Smt T.C. Usha, Kollam v. DCIT, Kollam

ITA 559/COCH/2007 | 2004-2005
Pronouncement Date: 18-03-2011

Appeal Details

RSA Number 55921914 RSA 2007
Assessee PAN ACDPC7638P
Bench Cochin
Appeal Number ITA 559/COCH/2007
Duration Of Justice 3 year(s) 9 month(s) 5 day(s)
Appellant Smt T.C. Usha, Kollam
Respondent DCIT, Kollam
Appeal Type Income Tax Appeal
Pronouncement Date 18-03-2011
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 18-03-2011
Date Of Final Hearing 15-12-2010
Next Hearing Date 15-12-2010
Assessment Year 2004-2005
Appeal Filed On 13-06-2007
Judgment Text
IN THE INCOME TAX APPELLAT E TRIBUNAL COCHIN BEN CH COCHIN BEFORE S/SHRI N.VIJAYAKUMARAN JM AND SANJAY AR ORA AM I.T.A. NO. 559/COCH/2007 ASSESSMENT YEAR : 2004-05 SMT. T.C.USHA PROP. CHETHANA CASHEW CORPORATION KOCHUPILAMMOODU KOLLAM. [PAN: ACDPC 7638P] VS. THE DEPUTY COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE KOLLAM (ASSESSEE -APPELLANT) (REVENUE-RESPONDENT) ASSESSEE BY SHRI T.V.HARIHARAN CA-AR REVENUE BY SHRI T.J.VINCENT DR O R D E R PER SANJAY ARORA AM: THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE O RDER OF THE COMMISSIONER OF INCOME- TAX (APPEALS)-I KOCHI (CIT(A) FOR SHORT) DATED 2 0.3.2007 AND THE ASSESSMENT YEAR (A.Y.) UNDER REFERENCE IS 2004-05. 2. THE PRINCIPAL ISSUE ARISING IN THE PRESENT APPEA L IS THE MAINTAINABILITY OF THE ADDITION FOR ` 72.87 LACS EFFECTED IN THE ASSESSMENT ON ACCOUNT OF UNDER-SELLING OF ITS GOODS I.E. CASHEW KERNELS BY THE ASSESSEE TO ITS SISTER CONCERNS SINCE CONFIRMED BY THE FIRST APPELLATE AUTHORITY. THE FACTS OF THE CASE A RE THAT THE ASSESSEE WAS DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS OBSERVED TO HAVE MAD E SALES OF KERNELS OF ` 431.99 LACS TO THE SISTER CONCERNS AT AN AVERAGE PRICE OF ` 178 PER KG. HOWEVER THE CLOSING STOCK THEREOF AS AT THE YEAR-END STOOD VALUED AT ` 208 PER KG. I.E. HIGHER BY ` 30 PER KG. (ON AN AVERAGE) ADMITTEDLY REPRESENTING THE AVERAGE COST OF PRODUCTION FOR THE YEAR. IT WAS ACCORDINGLY CALLED UPON TO EXPLAIN THE SAME; THE SA LES OSTENSIBLY HAVING BEEN MADE AT A LOSS OF `3 0 PER KG. THE ASSESSEE EXPLAINED BEFORE THE AUTHOR ITIES THAT ITS SELLING PRICE WHICH WAS DIFFERENT FOR DIFFERENT GRADES HAD NO RE LATION WITH ITS COST OF PRODUCTION WHICH NEVERTHELESS HAS TO BE BORNE BY IT AND IN TH E FACTS OF THE CASE WITNESSED AN ITA.NO.559 /COCH/2007 2 INCREASE FOR THE YEAR UNDER REFERENCE DUE TO A LOWE R VOLUME OF PRODUCTION AS THE FIXED COST/S HAD NECESSARILY TO BE MET SO THAT THERE WAS AN INCREASE IN THE PER UNIT COST PROPORTIONATELY I.E. AS RELATABLE THERE-TO. THE SALES TO THE SISTER CONCERNS AND WHICH WERE THE ONLY SALES MADE BY IT IN THE COURSE OF EXP ORT WERE GOVERNED BY THE OBTAINING RATES IN THE INTERNATIONAL MARKET. ACCORDINGLY WH AT WAS RELEVANT IS THE RULING PRICE OF THE RELEVANT GRADES OF CASHEW KERNELS AT THE RELEVA NT TIME. IF THE PRICE CHARGED BY THE ASSESSEE TO ITS SISTER CONCERNS IS IN TANDEM THEREW ITH I.E. ALLOWING A SUITABLE MARGIN TO ACCOUNT FOR A REASONABLE TRADING PROFIT THERE-TO ; NO CHARGE TOWARD UNDER-PRICING WOULD HOLD. IT FURNISHED RELEVANT DATA (BEFORE THE FIRST APPELLATE AUTHORITY) WHICH EXHIBITED THAT IN CASE OF HIGHER GRADES THE PRICE WAS IN EXCESS O F THE AVERAGE COST OF PRODUCTION AS ALSO THAT IN ALL CASES THE SALE PRICE CHARGED WAS LOWER THAN THE CORRESPONDING PRICE REALIZED BY ITS SISTER CONCERN(S). THAT AGAINST ITS AVERAGE SE LLING PRICE OF 178 PER KG. THE