M/s.Trinity Arcade P.Ltd, Cochin V. The ITO, Alappuzha

ITA 85/COCH/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8642 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-05-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 02-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K P GOPAKUMAR
• Keywords: Reopening of assessment
• Section: 80HHC; 80IB; 148

Judgement Text

ITA NO . 85 TO TO 87/COCH/2015 1 IN THE INCOME TAX APPEL L A TE T R IBUNAL COCHIN BENCH , COCHIN BEFORE S/SH RI B P JAIN , A M & G EORGE GEORGE.K , J M ITA NO S . 85 TO 87/COCH/2015 (ASST YEAR S 2006 - 07, 2007 - 08 & 2008 - 09 ) M/S TRINTY ARCADE PVT LTD 34/1759A TRINTY HOUSE OPP CHANGAMPOUZHA PARK EDAP ALLY PO KOCHI 682 024 VS THE JT COMMR OF INCOME TAX(OSD) CIRCLE 4(2), KOCHI ( APPELLANT) (RESPONDENT) PAN NO. AACCT2098L ASSESSEE BY SHRI SANTHAKUMAR K REVENUE BY SH KP GOPAKUMAR, SR DR DATE OF HEARING 10 TH MAY 2016 DATE OF PRONOUNCEMENT 11 TH , MAY 2016 OR D ER PER GEORGE GEORGE. K. J M: THESE THREE APPEALS, AT THE INSTANCE OF THE ASSESSEE ARE DIRECTED AGAINST SEPARATE ORDERS OF THE CIT(A), ALL DATED 30.9.2014. THE RELEVANT ASSESSMENT YEARS ARE 2006 - 07 TO 2008 - 09. 2 SINCE COMMON ISSUES ARE I NVOLVED IN THESE APPEALS AND THEY PERTAIN TO THE SAME ASSESSEE, THEY WERE HEARD TOGETHER AND DISPOSE OFF BY THIS COMMON ORDER. ITA NO . 85 TO TO 87/COCH/2015 2 3 VARIOUS GROUNDS ARE RAISED IN THE MEMORANDUM OF APPEAL. HOWEVER, THE SOLITARY ISSUE THAT WAS ARGUED I S WHETHER THE CIT(A) IS JUSTIFIED IN CONFIRMING THE AOS ACTION IN DENYING THE BENEFIT OF DEDUCTION U/S 80IB(10) OF THE I T ACT. 4 BRIEF FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE IS A DEVELOPER OF RESIDENTIAL APARTMENTS. FOR AYS 2006 - 07 TO 2008 - 09 , RETURNS WERE FILED AFTER CLAIMING DEDUCTION U/S 80IB(10) OF THE ACT. IN THE ORIGINAL ASSESSMENT COMPLETED, THE CLAIM OF DEDUCTION U/S 80IB(10) WAS ALLOWED. LATER THE ASSESSMENT WAS REOPENED BY ISSUING NOTI CE U/S 148 AND THE REASSESSMENT WAS COMPLETED BY DENYING THE BENEFIT OF DE DUCTION U/S 80IB(10) OF THE ACT. THE REASON S FOR THE AO TO DENY THE CLAIM OF DEDUCTION U/S 80IB(10) ARE TWOFOLD; NAMELY (I) IN VIEW OF INSERTION OF CLAUSE (3) TO CLAUSE A OF SEC. 80IB(10) W.E.F 1.4.2010, THE DEDUCTION IS ONLY AVAILABLE PROSPECTIVE FRO M 1.4.2010 ; (II) THE AUDIT REPORT IN FORM NO.10CCB WAS NOT FILED ALONG WITH THE RETURNS. 5 AGGRIEVED BY THE ASSESSMENTS COMPLETED FOR THE AYS 2006 - 07 TO 2008 - 09, THE ASSESSEE PREFERRED APPEAL TO THE FIRST APPELLATE AUTHORITY. THE CIT(A) HELD THAT THE AO IS NOT JUSTIFIED IN DENYING THE BENEFIT OF DEDUCTION U/S 80IB(10) FOR THE REASONS THAT IT IS ONLY AVAILABLE FROM 1.4.2010 {INSERTION OF CLAU SE (3) TO A OF SECTION 80IB(10) }. THE CIT(A), HOWEVER, SUSTAINED THE AOS ACTION FOR DISALLOWANCE OF CLAIM OF DEDUC TION U/S 80IB(10) FOR THE REASON THAT THE AUDIT ITA NO . 