DCIT, Circle - 3, Kolkata, Kolkata V. M/s. Al Qaiser Tobacco Pvt. Ltd., Kolkata

ITA 953/KOL/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4982 (ITAT-KOLKATA)
• Duration Of Justice: 5 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 24-02-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 07-05-2010
• Court: TRIBUNAL
• Department Lawyers: A MITAVA BHATTACHARYA LD
• Assessee Lawyers: MANISH TIWARI F C A LD
• Section: 80HHC; 10B

Judgement Text

ITA NO.953/K/2010 -C-AM M/S. AL QAISER TOBACCO P.LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, K OLKATA BEFORE : SHRI MAHAVIR SINGH, JUDICIAL MEMBER , AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 953/KOL/2010 A.Y 2004-05 D.C.I.T, CIR-3, KOLKATA VS. M/S. AL QAIS ER TOBACCO PVT.LTD PAN: AACCA 3 821A (APPELLANT) ( RESPONDENT) FOR THE APPELLANT/DEPARTMENT: SHRI A MITAVA BHATTACHARYA, LD.DR FOR THE RESPONDENT/ASSESSEE: SHR I MANISH TIWARI,FCA, LD.AR DATE OF HEARING: 24-02-2016 DATE OF PRONOUNCEMENT: 04 -03 -2016 ORDER SHRI M.BALAGANESH, AM THIS APPEAL OF THE REVENUE IS ARISING OUT OF TH E ORDER OF THE LEARNED CIT(A)-I, KOLKATA IN APPEAL NO. 567/CIT(A)-1/CIR-3/08-09 DAT ED 10-02-2010 FOR THE ASSESSMENT YEAR 2004-05 AGAINST THE ORDER OF ASSESSMENT FRA MED BY THE LD.AO U/S. 263/143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED T O AS THE ACT). 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL O F REVENUE IS AS TO WHETHER THE ASSESSEE IS ENTITLED FOR CLAIM OF DEDUCTION U/S. 10B OF THE ACT IN RESPECT OF PROFITS DERIVED FROM ITS EXPORT BUSINESS AS 100% EXPORT OR IENTED UNIT [EOU] IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASS ESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURER AND EXPORTER OF HOOKAH TO BACCO PASTE AND FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2004-05 SHOWING TOT AL INCOME OF RS.9,34,120/- UNDER ITA NO.953/K/2010 -C-AM M/S. AL QAISER TOBACCO P.LTD 2 THE HEAD CAPITAL GAINS AND INCOME FROM BUSINESS, WHICH WAS SUBJECTED TO CLAIM OF DEDUCTION U/S. 10B OF THE ACT. THE LD. AO OBSERVED THAT THE ASSESSEE HAD CLAIMED DEDUCTION OF RS.37,77,413/- U/S. 10B OF THE ACT. TH E ASSESSEE WAS ASKED BY THE LD.AO FOR SUBMISSION OF COPY OF APPROVAL FROM THE BOARD G RANTING THE ASSESSEES STATUS OF 100% EOU. THE LD. AO ALSO FOUND THAT THE ASSESSEE C OMPANY HAS BEEN ENGAGED IN BUSINESS FROM FY 1990-91 AND HAS BEEN CLAIMING DED UCTION U/S. 80HHC OF THE ACT IN RESPECT OF ITS EXPORT PROFITS. THE LD.AO ALSO OBSER VED THAT THE STATE GOVERNMENT HAD DIRECTED THE ASSESSEE TO RE-LOCATE ITS EXISTING UNI T AT TOPSIA TO BHOJERHAT. ACCORDING TO THE LD.AO THE ASSESSEE MERELY SHIFTED ITS EXISTING UNIT TO BOJERHAT AND CONTINUED THE SAME BUSINESS OF MANUFACTURING AND EXPORTING OF HOO KAH TOBACCO PASTE. THE UNIT WAS FORMED BY THE TRANSFER TO A NEW BUSINESS OF MACHINE RY AND PLANT PREVIOUSLY USED FOR ANY PURPOSE. ACCORDINGLY, HE DENIED THE DEDUCTION U/S. 10B OF THE ACT AS CLAIMED BY THE ASSESSEE. ON 1 ST APPEAL, THE LD. CIT(A) AFTER CONSIDERING THE SUBM ISSIONS OF THE ASSESSEE DELETED THE ADDITION MADE BY THE LD.AO ON THIS COUNT. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS :- 1. 'THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER OF THE CIT (A) IS ERRONEOUS IN ALLOWING THE EXEMPTION IN F AVOUR OF THE ASSESSEE BECAUSE THE ASSESSEE VIOLATES THE PROVISIO N OF SECTION 10B(2)(III) OF THE ACT.' 2. 'THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER OF THE CIT(A) IS PERVERSE, ERRONEOUS BECAUSE THE ORDER PAS SED WITHOUT GOING INTO THE MERIT OF THE CASE AND WITHOUT APPRECIATING THE EVIDENCE ON RECORD.' 4. THE LD.DR VEHEMENTLY SUPPORTED THE ORDER OF THE LD.AO IN MAKING DISALLOWANCE/ADDITION ON THIS COUNT. IN RESPONSE TO THIS, THE LD.AR ARGUED THAT THERE WAS NO VIOLATION OF PROVISIONS OF SECTION 10B(2)(II I) OF THE ACT AS PER GROUND RAISED BY THE REVENUE. HE FURTHER ARGUED THAT THE CONDITIONS STIPULATED IN SECTION 10B(2)(III) OF THE ACT IS APPLICABLE ONLY FOR NEW UNDERTAKINGS OR ESTABLISHMENTS AND NOT FOR CONVERSION OF EXISTING DOMESTIC TARIFF AREA(DTA) UN IT DUE TO 100% EOU. HE FURTHER ARGUED THAT THE ASSESSEE WAS FORCED TO SHIFT ITS E XISTING UNIT FROM TOPSIA TO BOJERHAT AT ITA NO.953/K/2010 -C-AM M/S. AL QAISER TOBACCO P.LTD 3 THE INSTANCE OF THE STATE GOVERNMENT, WHO PROVIDED LAND AND OTHER FACILITIES TO THE ASSESSEE. ACCORDINGLY, HE PLEADED BEFORE US FOR CO NFIRMATION OF IMPUGNED ORDER OF THE LD.CIT(A) IN DELETING THE ADDITION ON THIS ISS UE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE PAPER BOOK OF THE ASSESSEE AS FILED BY THE ASSESSEE BEFORE US CONTAINING COPY OF LETTER OF MINISTRY OF COMMERCE & INDUSTRY GRANTING PERMISSION THE ASSESSEE AS 100% EOU STATUS AND COPY OF EXPORT P ROMOTION COUNCIL FOR SEZ UNITS (EPCES) CIRCULAR NO.22 DATED 10-01-2015, AMONG OT HER DOCUMENTS. WE FIND FROM CORRESPONDENCE OF MINISTRY OF COMMERCE AND INDUSTR Y VIDE LETTER DATED 31-03-2003/ 02-4-2003 ADDRESSED TO THE ASSESSEE GRANTING PERMI SSION FOR EOU STATUS VIDE PAGE NO.7 OF THE PAPER BOOK. THE SAME IS REPRODUCED HERE IN BELOW FOR THE SAKE OF CONVENIENCE:- LETTER NO.2(1)/A-20/2003/298 DATE: 31/MAR/2003 02.04 TO M/S. AL QAISER TOBACCO PVT. LTD UNIT-II 18, HARIN BARI LANE KOLKATA PINCODE: 700 073 DEAR SIR, SUB : SUB :-- YOUR EXPORT ORIENTED UNIT APPLICATION FOR PERMISSION UNDER ME EOU SCHEME FOR THE MANUFACTURE OF HOOKAH TOBACCO PASTE REF: YOUR APPLICATION DATED FEB/19I2003 WITH REFERENCE TO THE ABOVE MENTIONED APPLICATION, GOVERNMENT/DEVELOPMENT COMMISSIONER IS PLEASED TO E XTEND TO YOU ALL THE FACILITIES AND PRIVILEGES ADMISSIBLE AND SUBJEC T TO THE PROVISIONS OF ME EXPORT ORIENTED UNIT SCHEME AS ENVISAGED IN EXPO RT IMPORT POLICY 2002-2007 TOR ME CONVERSION OF YOUR EXISTING DTA UN IT INTO A 100% EOU AT BHATIPOTA, BHOJERHAT, NEAR CALCUTTA LEATHER CQMPLEX, 24 PGS (S) IN ME STATE OF WEST BENGAL FOR THE MANUFACTURE ITA NO.953/K/2010 -C-AM M/S. AL QAISER TOBACCO P.LTD 4 OF THE FOLLOWING ITEM(S) UPTO THE CAPACITIES SPECI FIED BELOW IN THE BASIS OF MAXIMUM UTILIZATION OF PLANT & MACHINERY:- ITEM(S) OF MANUFACTURE UNIT OF MEASUREMENT ANNUA L CAPACITY ITC (HS) CODE HOOKAH TOBACCO PASTE KGS 2,000.000. 