AVERAGE SELLING PRICE FETCHED BY THE SISTER CONCERNS WAS AT ` 188 PER KG. (PB PG. 5). THE REVENUE AUTHORITIES WERE HOWEVER OF THE VIEW THAT THE ASS ESSEE HAD NOT ESTABLISHED THAT THE SALES TO THE SISTER CONCERNS WERE MADE ON AN ARMS LENGTH BASIS. EACH CONCERN IS A SEPARATE TAXABLE ENTITY AND ITS PROFITS OR INCOME HAD TO BE ASSESSED INDEPENDENTLY SO THAT WHERE THERE WAS A CASE OF UNDER-SELLING ADDITION INVOKIN G THE SAID PRINCIPLE (ARMS LENGTH PRINCIPLE OR APL FOR SHORT) COULD BE MADE EVEN AS HELD IN THE CASE OF PATEL CHEMICAL WORKS VS. CIT 265 ITR 273 (GUJ.). THAT THERE WAS CLEARLY A CHA RGE OF TAX AVOIDANCE IN- AS-MUCH AS THE SISTER CONCERNS WHICH STOOD TO GAIN CORRESPONDINGLY WERE ENTITLED TO THE BENEFIT OF DEDUCTION U/S. 80HHC. THE ASSESSEES CO NTENTION THAT IT OUGHT IN ANY CASE BE ALLOWED DEDUCTION U/S. 80HHC I.E. ON THE AMOUNT A DDED WAS ALSO DECLINED AS NO CLAIM U/S. 80HHC COULD POSSIBLY BE ALLOWED IN THE ABSENCE OF A WAIVER CERTIFICATE FROM THE CONCERNED EXPORTER TO IT AS A SUPPORTING MANUFACTUR ER. AGGRIEVED THE ASSESSEE IS IN APPEAL. 3. BEFORE US LIKE CONTENTIONS STOOD RAISED BY EITH ER SIDE WITH THE ASSESSEE RELYING ON SOME CASE LAWS. IN ADDITION IT HAS ALSO RAISED AN ADDITIONAL GROUND (NO. 4) WHICH READS AS:- ITA.NO.559 /COCH/2007 3 (4) WHILE ALLEGING THAT THE WEIGHTED AVERAGE PRICE FOR SALES IN THE COURSE OF EXPORT TO SISTER CONCERNS AT ` 178.00 PER KG WAS LOWER THAN THE COST OF PRODUCTION AT ` 207.72 PER KG THE LD. ASSESSING OFFICER FAILED TO RECOGNISE T HAT THE WEIGHTED AVERAGE PRICE FOR PURCHASE OF KERNELS IN THE COURSE OF EXPORT FROM TH ESE VERY SISTER CONCERNS WAS ` 166.25 PER KG WHICH WAS ALSO LOWER THAN THE COST OF PRODUC TION. ACCORDINGLY THE LD. OFFICER OUGHT TO HAVE CONSIDERED SET OFF OF THIS PRICE REDU CTION AGAINST THE ADDITION IN RESPECT OF ALLEGED UNDER SELLING PRICE DIFFERENCE. WITH REGARD TO ITS ALTERNATIVE CLAIM FOR DEDUCTION U/S. 80HHC RELIANCE WAS PLACED ON THE DECISION IN THE CASE OF CIT VS. BAWA SKIN COMPANY 294 ITR 537 (P&H). 4. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERIAL ON RECORD. 4.1 WE SHALL PROCEED ON FIRST PRINCIPLES. THE FIRS T THING IS WHETHER AN ADDITION TOWARD UNDER-SELLING I.E. WITHOUT SHOWING RECEIPT OF CON SIDERATION THERE-AGAINST COULD BE MADE. WE CONSIDER THAT IT COULD NOT BE SAID OF THE SAME A S A RULE AND THE MATTER RESTS ON FACTS AS WE FIND TO BE THE CASE IN EACH OF THE CASE LAW R ELIED UPON BY THE ASSESSEE. IT IS PERMISSIBLE WHERE AS IN THE PRESENT CASE THE TRAN SACTION IS BETWEEN RELATED PARTIES AND THE TAX MOTIVATION FOR THE ALLEGED UNDER-CHARGE IS APPARENT; THE BUYER I.E. SISTER CONCERNS BEING ELIGIBLE FOR DEDUCTION UNDER SECTIO N 80HHC. THIS IS AS THE POWER OF ASSESSMENT OF THE ASSESSING AUTHORITY UNDER THE ACT IS PLENARY AND HE HAS TO LOOK AT THE SUBSTANCE OF THE TRANSACTIONS SO THAT IF THESE ARE SHOWN TO BE CALIBRATED AND NOT REPRESENTING THE ACTUAL/COMMERCIAL TRANSACTIONS HE IS NOT BOUND BY THE TECHNICAL RULES OF EVIDENCE WHICH ARE NOT APPLICABLE TO THE TAX PROCE EDINGS AND EMPOWERED TO INTERFERE AND DETERMINE WHAT IN HIS OPINION THE ACTUAL PROFIT S AS BETWEEN THE MEN OF COMMERCE TRANSACTING ON ONE-TO-ONE BASIS WOULD BE; THE BOOK S OF ACCOUNT BEING NOT CONCLUSIVE AS THE PROFITS EARNED OR THE LOSSES INCURRED. REFEREN CE IN THIS CONTEXT MAY BE MADE TO INTER ALIA THE DECISIONS IN THE CASE OF SUMATI DAYAL V. CIT (1995) 214 ITR 801 (SC); ALA FIRM V. CIT (1991) 189 ITR 285 (SC); STATE BANK OF INDIA V. CIT (!986) 157 ITR 67 (SC); CIT V. DURGA PRASAD MORE (!971) 82 ITR 540 (SC). SO HOWEVER AS LONG AS THE ASSESSEE IS ABLE TO SHOW THAT THE PRICE CHARGED IS ON A ONE TO ONE BASIS I.E. CHARGED ON A COMMERCIAL BAS IS UNDER THE OBTAINING FACTS AND CIRCUMSTANCES I.E. IS NOT VITIATED BY EXTRANEOUS CONSIDERATIONS AND GUIDED BY AND WITH REGARD TO THE BUSINESS INTERESTS WHICH MAY NOT NEC ESSARILY EXTEND TO THE PERIOD UNDER REFERENCE (BUT FOR A LONG TERM PERSPECTIVE AS WELL) WE DO NOT THINK THAT THE AO CAN ITA.NO.559 /COCH/2007 4 ASSUME THE POWER TO INTERFERE WITH THE DECLARED TRA DING RESULTS EVEN IF IT LEADS TO A LOSS AS IN THE PRESENT CASE. IN OTHER WORDS THE CONDITION CIRCUMSCRIBING THE EXERCISE OF THE IMPLICIT POWER VESTED WITH THE AO IS THE ABSENCE OR THE INABILITY OF THE ASSESSEE TO EXHIBIT ITS BONA FIDES OR IN BEING UNABLE TO RATIONALLY EXPLAIN ITS TRANS ACTIONS IN BUSINESS TERMS OR THEIR NEXUS WITH ITS BUSINESS INTERESTS/PURPOSES I .E. THE COMMERCIAL EXPEDIENCY THERE-OF. ONCE THE AO ASSUMES JURISDICTION TO SO IN TERFERE THE REST IS A MATTER OF VALUATION OR QUANTIFICATION FOR WHICH THE ONLY CONDITION IS THA T HE HAS TO ACT REASONABLY ON A CONSIDERATION OF THE MATERIALS AVAILABLE. THAT IS HE CANNOT ACT ARBITRARILY OR DICTATE WHAT THE PRICE OF THE GOOD BEING TRADED IN OUGHT TO BE AND THE ASSESSMENT FRAMED SHOULD BE BASED ON RELEVANT MATERIALS OBJECTIVE AND FAIR. TH ERE IS NO LAW OR COMMERCIAL PRINCIPLE THAT THE GOODS WOULD FETCH A PRICE HIGHER THAN THE COST. IF THAT BE SO MARKET PRICE WOULD CEASE TO BE AN INDEPENDENT VARIABLE DEPENDANT ON T HE MARKET FORCES OF SUPPLY AND DEMAND AND BECOME A FUNCTION OF COST WHICH VARIES FROM PERSON TO PERSON. IN OTHER WORDS THE ASSESSMENT HAS TO BE OBJECTIVE BASED ON RELEVANT MATERIAL BY DRAWING COGENT INFERENCES. BUT THEN AS AFORESAID THAT IS A MATTE R OF QUANTIFICATION. TOWARDS THIS HOWEVER WE ARE IN AGREEMENT WITH THE OBSERVATION B Y THE LD. CIT(A) THAT THE FIGURE OF `AVERAGE COST OF PRODUCTION ADOPTED BY THE AO IS O NLY A BEST FIT OR BEST AVAILABLE MEASURE IN THE ABSENCE OF DATA ON GRADE-WISE COST O F PRODUCTION. IN FACT THE `COST OF PRODUCTION IS ITSELF A SURROGATE MEASURE ASSUMED F OR WANT OF A MORE RELIABLE SUBSTITUTE. THAT IS TO SAY THAT BEING ADMITTEDLY THE COST OF P RODUCTION SO THAT IT REPRESENTS THE AVERAGE PER UNIT COST OF PRODUCTION FOR THE YEAR T HE LEAST ONE WOULD EXPECT I.E. UNDER THE NORMAL CIRCUMSTANCES IS THAT THE SAME (COST OF PRO DUCTION) IS REALIZED SO THAT THERE IS NO LOSS I.E. THE SAME IS A NO PROFIT NO LOSS MEASU RE. AS THE ADOPTION OF THE SAME IN THE FACTS OF THE CASE LEADS TO THE ASSESSMENT OF PROFI TS OF THE ASSESSEES RELEVANT CONCERN AT ` 72.57 LACS AS AGAINST THE RETURNED LOSS OF ` 0.38 LAKHS (THE BALANCE DIFFERENCE OF ` 0.08 LACS BEING ON ACCOUNT OF DEPRECIATION) THAT WOULD ONLY IMPLY THAT THE VALUATION OF THE SALES (TO THE SISTER CONCERNS) AT THE VALUE CHARGED HAS LED TO A DECLINE IN THE PROFITS OR PUT DIFFERENTLY AN ABSORPTION OF THE PROFIT OF THE SAI D CONCERN FOR THE CURRENT YEAR FROM ITS OTHER SALES OF CASHEW KERNELS I.E. TO OTHER PARTI ES BY RS. 72.87 LACS. 4.2 WE MAY NOW EXAMINE THE FACTS TO SEE IF THERE IS SUFFICIENT MATERIAL FOR THE AO TO COME TO THE CONCLUSION THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE DO NOT REFLECT TRUE AND ITA.NO.559 /COCH/2007 5 FULL PARTICULARS OF HER TRANSACTIONS IN-SO-FAR AS T HESE RELATE TO SALES TO THE SISTER CONCERNS I.E. ARE NOT