85 TO TO 87/COCH/2015 3 REPORT IN F ORM 10CCB , AS PRESCRIBED U/S 80IB(13) R.W.R 1 8BBB , WAS NOT FILED DURING THE ASSESSMENT STAGE. 6 AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS NOW FILED THE AUDIT REPORT BEFORE THE AO AND THE COPY OF THE SAME HAS PLACED ON RECORD BEFORE THE TRIBUNAL. IT WAS FURTHER SUBMITTED THAT VARIOUS JUDICIAL PRONOUNCEMENTS HAVE HELD THAT SUBMISSION OF AUDIT REPORT IS NOT MANDATORY; BUT ONLY DIRECTORY. IT WAS FURTHER SUBMITTED THAT THE CIT(A) HAS NOT ADJUDICATED THE GROUND WITH REGARD TO REOPENING OF ASSESSMENT. ON THE OTHER HAND, THE LD DR PRESENT WAS DULY HEARD. 7 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ONLY ISSUE FOR OUR CONSIDERATION IS WHETHER THE NON FURNISHING OF AUDIT REPORT IN FORM 10CCB DURING THE COURSE OF ASSESSMENT PROCEEDINGS IS FATAL OR NOT? . THE ASSESSEE HAS NOW FURNISHED THE AUDIT REPORT BEFORE THE AO AND THE CO PY OF THE SAME IS ALSO PLACED ON RECORD BEFORE US. NO DOUBT, THE AUDIT REPORT WAS NOT FURNISHED BEFORE THE AO NOR BEFORE THE CIT(A) DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR APPELLATE PROCEEDINGS BEFORE THE CIT(A). 7.1 THE HON BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS MAGNUM EXPORT S (P) LTD REPORTED IN 262 ITR 10 WHILE INTERPRETING SECTION 80HHC(4) HAS HELD THAT ITA NO . 85 TO TO 87/COCH/2015 4 FILING OF AUDIT REPORT, THOUGH MANDATORY, THE TIME OF FILING OF THE AUDIT REPORT IS ONLY DIRECTORY IN NATURE. IN THE CASE CONSIDER ED BY THE HONBLE CALCUTTA HIGH COURT, THE AUDIT REPORT WAS SUBMITTED ONLY BEFORE THE TRIBUNAL AND THE SAME WAS TAKEN ON RECORD FOR CONSIDERATION OF DEDUCTION U/S 80HHC OF THE ACT. THE WORDING OF SECTION 80HHC(4) AND 80IB(13) ARE PARA - MATERIA. THE RELEVANT PORTION OF THE HONBLE CALCUTTA HIGH COURT JUDGMENT READ AS UNDER: NOW, THE QUESTION COMES WHETHER IT HAS TO BE FILED BEFORE THE ASSESSMENT IS OVER OR IT CAN BE FILED EVEN AT THE STAGE OF THE TRIBUNAL. THIS IS DEPENDENT ON THE INTENT OF THE LEGISLATURE TO BE ASCERTAINED FROM THE PHRASEOLOGY OF THE PROVISION HAVING REGARD TO THE SCHEME OF THE PROVISION, ITS CONTEXT, ITS NATURE, ITS DESIGN AND THE CONSEQUENCES THAT WOULD FOLLOW AND THE EXTENT TO WHICH IT COULD BE TREATED TO BE DIRECTORY. THE MADRAS HIGH CO URT HAS TAKEN THE VIEW THAT IT CAN BE FILED EVEN AT THE APPELLATE STAGE. BUT IT IS NOT NECESSARY FOR US TO DECIDE THE SAID QUESTION HAVING REGARD TO THE PECULIAR FACTS INVOLVED IN THIS CASE. IF IT WAS