M/s. Har International, CHENNAI V. DCIT, CHENNAI

ITA 908/CHNY/2011

• Counselvise Citation: 90821714 RSA 2011
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-11-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 18-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A C JOSEPH
• Assessee Lawyers: G STANLY
• Keywords: Business income; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENN AI BEFORE DR.O.K.NARAYANAN, VICE PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER .. ITA NO.908/MDS./2011 ASSESSMENT YE AR:2004-05 M/S.HAR INTERNATIONAL, G BLOCK, 49,FLAT NO.84, SARANYA APARTMENTS, V.O.C. NAGAR, 1 ST STREET, ANNA NAGAR(EAST), CHENNAI 600 012. VS. DEPUTY COMMISSIONER OF INCOME TAX , BUSINESS RANGE-XIII, 121,NUNGAMBAKKAM HIGH ROAD, CHENNAI 600 034. PAN AACFH 9269 C (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.STANLY, ADVOCATE DEPARTMENT BY : SHRI A.C.JOSEPH, DR DATE OF HEARING : 16.11.11 DATE OF PRONOUNCEMENT : 23.11 .11 O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2004- 2005 IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIO NER OF INCOME TAX(A), DATED 18.02.2011. THE ASSESSEE FIRM FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2004-05,SHOWED TOTAL INCOME OF RS.51,36,529/- OUT OF WHICH IT HAS CLAIME D DEDUCTION OF RS.13,89,943/- U/S.80HHC OF THE ACT, AND THUS, H AS PAGE OF 7 ITA.908/MDS/2011 2 DECLARED TOTAL INCOME OF RS.37,46,586/-. THE ASSE SSMENT ORDER U/S.143(3) WAS PASSED ON 26.12.06 DETERMINING THE TAXABLE INCOME AT RS.41,68,860/-. IN DOING SO,THE ASSESSING OFFICER HAS ADDED BACK AN AMOUNT OF RS.1,25,000/- B EING DISALLOWANCE OUT OF TRAVELING EXPENSES ON ACCOUNT O F PERSONAL ELEMENT BEING INVOLVED THEREIN AND HAS ALSO RESTRIC TED THE ELIGIBLE CLAIM OF DEDUCTION U/S.80HHC TO RS.10,82,6 79/- AS AGAINST CLAIM OF RS.13,89,943/-. IN FIRST APPEAL, THE ASSESSEE COULD NOT GET ANY RELIEF. ACCORDINGLY, THE SECOND APPEAL HAS BEEN FILED BY RAISING THE FOLLOWING GROUNDS:- A) THE COMMISSIONER OF INCOME TAX(A) ERRED IN STAT ING THAT THE APPELLANT HAS NOT RESPONDED TO ANY OF THE HEARING NOTICES BY WAY OF A LETTER OR PERSONAL APPEARANCES BY THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT. THE APPELLANT HAD ARGUED THE MATTER AT L ENGTH BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(A). B) THE COMMISSIONER OF INCOME TAX(A) ERRED IN DISMISSING THE APPELLANTS APPEAL CHALLENGING THE O RDER OF ASSESSMENT DATED 26.12.2006 IN RESPECT OF ASSESSMENT YEAR 2004-05, RESTRICTING THE DEDUCTION PAGE OF 7 ITA.908/MDS/2011 3 CLAIMED BY THE ASSESSEE UNDER SEC.80HHC OF THE INCOME TAX ACT. C) THE C.I.T.(A) ERRED IN CONFIRMING THE DISALLOWA NCE MADE TOWARDS TRAVELING EXPENSES OF THE PARTNERS. C) THE COMMISSIONER OF INCOME TAX(A) ERRED IN NOT NOTING THAT THE BENEFIT OF SEC.80HHC APPLIED TO INC OME FROM QUOTA SALES AND OUGHT TO HAVE BEEN ACCEPTED TH E APPELLANTS COMPUTATION OF DEDUCTION U/S.80HHC. D) THE COMMISSIONER OF INCOME TAX(A) ERRED IN NOT FOLLOWING THE CIRCULAR ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES IN F.NO.133/131/97-TPL DATED 23.02.199 9. THE CIRCULAR BRINGS INCOME FROM SALE OF QUOTA SALES WITHIN THE AMBIT OF BUSINESS INCOME FOR THE PURPOSE OF DEDUCTION U/S.80HHC. E) THE COMMISSIONER OF INCOME TAX(A) HAS NOT APPLI ED HIS MIND TO THE ABOVE CASE AND HAS VERBATIM REPRODUCED THE ORDER OF THE ASSESSING AUTHORITY WIT HOUT EVEN CONSIDERING THE AFORESAID CIRCULAR WHICH IS BI NDING ON THE DEPARTMENT. F) THE COMMISSIONER