M/s. Sameer E-Clipse(Products) P. Ltd., Vadodara V. The Income Tax Officer, Ward-4(3), Vadodara

MA 161/AHD/2016

• Counselvise Citation: [2017] 124 COUNSELVISE.COM (IT) 5483 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-04-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 26-08-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJESH MEENA
• Section: 10B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER MISC. APPLICATION NO.161/AHD/2016 IN ./ ITA.NO.506/AHD/2013 / ASSTT. YEAR: 2008-2009 SAMEER E - CLIPSE (PRODUCTS) P.LTD. (NOW KNOWN AS ECLIPSE GLOBAL P.LTD.) 903/10, GIDC INDUSTRIAL ESTATE MARKARPURA VADODARA 390 010. GUJARAT. PAN : AAGCS 7973 R VS ITO,WARD - 4(3) VADODARA. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI BHAVIN MARFATIA REVENUE BY : SHRI RAJESH MEENA, SR.DR / DATE OF HEARING : 07/04/2017 / DATE OF PRONOUNCEMENT: /04/2017 $%/ O R D E R PRESENT MISC. APPLICATION IS DIRECTED AT THE INSTAN CE OF THE ASSESSEE POINTING OUT APPARENT ERROR IN THE ORDER OF THE TRI BUNAL IN ITA NO.506/AHD/2013 DATED 18.7.2016. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S EARNED INCOME OF RS.19,26,669/- ON ACCOUNT OF SERVICES AND INCLUDED THIS IN THE TURNOVER. IT CLAIMED EXEMPTION UNDER SECTION 10B OF INCOME FROM SERVICES. THE AO OBSERVED THAT OUT OF THIS AMOUNT A SUM OF RS.4,21,8 00/- WAS INCURRED FOR EARNING DEVELOPMENT CHARGES. HE EXCLUDED THIS AMOU NT AND TREATED THE BALANCE INCOME OF RS.15,04,869/- AS INCOME FROM OT HER SOURCES. SINCE IT IS INCOME FROM OTHER SOURCES, HE DID NOT GRANT EXEMP TION UNDER SECTION 10B MA NO.161/AHD/2016 2 OF THE ACT. BEFORE THE LD.CIT(A) IT WAS POINTED OU T THAT A SUM OF RS.19,26,669/- CONTAINED TWO PARTS. FIRST PART IS OF RS.3,20,694/- WHICH RELATES TO DEVELOPING TOOLS FOR MANUFACTURE OF BLIN DS AS PER PRODUCT REQUIREMENTS OF THE CUSTOMER. THE LD.CIT(A) HAS CO NSIDERED THIS AMOUNT AS DERIVED FROM ACTIVITY OF MANUFACTURE OF INDUSTRIAL UNDERTAKING AND ALLOWED EXEMPTION UNDER SECTION 10B OF THE ACT. WITH REGAR D TO THE REMAINING PART, THE LD.CIT(A) OBSERVED THAT IT RELATES TO MAINTENAN CE CHARGES FOR THE PRODUCTS SOLD BY THE ASSESSEE. ACCORDING TO THE LD.CIT(A) M AINTENANCE HAS NO DIRECT NEXUS WITH THE MANUFACTURING AND IT IS ONE STEP AWA Y FROM MANUFACTURE. THE LD.AO HAS RIGHTLY TREATED IT AS AN INCOME FROM OT HER SOURCES. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT TRIBUNAL WHILE CONSIDERING THIS ISSUE HAS ERRED IN OBSERVING THAT THIS AMOUNT WAS A SSESSED AS INCOME FROM OTHER SOURCES. HE TOOK ME THROUGH COMPUTATION OF INCOME AT THE END OF THE ASSESSMENT ORDER, AND POINTED OUT THAT UNDER THE HE AD INCOME FROM OTHER SOURCES NO SUCH OTHER ITEM WAS REFERRED BY THE AO. SIMILARLY, HE FURTHER CONTENDED THAT IN THE LAST 4 LINES, THE TRIBUNAL HA S OBSERVED THAT THE ASSESSEE HAS NOWHERE PLEADED THAT SERVICE WAS PROVIDED BY TH E ASSESSEE ON THE ITEMS SOLD BY IT. THIS OBSERVATION IS FACTUALLY IN CONTR ADICTION WITH THE OBSERVATION OF THE LD.CIT(A). THEREFORE, ACCORDING TO THE LD.C OUNSEL FOR THE ASSESSEE, THE TRIBUNAL HAS COMMITTED APPARENT ERROR WHILE UPHOLDI NG THE ORDER OF THE LD.CIT(A) AND ORDER OF THE TRIBUNAL DESERVES TO BE RECALLED. ON THE OTHER HAND, LD.DR RELIED ON THE ORDER OF THE TRIBUNAL. 3. I HAVE CONSIDERED RIVAL CONTENTIONS AND GONE THR OUGH THE RECORD CAREFULLY. THE POWER OF RECTIFICATION UNDER SECTION 254(2) OF THE INCOME TAX ACT CAN BE EXERCISED ONLY WHEN THE MISTAKE, WHICH I S SOUGHT TO BE RECTIFIED, IS AN OBVIOUS PATENT MISTAKE, WHICH IS APPARENT FROM T HE RECORD AND NOT A MISTAKE, WHICH IS REQUIRED TO BE ESTABLISHED BY ARG UMENTS AND LONG DRAWN MA NO.161/AHD/2016 3 PROCESS OF REASONING ON POINTS, ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS. 4. AS FAR AS FIRST ERROR POINTED OUT BY THE LD.COUN SEL FOR THE ASSESSEE IS CONCERNED THAT INCOME WAS NOT ASSESSED AS INCOME FR OM OTHER SOURCES. I FIND THAT THE AO HAS RECORDED A CATEGORICAL FINDING IN P ARA-5 OF THE ASSESSMENT ORDER THAT THIS INCOME WILL BE ASSESSED UNDER THE H EAD INCOME FROM OTHER SOURCES. I WOULD LIKE TO MAKE REFERENCE TO FOLLOW ING LINES OF THE ASSESSMENT ORDER: .. THEREFORE, DEVELOPMENT CHARGES INCOME IS CONSI DERED INCOME FROM OTHER SOURCES AND IS REDUCED WHILE CALCULATING THE PROFIT ELIGIBLE FOR EXEMPTION U/S 10B OF THE I.T. ACT. IT IS CONTEN DED THAT EXPENSES OF RS. 4,21,800/- MAY BE GIVEN DEDUCTION AS THE SAME A RE INCURRED FOR EARNING DEVELOPMENT CHARGES. THE CONTENTION OF THE ASSESSEE IS CONSIDERED AND EXPENSES ARE ALLOWED. THE INCOME OF RS. 15,04,869/- (RS. 19,26,669 -RS. 4,21,800/-) IS TAXED SEPARATELY UNDER THE HEAD INCOME FROM OTHER SOURCES. PENALTY PROCEEDINGS U/S 271(1) (C) ARE INITIATED FOR FURNISHING INACCURATE PARTICULARS. 5. WHAT HAPPENED SUBSEQUENTLY IS NOT DISCERNIBLE FR OM THE RECORD. NO DOUBT, IN THE COMPUTATION THE LD.AO HAS NOT SHOWN I T UNDER THE HEAD INCOME FROM OTHER SOURCES. BUT WHILE CALCULATING THE DEDU CTION ADMISSIBLE UNDER SECTION 10B, HE HAS SPECIFICALLY EXCLUDED IT. THERE FORE, TO MY MIND, THERE IS NO APPARENT ERROR IN THIS FINDING. AS FAR AS SECON D ERROR POINTED OUT BY THE LD.COUNSEL FOR THE ASSESSEE THAT TRIBUNAL HAS ERRON EOUSLY OBSERVED THAT THE ASSESSEE HAS NOWHERE PLEADED THAT SERVICES WAS ONLY PROVIDED ON THE ITEMS SOLD BY IT, I FIND THAT THIS OBSERVATION OF THE TRI BUNAL IS FACTUALLY INCORRECT. THE ASSESSEE HAS PAID SERVICES ON THE ITEMS SOLD BY IT, AND THIS FACTUAL OBSERVATION IS TO BE EXPUNGED FROM THE ORDER. IN P LACE OF FOLLOWING WORDS: MA NO.161/AHD/2016 4 IT HAS ALSO TO BE KEPT IN MIND THAT THE ASSESSEE H AS NOWHERE PLEADED THAT SERVICE WAS ONLY PROVIDED ON THE ITEMS SOLD BY IT. THE ORDER WOULD READ AS UNDER: THE ASSESSEE HAS PROVIDED SERVICES ON THE ITEMS SO LD BY IT. BUT THIS WRONG REFERENCE HAS NOT GOADED THE TRIBUNA L ON WRONG CONCLUSION. IT IS ONLY AN ANCILLARY FACT. THE LD.CIT(A) HAS DISAL LOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT RENDERING OF SERVICES O N BLINDS SOLD BY THE ASSESSEE HAS NO NEXUS WITH ITS MANUFACTURING ACTIVI TY, AND IT IS A STEP AWAY FROM MAIN ACTIVITY. THEREFORE, THIS APPARENT ERROR HAS NOT INFLUENCED DECISION MAKING PROCESS OF THE TRIBUNAL, AND THE ORDER OF TH E TRIBUNAL CANNOT BE RECALLED. WITH THE ABOVE OBSERVATION MISC. APPLICA TION STANDS DISMISSED. 6. IN THE RESULT MISC. APPLICATION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 10 TH APRIL, 2017 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 10/04/2017