CORRECT AND COMPLETE IN RESPECT OF TH E SAID SALES OR NOT. THE SAME IS CLEARLY A MATTER OF AN INFERENTIAL FACT. THE PRIMARY FACTS AR E NOT IN DISPUTE; RATHER FLOW FROM THE ASSESSEE ITSELF. THE ONLY DIFFERENCE; HOWEVER THAT WE OBSERVE IS THAT WHILE THE AO STATES OF SUCH SALES TO BE FOR 242886 KGS. THE ASSESSEES WORKING IN ITS RESPECT (PB PG. 5 6 ) SHOWS THE SAME AT 211134 KGS. WITH THE BALANCE SALE OF 31752 KGS. (SOLD AT THE RATE OF ` 174 PER KG.) BEING THOUGH FOR THE EXPORT MARKET T O A THIRD PARTY. THE RELEVANT DETAILS STAND SUBMITTED FOR THE FIRST TIME BEFORE THE FIRST APPELLATE AUTHORITY WHO HAS NEITHER RECORDED ANY REASON FOR THE ADMISSION OF THE SAME N OR CONFRONTED THE AO THERE-WITH. THE REVENUE ALSO DOES NOT CONTEST THE SAME PERHAPS IN VIEW OF A FAVOURABLE CONFIRMING ORDER BY THE LD. CIT(A). UNDER THE CIRCUMSTANCES T HE SAME BEING OF PRIME RELEVANCE WE WOULD CONSIDER IT AS A PART OF RECORD THOUGH THE S AID INFORMATION FOR IT TO BE TREATED AS CORRECT AND ACCORDINGLY ACCEPTED AS BEING THE FAC T WOULD REQUIRE VERIFICATION AT THE AOS END BEING ALSO IN CONTRADICTION/DILUTION OF T HE ASSESSEES CLAIM OF THE SALES TO SISTER CONCERNS BEING THE ONLY SALES MADE IN THE COURSE OF EXPORT. THE SAME IT MAY BE ADDED WOULD BE RELEVANT IN RESPECT OF THE QUANTITY SOLD WHICH MAY IF AT ALL BE SUBJECT TO A RATE ADJUSTMENT. THE SECOND ADJUSTMENT THAT MAY BE REQU IRED IS IN WORKING THE AMOUNT OF LOSS. THE WORKING OF THE COST OF PRODUCTION (PB PG. 15/NOT BEFORE THE AO) SHOWS THE QUANTITY OF EXPORT QUALITY PRODUCTION FOR THE YEAR AT 205214 KGS. IN WHICH CASE THE BALANCE QUANTITY OF 37672 KGS. (242886 205214) SO LD DURING THE YEAR IS OUT OF THE OPENING STOCK (OF FINISHED GOODS) SO THAT IT IS TH E COST AT WHICH THE SAME IS CARRIED IN BOOKS THAT WOULD BE RELEVANT FOR THE PURPOSE. WE H OWEVER PROCEED WITH OUR ANALYSIS ADOPTING THE STATED FIGURES; THE SAME NOT IMPACTING THE ISSUE IN PRINCIPLE. 4.3 THE ADMITTED FACTS AS THEY EMANATE ARE AS: - THE ASSESSEE HAS MADE SALES OF PROCESSED CASHEW KERNELS TO ITS SISTER CONCERNS DURING THE YEAR FOR EXPORT AT THE RATE OF ` 178 PER KG.; THE AVERAGE COST OF EXPORT QUALITY PRODUCTION FOR THE YEAR IS AT ` 208 PR KG. (PB PG. 15) SO THAT THE ASSESSEE HAS AD MITTEDLY INCURRED A GROSS LOSS OF ` 30 PER KG. ON KERNELS SOLD TO ITS SISTER CONCERNS; - THE ASSESSEE HAS IN ADDITION INCURRED A SELLIN G EXPENDITURE OF ` 10.06 LACS DURING THE YEAR ON SALES OF EXPORT QUALITY PRODUCTION WHICH THOUGH IS NOT TAKEN FOR VALUATION (OF CLOSING STOCK) PURPOSES AND WRITTEN OFF WHOLLY TO T HE PROFIT AND LOSS ACCOUNT FOR THE YEAR; ITA.NO.559 /COCH/2007 6 - THE ASSESSEE HAS DURING THE YEAR EARNED A NET P ROFIT OF RS. 82.63 LACS ON THE DOMESTIC SALES OF CASHEW KERNELS RESULTING IN A NET LOSS OF ` 0.30 LACS ONLY FOR THE YEAR; -. THE PURCHASE OF CASHEW KERNELS (RAW NUTS) FOR TH E YEAR (INCLUDING FOR THE DOMESTIC PRODUCTION/SALES) IS ALSO (AS STATED) PRINCIPALLY F ROM SISTER CONCERNS AND FURTHER AT THE AVERAGE RATE OF ` 166 PER KG.[THIS INFORMATION ARISES ONLY OUT OF THE ASSESSEES ADDITIONAL GROUND BEFORE US]; AND - THE INCOME OF THE SISTER CONCERNS FROM EXPORTS I S SUBJECT TO DEDUCTION U/S. 80HHC OF THE ACT. 4.4 THE ASSESSEES EXPLANATION FOR THE LOSS SUFFERE D ON THE SALES TO THE SISTER CONCERNS DURING THE YEAR IS AS:- A) THE SALE RATE IS DE-LINKED FROM THE COST OF PRO DUCTION AND RATHER GOVERNED BY THE RULING INTERNATIONAL PRICES; B) IN ALL CASES THE EXPORTS MADE BY THE SISTER CO NCERNS ARE AT RATES WHICH VARY WITH GRADES AT A PROFIT TO THE SISTER CONCERNS AND W HICH ON AN AVERAGE IS AT ` 10 PER KG.; THE AVERAGE SALE RATE BEING ` 188 PER KG. EVEN THOUGH FOR HIGH QUALITY GRADES T HE SALE RATE EXCEEDS THE `BENCHMARK RATE OF ` 208 PER KG.; C) IT COULD NOT POSSIBLY ADOPT A COST PLUS METHOD FOR EXECUTING SALES TO SISTER CONCERNS AS IT WOULD BE RATHER ARTIFICIAL AND REMOVED FROM T HE TRADE REALITIES AND THAT IT HAD TO BEAR ITS COST OF PRODUCTION WHICH WITNESSED A JUMP FOR T HE YEAR ON ACCOUNT OF DECLINE IN (INDIRECT) EXPORT SALES VOLUME VIS--VIS THE IMMEDI ATELY PRECEDING YEAR. 4.5 WE DO NOT CONSIDER THE ASSESSEES EXPLANATION/S AS IN ANY MANNER JUSTIFYING THE ADMITTED FACTS. FIRSTLY THE ADOPTION OF AN AVERAGE RATE WHICH IS A WEIGHTED AVERAGE COST ACROSS DIFFERENT GRADE OF KERNELS BOUGHT AND SOLD IS A VALID BASIS FOR DRAWING INFERENCES. THIS IS AS BOTH THE PURCHASE AND SALE RATES AS FOR ANY OTHER COMMODITY ARE SUBJECT TO VARIATION IF NOT ON A DAYTO-DAY BASIS. UNDER THE CIRCUMSTANCES THEREFORE WHAT IS REQUIRED IS TO DRAW AN INFERENCE BASED ON AN OVER-A LL PERFORMANCE FOR A REASONABLY LONG PERIOD OF TIME AND ACROSS A VARIETY OF SITUATIONS. THIS IS AS THIS WOULD YIELD A MORE REPRESENTATIVE DATA AND THUS A CLEARER PICTURE E LIMINATING THE DISTORTIONS AND ABERRATIONS THAT MAY BE CAUSED BY BUSINESS EXIGENCIES ALSO EVE NING OUT THE VARIATION ACROSS DIFFERENT ITA.NO.559 /COCH/2007 7 SEGMENTS. OF COURSE WHERE THE BONA FIDES ARE SUSPECT EVEN INDIVIDUAL TRANSACTIONS COULD BE PUT TO SCRUTINY AND AS IT MAY WELL BE THA T SOME TRANSACTIONS OUT OF A MASS OF WHOLE ARE NOT GENUINE TRANSACTIONS AND INFLICTED W ITH SOME ULTERIOR MOTIVE. THE ARGUMENT THAT THE HIGHER GRADE QUALITY STOOD SOLD I N A LESSER PROPORTION DURING THE CURRENT YEAR FAILS TO ACCOUNT FOR THE FACT THAT IT IS NOT T HE PRICE FETCHED PER SE THAT IS RELEVANT BUT THE PRICE DIFFERENCE I.E. BETWEEN THE INPUT AND O UTPUT PRICES; THE HIGHER GRADE QUALITY WOULD LIKE WISE ALSO COST MORE. THE ARGUMENT THAT THE SALE PRICES WHETH ER FOR THE DOMESTIC OR THE EXPORT MARKET ARE NOT GUIDED BY COST CONSIDERATIONS THOUGH NOT I NCORRECT IS ONLY PARTLY TRUE. THE INCREASE IN THE PURCHASE COST OF GOODS IN ANY TRADE (WHICH IS THE MAIN COMPONENT OF THE COST OF PRODUCTION) EXCEPT WHERE ON A TEMPORAL BAS IS HAS NECESSARILY TO LEAD TO A CORRESPONDING INCREASE IN THE SALE PRICE OF THE GOO DS WHETHER SOLD AS SUCH OR AFTER FURTHER PROCESSING. THE EXTENT OF INCREASE (OR DECREASE LI KE WISE IN THE PURCHASE COST) IS A DIFFERENT MATTER AND WHICH MAY DEPEND UPON THE DEM AND AND SUPPLY POSITION IN THE RELEVANT MARKET. GENERALLY SPEAKING THE LESSER THE DEGREE OF PROCESSING SUFFERED OR VALUE ADDITION INCURRED THE HIGHER WOULD BE THE SYMPATHY OR THE DEGREE OF CORRELATION BETWEEN THE MARKET PRICE OF THE OUTPUT (SALE) AND INPUT (PU RCHASE). THE SAME WOULD HOLD FOR THE OTHER INPUT (CONVERSION) COSTS AS WELL. IF NOT THER EON ON WHAT WOULD BE THE COST AND THUS THE PRICE OF THE OUTPUT DEPEND OR AT LEAST IN TIM E? THIS IS AS ANY INDUSTRY TO BE VIABLE HAS TO OVER TIME GENERATE A SURPLUS I.E. AN EXCES S OVER COST. OF COURSE THE MARKET MAY NOT RESPOND TO OR TO THAT DEGREE TO THE COST CONS IDERATIONS OF AN INDIVIDUAL FIRM BUT THERE IS NOTHING ON RECORD TO SHOW THAT THE FIRMS COST F OR THE YEAR WAS ABNORMAL OR OUT OF TUNE WITH THAT OF OTHERS IN THE INDUSTRY. THE DEMAND AND SUPPLY FACTORS WHERE MARKETS ARE COMPETITIVE AS WE HAVE