ITO, New Delhi v. M/s. V.K. Metcast Pvt. Ltd., New Delhi

ITA 1400/DEL/2010 | 2005-2006
Pronouncement Date: 13-07-2010 | Result: Allowed

Appeal Details

RSA Number 140020114 RSA 2010
Assessee PAN AABCV6680M
Bench Delhi
Appeal Number ITA 1400/DEL/2010
Duration Of Justice 3 month(s) 13 day(s)
Appellant ITO, New Delhi
Respondent M/s. V.K. Metcast Pvt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 13-07-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted H
Tribunal Order Date 13-07-2010
Date Of Final Hearing 13-07-2010
Next Hearing Date 13-07-2010
Assessment Year 2005-2006
Appeal Filed On 31-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `H : NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER AND SHRI A.K. GARODIA ACCOUNTANT MEMBER I.T.A.NO.1400/DEL/2010 ASSESSMENT YEAR : 2005-06 INCOME-TAX OFFICER M/S. V.K. METCAST PVT. LTD. WARD 17(1) NEW DELHI. VS. 2654 SADAR THANA ROAD NEW DELHI. PAN: AABCV6680M (APPELLANT) (RESPONDENT) APPELLANT BY : MRS. BANITA DEVI NAOREM SR . DR. RESPONDENT BY : SHRI K.P . GANGULI ADVOCATE. O R D E R PER C.L. SETHI JUDICIAL MEMBER. THE REVENUE IS IN APPEAL AGAINST THE ORDER DATED 11 .01.2010 PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IN THE MATTER OF AN ASSESSMENT MADE UNDER SECTION 143(3) OF THE INCOME- TAX ACT 1961 (THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2005-06. 2. GROUND RAISED BY THE REVENUE IS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S 10B OF INCOME T AX ACT BY HOLDING THAT THE APPROVAL OF THE DEVELOPMENT COMMIS SIONER OF SEZ IS SUFFICIENT TO FULFILL THE CONDITIONS LAID DO WN UNDER INCOME TAX ACT FOR THE PURPOSE OF DEDUCTION U/S 10B IGNORING THE FACT THAT THE EXPLANATION 2(IV) TO SECTION 10B SPECIFICALLY PROVIDE FOR THE APPROVAL AS 100% EOU BY THE BOARD A PPOINTED IN THIS BEHALF BY THE CENTRAL GOVERNMENT IN EXERCIS E OF THE 2 POWERS CONFERRED BY THE SECTION 14 OF THE INDUSTRIE S (DEVELOPMENT AND REGULATION) ACT 1951. 3. IN THIS CASE THE ASSESSEES CLAIM OF DEDUCTION U NDER SECTION 10B WAS REJECTED ON ONE TECHNICAL GROUND THAT THE ASSESSEE FAILED TO FURNISH THE APPROVAL GRANTED BY THE BOARD AS PER PROVISIONS CON TAINED IN EXPLANATION 2(IV) TO SECTION 10B OF THE ACT. THE ASSESSING OFF ICER RELYING UPON THE DECISION OF HYDERABAD BENCH OF THE TRIBUNAL HELD T HAT IN THE ABSENCE OF SPECIFIC APPROVAL BY THE BOARD WITHIN THE MEANING O F EXPLANATION 2(IV) TO SEC. 10B OF THE ACT THE CLAIM OF DEDUCTION UNDER S ECTION 10B MADE BY THE ASSESSEE IS NOT LEGALLY JUSTIFIED. THE AO THEREFO RE REJECTED THE ASSESSEES CLAIM. 4. ON APPEAL THE CIT(A) HAD TAKEN A VIEW THAT THE A PPROVAL TAKEN FROM THE COMMISSIONER OF THE CONCERNED SEZ WHICH IS THE SPECIFIED AUTHORITY IS SUFFICIENT TO FULFILL THE CONDITION LAID DOWN UNDER THE ACT FOR THE PURPOSE OF DEDUCTION U/S 10B OF THE ACT. THE CIT(A)S MATERIA L OBSERVATIONS ARE REPRODUCED AS UNDER:- 9. THE AR IN THE COURSE OF THESE PROCEEDINGS FILED A LETTER DATED 07.03.2008 CLARIFYING THE POSITION THAT BOA H AD DELEGATED POWERS TO DEVELOPMENT COMMISSIONER. THE CONTENTS O F THE SAID LETTER ARE AS UNDER:- I AM DIRECTED TO REFER TO YOUR LETTER DATED 28.02.2008 ON THE SUBJECT CITED ABOVE AND TO CLARIFY THAT AS PER PARA 6.7(A) OF EXPORT IMPORT POLICY 2002-2007 THE BOARD OF APPROVAL (BOA) 3 HAD DELEGATED POWERS TO DEVELOPMENT COMMISSIONER OF CONCERNED SEZ FOR GRANT OF APPROVAL TO A 100% EOU EXCEPT IN SERVICES AND SUCH OTHER SECTORS AS MAY BE DECIDED BY BOA. THE APPROVAL GIVEN BY NOIDA SPECIAL ECONOMIC ZONE (NSEZ) IS THEREFORE IN ORDER. YOU MAY ACCORDINGLY TAKE UP THE MATTER WITH REVENUE AUTHORITIES. 