RC Golden Granites Private Ltd., CHENNAI V. ITO, CHENNAI

ITA 897/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8731 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 07-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUPRIYA PAL
• Assessee Lawyers: T BANUSEKAR
• Keywords: Opportunity of being heard; Principle of natural justice; Additional evidence; Question of law
• Section: 40A(3); 143(3); 10B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . ! ' , #'$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.AS. NO.897, 898, 899 & 900/MDS/2016 # % &% / ASSESSMENT YEARS : 2008-09, 2009-10, 2010-11, 2011-12. RC GOLDEN GRANITES PRIVATE LTD, PLOT NO.17,TYPE II, DR.VSI ESTATE, THIRUVANMIYUR, CHENNAI 600 041. VS. THE INCOME TAX OFFICER, COMPANY WARD V(1) CHENNAI. [PAN AADCR3826P ] ( / APPELLANT) ( /RESPONDENT) '( ) * / APPELLANT BY : SHRI. T. BANUSEKAR, C.A. +,'( ) * /RESPONDENT BY : SHRI. SUPRIYA PAL, JCIT. ! ) - / DATE OF HEARING : 29-06-2016 ./& ) - / DATE OF PRONOUNCEMENT : 22-07-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THESE FOUR APPEALS FILED BY THE ASSESSEE ARE D IRECTED AGAINST DIFFERENT ORDERS OF COMMISSIONER OF INCOM E-TAX (APPEALS)-3, CHENNAI DATED 26.02.2016 FOR THE ASSESSMENT YEARS 2008-09, 2009- 2010, 2010-2011 PASSED U/S.143(3) R.W.S.264 AND F OR ASSESSMENT ITA NOS.897 TO 900/MDS/2016. :- 2 -: YEAR 2011-12 U/SEC. 143(3) AND 250 OF THE INCOME TA X ACT, 1961. SINCE THE ISSUE IN THESE APPEALS ARE COMMON IN NATURE, THESE APPEAL S ARE CLUBBED, HEARD TOGETHER, AND DISPOSED OF BY THI S COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS WHIC H ARE COMMON FOR ALL ASSESSMENT YEARS 2008-09, 2009-2010 , 2010-2011 AND 2011-2012:- 1. FOR THAT THE ORDER OF THE COMMISSIONER OF INCOME TA X (APPEALS) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CAS E TO THE EXTENT PREJUDICIAL TO THE INTERESTS OF THE APPELLANT AND I S OPPOSED TO THE PRINCIPLES OF NATURAL JUSTICE, EQUITY AND FAIR PAY. 2. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) F AILED TO APPRECIATE THAT THE ORDER OF THE ASSESSING OFFICER IS WITHOUT JURISDICTION. 3. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) F AILED TO APPRECIATE THAT THE ASSESSING OFFICER ERRED IN DENY ING THE DEDUCTION CLAIMED UNDER SECTION 10B. 4. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) F AILED TO APPRECIATE THAT THE ASSESSING OFFICER OUGHT TO HAVE ALLOWED THE DEDUCTION CLAIMED BY THE APPELLANT U/S.10B AS ALL T HE CONDITIONS HAVE BEEN FULFILLED BY THE APPELLANT. 5. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) F AILED TO APPRECIATE THAT THE ASSESSING OFFICER ERRED IN STAT ING THAT THE RATIFICATION BY THE 'BOARD OF APPROVAL' FOR EOU SCH EME IS NOT THE ONE PRESCRIBED IN THE PROVISIONS OF SECTION 10B. 6. FOR THAT, WITHOUT PREJUDICE, THE COMMISSIONER OF IN COME TAX (APPEALS) FAILED TO APPRECIATE THAT THE ASSESSING O FFICER OUGHT TO HAVE ALLOWED THE APPELLANT, DEDUCTION U/S.1OA 7. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) F AILED TO ADMIT THE ADDITIONAL EVIDENCE FILED UNDER RULE 46A, EVEN WHEN THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PR ODUCING THE EVIDENCE BEFORE THE ASSESSING OFFICER ITA NOS.897 TO 900/MDS/2016. :- 3 -: THE ASSESSEE IN CONTINUATION TO ABOVE GROUNDS RAIS ED THE FOLLOWING GROUNDS FOR ASSESSMENT YEAR 2011-2012. 7 . FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS ) FAILED TO APPRECIATE THAT THE LD. ASSESSING OFFICER ERRED IN DISALLOWING A SUM OF A1,30,32,500/- U/S. 40A(3). 8. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS ) FAILED TO APPRECIATE THAT THE LD. ASSESSING OFFICER ERRED IN INVOKING THE PROVISIONS OF SECTION 40A(3) WHICH CANNOT BE INVOKE D IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 9. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE LD. ASSESSING OFFICER ERRED IN ALLEGING THAT THERE IS A MISMATCH BETWEEN THE CASH BOOK AND THE RECONCI LIATION STATEMENT SUBMITTED BY THE APPELLANT. 10. FOR THAT, WITHOUT PREJUDICE, THE LD. COMMISSIONER O F INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE DISALLOWANC E, IF ANY U/S.40A(3) WILL QUALIFY FOR DEDUCTION U/S.10B/10A. 11. FOR THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) FAILED TO ADMIT THE ADDITIONAL EVIDENCES FILED UNDER RULE 46A , EVEN WHEN THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PR ODUCING THE EVIDENCE BEFORE THE ASSESSING OFFICER. 