M/s. Safeflex International Limited, Jaipur V. Income Tax officer, Ward-6(4), Jaipur

ITA 804/JPR/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1260 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 07-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI JCIT DHK
• Keywords: Opportunity of being heard; Period of limitation; Additional evidence; Condonation of delay
• Section: 10AA; 56

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,OA JH FOE FLAG ;K NO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA-@ ITA NO. 804/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13. M/S. SAFEFLEX INTERNATIONAL LTD., 15, JAI JAWAN SCHEME NO. 1, TONK ROAD, JAIPUR. CUKE VS. THE INCOME TAX OFFICER, WARD 6(4), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAJCS 7201 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJEEV SOGANI (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI J.C. KULHARI (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 06.09.2018. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 10/09/2018. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 10 TH JANUARY, 2018 OF LD. CIT (A)-2, JAIPUR FOR THE ASSESSMENT YEAR 2012-13. THERE IS A DELAY OF 52 DAYS IN FILING THE PRESENT APPEAL. THE ASSESSEE HAS FILED AN APPLICATION FOR CONDONATION OF DELAY WHICH IS SUPPORTED BY THE AFFI DAVIT OF THE DIRECTOR OF THE ASSESSEE COMPANY. 2. WE HAVE HEARD THE LD. A/R AS WELL AS THE LD. D/R ON THE CONDONATION OF DELAY AND CAREFULLY PERUSED THE CONTENTS AND AVERMENTS MA DE IN THE APPLICATION AS WELL AS SUPPORTING AFFIDAVIT FILED BY THE ASSESSEE. THE ASS ESSEE HAS EXPLAINED THE DELAY IN FILING THE APPEAL AS UNDER :- 2 ITA NO. 804/JP/2018 M/S. SAFELEX INTERNATIONAL LTD., JAIPUR. IT IS SUBMITTED THAT FOR AY 2010-11 AND AY 2011-1 2, APPEAL INVOLVING SAME GROUND WAS HEARD ON 15.03.2018 AND THE ORDER W AS PASSED BY HONBLE ITAT ON 04.04.2018 WHICH WAS RECEIVED BY TH E ASSESSEE COMPANY ON 09.04.2018 I.E. BEFORE THE LAST DATE OF FILING FORM 36. HONBLE ITAT FOR BOTH THE YEARS SET ASIDE THE MATTE R TO THE FILE OF LD.AO FOR FRESH ADJUDICATION. THUS, I, DIRECTOR OF THE AS SESSEE COMPANY WAS UNDER A BONA-FIDE BELIEF THAT THE DECISION OF HONB LE ITAT FOR PRECEDING TWO YEARS WILL, AS IT IS, APPLY FOR ALL T HE SUBSEQUENT YEARS INCLUDING THE YEAR UNDER CONSIDERATION. HENCE, THE APPEAL WAS NOT FILED WITHIN THE STIPULATED TIME AND, THUS, THE TIME PERI OD FOR FILING THE APPEAL EXPIRED. DELAY WAS NOT DELIBERATE. A HUMBLE PRAYER ON ACCOUNT OF THE ABOVE REASON IS M ADE THAT DELAY IN FILING APPEAL MAY PLEASE BE CONDONED. THE LD. A/R HAS RELIED UPON THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF COLLECTOR, LAND ACQUISITION VS. MST. KATIJI, 167 IT R 471 (SC) AS WELL AS THE DECISION IN THE CASE OF M/S. GMG ENGINEERING INDUSTRIES VS. M/S . ISSA GREEN POWER SOLUTION IN CIVIL APPEAL NO. 4473/2015. 