NATURAL TEHNOLOGIES PVT. LTD,, Jaipur V. ACIT, Jaipur

MA 125/JPR/2016

• Counselvise Citation: [2017] 124 COUNSELVISE.COM (IT) 5446 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 13-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 05-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROSHANTA MEENA JCIT DHK
• Assessee Lawyers: SHEETAL MISHRA
• Section: 10B

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LAA MA NO.125/JP/16 (ARISING OUT OF ITA NO. 976/JP/13) FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08 NATURAL TECHNOLOGIES PVT. LTD. (NOW MERGED WITH HCL INFOSYSTEMS LTD.) E- 26, SIDDDARTH NAGAR, MALAVIYA NAGAR, JAIPUR CUKE VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-6, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABCN 4175 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHEETAL MISHRA JKTLO DH VKSJ LS@ REVENUE BY : ROSHANTA MEENA (J CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 10.02.2017 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 13/02/2017. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS MISC. APPLICATION UNDER SECTION 254(2) OF THE ACT HAS BEEN FILED BY THE ASSESSEE COMPANY AGAINST THE ORDER OF CO-ORDINA TE BENCH IN ITA NO. 976/JP/2013 DATED 27.05.2016. THE APPELLANT HAS ST ATED THAT THE CO-ORDINATE BENCH HAD ALLOWED THE APPEAL OF THE ASSESSEE FOR S TATISTICAL PURPOSES AND HAS REMANDED BACK THE MATTER TO THE LD. AO TO CALCULATE DEDUCTION U/S 10B OF THE ACT BY APPLYING CORRECT FORMULA MENTIONED U/S 10B(4 ) OF THE ACT. MA NO. 125/JP/16 NATURAL TECHNOLOGIES PVT. LTD VS. ACIT, CIRCLE-6, JAIPUR 2 2. THE APPELLANT STATED THAT THE CO-ORDINATE BENCH IN PARA 7.2 OF ITS ORDER HAS OBSERVED AS UNDER: (7.2) IN RESPECT TO THE SECOND ISSUE, IT WOULD BE RELEVANT TO POINT OUT THAT AS PER PARA 31 OF THE PAPER BOOK, THE TOTAL PROFIT OF BUSINESS HAS BEEN MENTIONED AT RS. 66,32,853/- AND TOTAL PROFIT OF UN DERTAKING WAS MENTIONED AT RS. 29,33,736/-.TOTAL TURNOVER OF THE UNDERTAKING AS WELL AS EXPORT TURNOVER WAS MENTIONED AS RS. 46,99,000/ - WHEREAS THE TOTAL TURNOVER OF THE BUSINESS HAS BEEN MENTIONED AS RS.8 ,81,97,775/-. THAT TOTAL PROFIT OF THE UNDERTAKING AND TOTAL TURNOVER OF THE UNDERTAKING IS REQUIRED TO BE APPLIED, AS PER THE FORMULA ACCEPTED IN TERMS OF SECTION 10B(4) OF THE IT ACT. SECTION 10B(4) PROVIDES AS UN DER: (4) FOR THE PURPOSES OF SUB-SECTION (1), THE PROFIT S DERIVED FROM EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE SHALL B E THE AMOUNT WHICH BEARS TO THE PROFITS OF THE BUSINESS OF THE U NDERTAKING, THE SAME PROPORTION AS THE EXPORT TURNOVER IN RESPECT O F SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE BEARS TO THE TOTAL T URNOVER OF THE BUSINESS CARRIED ON BY THE UNDERTAKING.) IN OUR OPINION, THE AO HAS CORRECTLY APPLIED THE FO RMULA BUT HAS APPLIED WRONG FIGURE. IN VIEW THEREOF, WE HAVE NO OPTION BUT TO REMAND THE MATTER TO THE FILE OF THE AO TO RECALCULATE THE DED UCTION AFTER APPLYING THE CORRECT FORMULA AS MENTIONED UNDER SECTION 10B( 4) OF THE IT ACT. IN VIEW THEREOF, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 3. DRAWING REFERENCE TO THE ABOVE, IT WAS SUBMITTED THAT THE OBSERVATION OF THE COORDINATE BENCH THAT THE AO HAS CORRECTLY APPLIED THE FORMULA BUT HAS APPLIED WRONG FIGURE REFLECT A MISTAKE APPARENT ON THE FACE OF THE RECOR D BEING CONTRARY TO THE DIRECTIONS TO RECALCULATE THE DEDUCTION AFTER APPLYING CORRECT FORMULA AS MENTIONED U/S 10B(4) OF THE ACT WHICH DESERVES TO BE JUSTIFIED IN THE INTEREST OF JUSTICE. MA NO. 125/JP/16 NATURAL TECHNOLOGIES PVT. LTD VS. ACIT, CIRCLE-6, JAIPUR 3 4. IN ORDER TO APPRECIATE THE CONTENTIONS RAISED BY THE ASSESSEE, WE REFER TO THE OBSERVATIONS OF THE AO AT PARA 12 & 13 OF IT S ORDER WHICH READS AS UNDER: 12. TAKING INTO CONSIDERATION THE ABOVE FACTS AND CIRCUMSTANCES, THE EXEMPTION U/S 10B AVAILABLE TO THE ASSESSEE IS CALC ULATED AS UNDER: PROFIT OF THE BUSINESS OF UNDERTAKING X EXPORT TUR NOVER TOTAL TURNOVER 66,32,852 X 46,99,000 = RS 3,48,584 8,94,12,499 (13) AS SUCH, IT IS EVIDENT THAT THE ASSESSEE CLAIM ED/WAS ALLOWED AN EXCESS DEDUCTION OF RS. 22,91,778/- (26,40,363 3,48,584) U/S 10B OF THE INCOME TAX ACT, 1961. THEREFORE, THE SAID AMOUNT IS HEREBY DI SALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS U /S 271(1)(C) ARE HEREBY INITIATED FOR CONCEALING THE PARTICULARS OF INCOME. 5. THE COORDINATE BENCH IN PARA 7.2 OF ITS ORDER HA S TAKEN NOTE OF THE DISTINCTION BETWEEN PROFITS OF THE BUSINESS AND PRO FITS OF BUSINESS OF THE UNDERTAKING AS WELL AS DISTINCTION BETWEEN TOTAL TU RNOVER OF THE BUSINESS AND TOTAL TURNOVER OF THE BUSINESS OF THE UNDERTAKING. AND THEREAFTER, THE COORDINATE BENCH HAS HELD THAT THAT TOTAL PROFIT O F THE UNDERTAKING AND TOTAL TURNOVER OF THE UNDERTAKING IS REQUIRED TO BE APPLI ED, AS PER THE FORMULA ACCEPTED IN TERMS OF SECTION 10B(4) OF THE IT ACT. THEREAFTER, IT REPRODUCES MA NO. 125/JP/16 NATURAL TECHNOLOGIES PVT. LTD VS. ACIT, CIRCLE-6, JAIPUR 4 SECTION 10B(4) WHICH PRESCRIBES THE FORMULAE FOR CA LCULATING THE DEDUCTION. NOW COMING TO THE SPECIFIC OBSERVATION OF THE COORD INATE BENCH THAT THE AO HAS CORRECTLY APPLIED THE FORMULA BUT HAS APPLIED W RONG FIGURE, THE SAID OBSERVATIONS OF THE COORDINATE BENCH REGARDING THE APPLICATION OF FORMULAE BY AO THEREFORE HAVE TO BE READ AND UNDERSTOOD IN THE ABOVE CONTEXT. THE AO HAS REFERRED TO THE PROFITS OF BUSINESS OF THE UNDE RTAKING IN ITS FORMULAE BUT HAS ACTUALLY APPLIED THE ACTUAL FIGURE OF THE PROFI T OF THE BUSINESS (RS 66,32,852) AS AGAINST PROFIT OF THE BUSINESS OF THE UNDERTAKING (RS 29,33,736) . SIMILARLY, THE AO HAS APPLIED THE TOTAL TURNOVER OF THE BUSINESS (RS 8,94,12,499) INSTEAD OF TOTAL TURNOVER OF THE BUSIN ESS OF THE UNDERTAKING (RS 46,99,000). THAT IS THE REASON WHY THE COORDINATE B ENCH HAS STATED THAT THE AO HAS CORRECTLY APPLIED THE FORMULA BUT HAS APPLIE D WRONG FIGURE AND THE MATTER WAS REMANDED BACK TO RECALCULATE THE DEDUCTI ON AFTER APPLYING THE CORRECT FORMULA AS MENTIONED UNDER SECTION 10B(4) O F THE ACT. IN OUR VIEW, THERE IS NO CONTRADICTION BETWEEN THE FINDINGS AND DIRECTIONS AND THE ABOVE STATED OBSERVATIONS OF THE COORDINATE BENCH WHEN RE AD IN THE CONTEXT AS STATED ABOVE. 6. IN LIGHT OF ABOVE, WE DO NOT SEE ANY MISTAKE APP ARENT FROM RECORD WHICH IS RECTIFIABLE UNDER SECTION 254(2) OF THE ACT. THE MISC. APPLICATION FILED BY THE ASSESSEE IS DISP OSED OFF. MA NO. 125/JP/16 NATURAL TECHNOLOGIES PVT. LTD VS. ACIT, CIRCLE-6, JAIPUR 5 ORDER PRONOUNCED IN THE OPEN COURT ON 13/02/ 2017. SD/- SD/- (KUL BHARAT ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 13/02/2017 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- NATURAL TECHNOLOGIES PVT. LTD. JAIP UR 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE-6, JAIPUR 3. VK;DJ VK;QDR@ CIT 3, JAIPUR 4 . VK;DJ VK;QDRVIHY@ THE CIT(A) -3, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (MA NO. 125/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR.