Asstt.Commissioner of Income Tax, Khanna V. M/S Little Bee Impex, Doraha

ITA 877/CHANDI/2014

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0515 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 16-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts; Set aside
• Section: 10B; 251; 80IC; 80IC

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH A, CHANDIGARH .., !' '# $, % &' BEFORE: SHRI. N.K.SAINI, VP & SHRI , SANJAY GARG, J M ITA NO. 877/CHD/2014 ASSESSMENT YEAR : 2011-12 ASST. CIT CIRCLE, KHANNA M/S LITTLE BEE IMPEX VILL MALHIPUR, G.T. ROAD DORAHA PAN NO: AABF9170D APPELLANT RESPONDENT !' ASSESSEE BY : SHRI AJAY JAIN, CA #!' REVENUE BY : SHRI CHANDRAJIT SINGH, CIT(DR) $ %! & DATE OF HEARING : 12/12/2019 '()*! & DATE OF PRONOUNCEMENT : 12/12/2019 &(/ ORDER PER N.K. SAINI, VICE PRESIDENT THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORD ER DT. 07/08/2014 OF THE LD. CIT(A)-II, LUDHIANA. 2. FOLLOWING GROUNDS HAS BEEN RAISED IN THIS APPEAL : 1. THAT THE LD. CIT (A)-1I. LUDHIANA HAS ERRED IN L AW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS. 10,21,90,874/- MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OF U/S 10B OF THE INCOME TAX ACT. 1961 BY IGNORING THE AO'S FIN DINGS WITH RESPECT TO THE CONDITIONS TO BE FULFILLED IN C LAIMING THE DEDUCTION U/S I OB. 2. THAT THE LD. CIT(A)-II. LUDHIANA HAS ERRED IN LA W AND ON FACTS IN DELETING THE ADDITION OF RS. 10,21,90,874/- U/S 10B BY APPLY ING THE RATIO OF JUDGMENT OF THE HON'BLE ITAT ORDER DATED 03.01.2014 IN ITA NO. 1210 /-1211/CHD/2012 AND NOT APPRECIATING THE DECISION OF THE HON'BLE SUPREME CO URT(THREE MEMBER BENCH) IN SIMILAR CASE OF CIT VS RELISH FOODS. 237 ITR 59 (SC ) WHEREIN IT HAS BEEN CATEGORICALLY HELD THAT 'THERE IS NO ESSENTIAL DIFF ERENCE BETWEEN RAW SHRIMPS & PRAWNS AND PROCESSED OR FROZEN SHRIMPS'' AND VARIOUS OTHER DECISIONS LIKE CIT VS. VENKETESHWARA HATCHERIES LTD. 237 ITR 59 (SC), INDI A HOTELS CO. LTD. VS. ITO 245 ITR 2 538 (SC). LUCKY MINMAT LTD. VS. CIT 245 ITR 830 (SC). SACS EAGLES CHICORY VS. CIT 254 ITR 178 (SC) AND CIT VS. GEM INDIA MFG. CO. 249 ITR 307 (SC). 3. THAT THE LD. CIT(A)-IL. LUDHIANA HAS ERRED IN LA W AND ON FACTS IN IGNORING THE ACTIVITY (JUST CLEANING, PURIFYING, PACKING AND GIVING A BRAND NAME) OF THE ASSESSEE WHICH CANNOT BE TERMED AS ' MANUFACTURE ' WITHIN THE MEANING OF SECTION 10B OF THE ACT AS IT DOES NOT RESULT IN PRO DUCTION OF A COMMERCIALLY NEW ARTICLE OR THING AND THE FINISHED PRODUCT IS NOT DI STINCT FROM THE RAW MATERIAL AS PER THE DECISIONS DELIVERED IN A NUMBER OF CASES. C IT VS. SOVRIN KNIT WORKS. 