3. ON THE OTHER HAND, THE LD. D/R HAS OBJECTED TO T HE CONDONATION OF DELAY AND SUBMITTED THAT THE REASONS EXPLAINED BY THE ASSESSE E ARE VAGUE AND ARE NOT SUFFICIENT TO EXPLAIN THE CAUSE OF DELAY. 4. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD, WE NOTE THAT THE ASSESSEE HAS EXPLAINED THE DELAY OF 52 DAYS IN FILING THE APPEAL DUE TO THE REASON THAT BEFORE THE EXPIRY OF LIMITATION OF FILING THE APPEAL AGAINST THE IMPUGNED ORDER OF THE LD. CIT (A), THE TRIBUNAL FOR THE ASSESSMENT YEARS 2010-11 AND 11-12 DECIDED THE SAME ISSUE IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 4 TH APRIL, 2018 AND HENCE THE ASSESSEE WAS UNDER BONAF IDE BELIEF THAT IN VIEW 3 ITA NO. 804/JP/2018 M/S. SAFELEX INTERNATIONAL LTD., JAIPUR. OF THE DECISION OF THE TRIBUNAL THE ISSUE IS SETTLE D IN FAVOUR OF THE ASSESSEE AND NO FURTHER APPEAL IS REQUIRED TO BE FILED. HOWEVER, S UBSEQUENTLY, THE COUNSEL OF THE ASSESSEE ADVISED THE APPELLANT TO FILE THE APPEAL A GAINST THE IMPUGNED ORDER OF LD. CIT (A) AS THE EARLIER ORDER OF THIS TRIBUNAL WOULD NOT AUTOMATICALLY REVERSE THE FINDINGS OF THE AO AND LD. CIT (A). HENCE WE FIND T HAT THE ASSESSEE HAS A REASONABLE AND SUFFICIENT CAUSE FOR NOT FILING THE APPEAL WITH IN THE PERIOD OF LIMITATION. FURTHER WHEN THE EXPLANATION OF THE ASSESSEE IS NOT FOUND T O BE MALAFIDE AND BY FILING THE BELATED APPEAL THE ASSESSEE HAS NOT ATTEMPTED TO AC T ARBITRARILY, VAGUE OR FANCIFUL MANNER THEN THE APPEAL OF THE ASSESSEE SHOULD BE DE CIDED ON MERIT INSTEAD OF DISMISSING THE SAME ON TECHNICAL GROUND. ACCORDING LY HAVING CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE SATISFIED THA T THE ASSESSEE HAD EXPLAINED THE SUFFICIENT CAUSE FOR DELAY AND ACCORDINGLY WE CONDO NE THE DELAY OF 52 DAYS IN FILING THE PRESENT APPEAL. 5. ON MERITS, THE ONLY ISSUE RAISED BY THE ASSESSEE IS REGARDING DENIAL OF DEDUCTION UNDER SECTION 10AA ON INTEREST ON FDR. T HE LD. A/R OF THE ASSESSEE HAS SUBMITTED THAT THE INTEREST ON FDR WAS RECEIVED BY THE ASSESSEE IN RESPECT OF THE FIXED DEPOSITS MADE WITH THE BANK FOR AVAILING THE WORKING CAPITAL LIMIT AS WELL AS FOR ISSUING THE BANK GUARANTEE FOR L/C LIMIT. HE HAS REFERRED TO THE SANCTION LETTER OF THE BANK WHEREIN THERE WAS A CONDITION OF MARGIN SE CURITY IN THE SHAPE OF FDR EQUIVALENT TO 15% OF THE EXPORTS AND THUS THE LD. A /R HAS SUBMITTED THAT WHEN THE FIXED DEPOSITS WERE MADE FOR THE PURPOSE OF WORKING CAPITAL AND ASSESSEE IS A 100% EOU THEN THE INTEREST ON SAID FDR IS ELIGIBLE FOR D EDUCTION UNDER SECTION 10AA OF THE ACT. THE LD. A/R HAS FILED AN APPLICATION UNDER RUL E 29 OF THE ITAT RULES, 1963 FOR ADMISSION OF ADDITIONAL EVIDENCE AND SUBMITTED THAT THE ADDITIONAL EVIDENCE SOUGHT 4 ITA NO. 804/JP/2018 M/S. SAFELEX INTERNATIONAL LTD., JAIPUR. TO BE FILED BY THE ASSESSEE IS THE