TO THE EXPORT INCENTIVE FOLLOWING THE AFORESAID JUDGMENT OF THE HON'BLE APEX COURT. WE, THEREFORE, FIND NO INFIRMITY THEREIN. ACCORDINGLY, WE CONFIRM THE ORDER OF T HE LD. CIT(A) ON THIS ISSUE AND REJECT THE GROUNDS OF APPEAL OF THE ASSESSEE . ITA NO. 189 /LKW/201 2 A.Y. 200 8 - 0 9 : 33 . IN THIS APPEAL, THE REVENUE HAS ASSAILED THE ORDER OF THE LD. CIT(A), INTER ALIA, ON VARIOUS GROUNDS, WHICH ARE AS UNDER: - 1 . THE LD. COMMISSIONE R OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2,16,79,647/ - ON ACCOUNT OF NON - DEDUCTION OF TDS ON PAYMENT OF COMMISSION TO FOREIGN AGENT WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING O FFICER DURING THE I COURSE OF ASSESSMENT PROCEEDINGS. 2 . THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II , KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE ABOVE ADDITION WITHOUT CONSIDERING THE BOARD'S CIRCULAR NO.7 OF 2009. 3 . THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS NOT APPRECIATED THE SETTLED PRINCIPLE IN RESPECT OF INTERPRETATION OF PROSPECTIVE OR RETROSPECTIVE NATURE OF AMENDMENT IN THE STATUTE AS LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS GOLD COIN HEALTH FOOD PV T. LTD. (2008) 304 ITR 308 (SC) AND CIT VS MOSER BAER INDIA LTD. [2009] 315 ITR 460 (SC). PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 21 - : 4 . THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - I I, KANPUR HAS ERRED IN L AW AND ON FACTS IN NOT APPRECIATING THE FACT THAT THE SERVICE RENDERED BY THE NON - RESIDENT AGENT TO PROCURE ORDERS FROM FOREIGN BUYERS ARE PURELY TEC HNICAL OR MANAGERIAL IN NATURE. THEREFO RE, THE PROVISION OF SECTION 9(1 ) (VII) IS CLEARLY APPLICABLE ON THE ASSESSEE. 5 . THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW A ND ON FACTS IN NOT APPRECIATING THE FACT THAT THE PAYMENT BY THE RESIDENT ASSESSEE IN CONNECTION WITH HIS BUSINESS IN INDIA TO A PERSON OUTSIDE THE COUNTRY IS NOTHING BUT A FEE WHICH HAS BEEN PAID BY THE RESIDENT ASSESSEE TO THE NON - RESIDENT FOR THE TECHNI CAL SERVICES RENDERED BY HIM. 6 . THAT THE ORDER OF THE LD. CIT (A) - II, KANPUR DATED 30.01.2012 NEEDS TO BE QUASHED AND THE ORDER PASSED BY THE ASSESSING OFFICER DATED 30.12.2010 TO BE RESTORED. 34 . THOUGH VARIOUS GROUNDS ARE RAISED, BUT THEY ALL RELATE T O THE DEDUCTION OF TDS ON PAYMENT OF COMMISSION OF FOREIGN AGENT. THIS GROUND IS ALSO SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL AND THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT. THIS ISSUE WAS EXAMINED BY US IN THE FOREGOING APPEALS IN THE L IGHT OF THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT AND THE EARLIER ORDER OF THE TRIBUNAL. FOLLOWING THE SAME, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AS WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. ACCORDIN GLY, WE CONFIRM THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND REJECT THE GROUNDS OF APPEAL OF THE REVENUE . 35 . IN THE RESULT, APPEAL S OF THE REVENUE IN ITA NO.753/LKW/2010 ITA NO.189/LKW/2012 ARE DISMISSED WHEREAS THE APPEALS OF THE ASSESSEE IN ITA NO.75 9 /LKW /2010 IS PARTLY ALLOWED; ITA NO.757/LKW/2010 & ITA PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 22 - : NO.758/LKW/2010 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES AND ITA NO. 156/LKW/2012 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.5.2014. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOU NTANT MEMBER JUDICIAL MEMBER DATED: 23 RD MAY , 2014 JJ: 2005 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )