Eastern Silk Industries Ltd., Kolkata v. ACIT, Circle - 12, Kolkata, Kolkata

ITA 30/KOL/2011 | 2004-2005
Pronouncement Date: 16-09-2011 | Result: Partly Allowed

Appeal Details

RSA Number 3023514 RSA 2011
Assessee PAN AAACE5807C
Bench Kolkata
Appeal Number ITA 30/KOL/2011
Duration Of Justice 8 month(s) 9 day(s)
Appellant Eastern Silk Industries Ltd., Kolkata
Respondent ACIT, Circle - 12, Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 16-09-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 16-09-2011
Assessment Year 2004-2005
Appeal Filed On 07-01-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE . . ! '# '# '# '# /AND ' $# ! ) [BEFORE HONBLE SHRI S. V. MEHROTRA AM & HONBLE S RI MAHAVIR SINGH JM] #% #% #% #% / I.T.A NO. 30/KOL/2011 $&' '() $&' '() $&' '() $&' '()/ // / ASSESSMENT YEAR: 2004-05 EASTERN SILK INDUSTRIES LTD. VS. ASSISTANT COMM ISSIONER OF INCOME-TAX (PAN-AAACE 5807 C) CIRCLE-12 KOLKATA. (+ /APPELLANT ) (-.+ / RESPONDENT ) FOR THE APPELLANT: SMT. ANUMITA SARKAR FOR THE RESPONDENT: SHRI A. K. PARAMANIK / / ORDER PER MAHAVIR SINGH JM ( ' $# ' $# ' $# ' $# ! ! ! ! ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF THE ORDER OF CIT(A)-XXXVI KOLKATA IN APPEAL NO.A-48/CIT(A)-XXXVI/KOL/CIR-12/06-07 VIDE D ATED 22.11.2010. ASSESSMENT WAS FRAMED BY ACIT CIRCLE-12 KOLKATA U/S. 143(3) OF T HE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2004- 05 VIDE HIS ORDER DATED 29.12.2006. 2. THE FIRST ISSUE IN THIS APPEAL OF THE ASSESSEE I S AGAINST THE ORDER OF CIT(A) CONFIRMING THE REDUCTION OF EXPORT TURNOVER ON ACCOUNT OF DELA YED REALIZATION OF SALES PROCEEDS. FOR THIS ASSESSEE HAS RAISED FOLLOWING GROUND NO.1: 1) THAT THE HONBLE CIT(A) WAS NOT JUSTIFIED IN CO NFIRMING THE REDUCTION IN THE EXPORT TURNOVER BY RS.1 75 68 429/- ON ACCOUNT OF DELAYED REALIZATION OF THE SALES PROCEEDS DURING THE FINANCIAL YEAR. 3. THE BRIEF FACTS ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF SILK AND SILK PRODUCTS AND EXPORTING ITS PRODUCTS. ASSESSEE EXPORTED GOODS DURING FY 2003-04 RELEVANT TO ASSESSMENT YEAR 2004-05 AMOUNTING TO RS.1 75 67 09 082/- OUT OF WHICH A SUM OF RS.1 75 68 429/- WAS DUE FROM FOREIGN BUYERS AS ON 31.03.2004 AND IT WAS RECEIVED ONLY FOLLOWING DATES: DATE OF RECEIPT AMOUNT (RS.) 01.10.2004 21 76 754/- 05.10.2004 1 25 42 364/- 06.10.2004 28 49 311/- 2 ITA 30/K/2011 EASTERN SILK INDUSTRIES LTD. . A.Y. 04-05 1 75 68 429/- THE ASSESSING OFFICER REDUCED FOB VALUE OF THESE R ECEIPTS FROM EXPORT TURNOVER ON THE BASIS THAT IT HAD RECEIVED SALE PROCEEDS IN FOREIGN CURRE NCY FOR EXPORT MADE BEYOND THE PERIOD OF SIX MONTHS FROM THE END OF PREVIOUS YEAR. THE ASSESSEE BEFORE ASSESSING OFFICER AS WELL AS BEFORE CIT(A) CONTENDED THAT THE DELAY WAS ONLY FOR FEW DA YS I.E. FOR FIVE DAYS OR FOUR DAYS BUT THE ASSESSING OFFICER HAS NOT TAKEN INTO CONSIDERATION WHILE COMPUTING EXPORT TURNOVER. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A) WHO ALSO CONFIRMED THE ACTION OF ASSESSING OFFICER BY GIVING FOLLOWING FINDING IN PA RA 4 OF HIS APPELLATE ORDER AS UNDER: 4. THE SUBMISSION OF THE A/R OF THE APPELLANT HAS BEEN DULY CONSIDERED AND I FIND MYSELF UNABLE TO ACCEPT THE SAME. FOR CLAIMING EXE MPTION U/S. 10B OF THE ACT THE CONVERTIBLE FOREIGN EXCHANGE HAS TO BE BROUGHT INTO INDIA WITHIN SIX MONTHS FROM THE END OF THE PREVIOUS YEAR I.E. WITHIN 30.09.2006 FOR TH IS PARTICULAR CASE. IT APPEARS THAT OUT OF THE TOTAL EXPORT TURNOVER AN AMOUNT OF RS.1 75 68 429/- WAS NOT BROUGHT INTO INDIA WITHIN THE STIPULATED TIME. THE APPELLANT WAS AL SO NOT IN POSSESSION OF PERMISSION OF EXTENDED TIME FROM THE AUTHORITY CONCERNED FOR DELA YED RECEIPT. THE LAW IS VERY CLEAR IN THIS REGARD. TO GET EXEMPTION U/S. 10B OF THE ACT FOREIGN CONVERTIBLE EXCHANGE SHALL HAVE TO BE BROUGHT INTO INDIA WITHIN THE PRESCRIBED TIME LIMIT. ADMITTEDLY THE APPELLANT COULD NOT DO SO. THEREFORE THE ACTION OF THE A.O. IN REDUCING THE SAME AMOUNT OF RS.1 75 68 429/- FROM THE FOB VALUE OF EXPORT TURNO VER WAS AS PER LAW AND THEREFORE SUSTAINED. THE APPEAL OF THE APPELLANT ON THIS GRO UND IS THEREFORE DISMISSED. AGGRIEVED ASSESSEE IS NOW IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE HAS FILED FORM NO. 56G CL AIMING EXEMPTION U/S. 10-B OF THE ACT FOR EXPORT RATIONALIZATION OF RS.1 75 68 429/- WHICH WAS RECEIVED BY ASSESSEE IN FOREIGN EXCHANGE BEYOND THE PRESCRIBED PERIOD OF SIX MONTHS FROM THE END OF PREVIOUS YEAR. WE FIND THAT BOTH THE LOWER AUTHORITIES ARE OF THE CONSIDERED OPINION THAT AS PER THE PROVISIONS OF SECTION 10B(3) OF THE ACT THE SALE PROCEEDS ARE TO BE BROUGHT INT O INDIA IN CONVERTIBLE FOREIGN EXCHANGE WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE PREVIOUS YEAR BUT IN THE PRESENT CASE SALE PROCEEDS ARE BROUGHT BEYOND THE PERIOD OF SIX MONTHS AND EVE N NO APPLICATION FOR EXTENSION OF TIME WAS FILED BEFORE COMPETENT AUTHORITY. THE RELEVANT PRO VISION OF SECTION 10B(3) READS AS UNDER: 3) THIS SECTION APPLIES TO THE UNDERTAKING IF THE SALE PROCEEDS OF ARTICLES OR THINGS OR COMPUTER SOFTWARE EXPORTED OUT OF INDIA ARE RECEIVE D IN OR BROUGHT INTO INDIA BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXCHANGE WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE PREVIOUS YEAR OR WITHIN SUCH FURTHER PERIOD AS THE COMPETENT AUTHORITY MAY ALLOW IN THIS BEHALF. WE AT THE TIME OF HEARING SPECIFICALLY ENQUIRED FR OM THE LD. COUNSEL FOR ASSESSEE THAT WHETHER HE HAS FILED ANY APPLICATION TILL DATE AND SHE REPL IED IN NEGATIVE. ONCE THE ASSESSEE HAS NOT FILED 3 ITA 30/K/2011 EASTERN SILK INDUSTRIES LTD. . A.Y. 04-05 ANY APPLICATION FOR EXTENSION OF TIME AND ADMITTEDL Y SALE PROCEEDS ARE REALISED BEYOND THE PRESCRIBED TIME LIMIT THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S. 10B OF THE ACT FOR DELAYED REALISATION OF RECEIPTS. ACCORDINGLY WE HAVE NO H ESITATION IN CONFIRMING THE ORDER OF CIT(A) AND THIS ISSUE OF THE ASSESSEES APPEAL IS DISMISSE D. 5. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF EXPENSES BY INVOKING PROVISIONS OF SECTION 14A OF THE ACT IN RELATION TO EXEMPT INCOME. FOR THIS THE ASSESSEE HAS RAISED FO LLOWING GROUND NO.2: 2. THAT THE HONBLE CIT(A) WAS WRONG IN NOT CONSID ERING THE ADDITIONAL GROUND OF APPEAL RELATING TO DISALLOWANCE OF RS.1 80 973/- T OWARDS EXPENSES U/S. 14A INCURRED IN RELATION TO EARNING OF THE EXEMPT INCOME. 6. AT THE OUTSET THE LD. COUNSEL FOR THE ASSESSEE FAIRLY CONCEDED THAT THIS ISSUE CAN BE REMITTED BACK TO THE FILE OF ASSESSING OFFICER TO F IND OUT THE NEXUS BY ASSESSING OFFICER BETWEEN THE EXPENSES AND EXEMPT INCOME EARNED BY AS SESSEE IN VIEW OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ BOY CEE MFG. CO. LTD. VS. DCIT [2010] 328 ITR 81 (BOM.). WE ALSO FIND THAT THE PRINCIPLE LAID DOWN BY HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ BOYCEE MFG. CO. LTD. VS. DCIT [ 2010] 328 ITR 81 (BOM.) AT PAGES 138 & 139 VIDE SUB PARAS (V) TO (VII) ARE AS UNDER: (V) THE PROVISIONS OF RULE 8D OF THE INCOME-TAX RU LES WHICH HAVE BEEN NOTIFIED WITH EFFECT FROM MARCH 24 2008 SHALL APPLY WITH E FFECT FROM THE ASSESSMENT YEAR 2008-09; (VI) EVEN PRIOR TO THE ASSESSMENT YEAR 2008-09 WHE N RULE 8D WAS NOT APPLICABLE THE ASSESSING OFFICER HAS TO ENFORCE TH E PROVISIONS OF SUB-SECTION (1) OF SECTION 14A. FOR THAT PURPOSE THE ASSESSING OFF ICER IS DUTY BOUND TO DETERMINE THE EXPENDITURE WHICH HAS BEEN INCURRED I N RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE AC T. THE ASSESSING OFFICER MUST ADOPT A REASONABLE BASIS OR METHOD CONSISTENT WITH ALL THE RELEVANT FACTS AND CIRCUMSTANCES AFTER FURNISHING A REASONABLE OPPORTU NITY TO THE ASSESSEE TO PLACE ALL GERMANE MATERIAL ON THE RECORD; (VII) THE PROCEEDINGS FOR THE ASSESSMENT YEAR 2002 -03 SHALL STAND REMANDED BACK TO THE ASSESSING OFFICER. THE ASSESSING OFFICE R SHALL DETERMINE AS TO WHETHER THE ASSESSEE HAS INCURRED ANY EXPENDITURE ( DIRECT OR INDIRECT) IN RELATION TO DIVIDEND INCOME/INCOME FROM MUTUAL FUNDS WHICH D OES NOT FORM PART OF THE TOTAL INCOME AS CONTEMPLATED UNDER SECTION 14A. THE ASSESSING OFFICER CAN ADOPT REASONABLE BASIS FOR EFFECTING THE APPORTIONM ENT. WHILE MAKING THAT DETERMINATION THE ASSESSING OFFICER SHALL PROVIDE A REASONABLE OPPORTUNITY TO THE ASSESSEE OF PRODUCING ITS ACCOUNTS AND RELEVANT AND GERMANE MATERIAL HAVING A BEARING ON THE FACTS AND CIRCUMSTANCES OF THE CAS E 4 ITA 30/K/2011 EASTERN SILK INDUSTRIES LTD. . A.Y. 04-05 IN VIEW OF THE DECISION OF HONBLE BOMBAY HIGH COUR T WE SET ASIDE THIS ISSUE TO THE FILE OF ASSESSING OFFICER TO DECIDE THIS ISSUE IN TERM OF D IRECTIONS OF HONBLE BOMBAY HIGH COURT CITED SUPRA. THIS GROUND OF ASSESSEES APPEAL IS A LLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES 8. ORDER PRONOUNCED IN OPEN COURT ON 16.09.2011. SD/- SD/- . . ! ' '' ' $# $# $# $# ! (S. V. MEHROTRA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( 0 0 0 0) )) ) DATED : 16 TH SEPTEMBER 2011 '12 $&34 $5' JD.(SR.P.S.) / 6 -$$7 87(9- COPY OF THE ORDER FORWARDED TO: 1 . + / APPELLANT M/S. EASTERN SILK INDUSTRIES LTD. 19 R. N. MUKHERJEE ROAD KOLKATA-700 001. 2 -.+ / RESPONDENT ACIT CIRCLE-12 KOLKATA. . 3 . $/& ( )/ THE CIT(A) KOLKATA 4. $/& / CIT KOLKATA 5 . '$? -$& / DR KOLKATA BENCHES KOLKATA .7 -$/ TRUE COPY /&@/ BY ORDER #4 /ASSTT. REGISTRAR .