3. FIRST, WE TAKE UP ITA NO.897/MDS/2016 OF ASSESSMENT YEAR 2008-2009 FOR ADJUDICATION:- THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURING AND EXPORT OF MONUMENT GRANITE COMPANY REGISTERED AS 100% EXPORT ORIENTED UNIT (EOU) IN SPECIAL ECONOMIC ZONE (SEZ) TAMBARAM AND ELIGIBLE F OR EXEMPTION U/S.10B OF THE ACT. DUE TO INABILITY OF THE ASSESSE E TO FILLUP RELEVANT COLUMNS IN E-RETURN OF INCOME EXEMPTION U/S.10B OF THE ACT WAS ITA NOS.897 TO 900/MDS/2016. :- 4 -: DENIED BY CPC, BANGALORE. SUBSEQUENTLY, THE ASSES SEE COMPANY HAS FILED REVISION PETITION U/S.264 OF THE ACT WITH CI T-V, CHENNAI. THE LD. COMMISSIONER OF INCOME TAX-V AFTER CONSIDERING THE FINDINGS OF THE LD. ASSESSING OFFICER AND SUBMISSIONS OF ASSESSEE HAS PASSED AN ORDER WITH FINDINGS THAT THE CLAIM OF THE ASSESSEE WITH R EGARD TO ALLOWANCE OF EXEMPTION U/S.10B OF THE ACT IS GENUINE AND ALLO WED THE REVISION PETITION WITH A DIRECTION TO THE LD. ASSESSING OFFI CER TO VERIFY THE CONDITIONS FOR CLAIMING 100% EXEMPTION AS EOU A ND EXEMPTION U/S. 10B ARE FULFILLED BY THE ASSESSEE. THE LD. ASSESSI NG OFFICER WHILE PASSING CONSEQUENTIAL ORDER FOR THE ASSESSMENT YE AR BASED ON THE DIRECTIONS OF THE COMMISSIONER OF INCOME TAX V U/S .264 OF THE ACT FOUND THAT IN THE ASSESSMENT PROCEEDING OF ASSESSME NT YEAR 2011- 2012, THE LD. ASSESSING OFFICER OBSERVED THAT THE A SSESSEE HAS NOT FULFILLED THE CONDITIONS AS STIPULATED IN THE ACT A ND PASSED ASSESSMENT ORDER U/S.143(3) DATED 28.03.2014 DENYING THE CLAIM REFERRED AT PAGE 2 & 3 AS UNDER: THE ASSESSEE COMPANY IS A 100% EXPORT ORIENTED UNDERTAKING LOCATED IN MEPZ-SEZ AND DOING THE BUSIN ESS OF MANUFACTURE AND EXPORT OF MARBLES & GRANITES THE ASSESSEE HAS CLAIMED DEDUCTION U/S 10(B) OF THE INC OME TAX 1961 IN RESPECT OF ASST. YEAR 2011-12 FOR RS. 65,32,975/- AND THE SAME IS DISALLOWED FOR THE FOLL OWING REASONS. 'AS PER EXPLANATION 2(IV) TO SECTION 10(B),100% EXPORT ORIENTED UNDERTAKING(EOU) MEANS AN UNDERTAKING WHIC H HAS BEEN APPROVED AS A 100% EOU BY THE BOARD ITA NOS.897 TO 900/MDS/2016. :- 5 -: APPOINTED IN THIS BEHALF BY THE CENTRAL GOVT. IN EX ERCISE OF POWERS CONFERRED BY SECTION 14 OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT 1951 AND RULES MAD E UNDER THAT ACT'. BUT THE AR HAS SUBMITTED ONLY A COPY OF GREEN CARD AS AN 100% EOU AND THE LETTER OF THE DEVELOPMENT COMMISSIONER OF MEPZ(SEZ) DT.27/03/2014 WHEREIN IT WAS STATED THAT THE APPROVAL FOR SETTING UP A 100% EOU HAS BEEN RATIFIED BY THE BOARD OF APPROVAL IN ITS 2ND MEETING (2011 SERIES) HELD ON 25/03/2011 ALONG WITH THE A COPY OF MINUTES WHICH IS NOT PRESCRIBED ONE AS PE R PROVISIONS OF SECTION 1 0B OF THE IT, ACT, 1961 TO ALLOW DEDUCTION CLAIMED U/S.10B IT HAS BEEN HELD IN THE CASE OF REGENCY CREATIONS L TD. AND VALIANT COMMUNICATIONS LTD(ITA 69-2008J83 OF 2009,2 39 OF 2011) AS UNDER: ' THERE IS NO NOTIFICATION OR OFFICIAL DOCUMENT SUGGESTING THAT EITHER THE INTER-MINISTERIAL COMMIT TEE OR ANY OTHER OFFICER OR AGENCY WAS NOMINATED TO PERFOR M THE DUTIES OF THE BOARD (CONSTITUTED UNDER SECTION 14 OF THE IOR ACT) FOR THE PURPOSES OF APPROVALS U/S 10B. THOUGH THE CONSIDERATION WHICH APPLY FOR GRANTING APPROVAL U/S 10A AND 10B MAY, TO AN EXTENT OVERLAP, YET THE DELIBERATE SEGREGATION OF THESE TWO BENEFIT S BY THE STATUTE REFLECT THE PARLIAMENTARY INTENTION THA T THE SPECIFIC PROCEDURE ENACTED FOR THE PURPOSE UNDER EI THER HAS TO BE FOLLOWED TO QUALIFY FOR BENEFIT. THERE IS NOTHING IN ANY OF THE CIRCULARS OR INSTRUCTION IM PLYING THAT APPROVAL FOR PURPOSE FOR PURPOSES OF AN STP/EOU/EPZ ALSO ENTITLED A UNIT TO BENEFIT U/S 10B.' IN VIEW OF THE ABOVE, THE ASSESSEE'S CLAIM ON DEDUC TION U/S 10B FOR RS.6532975/- IS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ' ON THE BASIS OF FINDINGS OF THE LD. ASSESSING OFFIC ER IN THE ASSESSMENT YEAR 2011-2012, THE PRESENT LD. ASSESSING OFFICER H AS DISALLOWED THE ITA NOS.897 TO 900/MDS/2016. :- 6 -: DEDUCTION U/S.10B OF THE ACT OF A65,32,975/- AND AD DED TO THE RETURNED INCOME. AGGRIEVED BY THE ORDER, THE ASSE SSEE FILED AN APPEAL BEFORE COMMISSIONER OF INCOME TAX (APPEALS). 4. IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE OF ASSESSEE ARGUED THE GROUNDS EXPLA INING THAT THE LD. ASSESSING OFFICER OUGHT TO HAVE ALLOWED THE DEDUCTI ON CLAIMED BY THE ASSESSEE U/S.10B OF THE ACT HAVE BEEN COMPLIED. THE LD. ASSESSING OFFICER OBSERVED RATIFICATION BY THE BOARD OF APP ROVAL GRANTED BY THE DEVELOPMENT COMMISSIONER, MEPZ, SEZ, TAMBARAM HAS N OT THE ONE PRESCRIBED UNDER THE PROVISIONS OF SEC. 10B OF THE ACT. THE LD. ASSESSING OFFICER ALSO RELIED ON THE DECISION OF DE LHI HIGH COURT IN THE CASE OF CIT VS. REGENCY CREATIONS LTD (2013) 353 ITR 326 AND ITAT, DELHI DECISION IN THE CASE OF DCIT VS. VALIANT COMMUNICATIONS LTD (2012) 11 TMI 382, THE LD. AUTHORISED REPRESENTATIVE FURTHER ARGUED THAT ALTERNATIVELY THE LD. ASSESSING OFFICER SHOULD HAVE ALLOWED DEDUCTION U/S.10A OF THE ACT. IN THE APPELLATE PRO CEEDINGS, THE ASSESSEE HAS PRODUCED ON 28.01.2016 ADDITIONAL INFO RMATION BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) UNDER THE PROVISIONS OF RULE 46A OF THE INCOME TAX ACT AND EXPLAINED THAT CERTAIN PAPERS SHOULD BE ACCEPTED AS ADDITIONAL EVIDENCE UNDER RU LE 46A. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) QUESTIONED THE ASSESSEE ITA NOS.897 TO 900/MDS/2016. :- 7 -: COMPANY WHY IT COULD NOT ADDUCE THE EVIDENCE BEFOR E LD. ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS AND ALSO PERU SED THE PROVISIONS AND FOUND THAT THE REASONS EXPLAINED BY THE ASSESSE E DURING THE APPELLANT PROCEEDINGS FOR FILING ADDITIONAL EVIDENC E ARE NOT COVERED BY THE PROVISIONS OF RULE 46A OF THE ACT AND REJECTED THE EVIDENCE ON RECORD. SUBSEQUENTLY, THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) PERUSED THE GROUNDS AND FINDINGS OF THE LD. ASSESS ING OFFICER AND THE REASONS RECORDED BY THE LD.AO IN HIS ORDER REFERRED AT PAGE 4. THE LD. AUTHORISED REPRESENTATIVE IN COMPLIANCE TO GROUNDS OF APPEAL AND ADDITIONAL EVIDENCE HAS FILED WRITTEN SUBMISSIONS O N DISALLOWANCE U/S.10B OF THE ACT RELYING ON THE APPLICABILITY OF PROVISIONS ON THE PERMISSION, RENEWAL AND APPROVALS OF DEVELOPMENT CO MMISSIONER OF MEPZ, EOU SCHEME AND FURTHER SUPPORTED THE GROUNDS WITH DECISIONS OF SUPREME COURT, TRIBUNAL ,JUDICIAL DECISIONS AND CBDT CIRCULARS. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) OBSERV ED THE SUBMISSIONS AT PAGE 4 TO 9 OF HIS ORDER. THE LD. C OMMISSIONER OF INCOME TAX (APPEALS) BASED ON THE FINDINGS OF THE L D. ASSESSING OFFICER, ARGUMENTS, GROUNDS AND WRITTEN SUBMISSION S IS OF THE OPINION THAT THE ACTION OF THE LD. ASSESSING OFFICER SHALL BE SUSTAINED AS THE ASSESSEE COMPANY COULD NOT PRODUCE INFORMATION OR C OMPLY THE CONDITIONS. . THE LD. COMMISSIONER OF INCOME TAX (A PPEALS) AT PAGE 9 OF HIS ORDER OBSERVED AS UNDER:- ITA NOS.897 TO 900/MDS/2016. :- 8 -: I HAVE CONSIDERED SUBMISSIONS OF THE AR OF THE AP PELLANT, FINDINGS OF THE ASSESSING OFFICER , ON PERUSAL OF AO'S FINDI NG IN SO FAR AS DISALLOWANCE MADE U/S 10B, I FOUND THAT AO'S FINDING HAS FORCE. AO HAS COME TO CONCLUSION THAT APPELLANT COMPANY CO ULD NOT PRODUCE APPROVAL FROM THE BOARD APPOINTED IN THIS B EHALF BY CENTRAL GOVT. IN EXERCISE OF THE POWERS CONFERRED BY SECTIO N 14 OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT. 1951. AND THE RULES MADE UNDER THAT ACT. ASSESSING OFFICER HAS ALSO PL ACED RELIANCE ON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CAS E OF REGENCY CREATIONS LTD AND VALIANT COMMUNICATIONS LTD(LTA 69-2008, 783 OF 2009 239 OF 2011. IT HAS BEEN HELD IN THE CASE OF REGENCY CREATIONS LTD. AND VALIANT COMMUNICATIONS LTD (ITA 69- 2008, 783 OF 2009,239 OF 2011) AS UNDER :- 'THERE IS NO NOTIFICATION OR OFFICIAL DOCUMENT SUGG ESTING THAT EITHER THE INTER-MINISTERIAL COMMITTEE OR ANY OTHER OFFICER OR AGENCY WAS NOMINATED TO PERFORM THE DUTIES OF THE B OARD (CONSTITUTED U/S. 14 OF THE IDR ACT) FOR THE PURPOSE OF APPROVALS U/S. 10B. THOUGH THE CONSIDERATION WHICH APPLY FOR GRANTING APPROVAL ULS.10A AND 10B MAY, TO AN EXTENT OVERLAP, YET THE DELIBERATE SEGREGATION OF THESE TWO BENEFITS BY THE STATUE REFLECT THE PARLIAMENTARY INTENTION T HAT THE SPECIFIC PROCEDURE ENACTED FOR THE PURPOSE UNDER EI THER HAS TO BE FOLLOWED TO QUALIFY FOR BENEFIT. THERE IS NOTHING IN ANY OF THE CIRCULARS OR INSTRUCTIONS IMPLYING THAT APPROVAL FO R PURPOSE OF AN STP/EOU/EPZ ALSO ENTITLED A UNIT TO BENEFIT U/S. 10B'. I AM ALSO FORTIFIED BY THE JURISDICTIONAL HIGH COU RT ORDER IN THE CASE OF CIT VS. LIVE CONNECTION SOFTWARE (P) LTD (2014) 51 TAXMANN.COM 454 (MAD). FURTHER, THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) BASED ON THE ABOVE DECISIONS IS OF THE OPINION THAT THE LD. ASSE SSING OFFICER HAS CATEGORICALLY STATED THAT THE ASSESSEE COMPANY COUL D NOT GET SUCH APPROVAL AND THE ARGUMENTS OF THE LD. AUTHORISED RE PRESENTATIVE OF ASSESSEE ARE WITHOUT ANY SUBSTANCE. THE ASSESSEE CO MPANY COULD NOT COMPLY THE CONDITIONS FOR ELIGIBILITY TO CLAIM D EDUCTION U/S.10B OF ITA NOS.897 TO 900/MDS/2016. :- 9 -: THE ACT FOR APPROVAL FROM THE BOARD APPOINTED BY TH E CENTRAL GOVERNMENT. SINCE THE ASSESSEE COMPANY HAS FAILED TO OBTAIN APPROVAL, THE LD. ASSESSING OFFICER HAS DISALLOWED THE CLAIM U/S.10B OF THE ACT AND SAME WAS UPHELD BY COMMISSIONER OF INCO ME TAX (APPEALS) AND DISMISSED THE GROUNDS OF THE ASSESSEE . 