10. THE AR REQUESTED ME TO CONSIDER THE ABOVE LETTE R U/R 46A. ACCORDINGLY THE SAME WAS SENT TO THE AO WHO SUBMITTED REMAND REPORT DATED 06.01.2008 WHICH WAS MADE AVAIL ABLE TO AR. THE AR FILED REJOINDER ON 02.04.2009. 11. SINCE THE POWERS OF BOARD OF APPROVAL HAS BEEN DELEGATED TO DEVELOPMENT COMMISSIONER OF CONCERNED SEZ THE CERTIFICATE ISSUED BY NOIDA SPECIAL ECONOMIC ZO NE IS VALID AND IT CAN BE CONCLUDED THAT THE ASSESSEE HAD SATIS FIED THE CONDITIONS LAID DOWN U/S 10B. IT HAS NOT BEEN BROU GHT ON RECORD THAT THE ASSESSEE IN ANY OTHER MANNER HAS NO T FULFILLED OTHER CONDITIONS TO MAKE IT INELIGIBLE FOR DEDUCTIO N U/S 10B. IN VIEW OF THE SITUATION AS APPROVAL TAKEN FROM DEVEL OPMENT COMMISSIONER OF THE CONCERNED SEZ WHICH IS THE SPE CIFIED AUTHORITY IS SUFFICIENT TO FULFILL THE CONDITION L AID DOWN UNDER IT ACT FOR THE PURPOSE OF DEDUCTION U/S 10B. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. IN THE COURSE OF HEARING OF THIS APPEAL T HE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT AS PER PARA 6.7(A) OF EXP ORT IMPORT POLICY 2002- 2007 THE BOARD OF APPROVAL (BOA) HAD DELEGATED POW ERS TO DEVELOPMENT COMMISSIONER OF CONCERNED SEZ FOR GRANT OF APPROVAL TO A 100% EOU EXCEPT IN SERVICES AND SUCH OTHER SECTORS AS MAY BE DECIDED BY BOA. HE THEREFORE CONTENDED THAT THE APPROVAL GIVEN BY COM MISSIONER OF NOIDA 4 SPECIAL ECONOMIC ZONE (NSEZ) WAS THEREFORE SUFFICI ENT TO SATISFY THE CONDITION ENUMERATED IN SECTION 10B OF THE ACT. TH E ASSESSEE HAS GIVEN THE CLARIFICATION FROM THE CONCERNED COMMISSIONER TO TH AT EFFECT. THE LEARNED COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE PHOTOCOPY OF PAPER CUTTING OF THE ECONOMIC TIMES (UNDATED) WHERE IT IS STATED THAT THE CENTRAL BOARD OF DIRECT TAXES (CBDT) HAS INSTRUCTED INCOME- TAX OFFICIALS TO ALLOW EXPORT-ORIENTED UNITS (EOUS) APPROVED BY DEVELOPMEN T COMMISSIONERS TO CLAIM TAX EXEMPTION ENDING THE UNCERTAINTY OVER TA X BENEFITS TO EOUS. IT IS MENTIONED THEREIN THAT IT HAS BEEN DECIDED THAT AN APPROVAL GRANTED BY THE DEVELOPMENT COMMISSIONER IN THE CASE OF EXPORT-ORIE NTED UNIT SET UP IN AN EXPORT PROCESSING ZONE WILL BE CONSIDERED VALID ON CE SUCH AN APPROVAL IS RATIFIED BY THE BOARD OF APPROVALS (BOA) FOR EOU SC HEME. HOWEVER IN THE PRESENT CASE IT IS NOTED THAT NO PROPER EVIDEN CES HAVE BEEN PLACED BEFORE US IN THE NATURE OF A CLARIFICATION FROM THE BOA AS TO WHETHER THE BOA HAS DELEGATED THE POWER TO THE DEVELOPMENT COMMISSIONER TO GRANT APPROVAL AND WHETHER THE APPROVAL SO GRANTED BY THE DEVELOPM ENT COMMISSIONER HAS BEEN LATER RATIFIED BY THE BOA. WE THEREFORE RES TORE THIS MATTER BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION AFTER MAKING NECESSARY ENQUIRY FROM THE CONCERNED SEZ DEVELOPMENT COMMISSIONER AS WELL AS FROM THE BOARD OF APPROVALS FOR EOU SCHEME AND THEN TO DECIDE THE MATTER IN THE LIGHT OF 5 CLARIFICATION GIVEN BY THE CBDT AND IN THE LIGHT OF THE DECISION TAKEN BY THE BOARD OF APPROVALS ABOUT GRANTING APPROVAL TO THE A SSESSEE AS 100% EOU SEZ UNIT. THE AO SHALL PROVIDE REASONABLE OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE. WE RESTORE THIS MATTER ONLY FOR THI S LIMITED PURPOSE AS NO OTHER ISSUES AS TO THE ELIGIBILITY OF DEDUCTION UND ER SECTION 10B OF THE ACT ARE INVOLVED IN THIS APPEAL. 6. IN THE RESULT THE APPEAL FILED BY THE RE VENUE IS TREATED TO BE ALLOWED FOR STATISTICAL PURPOSES. THIS DECISION IS PRONOUNCED IN THE OPEN COURT IMMED IATELY AFTER THE HEARING WAS OVER ON 13 TH JULY 2010. SD/- SD/- (A.K. GARODIA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13 TH JULY 2010. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR ITAT.