RELATED TO THE CERTIFICATION OF THE EXPORT OF THE GOODS AND MERCHANDISE IN ITS ACTUALITY WHICH IS MUCH DEPENDENT ON SUCH CERTIFICATION, THEN IT MAY BE HELD TO BE SO MANDATORY AS TO CONFINE THE SAME WITHIN THE TIME LIMIT BEFORE THE ASSESSMENT IS COMPLETE OR WITHIN THE TIME LIMIT PROVIDED IN SECTION 139(1). INAS MUCH AS, THE NECESSITY OF AUDIT REPORT IS RELATED TO THE ASCERTAINMENT OF THE VERACITY OF THE CLAIM AGAINST THE ACTUALITY OF THE EXPORT HAVING BEEN MADE. IT MAY BE A LITTLE DIFFERENT WHEN THE VERACITY OF THE CLAIM IS NOT MUCH DEPENDENT ON AUTHENTICATION, A SITUATION, WHICH IS NOT SO DIFFICULT TO ASCERTAIN OR PROVE. WHEN BY LEGAL FICTION THE RECEIPT AGAINST SALE OF IMPORT LICENCE IS INCLUDED IN EXPORT TURNOVER, THEN IT IS THE RECEIPT AGAINST THE TRANSFER OF THE IMPORT LICENCE TO BE AUTHENTICATED IN THE AUDIT REPORT. THIS SEEMS TO BE MORE A FORMALITY IN THAT SENSE. HAVING REGARD TO SUCH A SITUATION, IT MAY, THEREFORE, NOT BE INTERPRETED SO STRICTLY. THEREFORE, IN SUCH A CASE FILING OF THE AUDIT REPORT AT THE TRIBUNAL STAGE WOULD NOT BE FATAL TO DISENTITLE THE CLAIMANT. BUT THEN THE TRIBUNAL HAS ACCEPTED THE SAME AND REMITTED THE MATTER TO THE ASSESSING OFFICER FOR MAKING THE ASSESSMENT. AS SUCH IT CANNOT BE OVERLOOKED THAT THE ENTITLEMENT CAN STILL BE PURSUED ON THE BASIS OF THE AUDIT REPORT SINCE THE ASSESSMEN T IS YET TO BE MADE AND THERE IS A SCOPE FOR MAKING SUCH ASSESSMENT RELATING TO THE ENTITLEMENT TO THE CLAIM. 7.2 NO OTHER CONTRARY JUDGMENT HAS BEEN BROUGHT TO OUR NOTICE; THEREFORE, WE RESPECTFULLY FOLLOW THE DICTUM LAID DOWN BY THE JUDGMENT OF THE HO NBLE ITA NO . 85 TO TO 87/COCH/2015 5 CALCUTTA HIGH COURT (SUPRA) AND TAKE ON RECORD THE AUDIT REPORT FILED IN FORM 10CC. SINCE THE AUDIT REPORT IN FORM 10CCB IS TAKEN ON RECORD, WE DEEM IT APPROPRIATE TO REMIT THE ISSUE TO THE AO TO CONSIDER WHETHER THE ASSESSEE HAD FULFILLED THE COND ITION FOR CLAIMING DEDUCTION U/S 80IB(10) OF THE ACT. WE MAKE IT CLEAR THAT NON SUBMISSION OF AUDIT REPORT BEFORE THE I T AUTHORITIES DURING THE ASSESSMENT STAGE OR APPELLATE PROCEEDINGS BEFORE THE CIT(A) SHALL NOT BE A GROUND FOR DENIAL OF THE BENEFIT O F DEDUCTION U/S 80IB (10) OF THE ACT , WHEN THE ASSESSMENT IS REDONE BY THE AO PURSUANT TO OUR ORDERS. IT IS ORDERED ACCORDINGLY. 8 IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COUR T ON THIS 11 TH DAY OF MA Y 2016 . SD/ - SD/ - ( B P JAIN ) ( GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN: DATED 11 TH , M AY 2016 RAJ* ITA NO . 85 TO TO 87/COCH/2015 6 COPY TO : 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT , 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN