Patram Bishnoi and M/S Shehawati Art Exports and M/S Bothra International V. Income Tax Officer, Ward-l(3) Jodhpur and Income Tax Officer Ward-l(2) Jodhpur

ITA/118/2010

AI Insights

The case involves multiple appeals by different assessees against the orders of the Income Tax Tribunal, which had dismissed their appeals concerning tax exemptions. The primary legal issue was whether the assessees were entitled to claim the benefit of tax exemption under Section 10BA of the Income Tax Act. The appellants argued that their cases were similar to precedents set by the Supreme Court in Liberty India and Topman Exports, which supported their claims for tax exemptions on profits derived from exports. The High Court of Rajasthan found that the Tribunal had not adequately considered these precedents and remitted the cases back to the AO for a fresh assessment in accordance with the Supreme Court's rulings.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 813144 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 23-10-2017
• Assessment Year: misc
• Other Referred Cases: Liberty India vs. Commissioner of Income Tax, Topman Exports vs. Commissioner of Income Tax, Angira Art Exports vs. ITAT Jodhpur, Suraj Exports India vs. ITAT Jodhpur, Arts & Crafts Exports vs. IT0 Mumbai
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K K WISSA
• Assessee Lawyers: SHARAD KOTHARI; LALIT PAREEK
• Keywords: Eligible Business; Export incentive; Income tax appeal; Profit Loss; Tax Exemption
• Section: 10BA; 28(iii)(b)

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Income Tax Appeal No. 77 / 2010 Patram Bishnoi S/o Mohanlal Bishnoi aged 41 years R/o CE-64 High Court Colony Ratanada, Jodhpur Versus Income Tax Officer, Ward-l(3) Jodhpur r . 5 I, Shyamlal Ji Bothra age dent of E-27 Shastri Nagar, Op. Tarabi Des Income Tax Officer Wa D.B. Income Tax Appeal No. 119 / 2010 M/S Shehawati Art Exports Bank Colony, Rai Ka Bagh Jodhpur. Through its Partner Vinod Johari S/o Shri Om Prakash Ji Johari aged 46 years resident of 65A Bank Colony Rai Ka Bagh Jodhpur Versus Income Tax Officer Ward-l(2)Jodhpur - D.B. Income Tax Appeal No. 187 / 2010 MIS Bothra International 230, Marudhar Industrial Area, I1 Phase Basni, Jodhpur. Through its Partner Naresh Bothra S/o Sheri Shyamlal Ji Bothra, Aged 40 years Resident of E-27, Shastri Nagar, Opp. Tarabi Desai Hospital Jodhpur Versus p Income Tax Officer ~ a r d - l ( 3 ) , J o d h ~ u r For Appellant(s) : Mr. Sharad Kothari with Mr. Lalit Pareek For Respondent(s) : Mr. <.‘. K.K.Wi.ssa . @ % : . . + % , . i.. > HON'BLE MR,,$~~,S,I~~ICE K. S. JHAVERI s i c 4 ., HON'BLE DR. JUSTICE P'USHPENDRA SINGH BHATI Since common jqoestion. of- law and facts are involved in ygtY' *' y> + $ g ; , & & $ ~ \"-$E : . , & . \" . ; * ) $ , * .. g;::.: these appeals, hence, they-are~dec~ded by this common judgment. By way of these ppeals, -the assessee has challenged the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeals of the assessee. This Court while admitting the matters framed the following substantial question of law:- I n DBITA No. 77/2010 \"Whether the Tribunal was justified in holding that: assessee is not entitled to claim the benefit of tax exemption available to them under Section IOBA of the Income Tax Act.\" Counsel for the appellant contended that the issue is not covered and in view of decision of Supreme Court in Liberty India, the appeal is required to be allowed in favour of assessee. that the issue is now sq 12016) decided on 23rd October, 2017 whesein it has v $ $ beer j as under:- the Tribunal in the case o as considered back and with r m part of the net deduction is usiness of an n percentage of assessment reas in section derived from (IIA) and I I B ) as such business being referred to as the eligible business on certain percentage basis and for such number of assessment years specified under the law. Section IOBA also provides special deduction of such profit of eligible article or things. This section applies to any undertaking which fulfill the following conditions, namely, (a)It manufactures or produces the eligible articles or things without the use of imported raw materials (d) Ninety per cent or more of its sales during the previous year relevant to the assessment year are by way of exports of the eligible articles or things. Besides these, other conditions provided in clause (b), (c) and (e) are to be fulfilled for claiming deduction. The sub section (4) of section IOBA reads as under :- Sub Section (4) : For the purposes of sub-section (I), the profits derived from export out of India of the eligible articles or things shall be the amount which bears to the profits of the business of the undertaking, the same proportion as the export turnover in respect of such articles or things bears and sub-section (I) o in relation to th rred to in this section as they se of undertaking referred to in section 8@8, on IOBA was inserted by the Finance Act, reas section ~ t h effect from e sections are are different. reme Court in the applicable in case IOBA and cre Profit & Loss reverse the order hat entire sale credit - DEPB credihcha s income under T* section 2 8 ( i i i ~ @ ~ $ ~ ~ [ ~ ~ plied for against exports. ~urthe;, profit nsfer of credit chargeable under section 28(iiid) in year in which transferred. The Id AR has also referred the decision of ITAT Jodhpur Bench, Jodhpur in the case of Angira Art Exports and Suraj Exports India and others in ITA No. 360/Jodh/2012 order dated 31/1/2013 and also ITAT Mumbai Bench in the case of Arts & Crafts Exports Vs. IT0 66 DTR 69 (ITAT Mumbai Bench) and claimed that both the ITATs have allowed the assesseers appeal by considering the Hon'ble Supreme Court decision in the case of Liberty India and Topman Exports (supra). We have considered the assessee's submission but fact of both the cases are not verifiable from the submissions made by the assessee, therefore the Assessing Officer is directed to considering the order of t h e Hon'ble Supreme Court in t h e case of Topman Exports (supra) and case laws referred by t h e assessee i.e, decision of ITAT Jodhpur Bench, Jodhpur in t h e case of Angira Art Exports and Suraj Exports India and others and ITAT Mumbai Bench decision in the case of Arts & Crafts Exports Vs. IT0 (supra)and recalculate the income accordingly. Therefore, this ground of appeal is setaside to the Id Assessing Offce . However the view taken by L &t d . & ' - % t h e ~ u p r - $ $ g u the&-gse ~of\"Go.mmissioner of 1ncome;~~xbrs Meg halaya Steels -% 2 tdp~bFO16] 383 wherein it has been heldgas~rr der:- this being the fourth judgment\" help Revenue. What th'fburt V F B . ~ %&as concerned with was an export incentive, w y ~ p is very far removed from reimbursement ofFan at is after it s not proximate or . Also, t h e object s been held by this itself.\" 28, It only der one further argument by Shri Radhakrishnan. H e has argued that as the subsidies that are received by the respondent, would be income from other sources referable to Section 56 of the Income Tax Act, any.' deduction that is tc be made, can only be made from income from other sources and not from profits and gains of business, which is a separate and distinct head as recognised by Section 14 of the Income Tax Act. Shri Radhakrishnan is not correct in his submission that assistance by way of subsidies which are reimbursed on the incurring of subsidies which are reimbursed on the incurring of costs relatable to a business, are under the head 'income from other sources\", which is a residuary head of income that can be availed only if' income does not fall under any of the other four heads of income. Section 28(iii)(b) specifically states that income from cash assistance, by whatever name called, received or receivable by any person against exports under any scheme of- the^ ~ o v e r n m e n t of ~ndia, will be income chargeable to income tax under the head \"profits and gains of business or profession\". If cash- assistance received or receivable against exports schemes are included as being inco,me ..+ % .und,er . ' the head \"profits and gains of busines