199 ITR 679 (P&H), NIRMALA TEXTILE FINISHING MILL (P) LTD. 152 ITR 59 (SC). ASPINWALL & CO. LTD. VS. CIT, 251 ITR 323 (SC). JHAVERI COATERS (P) LTD. VS ACIT 74 DTR 145 (GUJ), DY. CST VS PIO FOOD PACKERS (1980). 46 STC 63 AND AQUA MINI RALS (P) LTD. VS. DC IT (ITAT. AHD). 96 11D417. 4. THAT THE LD. CIT (A)-II. LUDHIANA HAS ALSO ERRED IN LAW AND ON FACTS B) NOT APPRECIATING THE DECISION OF THE HON'BLE MUMBAI CUS TOMS, EXCISE AND COLD TRIBUNAL IN THE CASE ON CHARAK PHARMACEUTICALS INDIA PVT. LT D. V/S COMMISSIONER OF CENTRAL EXCISE IN HOLDING THAI HONE) PROCESSED F ROM APIARIES AND SUBJECTED TO PROCURING SUCH AS HEATING, COOLING, STAINING, FILTR ATION AND THEN PACKED IN THE CONTAINERS FOR MARKETING DOES NOT AMOUNT TO MANUFAC TURE. 5. THAT THE LD. CIT (A)-II, LUDHIANA IS FACTUALLY I NCORRECT IN CONSIDERING THAT THE HONEY IS INCLUDED IN THE EXCISE TARIFF LIST WHE RE AS THE FINANCE BILL, 2002 HAS INCLUDED ONLY ARTIFICIAL HONE) (WHETHER OR NOT MIXE D WITH NATURAL HONEY) TO THE LIST UNDER THE FIRST SCHEDULE TO CENTRAL EXCISE TARIFF A CT, 1985. 6. THAT THE LD. CIT (A)-LL. LUDHIANA HAS ALSO ERRED IN LAW AND ON FACTS IN EXTENDING THE BENEFIT OF SCHEDULE XIV READ WITH SEC TION 80IC WHEREIN THE DEDUCTION IS AVAILABLE EVEN ON PROCESSING OF HONEY IN THE STATE OF SIKKIM. HIMACHAL PRADESH AND UTTARAKHAND THEREBY ATTEMPTING TO MAKE EXTRA TERRITORIAL LEGISLATION UNDER SECTION 80IC OF THE INCOME TAX AC T PROVIDING ONLY SPECIFIC AREA BOND INCENTIVES. 7. THAT THE ORDER OF THE CIT (A)-LL. LUDHIANA BE SE T ASIDE AND THAT OF THE A.O. BE RESTORED. 8. THAT THE APPELLANT GRAVES LEAVE TO ADD OR AMEND ANY GROUND OF APPEAL BEFORE IT IS FINALLY DISPOSED. 3. THE ONLY GRIEVANCE OF THE DEPARTMENT IN THIS APP EAL RELATES TO THE DELETION OF ADDITION OF RS. 10,21,90,874/- MADE BY THE A.O. BY MAKING DISALLOWANCE OF DEDUCTION UNDER SECTION 10B OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT). 3 4. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSE SSEE FILED THE RETURN OF INCOME ON 29/09/2011 DECLARING AN INCOME OF RS. 67, 49,235/- AFTER CLAIMING EXEMPTION UNDER SECTION 10B OF THE ACT, AMOUNTING T O RS. 12,27,63,202/-. THE SAID RETURN WAS PROCESSED AT SAME FIGURE, LATER ON THE CASE WAS SELECTED FOR SCRUTINY. THE A.O. DISALLOWED THE CLAIM OF THE ASSE SSEE UNDER SECTION 10B OF THE ACT. 5. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) WHO ALLOWED THE CLAIM TO THE EXTENT OF RS. 10,21,90,874 /- BY OBSERVING IN PARA 3.17 OF THE IMPUGNED ORDER AS UNDER: 3.17 THIS COMPUTATION OF DEDUCTION U/S 10B FILED BY THE APPELLANT, VIDE LETTER DT. 25/02/2004, IS THE CORRECT COMPUTATION IN ACCORDANC E WITH THE PROVISIONS OF SECTION 10B OF THE I.T. ACT AND THEREFORE THE APPEL LANT IS ELIGIBLE FOR DEDUCTION U/S 10B AT RS. 10,21,90,874/- ONLY AS AGAINST THE DEDUC TION OF RS. 12,27,63,202/- CLAIMED IN THE RETURN OF INCOME. HOWEVER, THE CLAIM OF THE ASSESSEE ON THE BAD DEBTS FOR THE DEDUCTION UNDER SECTION 10B OF THE ACT WAS NOT ACCEPTED. / 6. NOW THE DEPARTMENT IS IN APPEAL. 7. DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THIS ISSUE IS SQUARELY COVERED V IDE ORDER DT. 18/09/2015 IN ITA NO. 346/CHD/2014 FOR THE A.Y. 2007-08 IN ASSESSEES OWN CASE WHEREIN BY FOLLOWING THE EARLIER ORDERS OF THE TRIBUNAL THIS I SSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE, REFERENCE WAS MADE TO PARA 5 TO 9 OF THE AFORESAID REFERRED TO ORDER DT. 18/09/2015. 8. IN HIS RIVAL SUBMISSIONS THE LD. CIT DR ALTHOUGH SUPPORTED THE ORDER OF THE A.O. BUT COULD NOT CONTROVERT THE AFORESAID CONTENT ION OF THE LD. COUNSEL FOR THE ASSESSEE. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CA SE IT IS NOTICED THAT AN 4 IDENTICAL ISSUE HAD ALREADY BEEN ADJUDICATED BY THE ITAT, DIVISION BENCH CHANDIGARH IN ASSESSEES OWN CASE IN ITA NO. 346/CH D/2014 FOR THE A.Y. 2007-08 VIDE ORDER DT. 18/09/2015 AND THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARA 5 TO 9 WHICH READ AS UNDER: 5. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER , THE ASSESSEE WENT IN APPEAL BEFORE THE LEARNED CIT (APPEALS) AND SUBMITTED THAT FOR ASSESSMENT YEARS 2006-07 AND 2009-10, THE SAME ISSUE WAS RAISED IN ASSESSEE S OWN CASE. HOWEVER, THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE CHANDIGARH BENCH OF THE ITAT. IT WAS PRAYED THAT SINCE THE FACTS OF THE CASE OF THE ASSESSEE IN THE YEAR UNDER CONSIDERATION ARE IDENTICAL, THE SAME MAY BE ALLOWED IN FAVOUR OF THE ASSESSEE. 6. THE LEARNED CIT (APPEALS) ALLOWED THE GROUNDS OF APPEAL HOLDING AS FOLLOWS : 3.3 I HAVE CAREFULLY CONSIDERED THE APPELLANT'S SU BMISSIONS. SIMILAR ISSUE WAS DECIDED BY ME IN APPELLANT'S OWN CASE FOR A.Y. 2006 -07 AND 2009-10 VIDE ORDER DATED 20.09.2012 IN APPEALS NO. 457/IT/CIT(A)-II/LD H/2011-12 AND 458/IT/CIT(A)- II/LDH/2011-12. IN THAT CASE, SIMILAR DISALLOWANCE MADE BY THE AO HAD BEEN CONFIRMED BY ME. THE APPELLANT FILED APPEALS BEFORE THE HON'BLE ITAT. THE HON'BLE ITAT VIDE ITS ORDER DATED 03.01.2014 IN ITA NO. 1210-1211/CHD/2012 AS ALLOWED THE APPEAL OF THE APPELLANT AND HELD THAT T HE APPELLANT IS ENTITLED TO CLAIM OF DEDUCTION U/S 10B OF THE I.T. ACT. RESPECT FULLY FOLLOWING THE DECISION OF THE HON'BLE ITAT, I HOLD THAT THE APPELLANT IS ENTI TLED TO CLAIM OF DEDUCTION U/S 10B OF THE I.T. ACT. THE DISALLOWANCE MADE BY THE AO IS DELETED. THESE GROUNDS OF APPEAL ARE ACCORDINGLY ALLOWED. 