SANCTION LETTER OF THE BANK GRANTING THE CREDIT LIMIT FOR WORKING CAPITAL AGAINST THE CONDITION OF MAKING FDR EQUIVALENT TO 15% OF THE EXPORTS. HE HAS FURTHER POINTED OUT THAT FOR THE AS SESSMENT YEARS 2010-11 AND 11- 12 THE TRIBUNAL VIDE ORDER DATED 04.04.2018 IN ITA NO. 696/JP/2014 AND 702/JP/2016 HAS ADMITTED THE ADDITIONAL EVIDENCE AN D REMITTED THE ISSUE TO THE RECORD OF THE AO FOR VERIFICATION AND ADJUDICATION OF THE CLAIM OF DEDUCTION UNDER SECTION 10AA OF THE ACT. HENCE THE LD. A/R HAS PLEA DED THAT THE ADDITIONAL EVIDENCE SOUGHT TO BE FILED BY THE ASSESSEE MAY BE ADMITTED. 6. ON THE OTHER HAND, THE LD. D/R HAS RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE AO HAS CONSIDERED THIS ISSUE IN THE LIGHT OF VARIOUS DECISIONS OF HONBLE SUPREME COURT AS WELL AS THE H ONBLE HIGH COURTS. HE HAS SUBMITTED THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SHREE RAM HONDA POWER EQUIPMENT, 289 ITR 475 (DELHI) HAS HELD THAT THE INTEREST INCOME EARNED ON DEPOSITS IS TO BE TAXABLE AS INCOME FROM OTHER SOUR CES UNDER SECTION 56 OF THE ACT. SIMILARLY, THE HONBLE SUPREME COURT IN CASE OF TUT ICORIN ALAKALIES AND FERTILIZERS AS WELL AS IN CASE OF CIT VS. AUTO KAST LTD., 248 ITR 110 (SC) HAS HELD THAT THE INTEREST INCOME IS INCOME FROM OTHER SOURCES. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE AO HAS DISALLOWED THE CLA IM UNDER SECTION 10AA IN RESPECT OF INTEREST ON FDR BY TREATING THE SAME AS INCOME F ROM OTHER SOURCES NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 10AA OF THE ACT. HOWEVER, THE LD. A/R OF THE ASSESSEE HAS NOW FILED THE ADDITIONAL EVIDENCE IN THE SHAPE OF S ANCTION LETTER OF THE BANK GRANTING TERM LOAN AND WORKING CAPITAL CREDIT LIMIT TO THE A SSESSEE. THE SAID SANCTION OF LOAN IS SUBJECT TO THE CONDITION THAT THE ASSESSEE SHOUL D MAKE FDR EQUIVALENT TO 15% OF 5 ITA NO. 804/JP/2018 M/S. SAFELEX INTERNATIONAL LTD., JAIPUR. THE CASH GENERATED BY THE ASSESSEE. AN IDENTICAL I SSUE WAS CONSIDERED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2010-11 AND 11-12 VIDE ORDER DATED 04.04.2018 IN ITA NOS. 696/JP/2014 AND 702/JP/2016 IN PARA 5.4 AS UNDER :- 5.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED THAT THE AO DURING THE COURSE O F ASSESSMENT PROCEEDING MADE THE ADDITION OF RS. 4,33,429/- BY DISALLOWING EXEMPTION U/S 10AA OF THE ACT ON ACCOUNT OF INTEREST ON FDR BY OBSERVING AS UNDER:- 4.2 THE NATURE OF THE INCOME AS WELL AS ASSESSEE' S CONTENTION HAVE BEEN CONSIDERED AND BEFORE TAKING FINAL VIEW, I WOULD LI KE TO PLACE RELIANCE ON THE JUDICIAL PRONOUNCEMENTS ON THE ISSUE UNDER CONSIDER ATION. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS SREE RAM HONDA PO WER EQUIPMENT 289 ITR 475 (DELHI) HAS HELD THAT THE INTEREST INCOME EARNE D ON DEPOSITS IS TO BE TAXABLE AS INCOME FROM OTHER SOURCES U/S 56 OF THE ACT. SIMILAR VIEW HAS ALSO BEEN EXPRESSED IN OTHER DECISIONS PARTICULARLY APE X COURTS DECISION IN THE CASE OF TUTICORIN ALKALIES AND FERTILIZERS AND ALSO IN CIT VS AUTO KAST LTD 248 ITR 110 (SC), CIT VS V. GOPPINATHAN, CONSOLIDATED FIBRES VS CIT AND K RAVINDRANATHAM V/S DCIT (ASSTT.) 262 ITR 669. ALL T HE ABOVE JUDICIAL PRONOUNCEMENT SUPPORT THE VIEW THAT THE INTEREST IN COME IS INCOME FROM OTHER SOURCES. THIS ISSUE WAS ALSO RAISED DURING TH E SCRUTINY ASSESSMENT PROCEEDINGS FOR A.Y. 2009-10 WHEREIN THE AO HAS HEL D THAT INTEREST ON FDRS IS INCOME FROM OTHER SOURCES. THIS ISSUE WAS ALSO RAISED DURING THE SCRUTINY ASSESSMENT PROCEEDING FOR A.Y. 2009-10 WHEREIN THE AO HAS HELD THAT INTEREST ON FDRS IS INCOME FROM OTHER SOURCES. IN V IEW OF THE ABOVE FACTS AS WELL AS THE PAST HISTORY OF THE CASE THE INTEREST O N FDR AMOUNTING TO RS. 4,33,729/- IS ASSESSED AS INCOME FROM OTHER SOURCES OF THE ASSESSEE AND HE IS NOT ELIGIBLE FOR CLAIMING EXEMPTION U/S 10AA ON THI S COMPONENT OF THE INCOME AS SHOWN IN THE PROFIT AND LOSS ACCOUNT. IN THIS CASE, THE LD.AR OF THE ASSESSEE HAS FILED T HE ADDITIONAL EVIDENCE PRAYING THAT IT IS A VITAL MATTER OF THE ISSUE IN QUESTION WHICH GO ES TO THE ROOT OF THE MATTER. IT IS ALSO NOTED THAT THIS ADDITIONAL EVIDENCE WAS NOT PR ODUCED BEFORE THE LOWER AUTHORITIES. LOOKING TO THE PRESENT FACTS AND CIRCU MSTANCES OF THE CASE, IT WILL BE IN THE INTEREST OF EQUITY AND JUSTICE TO RESTORE THE I SSUE IN QUESTION TO THE FILE OF THE AO TO DECIDE IT AFRESH TAKING INTO CONSIDERATION THE A DDITIONAL EVIDENCE (SUPRA) AND DECIDE THE ISSUE BY PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS GROUND NO. 3 OF THE ASSESSEE IS ALLOWED FOR ST ATISTICAL PURPOSES. 6 ITA NO. 804/JP/2018 M/S. SAFELEX INTERNATIONAL LTD., JAIPUR. THUS THE TRIBUNAL AFTER CONSIDERING THE IDENTICAL F INDING OF THE AO FOR THE EARLIER ASSESSMENT YEARS HAS REMITTED THE ISSUE TO THE RECO RD OF THE AO FOR CONSIDERATION OF ADDITIONAL EVIDENCE FILED BY THE ASSESSEE WHICH IS RELEVANT FOR DETERMINATION OF THE ISSUE OF ALLOWABILITY OF THE CLAIM UNDER SECTION 10 AA OF THE ACT. HENCE IN VIEW OF THE EARLIER ORDER OF THIS TRIBUNAL, WE SET ASIDE THE MA TTER TO THE RECORD OF THE AO FOR RE- ADJUDICATION OF THE SAME AFTER CONSIDERING THE ADDI TIONAL EVIDENCE FILED BY THE ASSESSEE AND IN THE LIGHT OF THE VARIOUS DECISIONS ON THE ISSUE. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 10/09/ 2018. SD/- SD/- ( FOE FLAG ;KNO ) ( FOT; IKY JKWO (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 10/09/2018. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S. SAFELEX INTERNATIONAL LTD., JAIPUR. 2. THE RESPONDENT THE ITO WARD 6(4), JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 804/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 7 ITA NO. 804/JP/2018 M/S. SAFELEX INTERNATIONAL LTD., JAIPUR.