M/s Little Bee Impex, Ludhiana V. Assessing Officer, Ludhiana

MA 5/CHANDI/2014

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 2004 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 19-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 26-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER MA NO.3/CHD/2014 IN ITA NO. NO. 553/CHD/2011 ASSESSMENT YEAR : 2006-07 MS. LITTLE BEE IMPEX VS THE DY. COMMISSIONER VILL. MALLIPUR, OF INCOME TAX, DORAHA (PUNJAB) CIRCLE, CHANDIGARH. KHANNA. PAN : AABFL9170D & MA NOS.4 & 5/CHD/2014 IN ITA NO. NOS. 1210 & 1211/CHD/2012 A. Y.: 2006-07 & 2009-10 MS. LITTLE BEE IMPEX VS THE ASSESSING OFFICER, VILL. MALLIPUR, KHANNA CIRCLE, DORAHA (PUNJAB) KHANNA. & MA NO.6/CHD/2014 IN ITA NO. NO. 690/CHD/2011 ASSESSMENT YEAR : 2008-09 MS. LITTLE BEE IMPEX VS THE ACIT, VILL. MALLIPUR, CIRCLE, DORAHA (PUNJAB) KHANNA. CHANDIGARH. PAN : AABFL9170D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI KUMAR RESPONDENT BY : SHRI AKHILESH GUPTA DATE OF HEARING : 06.06.2014 DATE OF PRONOUNCEMENT : 19.06.2014 O R D E R PER SUSHMA CHOWLA, JM THE APPLICANT IN THE PRESENT MISCELLANEOUS APPLICAT IONS IS AGGRIEVED BY THE CONSOLIDATED ORDER OF THE TRIBUNAL DATED 03.01.2014. ALL THE PRESENT MISCELLANEOUS APPLICATIONS RELATING TO THE SAME 2 ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE MISCELLANEOUS APPLICATION NO. 3/CHD/2014 IS AGAINST ITA NO. 553/CHD/2011 AND THE GRIEVANCE OF THE APPLICANT IN THIS MISCELLANEOUS APPLICATION WAS AGAINST THE ISSUE OF PROFITS ON SALE OF INCENTIVES RECEIVED FROM MINISTRY OF COMMERCE, GOVE RNMENT OF INDIA AND WHETHER THE SAME WERE ELIGIBLE FOR DEDUCTION UN DER SECTION 10B OF THE ACT. THE TRIBUNAL HAD CONSIDERED SCHEME TITLED AS VISHESH KRISHI UPAJ YOJNA AND HELD VIDE PARA 50 TO 58 AT PAGE 42 T O 47 OF THE ORDER THAT THE ISSUE IS SQUARELY COVERED BY THE RATIO LAI D DOWN BY THE HON'BLE SUPREME COURT IN LIBERTY INDIA VS CIT [317 ITR 218 (S.C)]. THE GRIEVANCE OF THE APPELLANT WAS THAT DURING THE COURSE OF ARGUMENTS, THE COUNSEL FOR THE ASSESSEE HAD REFERRE D TO THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN MARAL OVERSEAS VS ADDL. CIT [70 DTR 170 (SB)] AND ALSO ARTS & CRAFTS EXPORTS V ITO [66 DTR 69 (MUM)] AND THE ISSUE IN THE PRESENT APPEAL HAS BEEN DECIDED WITHOUT CONSIDERING RATIO OF THE SAID JUDGEMENTS. 3. THE LD. AR FOR THE APPLICANT DURING THE COURSE O F HEARING POINTED OUT THAT THE RESPECTIVE BENCHES OF THE TRIB UNAL HAD DULY CONSIDERED THE RATIO LAID DOWN BY THE HON'BLE SUPRE ME COURT IN LIBERTY INDIA VS CIT (SUPRA) AND HELD THAT THE APPL ICANT WAS ENTITLED TO EXEMPTION UNDER SECTION 10B OF THE ACT IN RESPEC T OF THE EXPORTS BENEFITS. IT WAS CONTENDED BY THE LD. AR FOR THE A SSESSEE THAT NON CONSIDERATION OF THE SAID DECISIONS CONSTITUTED MIS TAKE APPARENT FROM RECORD. 4. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE TRIBUNAL HAD CONSIDERED THE ISSUE AT LENGTH AND EVEN CONSIDERED THE SCHEME UNDER WHICH INCENTIVES WERE GIVEN BY THE GOVERNMENT OF IN DIA TO THE 3 ASSESSEE WITH THE SCHEME AS CONSIDERED BY THE HON'B LE SUPREME COURT IN LIBERTY INDIA V CIT (SUPRA). IT WAS FURTHER POIN TED OUT BY THE LD. DR FOR THE REVENUE THAT SCHEME CONSIDERED BY THE DI FFERENT BENCHES OF THE TRIBUNAL WERE AT VARIANCE AND THE RATIO UNDER T HE SAID DECISION WAS NOT APPLICABLE TO THE FACTS OF THE CASE. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE IN ITA NO. NO. 553/CHD/2011 HAD RAISED THE ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT VIS--VIS TH E PROFITS ON SALE OF INCENTIVES RECEIVED UNDER THE SCHEME VISHESH KRISHI UPAJ YOJNA @ 5% OF FOB VALUE OF EXPORTS, RECEIVED FROM MINISTRY OF COMMERCE, GOVT. OF INDIA. THE TRIBUNAL VIDE PARAS 47 TO 59 A T PAGES 40 TO 48 HAD CONSIDERED THE PLEA OF THE ASSESSEE AND THE SCHEME UNDER WHICH INCENTIVES WERE RECEIVED AND ALSO THE RATIO LAID DO WN BY THE HON'BLE SUPREME COURT IN LIBERTY INDIA V CIT (SUPRA). AFTE R HOLDING THAT THE ASSESSEE WAS ENTITLED TO CLAIM OF DEDUCTION UNDER S ECTION 10B OF THE ACT ON ITS PROFITS FROM BUSINESS, THE OTHER ISSUE C ONSIDERED BY THE TRIBUNAL WAS WHETHER THE INCENTIVES RECEIVED UNDER VISHESH KRISHI UPAJ YOJNA WERE DERIVED FROM THE UNDERTAKING AND WE RE THUS, ELIGIBLE FOR DEDUCTION UNDER SECTION 10B OF THE ACT. THE TRI BUNAL VIDE PARAS 56 AND 57 CONSIDERED THE SCHEME UNDER WHICH THE ASS ESSEE HAD RECEIVED THE INCENTIVES AND IT HAS BEEN HELD THAT T HE INCENTIVES RECEIVED BY THE ASSESSEE UNDER THE SAID SCHEME WERE GIVEN TO THE ASSESSEE TO NEUTRALIZE THE INCIDENCE OF HIGH TRANSP ORT COST AND ALSO TO OFFSET OTHER DISADVANTAGE. THE TRIBUNAL FURTHER HE LD THAT THE SAID NEUTRALIZATION AS IN THE CASE OF HON'BLE SUPREME CO URT IN THE CASE LIBERTY INDIA VS. CIT (SUPRA) IS LINKED TO THE FOB VALUE OF EXPORTS BY WAY OF DUTY CREDIT SCRIP. THE SAID BENEFITS ARE PRO VIDED BY DGFT IN THE CASE OF THE ASSESSEE AND THE SAID SCHEME BEING SIMILAR TO THE SCHEME OF GRANT OF DUTY DRAWBACK/DEPB AND IN TURN A PPLYING THE 4 RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS. CIT (SUPRA) WE HOLD THAT THE ASSESSEE IS NOT ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT ON THE SAID INCENTIVES. 6. IN VIEW OF THE SAID FINDINGS, WE FIND NO MERIT I N THE STAND OF THE ASSESSEE THAT THE SPECIAL BENCH OF TRIBUNAL IN MARA L OVERSEAS VS ADDL. CIT (SUPRA) AND MUMBAI BENCH OF TRIBUNAL IN A RTS & CRAFTS EXPORTS V ITO (SUPRA) HAD ALLOWED SIMILAR BENEFIT O F EXEMPTION UNDER SECTION 10B OF THE ACT IN RESPECT OF EXPORT BENEFIT S. THE SAID DECISIONS WERE REFERRED TO BY THE LD. AR FOR THE AS SESSEE DURING THE COURSE OF ARGUING THE APPEAL. HOWEVER, SINCE THE I SSUE WAS SQUARELY COVERED BY THE RATIO LAID DOWN BY THE HON'BLE SUPRE ME COURT AND THE SCHEME BEING SIMILAR AS TO THE SCHEME CONSIDERED BY THE HON'BLE SUPREME COURT IN LIBERTY INDIA V CIT (SUPRA) AND FU RTHER THE SCHEME CONSIDERED BY THE DIFFERENT BENCHES OF TRIBUNAL BEI NG AT VARIANCE, NO FAULT CAN BE FOUND WITH THE ORDER OF THE TRIBUNAL A ND WE FIND NO MERIT IN THE PRESENT MISCELLANEOUS APPLICATION MOVED BY T HE ASSESSEE IN THIS REGARD AND THE SAME IS DISMISSED. 