ELETE INTERNATIONAL P.LTD, MUMBAI V. DCIT 6(2), MUMBAI

ITA 81/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3273 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 07-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIMAL PUNIMIYA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.81/M/2016 ASSESSMENT YEAR: 2011-12 M/S. ELITE INTERNATIONAL PVT. LTD., 1/9, FATIMA BUILDING, 66, DR. RAIKAR MARG, MAHIM, MUMBAI 400 016 PAN: AABCE 3393G VS. DCIT-CIRCLE 6(2), MUMBAI (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI VIMAL PUNIMIYA, A.R. REVENUE BY : SHRI RAJESH KUMAR, D.R. DATE OF HEARING : 19.06.2018 DATE OF PRONOUNCEMENT : 24.08.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 04.04.2014 OF THE COMMISSIONE R OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2011-12. 2. THE SOLE ISSUE RAISED IN THE VARIOUS GROUNDS OF APPEAL BY THE ASSESSEE IS AGAINST THE CONFIRMATION OF ADDI TION OF RS.2,93,15,493/- BY CIT(A) AS MADE BY THE AO ON AC COUNT OF WRITING OFF THE DFEC LICENSES BESIDE RAISING THE IS SUE OF NON GRANTING OFF SUFFICIENT OPPORTUNITY. ITA NO.81/M/2016 M/S. ELITE INTERNATIONAL PVT. LTD. 2 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENG AGED IN THE BUSINESS OF MANUFACTURING OF TEXTILES MADE-UPS AND HANDLOOM PRODUCTS. DURING THE YEAR THE ASSESSEE HAS WRITTEN O FF RS. 2,93,15,493/- ON ACCOUNT OF NON RECOVERY OF RECEIVA BLE FROM TRANSFER OF DEFC LICENSES WHICH WERE SOLD IN FINAN CIAL YEAR 2007-08. UPON SALE OF THE SAID DEFC LICENSES TO GHC L, INCOME WAS RECOGNIZED BY THE ASSESSEE IN ASSESSMENT YEAR 2 008-09. THE SAID LICENSES REMAINED UNUTILIZED FOR THE REASO N THAT THE LICENSES WERE NOT TRANSFERABLE AND PURCHASER COULD NOT USE THESE LICENSES. THE AMOUNT SHOWN AS RECEIVABLE WAS NOT REALIZED AND ULTIMATELY HAS TO BE WRITTEN OFF DURI NG THE YEAR. SO THIS IS JUST A REVERSAL OF INCOME WHICH WAS RECO GNIZED IN A.Y. 2008-09 ON ACCOUNT OF SALE OF DFEC LICENSES BY WRITING OFF THE AMOUNT SHOWN AS RECEIVABLE WHEN THE SAME C OULD NOT BE USED DUE TO TECHNICAL DIFFICULTIES. AO DURING T HE ASSESSMENT PROCEEDINGS ADDED THE SAME TO THE INCOME OF THE ASSESSEE FOR THE REASONS THAT NO DETAILS/EVIDENCES WERE PRODUCED IN THE ASSESSMENT PROCEEDINGS. 4. THE LD CIT(A) ALSO DISMISSED THE APPEAL OF THE AS SESSEE UPHOLDING THE ORDER OF AO AFTER CONSIDERING THE ASS ESSEES CONTENTIONS. 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE SOLD EXPORT LIC ENSES TO GHCL DURING THE FINANCIAL YEAR 2007-08 WHICH COUL D NOT BE USED BY THE PURCHASER DUE TO NON TRANSFERABILITY OF THE SAID LICENSES IN FAVOUR OF THE GHCL AND THEREFORE THESE REMAINED UNUSED TILL THE CURRENT FINANCIAL YEAR AND FINALLY EXPIRED DURING ITA NO.81/M/2016 M/S. ELITE INTERNATIONAL PVT. LTD. 3 THE YEAR. THE SAID LICENSES WERE TRANSFERRED BECAUS E THE ASSESSEE WAS IN A VERY PRECARIOUS FINANCIAL POSITIO N AND AND COULD NOT ARRANGE TO EXPORT THE MATERIALS. IT IS ALS O UNDISPUTED THAT THE INCOME WAS DULY SHOWN BY THE ASSESSEE IN THE AY 2008-09 WHEN THESE LICENSES WERE SOLD AS IS CLEAR F ROM THE RECORDS BEFORE US AND AMOUNT DUE WAS SHOWN AS RECOVERABLE/RECEIVABLE FROM GHCL. THE LICENSES WERE RETURNED AND NO PAYMENT WAS MADE TO THE ASSESSEE. DURING THE YEAR WE OBSERVE THAT IT IS MERE A REVERSAL OF INCOME WH ICH WAS RECOGNIZED IN A.Y. 2008-09 ON ACCOUNT OF SALE OF GHC L LICENSES OF RS.2,93,15,493/- BY WAY OF WRITING OF F AND HAS TO BE ALLOWED AS DEDUCTION AS THE RECOVERY COULD NOT B E EFFECTED DUE TO NON TRANSFERABILITY OF THE LICENSES AS IS AP PARENT FROM THE FOLLOWING :- ITA NO.81/M/2016 M/S. ELITE INTERNATIONAL PVT. LTD. 4 WE FIND FROM THE RECORDS BEFORE US THAT THE ASSESSE E HAS PRODUCED ALL THESE EXPORT LICENSES BEFORE THE LOWER AUTHORITIES HOWEVER THE ASSESSEE WAS DENIED THE LEGITIMATE CLAI M OF WRITE. IT IS CLEAR FROM THE ABOVE THAT THE EXPORT L ICENSES WERE NON TRANSFERABLE. IN VIEW OF THESE FACTS WE ARE NOT IN AGREEMENT WITH THE CONCLUSION OF THE LD CIT(A). IN OUR CONSIDERED VIEW THE CLAIM OF THE ASSESSEE IS QUITE LEGITIMATE AND THUS ADMISSIBLE. ACCORDINGLY WE SET ASIDE THE OR DER OF AO AND DIRECT THE AO TO ALLOW THE CLAIM OF THE ASSESSE E. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.08.2018. SD/- SD/- (C.N. PRASAD) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 24.08.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.