7. NOW, THE DEPARTMENT HAS COME UP IN APPEAL AGAINS T THE SAID ORDER OF THE LEARNED CIT (APPEALS). DURING THE COURSE OF HEARING BEFORE US, THE LEARNED D.R. RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND PRAYED THAT THE ORDER OF THE LEARNED CIT (APPEALS) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE SUSTAINED. 8. THE LEARNED COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE ORDER OF THE CHANDIGARH BENCH OF THE ITAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2006- 07 AND 2008- 09 IN ITA NO.553/CHD/2011 AND ITA NO.6 90/CHD/2011 DATED 3.1.2014. IN THESE APPEALS ALSO, ONE OF THE ISSUES WAS THE ELIGIBILITY OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 10B OF THE ACT. AFTER H EARING BOTH THE PARTIES AT LENGTH, THE CHANDIGARH BENCH OF THE ITAT DECIDED TH E ISSUE AT PAGE 32, PARA 32 OF ITS ORDER, WHICH READS AS UNDER : 32. IN VIEW THEREOF, WE HOLD THAT THE ASSESSEE WAS ENGAGED IN THE PRODUCTION OF FINISHED HONEY AND THE PROFITS AND GAINS ARISING FR OM SUCH ACTIVITY WERE ELIGIBLE FOR DEDUCTION UNDER SECTION 10B OF THE ACT AS THE ASSES SEE FULFILLS THE CONDITION OF BEING 100% EXPORT ORIENTED UNIT AND TOTAL SALE PROC EEDS WERE RECEIVED IN FOREIGN EXCHANGE BY THE ASSESSEE. IN THE TOTALITY OF THE FA CTS AND CIRCUMSTANCES, WE ARE IN CONFORMITY WITH THE FINDING OF THE ASSESSING OFFI CE R THAT THE ASSESSEE WAS ELIGIBLE FOR THE CLAIM OF DEDUCTION UNDER SECTION 1 0B OF THE ACT. 5 9. SINCE NO DISTINGUISHING FACTS WERE BROUGHT TO OU R ATTENTION, RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINATE BENCH WE ALSO UPHOLD THE ORDER OF THE LEARNED CIT (APPEALS) AND ALLOW THE BENEFIT UNDER S ECTION 10B OF THE ACT TO THE ASSESSEE. SINCE THE FACTS FOR THE YEAR UNDER CONSIDERATION AR E SIMILAR TO THE FACTS INVOLVED IN ITA NO. 346/CHD/2014 FOR THE A.Y. 2007- 08, SO RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER DT. 18/09/2015, WE DO NOT SEE ANY MERIT IN THIS GROUND OF THE DEPARTMENTAL APPEAL. 10. AS REGARDS GROUND NO. 2 THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THIS GROUND IS WRONGLY RAISED AS IT IS NOT EMERGING EITHER OUT OF THE ASSESSMENT ORDER OF THE A.O. OR THE IMPUGNED ORDER OF THE LD. CIT(A). THE AFORESAID CONTENTION OF THE LD. COUNSEL FOR THE ASSESEE WAS N OT CONTROVERTED BY THE LD. CIT DR, THEREFORE THIS GROUND IS DISMISSED AS THE S AME IS NOT EMERGING OUT OF THE ASSESSMENT ORDER AND WAS WRONGLY TAKEN BY THE DEPAR TMENT. 11. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISM ISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 12/12/2019) SD/- SD/- '# $ .., (SANJAY GARG ) ( N.K. SAI NI) % &'/ JUDICIAL MEMBER / VICE PRESIDENT AG DATE: 12/12/2019 (+! ,-.- COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. $ / CIT 4. $ / 01 THE CIT(A) 5. -2 45&456789 DR, ITAT, CHANDIGARH 6. 8:% GUARD FILE