OF INCOME TAX(A)ERRED IN NOT FOLLOWING THE DECISION OF HONBLE INCOME TAX APPELL ATE TRIBUNAL CHENNAI IN THE CASE OF A.C.ENTERPRISES (IT A PAGE OF 7 ITA.908/MDS/2011 4 NO.813 OF 2008) AND IN THE CASE OF MEHAR GARMENTS INTERNATIONAL ITA NO.140 TO 2009 AS WELL AS THE DEC ISION OF THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI IN THE CASE OF BERLINGTON EXPORTS VS. ACIT REPORTED IN 200 5 96 ITD 151 MUMBAI NOTWITHSTANDING THAT THE FACTS OF TH E ABOVE CASES ARE IDENTICAL TO THE PRESENT APPEAL. G) THE COMMISSIONER OF INCOME TAX(A) ERRED IN CONFIRMING THE DISALLOWANCE CLAIMED BY THE APPELLAN T ON ACCOUNT OF FOREIGN TRAVEL. NOT WITHSTANDING THAT TH E AFORESAID EXPENDITURE HAS BEEN INCURRED BY THE APPELLANT ON ACCOUNT OF PROMOTION OF THE APPELLANT S BUSINESS. H) THE COMMISSIONER OF INCOME TAX(A) ERRED IN MAKIN G AN ADHOC ADDITION IN RESPECT OF FOREIGN TRAVEL EXPE NSES BASED ON CONJECTURES AND SURMISES. THIS DISALLOWAN CE HAVING BEEN MADE WITHOUT GIVING ANY VALID REASON FO R MAKING THE ADDITION IS UNSUSTAINABLE. I) THE COMMISSIONER OF INCOME TAX(A) FAILED TO FOL LOW THE DECISION OF THE JURISDICTIONAL TRIBUNAL IN THE CASE OF MEHAR GARMENTS INTERNATIONAL ITA NO.140/2009 WHEREI N THE HONBLE INCOME TAX APPELLATE TRIBUNAL CHENNAI H AS PAGE OF 7 ITA.908/MDS/2011 5 DECIDED THE MATTER REGARDING FOREIGN TRAVEL EXPENSE S IN FAVOUR OF THE ASSESSEE . J) THE COMMISSIONER OF INCOME TAX(A) ERRED IN CONFIRMING LEVY OF INTEREST U/S.234 B AND 234 C IN SPITE OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF REVATHY EQUIPMENTS. K) ANY OTHER GROUND THAT MAY BE TAKEN AT THE TIME O F PERSONAL HEARING. 2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CA REFULLY PERUSED THE ENTIRE RECORD. IT WAS NOTICED THAT B EFORE LD. COMMISSIONER OF INCOME TAX(A), THE CASE OF THE ASSE SSEE REMAINED UNREPRESENTED AND DUE TO THIS FACT, ACTUAL FACTS, RELATING TO THE ITEMS OF INCOME IN QUESTION, COULD NOT BE COLLATED IN FULL. IN THIS BACKGROUND, IT WAS REQUE STED BY LD. AR THAT THE MATTER MAY BE SENT BACK TO LD. COMMISSION ER OF INCOME TAX(A), SO THAT THE FULL AND FINAL FACT MAY COME ON RECORD. IT WAS ARGUED THAT WRITTEN SUBMISSION, WH ICH WAS FILED BEFORE THE LD. COMMISSIONER OF INCOME TAX(A), AND H AS NOT BEEN AT ALL CONSIDERED BY HIM. ON THE OTHER HAND, L D. DR, ALTHOUGH SUPPORTED THE APPELLATE ORDER, YET HE ALSO FELT THAT FULL AND FINAL FACTS OF THE IMPUGNED ISSUE HAVE NOT COME ON FILE. PAGE OF 7 ITA.908/MDS/2011 6 WE ARE ALSO OF THE SAME OPINION THAT THE APPEAL NEE DS TO BE RESTORED BACK TO THE FILE OF THE COMMISSIONER OF IN COME TAX(A). THE TRIBUNAL BEING THE FINAL FACT FINDING BODY, IT BECOMES IMPERATIVE THAT FULL AND FINAL FACTS SHOULD BE CULLED OUT FROM THE AVAILABLE RECORDS. THEREFORE, IN THE INTEREST OF JUSTICE, WE REMIT BACK THE ENTIRE CASE TO THE FILE OF THE LD. COMMISSIONER OF INCOME TAX(A) WITH A DIRECTION THAT HE SHALL ACCORD OPPORTUNITY OF BEING HEARD TO THE ASSESSEE A S PER LAW. 3. IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 23 RD NOVEMBER, 2011. SD/- SD/- (DR.O.K.NARAYANAN ) ( HARI OM MARATHA ) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 23 RD NOVEMBER, 2011. K S SUNDARAM COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE PAGE OF 7 ITA.908/MDS/2011 7 DATE INITIALS 1. DRAFT DICTATED ON 2. DRAFT PLACED BEFORE AUTHORITY 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S. 6. KEEP FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE 9. DATE OF DISPATCH OF ORDER