4.1 IN RESPECT OF ALTERNATIVE CLAIM OF DEDUCTION U/ S.10A OF THE ACT. THE ASSESSEE COMPANY HAS NOT MADE SUCH CLAIM BEFORE LD. ASSESSING OFFICER. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) PERUSED AND COMPARED THE PROVISIONS OF SECS. 10A AN D 10B OF THE ACT WERE TWO SECTIONS STAND ON THE SEPARATE FOOTINGS AS FAR AS ELIGIBILITY CRITERIA, INTENT AND PURPOSE ARE CONCERNED, WEREAS PROCEDURE AND CONDITIONS LAID DOWN TO CLAIM DEDUCTION UNDER RESPE CTIVE SECTION ARE DIFFERENT AND THE ASSESSEE COMPANY HAS NOT PRODUCED ANY EVIDENCE IN SUPPORT OF ALTERNATIVE CLAIM. THEREFORE, THE ALTER NATIVE GROUND RAISED BY THE ASSESSEE IS DISMISSED AND PASSED AN ORDER DA TED 26.02.2016. AGGRIEVED BY THE COMMISSIONER OF INCOME TAX (APPEAL S) ORDER, THE ASSESSEE ASSAILED AN APPEAL BEFORE TRIBUNAL. 5. BEFORE US, THE LD. AUTHORISED REPRESENTATIVE OF ASS ESSEE REITERATED THE SUBMISSIONS MADE BEFORE ASSESSMENT A ND APPELLATE PROCEEDINGS ALONGWITH EVIDENCES AND ARGUED THE GROU NDS THAT LD. ITA NOS.897 TO 900/MDS/2016. :- 10 -: COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN C ONFIRMING THE FINDINGS OF THE LD. ASSESSING OFFICER IN DENYING TH E CLAIM OF SEC. 10B OF THE ACT. THE LD. ASSESSING OFFICER SHOULD HAVE ALL OWED THE DEDUCTION CLAIMED BY THE ASSESSEE AS ALL THE CONDITIONS ARE F ULFILLED. FURTHER, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS NOT COR RECT IN CONCURRING WITH THE FINDINGS OF THE LD. ASSESSING OFFICER THAT THE RATIFICATION BY THE BOARD OF APPROVAL FOR EOU SCHEME IS NOT ONE PRE SCRIBED IN THE PROVISIONS OF SEC. 10B OF THE ACT AND ALSO THE ASS ESSEE COMPANY WAS DENIED ALTERNATIVE CLAIM U/S.10A OF THE ACT. THE L D. COMMISSIONER OF INCOME TAX (APPEALS) HAS REJECTED TO ADMIT ADDITION AL EVIDENCE FILED UNDER RULE 46A, WHICH ASSESSEE COMPANY WAS PREVENT ED BY SUFFICIENT CAUSE IN PRODUCING BEFORE LD. ASSESSING OFFICER. F URTHER, THE ADDITIONAL EVIDENCE PLAY A VITAL ROLE IN SUPPORT OF THE ASSESSEE GROUND AND FILED PAPER BOOK AND RELIED ON CASE LAWS AND PRAYED FOR ALLOWING THE APPEAL. 6. CONTRA, LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND VEH EMENTLY OPPOSED THE GROUNDS. 7. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIA L ON RECORD AND JUDICIAL DECISIONS CITED. THE ARGUMENTS OF THE LD. AUTHORISED REPRESENTATIVE THAT THE LD. ASSESSING OF FICER HAS REJECTED ITA NOS.897 TO 900/MDS/2016. :- 11 -: THE CLAIM OF DEDUCTION U/S. 10B OF THE ACT RELYING ON THE FINDINGS OF THE LD. ASSESSING OFFICER IN SUBSEQUENT ASSESSMENT YEAR IN HIS ASSESSMENT ORDER. THE LD. ASSESSING OFFICER IS OF THE OPINION THAT RATIFICATION OF BOARD OF APPROVAL FOR EOU SCHEME IS NOT THE SAME AN D IRRESPECTIVE OF THE FACT THAT THE ASSESSEE HAS COMPLIED THE CONDITI ONS FOR ELIGIBILITY OF DEDUCTION U/S.10B OF THE ACT. THE LD. AUTHORISED RE PRESENTATIVE DREW OUR ATTENTION TO THE PAGE NO.2 TO 5OF PAPER BOOK W ERE A LETTER DATED 27.03.2014 ADDRESSED TO THE ASSESSEE AND OFFICE M EMORANDUM DATED 28.03.2011 AND PART -II WAS FILED AS UNDER: G OV E RNME NT O F IN D IA , MINI ST RY O F CO M MERC E AND INDU STRY, DEPA R T M EN T OF C OMMERC E, OFFICE O F THE D E V E L OPM E N T C OM MIS S I O N E R , M EPZ SPECIA L EC O NOMIC ZO N E & HE OU S IN TAMIL NADU, POODI C H E RR Y, A NDAM A N & NICO B A R I S L AND ADM IN IS TRA T IVE OFFI CE B UIL DI N G , N A TI O NA L H IGHWAY -4 5 , T AMB ARAM , CHENNAI - 600 045. F. NO.A/2007/08/EOU-TN, DATED 27.03.2014 M / S . R C GOLDEN GRA N ITE S P \ L T I TD ., M C5FN ( ) F L , TYPE 1 1 , D R.V S I E S T A T E, THIRU VA NMI Y UR , CHENNAI 600 041. SUB: MEP Z 1 0 0 % EOU - CLAIMING OF INCOME TAX E X EMPTION - R EG . REF : 1 . Y OUR LETTER DATED 1 7 . 3 . 2014 . 2 . LOP NO . A / 2007 / 008/EOU-TN DATED 9 . 3 . 2007 . * ****** ** ** * PLE AS E REFER TO YOUR LETT E R CITED ABOV E. IT I S INFO R MED THAT M/ S . RC G O LD E N G R A NIT ES PV T LT D . , WER E I S SUED LOP BY THE DEVELOPMENT COMMI SS IONER , MEP Z - SEZ V I DE THI S OF F ICE L E TT E R NO . A / 2007 / 008/EOU- TN DATED 9 . 3 . 