EVERY REASON TO BELIEVE THA T THE INSTANT INDUSTRY IS ONLY CAUSE ONE TO ALIGN OR BRING ONES EFFICIENCY (BE IT FOR B OUGHT-OUT OR CONVERSION COST) WITH THE INDUSTRY/TRADE NORM. E.G. IF THE INDUSTRY NORM IS FOR A REJECTION RATE OF (SAY) 2% ONE CANNOT POSSIBLY SUSTAIN WITH A HIGHER REJECTION RAT E (AS SAY 5%). AGAIN IF THE CONVERSION COST IS AT (SAY) 10% ONE COULD NOT POSS IBLY HOLD OR CONTINUE FOR LONG WITH A CONVERSION COST OF (SAY) 15% OR 20%. APART FROM TH E EFFICIENCY FACTOR WHICH IS INTRINSIC AND CANNOT WHOLLY BE ELIMINATED AS INDEED THE EFFI CIENCY OF EVERY PERSON VARIES THERE ITA.NO.559 /COCH/2007 8 ARE OTHER IMPERFECTIONS WITH WHICH EVERY SYSTEM IS IMBUED WHICH CAUSE VARIATION IN THE OPERATING RESULTS ACROSS THE ORGANIZATIONS. THE ASSESSEES CONTENTION OF IT BEING UNABLE TO ADOPT THE COST PLUS METHOD IS WELL TAKEN. BUT THE SAME IS NEITHER HERE NOR THERE AND DOES NOT ASSIST ITS CASE IN ANY MANNER WHICH IS THAT THE RATES FETCHED FOR ITS INDIRECT EX PORTS (THROUGH SISTER CONCERNS) ARE THE NORMATIVE RATES I.E. GIVEN THE RATES OBTAINING IN THE INTERNATIONAL MARKET. IF THAT BE SO ITS TRADING RESULTS WOULD BE AT PAR WITH THAT FOR THE P RECEDING YEARS TO WHICH WE FIND NO REFERENCE BY IT AT ALL OR EVEN TO THAT OF OTHERS I N THE TRADE. EVEN IF THERE HAS BEEN SOME INCREASE IN THE COST OF PRODUCTION DUE TO A LOWER V OLUME OF PRODUCTION OF WHICH THOUGH THERE IS NO PROOF; THE LOWER QUANTITY OF KERNELS SO LD (10379 BAGS AS AGAINST 24251 BAGS FOR THE IMMEDIATELY PRECEDING YEAR) SHOULD NOT HAVE ANY BEARING OR IMPACT ON THE COST OF PRODUCTION AT ALL THE SAME WOULD BE NOMINAL AND I N ANY CASE MUCH LOWER. THE ASSESSEES CONVERSION COST GIVEN ITS AVERAGE PURCH ASE COST AND THE DIRECT COST OF PRODUCTION AT ` 166 PER KG. AND ` 179 PER KG. RESPECTIVELY WORKS TO ` 13 PER KG. WHICH WOULD REMAIN ALMOST CONSTANT IN THE FACE OF DECLIN E IN PRODUCTION I.E. IF SO. THE FIXED OVERHEAD COST WORKS TO ` 15 PER KG. ON A UNITISED/PER KG. BASIS (PB PG. 15) . EVEN ASSUMING AN INCREASE OF ` 5 PER KG. I.E. OVER THE PRECEDING YEAR THAT WOUL D LEAD TO AT BEST A DECLINE IN PROFIT TO THAT EXTENT I.E. FROM THAT EARNED ON A PER UNIT BASIS IN THE PAST WHILE WE FIND THAT THERE IS A LOSS OF ` 30 PER KG. FURTHER THE SAME I.E. THE INCREASED COST OF PRODUCTION SHOULD EQUALLY IMPACT THE PROFITABIL ITY OF DOMESTIC SALES. WHAT IS THE DOMESTIC PROFITABILITY FOR THE CURRENT AND THE PREC EDING YEARS? AGAIN WE FIND NO ANSWER. FURTHERMORE WE FIND THAT THE ASSESSEE CLAIMS TO HA VE PURCHASED THE CASHEW KERNELS FROM ITS SISTER CONCERNS WHICH APPEAR TO BE ITS ONLY OR AT LEAST THE PRINCIPAL SOURCE CONSIDERING THE PURCHASE VOLUME AT 75251 KG. IS OVER THREE TI MES THE EXPORT QUALITY PRODUCTION/SALES. THERE IS NO FINDING BY THE AUTHORITIES BELOW ON THI S; THE SAID FACT HAVING BEEN BROUGHT TO THE FORE BY THE ASSESSEE ONLY BEFORE US THROUGH/IN PURSUANCE OF ITS ADDITIONAL GROUND THE IMPORT OF WHICH WE ARE UNABLE TO UNDERSTAND. WHAT IS ITS UNDERSTANDING WITH THE SISTER CONCERNS CONSIDERING THAT THE ASSESSEE IS BOTH PUR CHASING FROM AND SELLING TO THEM ? IS THERE A BUY-BACK ARRANGEMENT A FIXED MARK-UP AS A LSO APPEARS FROM THE ARGUMENTS ADVANCED BY THE ASSESSEE WHEN IT SAYS THAT ITS PRI CE FOR THE EXPORT SEGMENT IS LINKED TO ITA.NO.559 /COCH/2007 9 THE PRICE BEING ULTIMATELY REALIZED BY THE EXPORT H OUSE (ALSO REFER COMMENTS ON AUDIT REPORT U/S. 44AB/PB PG 14) THE RELEVANT CLAUSE RE ADING AS:- 5. TRANSFER PRICES FOR TRANSFERS OF SALEABLE GOOD S TO/FROM RELATED UNITS ARE DETERMINED KEEPING IN VIEW THE QUALITY/GRADES AND EXPORT PRICE S REALIZED BY THE EXPORT HOUSE (BUYER). THE ASSESSEE HAS THEREBY ALLOWED A FIXED MARGIN TO ITS SISTER CONCERNS SO THAT THE COST PLUS METHOD IS BEING INDEED FOLLOWED THOUGH B Y AND FOR THE BENEFIT OF OR WITH RESPECT TO THE COST OF THE SISTER CONCERNS. FURTH ER EVEN ASSUMING THERE IS AN ARRANGEMENT IN PLACE THE SAME WOULD NOT NECESSARILY IMPLY A CO NCERTED ACTION TO DIVERT PROFIT BUT COULD WELL BE AN ARRANGEMENT TO ENSURE SUPPLY OF RA W MATERIAL TO THE ASSESSEE SO AS TO IN TURN BE ABLE TO SUPPLY TO ITS SISTER CONCERNS AT AS SURED RATES I.E. KEEPING THE FINAL RATE IN VIEW. WHAT IS THE ARRANGEMENT AND HOW DOES IT WORK I.E. HOW ARE THE RATES DETERMINED ? MERELY STATING THAT THE RATES ARE FIXED KEEPING THE FINAL RATES IN VIEW DOES NOT BY ITSELF THROW ANY LIGHT ON THE PARAMETERS/CONSIDERATIONS IN VOLVED. ALSO AS WE GATHER FROM THE ASSESSEES EXPLANATION OF THE ARRANGEMENT IT IS TH E SISTER CONCERNS WHO HAVE HEDGED THEIR PROFITS. WHATEVER BE IT IT IS APPARENT THAT THE F ULL FACTS IN RELATION TO THE ISSUE AT LARGE HAVE NOT BEEN BROUGHT ON RECORD AND THE MATTER CLE ARLY REQUIRES FURTHER INVESTIGATION AND CLARITY ON FACTS. WE WONDER WHY THE ASSESSEE IN T HAT CASE AS IT NOW MAKES OUT DID NOT STATE THIS FACT AND CLARIFIED THE POSITION AT THE V ERY BEGINNING OF THE INQUIRY IN THE MATTER. WE MAY FURTHER WITHOUT PREJUDICE STATE THAT IF T HE ARRANGEMENT ASSUMING SO BALANCES THE TRADE INTEREST OF BOTH THE PARTIES WHICH IS CR UCIAL IT CANNOT BE IMPUGNED ELSE IT CAN BE. TWO MORE THINGS ARE RELEVANT. AS APPAREN T THE ARRANGEMENT IS NOT A NEW PHENOMENON BUT A CONTINUING TRADE PRACTICE. AS SU CH HOW THE SAME HAS IMPACTED THE PROFITS OF ITS CONCERNS IN THE PAST AND THUS ITS PERFORMANCE OVER A PERIOD I.E. FROM A LONG TERM PERSPECTIVE WOULD NEED TO BE SEEN BEFOR E GIVING A FINAL FINDING IN THE MATTER. ALSO WE MAY CLARIFY THAT THE SISTER CONCERNS STAND TO SECURE EXPORT BENEFITS IT IS THE GROSS REALIZATION FROM EXPORTS THAT WOULD BE RELEVANT WHI LE CONSIDERING ANY ARRANGEMENT RATHER THAN ONLY THE AMOUNT RECEIVED FROM THE FOREIGN BUYE R ONLY; I.E. AGAINST EXPORT INVOICE(S). THAT IS THE EXPORTER NETTING NOT ONLY THE PRICE DI FFERENCE BETWEEN ITS PURCHASE AND SALE ITA.NO.559 /COCH/2007 10 PRICE WHICH WE FIND TO BE AT AN AVERAGE OF ` 10 PER KG. BUT EXPORT BENEFITS AS WELL THESE NEED TO BE FACTORED INTO FOR AN OVERALL ASSESSMENT THAT NEEDS TO BE MADE IN THE MATTER. CONCLUSION : 5. WHERE A TRADER CHARGES LESS THAN THE MARKET PRICE FOR HIS GOOD FROM ANOTHER TRADER THE SAME WOULD NOT RENDER HIM LIABLE TO TAX ON THE DIFFERENTIAL IGNORING THE REAL PRICE FETCHED WHERE THE TRANSACTION IS BONA FIDE . THIS IS TRITE LAW FOR WHICH HE REFERENCE MAY BE MADE TO THE DECISION IN THE CASE OF CIT VS. CALCUTTA DISCOUNT CO. (1973) 91 ITR 1 (SC). THIS IS AS IT IS ONLY THE REAL ACTUAL PROFI T AND NOT ONE THAT COULD BE REALIZED WHICH WOULD THUS ONLY BE NOTIONAL THAT CAN BE SUBJECT TO INCOME-TAX. HOWEVER THE ONUS TO ESTABLISH ITS BONA FIDES UNDER THE CIRCUMSTANCES THAT EXHIBIT A SYSTEMATIC DIVERSION OF PROFIT TO RELATED PARTIES ENJOYING TAX EXEMPTION A ND INCURRING A HUGE LOSS IN THE PROCESS IS ON THE ASSESSEE AND HEAVY. WE SAY DIVERSION OR SUPPRESSION OF PROFIT AS THE ASSESSEES PURCHASES COULD ONLY BE TAKEN AT THE OBTAINING MARK ET PRICES WHILE THE MARKET PRICE OF ITS PRODUCE (OUTPUT) DURING THE YEAR