7. THE MISCELLANEOUS APPLICATION NOS. 4 & 5 FILED B Y THE ASSESSEE ARE AGAINST THE ORDER OF THE TRIBUNAL IN ITA NOS. 1210 AND 1211/CHD/2012. THE APPLICANT VIDE THE SAID MISCELL ANEOUS APPLICATIONS IS AGGRIEVED BY THE ALLOWING OF DEDUCT ION UNDER SECTION 10B OF THE ACT @ 90% OF THE ELIGIBLE PROFITS AS AGA INST THE CLAIM OF DEDUCTION AT 100% OF THE ELIGIBLE PROFITS. THE PLE A OF THE APPLICANT BEFORE US WAS THAT THE SECOND PROVISO UNDER SECTION 10B OF THE ACT PROVIDES THE DEDUCTION AT 90% OF THE PROFITS AND GA INS DERIVED BY AN ENTERPRISES FROM THE EXPORT OF SUCH ARTICLE OR THIN G OR COMPUTER SOFTWARE ONLY FOR THE ASSESSMENT YEAR 2003-04. OUR ATTENTION WAS 5 DRAWN TO THE CBDT CIRCULAR NO. 8 OF 2002 DATED 27.0 8.2002 REPORTED IN 258 ITR 13 (ST) WHEREIN IT HAS BEEN CLEARLY CLAR IFIED THAT THE RESTRICTION IN DEDUCTION TO 90% WAS ONLY FOR ASSESS MENT YEAR 2003-04 AND FOR THE OTHER YEARS THE DEDUCTION HAD TO BE ALL OWED @ 100%. IT IS THUS, POINTED OUT BY THE APPLICANT THAT THE ABOVE C ONSTITUTE A MISTAKE APPARENT FROM RECORD IN THE ORDER DATED 03.01.2014 PASSED BY THE TRIBUNAL. 8. THE LD. AR FOR THE APPLICANT DREW OUR ATTENTION TO THE CIRCULAR, COPY OF WHICH IS AVAILABLE ON RECORD. THE LD. AR F OR THE ASSESSEE TOOK US THROUGH THE CBDT CIRCULAR ISSUED IN THIS REGARD AND POINTED OUT THAT THE ASSESSEE WAS ENTITLED TO THE CLAIM OF DEDU CTION @ 100% AND NOT 90% FOR THE CAPTIONED ASSESSMENT YEARS. 9. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE CIRCULARS ISSUED BY THE INCOME TAX DEPARTMENT WAS NOT BINDING UPON T HE TRIBUNAL AND THE SAME DOES NOT CONSTITUTE A MISTAKE APPARENT FRO M RECORD. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE APPLICANT DURING THE YEAR UNDER CONSIDERATION HAD C LAIMED DEDUCTION UNDER SECTION 10B OF THE ACT ON THE PROFITS AND GAI NS. THE ASSESSING OFFICER HAD RESTRICTED THE SAID DEDUCTION TO 90% IN VIEW OF THE SECOND PROVISO UNDER SECTION 10B OF THE ACT WHEREIN IT IS PROVIDED THAT FOR THE ASSESSMENT YEAR BEGINNING ON THE FIRST DAY OF A PRIL, 2003, THE DEDUCTION SHALL BE 90% OF THE PROFITS & GAINS DERIV ED BY AN ENTERPRISES FROM THE EXPORT OF SUCH ARTICLES OR THI NGS OR COMPUTER SOFTWARE. THE CASE OF THE APPLICANT IS THAT THE SA ID PROVISO IS RELEVANT ONLY FOR ASSESSMENT YEAR 2003-04. HOWEVER, THE TRI BUNAL WHILE DECIDING THE APPEALS OF THE APPLICANT RELATING TO A SSESSMENT YEARS 2006-07 AND 2009-10 HAD VIDE ORDER DATED 03.01.2014 RESTRICTED THE DEDUCTION TO 90% OF THE PROFITS OF THE RESPECTIVE Y EARS. 6 11. WE FIND THAT THE CBDT HAS ISSUED THE CIRCULAR N O. 8 OF 2002 DATED 27.08.2002 (SUPRA) AND THE RELEVANT PORTION O F PARA 19.4 OF THE SAID CIRCULAR READS AS UNDER : '19.4 IN VIEW OF THE NEED FOR RESOURCE MOBILIZATION IN THE SHORT RUN, THE FINANCE ACT, 2002 SEEKS TO RESTRICT THE 100% DEDUCT/ON UNDER SECTIONS 10A AND 10B, FOR ONE ASSES SMENT YEAR I.E. 2003-2004 TO 90% OF SUCH PROFITS AND GAIN S AS ARE DERIVED BY AN UNDERTAKING FROM THE EXPORT OF ARTICL ES OR THINGS OR COMPUTER SOFTWARE.' 12. THE PERUSAL OF THE SAID CLARIFICATION ISSUED BY THE CBDT CLARIFIES THAT THE RESTRICTION IN DEDUCTION UNDER S ECTION 10A AND 10B TO 90% OF THE PROFITS AND GAINS OF THE ENTERPRISES WAS FOR ONLY ONE ASSESSMENT YEAR I.E. 2003-04. THE ASSESSEE IS IN A PPEAL BEFORE US RELATING TO ASSESSMENT YEARS 2006-07 AND 2009-10. H ENCE, THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEDUCTION @ 100% OF THE PROFITS AND GAINS OF THE ENTERPRISES. WE FIND THAT A MISTAKE HAS OCC URRED IN THE ORDER OF THE TRIBUNAL. IN VIEW THEREOF, WE MODIFY THE FINDI NGS OF THE TRIBUNAL IN PARA 62 AND HOLD THAT THE ASSESSEE IS ENTITLED T O DEDUCTION @ 100% OF THE PROFITS OF THE EOU UNIT. THE AMENDED PARA 6 2 WOULD READ AS UNDER : 62. THE ISSUED VIDE GROUND OF APPEAL NO.2 IS AGAI NST THE ALLOWANCE OF DEDUCTION UNDER SECTION 10B OF THE ACT @ 100% INSTEAD OF 90% ALLOWED BY THE ASSESSING OFFICER. UN DER THE PROVISIONS OF SECTION 10B OF THE ACT THE ASSESSEE I S ENTITLED TO THE CLAIM OF DEDUCTION OF SUCH PROFITS AND GAINS AS ARE DERIVED FROM 100% EOU UNIT. THE SECOND PROVISO UNDER SECTIO N 10B OF THE ACT PROVIDES THAT FOR THE ASSESSMENT YEAR BEGIN NING ON THE FIRST DAY OF APRIL, 2003, THE DEDUCTION SHALL BE 90 % OF THE PROFITS AND GAINS DERIVED BY AN UNDERTAKING FROM T HE EXPORT OF SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE. HOWEVER, THE CBDT VIDE CIRCULAR NO. 8 OF 2002 DATED 27.08.2012 R EPORTED IN 258 ITR 13 (ST) HAS VIDE PARA 19.4 CLARIFIED THAT T HE RESTRICTION TO 90% OF THE PROFITS AND GAINS AS ARE DERIVED BY A N UNDERTAKING FROM THE EXPORT OF ARTICLES OR THINGS O R COMPUTER SOFTWARE WOULD BE RESTRICTED TO ONE ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2003-04. SINCE THE ASSESSEE IS IN A PPEAL AGAINST THE SAID CLAIM OF DEDUCTION RELATING TO ASS ESSMENT YEARS 2006-07 AND 2009-10, WE HOLD THAT THE ASSESSE E IS 7 ENTITLED TO THE DEDUCTION @ 100% OF THE PROFITS AND GAINS OF THE EOU. THE CLAIM OF THE ASSESSEE IS THUS ALLOWED AND THE GROUND OF APPEAL NO. 2 RAISED BY THE ASSESSEE IS TH US, ALLOWED. 13. IN VIEW THEREOF, WE ALLOW THE MISCELLANEOUS APP LICATION MOVED BY THE ASSESSEE RELATING TO ASSESSMENT YEARS 2006-0 7 AND 2009-10 ON THE ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 10B O F THE ACT TO BE ALLOWED AT 100% OF THE PROFITS OF EOU UNIT. THE RE MAINING ORDER PASSED BY THE TRIBUNAL SHALL REMAIN UNCHANGED. 14. THE ASSESSEE HAS FURTHER FILED MISCELLANEOUS AP PLICATION NO. 6/CHD/2014 AGAINST THE ORDER OF THE TRIBUNAL DATED 03.01.2014 IN ITA NO. 690/CHD/2011. IT WAS POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT SINCE THE TRIBUNAL HAD PASSED CONSOLIDATED ORD ER AND BY AN ERROR, THE SAID MISCELLANEOUS APPLICATION WAS FILED AGAINS T THE APPEAL OF THE REVENUE IN ITA NO. 690/CHD/2011 AND THE SAME IS NOT MAINTAINABLE. IN VIEW THEREOF, THE SAID MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS DISMISSED. 15. IN THE RESULT, THE MISCELLANEOUS APPLICATION NO S. 3 & 6/CHD/2014 IN ITA NOS. 553 AND 690/CHD/2011 ARE DIS MISSED AND MISCELLANEOUS APPLICATION NOS. 4 & 5/CHD/2014 IN IT A NOS. 1210 & 1211/CHD/2012 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JUNE, 2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 19 TH JUNE, 2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR. ASSISTANT REGISTRAR ITAT,CHD.