200 7 IS S UED TO YOUR UNIT FOR S ETTING UP A NEW 100 % EOU FOR MANUFACTURE AND E X PORT OF YOUR ITA NOS.897 TO 900/MDS/2016. :- 12 -: LICENSED PRODUCT AT , RS NO. 124 , MAN GA LAM V I LLA G E , UTHIRAME RU R , MATHURANTHA G AM TALUK, K A NCHEEPURAM DISTRICT - 60 3 10 7, TAMILNADU , UND E R T H E PR O VI S IONS OF E X IM PO LICY 2004 - 09 . THE SAID A PPROVAL WAS S UBSEQUENTLY R A TIFIED BY THE BOARD OF APPR O VAL I N ITS 2 ND M EET I N G (2011 SERIE S ) HELD ON 25 .3.2 011 ( COPY ENCLOSED) . YOURS FAITHFULLY, (UMA RAGHUNATHAN) ASST. DEVELOPMENT COMMISSIONER ENCL: COPY OF THE MINUTES OF THE BOA FOR DEVELOPMEN T COMMISSIONER MOST /IMMEDIATE BY FAX/SPEED POST NO.F14/2/2011-EOU GOVERNMENT OF INDIA MINISTRY OF COMMERCE AND INDUSTRY, DEPARTMENT OF COMMERCE. U DYOG BHAWAN, NEW DELHI THE 28 TH MARCH, 2011 003170 OFFICE MEMORANDUM SUBJECT:- MINUTES OF THE 2 ND MEETING (2011 SERIES) OF THE BOARD OF APPROVAL FOR THE EOU SCHEME HELD ON 25 TH MARCH, 2011. THE UNDERSIGNED IS DIRECTED TO FORWARD HEREWIT H A COPY O F T HE ' M I NUTE S OF THE , 2 N D MEETING (2011 SERIES] OF THE BOARD OF APPROVAL FOR EOU SCH E M E HEL D ON 25.03.2011 FOR NECESSARY ACTION. 2. IMPLEMENTATION REPORT ON THE DECISIONS TAKEN BY THE BOARD OF APPROVAL MAY PLEASE FOR FORWARDED TO THIS DEPARTMENT ON PRIORITY BASIS. ENCL: AS ABOVE. (G. MUTHURAJA) UNDER SE CRETARY TO THE GOVT. OF INDIA. TEL[phone] ITA NOS.897 TO 900/MDS/2016. :- 13 -: EMAIL:[e-mail] 1 . SHRI SHY AMAL M I SHRA, 'DI R ECTOR, % INDU S TR IAL PO LICY & PROMOTI O N 2. CBEC (MEMBER (CUSTOMS) M/O. FINANCE. 3.CBDT (MEMBER(INCOME TAX) M/SO. FINANCE 4. DGFT. 5. THE JOINT SECRETARY, M/O. ENVIRONMENT & FOREST. 6. THE JOINT SECRETARY, M/O SCIENCE & TECHNOLOGY. 7. THE ADDITIONAL DEVELOPMENT COMMIS SIONER, MSME, M/O. MICRO, SMALL AND MEDIUM ENTERPRISES. 8. THE DEVELOPMENT COMMISSIONER, SEEPZ-SEZ, FSEZ, MSEZ, VSEZ, KASEZ, CSEZ, NSEZ & ISEZ. 9. THE DIRECTOR GENERAL, EPCES. 10. ALL CONCERNED ADMINISTRATIVE MINISTRIES. COPY TO PPS TO PPS TO SS(PKC)/PS TO JS(TS)/PS TO JS (AW) PS TO DIR (SS) PART II APPROVAL GRANTED BY DEVELOPMENT COMMISSIONER UNDER DELEGATED POWERS FOR RATIFICATION OF BOA AS PER PRESS NOTE NO .3 OF 1995 (I) THE BOARD RATIFIED THE APPROVALS GRANTED BY UN IT APPROVAL COMMITTEE (EXCEPT ISEZ AND NSEZ FROM WHICH NO SUCH PROPOSAL WAS RECEIVED) AS BELOW: A APPROVAL GRANTED UNDER DELEGATED POWERS FOR THE MONTH OF DECEMBER,2010 AND JANUARY, 2011 CSEZ B APPROVAL GRANTED UNDER DELEGATED POWERS FOR THE MONTH OF AND JANUARY, 2011 MEEZ C APPROVAL GRANTED UNDER DELEGATED POWERS FOR THE MONTH OF DECEMBER,2010 AND JANUARY, 2011 FASEZ D APPROVAL GRANTED UNDER DELEGATED POWERS FOR THE MONTH OF JANUARY, AND FEBRUARY 2011 SEEPZ E APPROVAL GRANTED UNDER DELEGATED POWERS FOR THE MONTH OF DECEMBER, 2010 JANUARY, AND FEBRUARY 2011 VSEZ F APPROVAL GRANTED UNDER DELEGATED POWERS FOR THE MONTH OF OCTOBER 2010 TO DECEMBER, 2010. KASEZ G APPROVALS NOT RECEIVED ISEZ H APPROVALS NOT RECEIVED NSEZ ITA NOS.897 TO 900/MDS/2016. :- 14 -: (II) THE BOARD ALSO RATIFIED THE APPROVALS GIVEN BY SEZS(OLD CASES) AS BELOW:- 1 RATIFICATION OF PROJECT APPROVALS UNDER AUTOMATIC APPROVAL SCHEME YEAR 2001 TO 2002 (19LOPS) YEAR 2002 TO 2003 (20LOPS) YEAR 2003 TO 2004 (20LOPS) YEAR 2004 TO 2005 (13LOPS) YEAR 2005 TO 2006 (38LOPS) YEAR 2006 TO 2007 (23LOPS) YEAR 2007 TO 2008 (4 LOPS) KASEZ 2 YEAR 2005 TO 2006 (52LOPS) YEAR 2006 TO 2007 (52LOPS) YEAR 2007 TO 2008 (41 LOPS) YEAR 2008 TO 2009 (33LOPS) YEAR 2009 TO 2010 (19 LOPS) YEAR 2010 TO JAN, 2011 (28 LOPS) MSEZ 3 MARCH TO MAY, 2010 JUNE TO JULY, 2010 AUGUST TO SEPT 2010 SEEPZ LOP 2006-07 44 RC GOLDEN GRANTIIES PVT. LTD A/2007/008/EOU- PY 09.3.2007 45 SOWRAG AGRO EXPORTS A/2007/008/EOU- T 19.02.2007 46 NACHORIS ENTERPRISES A/2006/024/EOU- 12.04.2006 47 K.M.B. GRANITES (P) LTD A/2007/006/EOU 29.01.2007 48 PHOTON INFORTECH PVT. LTD A/2006/80/EOU-TN 08.01.2007 49 AVATHAR INTERNATIONAL A/2007/50/EOU-TN 10.10.2007 50 AMRITA CHEMICALS (INDIA) A/2007/17/EOU-TN 19.04.2007 51 ARASAN TECHNOLOGY P. LTD A/2006/002/EOU-TN 31.03.2006 52 BALA MURUGAN COMPANY A/2006/067/EOU-TN 26.06.2006 53 STANDARD GRANITIES A/2006/36/EOU-TN 19.05.2006 54 STETLITE INDUSTRIES (I) LTD A/2006/30/EOU-TN 27.04.2006 ON PERUSAL OF THE LETTER DATED 27.03.2014, THE DE VELOPMENT COMMISSIONER INFORMED THAT THE BOARD HAS SUBSEQUENT LY RATIFIED ITS ITA NOS.897 TO 900/MDS/2016. :- 15 -: APPROVAL IN SECOND MEETING HELD ON 25.03.2011. FUR THER, ON PERUSAL OF THE DOCUMENT DATED 28.03.2011 FROM GOVERNMENT OF INDIA, MINISTRY OF COMMERCE AND INDUSTRIES, DEPARTMENT OF COMMERCE WERE THE MINUTES OF THE 2ND MEETING OF THE BOARD OF APPROVAL FOR EOU SCHEME HELD ON 25.03.2011 AND WAS ENDORSED TO THE DEVELOPM ENT COMMISSIONERS AT SL. NO.8. THE LD. AUTHORISED REPR ESENTATIVE DREW OUR ATTENTION TO THE CBDT INSTRUCTIONS DATED 09.03. 2009 ON THE SUBJECT OF SECTION 10B CLARIFICATIONS REGARDING VALIDITY OF APPROVALS GIVEN BY DEVELOPMENT COMMISSIONER HAS BEEN EXAMINED BY THE B OARD. IT HAS BEEN DECIDED THAT AN APPROVAL GRANTED BY THE DEVELO PMENT COMMISSIONER IN THE CASE OF AN EXPORT ORIENTED UNIT SET UP IN AN EXPORT PROCESSING ZONE WILL BE CONSIDERED VALID, ON CE SUCH AN APPROVAL IS RATIFIED BY THE BOARD OF APPROVAL FOR EOU SCHEME AND IN SUBSEQUENT CORRIGENDUM DATED 08.05.2009 IT WAS MENTIOEND THA T AS UNDER:- CBDT HAS ISSUED AN INSTRUCTION NO.02/2009, DATED 9 TH MARCH, 2009. THE SECOND PARA OF THAT INSTUR4ITRON MAY BE SUBSTITUTED WITH THE FOLLOWING PARA : THE MATTER REGARDING VALIDITY OF APPROVALS GIVEN BY DEVELOPMENT COMMISSIONERS HAS BEEN EXAMINED IN THE BOARD IT HAS BEEN DECIDED THAT AN APPROVAL GRANTED BY THE DE VELOPMENT COMMISSIONER IN THE CASE OF AN HUNDRED PERCENT EXPO RT ORIENTED UNIT WILL BE CONSIDERED VALID ONCE SUCH AN APPROVAL IS RATIFIED BY THE BOARD OF APPROVAL FOR EOU SCHEME. THIS MAY KINDLY BE BROUGHT INTO THE NOTICE OF ALL O FFICER UNDER YOUR CHARGE. ITA NOS.897 TO 900/MDS/2016. :- 16 -: THE LD. AUTHORISED REPRESENTATIVE RELIED ON THE JUD ICIAL DECISIONS AND WE ON PERUSAL OF DECISION OF GUJARAT HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX VS. ECI TECHNOLOGIES PVT . LTD (2015) 375 ITR 0595 (GUJ) WERE SIMILAR ISSUE ON SEC. 10B WAS DEALT WERE IT W AS HELD AS UNDER: IT IS AN ADMITTED POSITION THAT THERE WAS ALREADY A PERMISSION/ APPROVAL GRANTED BY THE DEVELOPMENT COMMISSIONER DECLARING /APPROVING THE ASSESSEE AS 1 00% EOU. HOWEVER, ON CONSIDERING THE WORD, APPROVED BY THE BOARD OF APPROVAL AS MENTIONED IN SEC. 10 OF THE AC T AND AT THE RELEVANT TIME THERE WAS NO RATIFICATION OF THE DECISION OF THE DEVELOPMENT COMMISSIONER BY THE BOARD OF APPROVAL, THE ASSESSING OFFICER DENIED THE DEDUCTION UNDER SECTION 10B OF THE ACT. HOWEVER, IT IS REQUIRED TO BE NOTED AND IT IS NOT IN DISPUTE THAT VIDE CIRCULAR / INSTRUCTION OF THE CBDT DATED 09/03/2009 IT WAS CLARIFIED THAT THE APPROVAL GRANTED BY THE DEVELOPMENT COMMISSIONER IN THE CASE OF EXPORT ORIENTED UNIT SET UP IN AN EXPORT PROCESSING ZONE WILL BE CONSIDERED VALID, ONCE SUCH AN APPROVAL IS RATIFIED BY THE BOARD OF APPROVAL FOR EOU SCHEME. IN THE PRESENT CASE, IT IS NOT IN DISPUTE THAT THE PERMISSION / APPROVAL GRANTED BY THE DEVELOPMENT COMMISSIONER HAS BEEN RATIFIED BY THE BOARD OF APPROVAL, MAY BE SUBSEQUENTLY. THE MOMENT THE DECISION / APPROVAL OF THE DEVELOPMENT COMMISSIONER IS RATIFIED BY THE BOA RD OF APPROVAL IT WILL RELATE BACK TO THE DATE ON WHIC H THE APPROVAL WAS GRANTED BY THE DEVELOPMENT COMMISSIONER. IF THAT BE SO, IT CANNOT BE SAID THAT THE ASSESSEE WAS NOT A EXPORT ORIENTED UNIT, WHICH WAS ENTITLED TO THE DEDUCTION UNDER SECTION 10B OF THE ACT. INCIDENTALLY IT IS TO BE NOTED THAT IN THE SUBSEQUE NT CIRCULAR NO.68 ISSUED BY THE EXPORT PROMOTION COUNC IL FOR EOUS & SEZS DATED 14/05/2009 IT MENTIONS THAT FROM 1990 ONWARDS BOARD OF APPROVAL HAD DELEGATED THE POWER OF APPROVAL OF 100% TO THE DEVELOPMENT COMMISSIONER AND, THEREFORE, IT CAN BE VERY WELL ITA NOS.897 TO 900/MDS/2016. :- 17 -: ARGUED AND SAID THAT THE DEVELOPMENT COMMISSIONER WHILE GRANTING THE APPROVAL OF 100% EOU EXERCISES DELEGATED POWERS. IN ANY CASE AND APART FROM THE ABOVE WHEN IT IS FOUND THAT AT THE RELEVANT TIME TH E DEVELOPMENT COMMISSIONER GRANTED THE APPROVAL OF 100% EOU IN FAVOUR OF THE ASSESSEE-COMPANY, WHICH CAME TO BE SUBSEQUENTLY RATIFIED BY THE BOARD OF APPROVAL AND AS OBSERVED HEREINABOVE AS SUCH THE RATIFICATION SHALL BE FROM THE DATE ON WHICH THE DEVELOPMENT COMMISSIONER GRANTED THE APPROVAL, BOTH THE LEARNED CIT(A) AS WELL AS THE LEARNED TRIBUNAL HAVE RIGHTLY HELD THAT THE ASSESSEE WAS ENTITLED TO DEDU CTION UNDER SECTION10B OF THE ACT AS CLAIMED. HIGH COURT CONFIRM THE VIEW TAKEN BY BOTH THE AUTHORITIES BELO W HOLDING THAT THE ASSESSEE WAS ENTITLED TO 100% EOU AS CLAIMED. NO SUBSTANTIAL QUESTION OF LAW ARISES IN T HE PRESENT TAX APPEAL. HENCE, THE PRESENT TAX APPEAL DESERVES TO BE DISMISSED AND IS ACCORDINGLY DISMISS ED. THE LD. AUTHORISED REPRESENTATIVE SUPPORTED THE CAS E WITH THE FACTS AND LAW WITH HIGH COURT DECISIONS AND FIND THE CO-O RDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. M/S. SEVERN GLOCON (INDIA) PVT. LTD IN ITA NO.2816/MDS/2014, DATED 19.06.2014 HELD IN PARA 9, PAGE 6 IN RESPECT OF CLAIM OF SEC. 10B AND ALTERNATIVE CLA IM U/S.10A OF THE ACT HELD AS UNDER:- 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EI THER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. EXPLAN ATION 2(IV) TO SECTION 10B CLEARLY SAYS THAT APPROVAL BY THE BOARD APPOINTED BY GOVERNMENT OF INDIA UNDER SECTION 14 O F THE INDUSTRIES (DEVELOPMENT & REGULATION) ACT, 1951 IS AN ESSENTIAL CONDITION. IN THIS CASE, THOUGH THE ASSES SEE CLAIMS THAT THE APPROVAL INITIALLY GRANTED BY DEVELOPMENT COMMISSIONER, SPECIAL ECONOMIC ZONE WAS RATIFIED BY THE BOARD, IT IS NOT CLEAR FROM THE MATERIAL AVAILABLE ON RECORD WHETHER RATIFICATION WAS ACCORDED BY THE BOARD CONS TITUTED BY GOVERNMENT OF INDIA UNDER SECTION 14 OF THE INDU STRIES (DEVELOPMENT & REGULATION) ACT, 1951. IN THE ABSENC E OF ANY MATERIAL TO SHOW THAT WHETHER THE APPROVAL WAS ACCORDED BY THE BOARD CONSTITUTED UNDER INDUSTRIES (DEVELOPMENT & REGULATION) ACT, 1951, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RE-E XAMINED. ITA NOS.897 TO 900/MDS/2016. :- 18 -: MOREOVER, SECTION 10A ALSO GIVES EXEMPTION TO 100% EXPORT ORIENTED UNIT. THEREFORE, THIS TRIBUNAL IS OF THE C ONSIDERED OPINION THAT THE MATTER NEEDS TO BE RE-EXAMINED BY THE ASSESSING OFFICER IN THE LIGHT OF THE PROVISIONS OF SECTION 10A OF THE ACT, IN CASE THE ASSESSEE IS NOT ELIGIBLE UN DER SECTION 10B OF THE ACT. ACCORDINGLY, THE ORDERS OF THE LOWE R AUTHORITIES ARE SET ASIDE AND THE ENTIRE ISSUE IS R EMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE ISSUE AFRESH AND FIND OUT WHET HER THE BOARD CONSTITUTED BY GOVERNMENT OF INDIA UNDER SECT ION 14 OF THE INDUSTRIES (DEVELOPMENT & REGULATION) ACT, 1 951 HAS APPROVED THE ASSESSEE AS 100% EXPORT ORIENTED UNIT. IN CASE SUCH APPROVAL WAS NOT GRANTED, THE ASSESSING OFFICE R SHALL ALSO EXAMINE THE CLAIM OF THE ASSESSEE UNDER SECTIO N 10A OF THE ACT ON MERIT, IN ACCORDANCE WITH LAW, AFTER GIV ING A REASONABLE OPPORTUNITY TO THE ASSESSEE. SO, WE ARE OF THE OPINION THAT BOARD HAS RATIFIED THE APPROVAL OF 100% EOU WHICH IS NOT DISPUTED BY THE REVENUE. THE DECISION OF ECI TECHNOLOGIES PVT. LTD (CITED SUPRA) HAS DEALT ON THE ISSUE WERE THE APPROVAL OF DEVELOPMENT COMMISSIONER WAS RATIFIED B Y THE BOARD OF APPROVAL SHALL RELATE BACK TO THE APPROVAL OF DEVEL OPMENT COMMISSIONER. IN THE PRESENT CASE, THE LD. ASSESS ING OFFICER IS OF THE OPINION THAT THE ASSESSEE HAS NOT FULFILLED THE CON DITIONS STIPULATED UNDER THE ACT AND THE ASSESSEE COMPANY IS 100% EOU DOING BUSINESS OF MANUFACTURE AND EXPORT OF MARBLES AND GRANITES. THE LD. ASSESSING OFFICER HAS ALSO INTERPRETED THE EXPLANATION THAT T HE APPROVAL SHOULD BE 100% EOU BY THE BOARD APPOINTED ON BEHALF OF CEN TRAL GOVERNMENT AND IS OF THE VIEW THAT DEVELOPMENT COMM ISSIONER LETTER OF THE MEPZ SEZ DATED 27.03.2014 REGARDING RATIFICA TION IS NOT ITA NOS.897 TO 900/MDS/2016. :- 19 -: PRESCRIBED ONE AS PER PROVISIONS OF SEC. 10B OF THE ACT. THE LD. ASSESSING OFFICER HAS NOT MADE ANY INDEPENDENT INVE STIGATION OR ADDUCE ANY EVIDENCE WITH AUTHENTIC PROOF THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S.10B OF THE ACT. FURTHER , THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS REJECTED T HE ADDITIONAL EVIDENCE PRODUCED UNDER PROVISIONS OF RULE 46A IN T HE APPELLATE PROCEEDINGS IRRESPECTIVE OF THE FACT THAT SUFFICIE NT CAUSE WAS EXPLAINED FOR NOT FILING IN ASSESSMENT PROCEEDINGS . NOW THE QUESTION ARISE, THE LD. ASSESSING OFFICER OR LD. COMMISSIONE R OF INCOME TAX (APPEALS) HAD NEVER VERIFIED THE CREDIBLE EVIDENCE AND DOCUMENTS WHICH ARE VITAL FOR CLAIM OF THE ASSESSEE COMPANY. WE RESPECTFULLY FOLLOWING THE CO-ORDINATE BENCH DECISION IN THE CA SE OF M/S. SEVERN GLOCON (INDIA) PVT. LTD (CITED SUPRA) REMIT THE DISPUTED ISSUE TO THE FILE OF ASSESSING OFFICER TO RE-EXAMINE THE ISSUE A FRESH CONSIDERING APPROVAL OF THE BOARD AND PASS THE ORDER AND THE A SSESSEE SHOULD BE PROVIDED ADEQUATE OPPORTUNITY OF BEING HEARD AND AL SO ALTERNATIVE CLAIM ON SEC. 10A OF THE ACT. THE GROUND OF THE A SSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 8. SIMILARLY, THE APPEAL OF THE ASSESSEE IN ITA NOS.8 98 & 899/MDS/2016 OF ASSESSMENT YEARS 2008-09, 2009-2010 AND 2010- 2011 ARE ALLOWED FOR STATISTICAL PURPOSE. ITA NOS.897 TO 900/MDS/2016. :- 20 -: 9. IN ITA NO.900/MDS/2016, FOR ASSESSMENT YEAR 2011 -2012, THE ASSESSEE HAS RAISED ONE MORE GROUND THAT THE C OMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALL OWANCE OF A1,30,32,500/- ON APPLICATION OF PROVISIONS OF SEC. 40A(3) OF THE ACT. 9.1 THE LD. AUTHORISED REPRESENTATIVE ARGUED THE GR OUNDS THAT THE LD. ASSESSING OFFICER HAS ERRED IN INVOKING PRO VISIONS OF SEC. 40A(3)OF THE ACT IN ALLEGING THAT THERE IS MISMATC H BETWEEN CASH BOOK AND RECONCILIATION STATEMENT SUBMITTED BY THE ASSESSEE COMPANY IN ASSESSMENT PROCEEDINGS AND DISALLOWANCE U/SEC. 4 0A(3) OF THE ACT IF CONFIRMED, THE SAME SHALL BE CONSIDERED IN COMPUTI NG DEDUCTION U/SEC.10A OF THE ACT. THE LD. AUTHORISED REPRESENT ATIVE SUBMITTED PAPER BOOK AND EXPLAINED THAT THE LD. ASSESSING OFF ICER HAS VERIFIED BANK ACCOUNT AND BOOKS OF ACCOUNT AND FURTHER THE S YSTEM OF REPORTING OF CASH EXPENSES IN THE BOOKS OF ACCOUNT AND RECONCILIATION STATEMENT WAS FILED. THE LD. ASSESSING OFFICER ON VERIFICATION IS OF THE OPINION THAT THERE IS NO MATCHING OF EXPENSES WITH WITHDRAWALS FROM THE BANK AND ISSUED LETTER DATED 19.03.2014 U/S.1 33(6) OF THE ACT TO THE BANKS AND OBTAINED A COPY OF THE SELF CHEQUES AND EXCEEDING MORE THAN A20,000/- . THE LD. AUTHORISED REPRESENT ATIVE ON PERUSAL FOUND THAT THE ASSESSEE COMPANY HAS ISSUED CHEQUES EXCEEDING A20,000/- IN THE FINANCIAL YEAR 2010-2011 TOTALING A1,30,32,500/- IN ITA NOS.897 TO 900/MDS/2016. :- 21 -: RESPECT OF EXPENSE AND BY APPLYING THE PROVISIONS O F SEC. 40A(3) OF THE ACT ADDED TO THE RETURNED INCOME. THE LD. AUTH ORISED REPRESENTATIVE FILED PAPER BOOK WITH PROVIDENT FUND STATEMENT AT PAGE NO.6 AND ALSO CASH BOOK OF THE ASSESSEE COMPAN Y FROM 01.04.2010 TO 31.03.2011 AND THE RECONCILIATION ST ATEMENT CONSIDERING THE AMOUNT DRAWN FROM THE BANKS BY CHE QUE AND THE PAYMENTS WERE MADE TOWARDS SALARY, OTHER EXPENSES. FURTHER, THE SALARY PAYMENTS, STATEMENTS OF FACTORY, OFFICE AND CASUAL LABOURS FROM PAGE 86 TO 229 ARE FILED TO SUPPORT THE GROUNDS THA T THE ACTION OF THE LD. ASSESSING OFFICER INVOKING PROVISIONS OF SEC. 4 0A(3) OF THE ACT IS BAD IN LAW. THE ASSESSEE COMPANY HAS WITHDRAWN FR OM BANK CONSOLIDATED AMOUNT AND THE PAYMENTS WERE MADE TO INDIVIDUAL WORKERS IN CURRENT FINANCIAL YEAR BY PASSING THE EN TRIES IN THE BOOKS OF ACCOUNT AND PRAYED FOR ALLOWING THE APPEAL. 9.2 CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE RE LIED ON THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS) AND OPPOSED TO THE GROUNDS. 9.3 WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MAT ERIAL ON RECORD AND MATERIAL EVIDENCE FILED. THE CRUX OF TH E ISSUE LIES ON THE DISALLOWANCE U/S.40A(3) OF THE ACT WERE THE PAYMENT S IN CASH EXCEEDED MORE THAN A20,000/-. THE LD. AUTHORISED REPRESENTATIVE ITA NOS.897 TO 900/MDS/2016. :- 22 -: EXPLAINED THAT THE ASSESSEE IS A MANUFACTURER AND A LSO HAS TRADING UNIT AND SHALL PAY WAGES AND SALARIES TO THE CASUAL LAB OURS AND ALSO STATUTORY PAYMENTS. THE MONEY IS WITHDRAWN FROM THE BANK IS REFLECTED IN THE CASH BOOK AND CORRESPONDING EXPEND ITURE WAS INCURRED BY CASH WHICH IS BELOW THE ADMISSIBLE LIMITS U/S. 4 0A(3) OF THE ACT. FURTHER, THE LD. AUTHORISED REPRESENTATIVE DREW OUR ATTENTION TO THE CASH BOOK AND RECONCILIATION STATEMENT OF SALARY WI TH CASH BOOK AND SALARY STATEMENTS OF OFFICE EMPLOYEE AND CASUAL LAB OURS. WE FOUND THAT THERE ARE NO FINDINGS BY THE LD. ASSESSING OF FICER IN ASSESSMENT ORDER REGARDING SUBMISSIONS FILED BEFORE US WHICH N EED TO CHECKED AND EXAMINED. SO, WE ARE OF THE OPINION THAT THE LD. A SSESSING OFFICER HAS TO VERIFY THE VOLUMINOUS DOCUMENTS SUBMITTED BEFORE US ON THE LCAIM U/S.40A(3) OF THE ACT AND WE REMIT THE DISPUTED ISS UE TO THE FILE OF THE LD. ASSESSING OFFICER. FURTHER IF ANY DISALLOWANCE IS CONFIRMED U/S.40A(3) OF THE ACT, THE SAME SHALL CONSIDERED IN COMPUTING ALTERNATIVE CLAIM U/S. 10A OF THE ACT. HENCE, WE SE T ASIDE THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AND REMIT THE ENTIRE ISSUE TO THE FILE OF THE LD. ASSESSING OFFICER FOR RE-EXAMI NATION. THE LD. ASSESSING OFFICER SHALL PROVIDE ADEQUATE OPPORTUNI TY OF BEING HEARD TO THE ASSESSEE AND DECIDE THE ISSUE ON MERITS. THE GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ITA NOS.897 TO 900/MDS/2016. :- 23 -: 9.4 THE APPEAL OF THE ASSESSEE IN ITA NO.900/MDS/20 16 OF ASSESSMENT YEAR 2011-2012 IS ALLOWED FOR STATISTICA L PURPOSE. 10. IN THE RESULT, THE APPEALS OF THE ASSESSEE IN ITA NOS. 897 TO 900/MDS/2016 OF ASSESSMENT YEARS 2008-09, 2009-1 0, 2010-11 AND 2011-12 ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON FRIDAY, THE 22ND DAY OF JULY , 2016, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ! ' ) (G. PAVAN KUMAR) / JUDICIAL MEMBER / CHENNAI 1 / DATED:22.07.2016 KV 2 ) +#-34 54&- / COPY TO: 1 . '( / APPELLANT 3. ! 6- () / CIT(A) 5. 4 9: +#-# / DR 2. +,'( / RESPONDENT 4. ! 6- / CIT 6. :;% < / GF