00 24031001 6. WE ALSO FIND THAT THE ASSESSEE HAS BEEN ENGAGED IN THE BUSINESS OF MANUFACTURE AND EXPORT OF HOOKAH TOBACCO PASTE FROM THE YEAR 1 990-91 AND CLAIMED DEDUCTION U/S.80HHC OF THE ACT AS PER RECORDS AVAILABLE. W E FIND LOT OF FORCE IN THE ARGUMENTS OF THE LD.AR THAT SHIFTING OF UNIT FROM TOPSIA TO B OJERHAT WAS DONE AT THE INSTANCE OF THE STATE GOVERNMENT, WHICH THE ASSESSEE DOES NOT H AVE ANY CONTROL. WE FIND FROM THE CORRESPONDENCE FROM MINISTRY OF COMMERCE AND I NDUSTRY (SUPRA) THAT A CERTIFICATE TO THIS EFFECT HAS BEEN ISSUED BY THE DEVELOPMENT C OMMISSIONER APPROVED THE ASSESSEES UNIT AS 100% EOU, WHICH IS SUFFICIENT FO R ALLOWING EXEMPTION U/S. 10B OF THE ACT. WE FIND THAT THE DEVELOPMENT COMMISSIONE R IS DULY AUTHORIZED FOR THE PURPOSE OF ISSUING APPROVAL UPTO THE PERIOD 2002-20 07 IN THE MATTER OF CONVERTING THE EXISTING DTA UNIT INTO 100% EOU IN CERTAIN PLACES. THE ASSESSEE HAS STARTED MANUFACTURING THE ARTICLE, WHICH IS PERMISSIBLE AS PER THE PROVISIONS OF THE ACT, COMMENCING FROM AY 2004-05 IN ITS 100% EOU PURSUANT TO ITS CONVERSION. THE LD. CIT(A) HAD OBSERVED THAT RECONSTITUTION OF OLD BUSI NESS AS STATED BY THE LD.AO HAS NOT AT ALL TAKEN PLACE. IN THE INSTANT CASE THE ASSESS EE HAD MERELY PROCEEDED TO COMMENCE PRODUCTION OF ARTICLES FOLLOWING THE CERTIFICATE I SSUED BY THE DEVELOPMENT COMMISSION, WHO IS A DELEGATED AUTHORITY FOR GRANTI NG APPROVAL OF 100% EOU. WE FIND THAT THE APPROVAL WAS GRANTED BY THE DEVELOPM ENT COMMISSIONER AND STATUS OF 100% EOU OF THE ASSESSEE FOR PRODUCTION OF ARTICLES FOR CLAIMING DEDUCTION IS PERMISSIBLE AS PER THE ACT. ADMITTEDLY, THE MANUFA CTURE AND EXPORT OF HOOKAH TOBACCO PASTE IS A PERMISSIBLE ARTICLE AS PER PROV ISIONS OF THE ACT. ITA NO.953/K/2010 -C-AM M/S. AL QAISER TOBACCO P.LTD 5 6.1 IN VIEW OF THE AFORESAID FACTS, WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER OF LD. CIT(A) IN ALLOWING EXEMPTION. WE UPHO LD THE SAME. THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 04 - 03 - 2016 1.. THE APPELLANT/DEPARTMENT: DCIT, CIR-3 8/2 ESP LANADE EAST, DWARLI HOUSE, 2 ND FLOOR, KOL-69. 2 THE RESPONDENT/ASSESSEE- M/S. AL QAISER TOBACCO P VT. LTD 44B SHAMSHUL HUDA ROAD, PARK CIRCUS, KOL-17. 3 /THE CIT, 4.THE CIT(A ) 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR **PRADIP SPS SD/- ( MAHAVIR SINGH, JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) DATE: DATE 04 -03-2016 COPY OF THE ORDER FORWARDED TO:-