IS MUCH HIGHER AS APPARENT FROM THE SURPLUS ON SALES TO THIRD PARTIES WHICH IT TERMS OF `DOMESTIC SALES. THE REVENUE HAS DISCHARGED ITS PRIMARY ONUS BY MAKING OUT A PRIMA FACIE CASE IN THIS RESPECT ( ALSO REFER PARA 4.1 OF THIS ORDER ). THE ASSESSEES EXPLANATION IN THE MATTER IS FAR FRO M SATISFACTORY THE VARIOUS ASPECTS OF WHICH STAND DISCUSSED IN DETAIL PER PRECEDING PART (PARA # 4.5) OF THIS ORDER. IN FACT IT ADMITS TO AN ARRANGEMENT WITH THE BUYERS WHEREBY T HE PRICE CHARGED TO THEM IS TO BE FIXED IN VIEW OF THE PRICE BEING CHARGED BY THEM FR OM THEIR BUYER(S) ON ACTUAL EXPORTS. THERE IS NO MATERIAL ON RECORD TO SHOW THAT THE OUT PUT PRICE IS IN PARITY WITH THE OBTAINING PRICE - WHICH WOULD AGAIN VARY FOR DIFFERENT GRADES - IN THE INTERNATIONAL MARKET; THOUGH SOME DATE ON THE WEEKLY PRICE OF EDIBLE NUTS IN THE LONDON MARKET HAS BEEN FURNISHED BY THE ASSESSEE (PB II/PG. 1) THE SAME WAS NOT BEFORE THE AUTHORITIES BELOW AND NEITHER IS THERE ANY PRAYER FOR ADMISSION OF ADDITIONAL EVIDEN CE. THE PRICES IN THE INTERNATIONAL MARKET RATHER EXHIBIT MORE ROBUSTNESS THAN THE DO MESTIC PRICES WHILE THE ASSESSEE HAS EARNED HANDSOME PROFITS FROM DOMESTIC SALES IMPLYI NG SELLING AT PRICES HIGHER THAN COST WHICH IS THE SAME FOR BOTH THE MARKETS. THE BUSINES S PURPOSE OF SELLING AT RATES MUCH BELOW THE DOMESTIC RATES THE ASSESSEE BEING NOT EN TITLED TO THE EXPORT BENEFITS ON SALES TO SISTER CONCERNS NOR HAVING CLAIMED ANY DEDUCTION U/ S. 80HHC HAS NOT BEEN EXPLAINED. ITA.NO.559 /COCH/2007 11 IN FACT THEREFORE THE QUALITY OF THE OUTPUT FOR D OMESTIC MARKET FOR EACH GRADE WOULD BE AT PAR OR NEARLY WITH THAT FOR THE DOMESTIC MARKE T. EVEN OTHERWISE A HIGHER QUALITY GRADE WOULD NORMALLY FETCH A HIGHER PREMIUM I.E. ENTAILS A HIGHER VALUE ADDITION. THE ARRANGEMENT WITH ITS SISTER CONCERNS WHO ENJO Y TAX EXEMPTION U/S. 80HHC ITSELF SHOWS THAT THE PRICES CHARGED ARE BY ACTING IN CONSORT. AN INDEPENDENT BUYER WOULD NOT NORMALLY DISCLOSE ITS SELLING PRICE AS WAS IND EED THE CASE IN RESPECT OF THE STATED THIRD PARTY SALE FOR 31752 KGS. EVEN SO THAT BY ITSELF CANNOT LEAD TO PREJUDICE AND COULD BE A RESULT OF A STABLE ARRANGEMENT TO ACTING IN UNISON EARN A FAIR AMOUNT. THE ASSESSEE ON THE OTHER HAND HAS RUN A SIZEABLE LOSS WHICH IS I NEXPLICABLE. AGAIN THE OTHER AMOUNTS REALISED BY WAY OF EXPORT BENEFITS BEING A PART OF THE REALIZATION AGAINST EXPORT BY THE EXPORTER (SISTER CONCERN) CANNOT BE IGNORED TO THE DETRIMENT OF THE ASSESSEE WHERE THE ARRANGEMENT IS ADMITTEDLY BASED ON WHAT THE GOODS S OLD BY IT WOULD ULTIMATELY FETCH. THOUGH THE ARRANGEMENT HAS BEEN FUNCTIONAL FOR THE PAST YEARS AS WELL NO DATA THEREFOR OR ON DOMESTIC SALES/PROFITABILITY OR OF OTHER CON CERNS ENGAGED IN INDIRECT EXPORT HAS BEEN FURNISHED. THE REVENUES CHALLENGE TO THE ASSE SSEES BONA FIDES IN THE PRESENT CASE IS THUS VALID AND IT IS NOT PRECLUDED FROM INFERRI NG SYSTEMATIC DIVERSION OF PROFIT AND PROCEEDING TO ESTIMATE THE SAME BY ADOPTING THE AVE RAGE COST OF PRODUCTION AS THE FAIR MARKET VALUE. THE SAME IS ONLY A `NO PROFIT NO LOS S MEASURE AND WHICH IS PERFECTLY VALID UNDER THE CIRCUMSTANCES WHICH DEMONSTRATE THE EXISTENCE OF DOMESTIC MARKET PRICES IN EXCESS OF COST AS WELL AS IN THE EXPORT MARKET NET OF SELLING EXPENSES AT A HIGHER FIGURE. IT WAS OPEN TO THE ASSESSEE GIVEN THE AVE RAGE PURCHASE PRICE FOR EACH GRADE TO CONTEND FOR A DIFFERENT COST OF PRODUCTION (AVERAGE ) FOR EACH GRADE I.E. BY ADDING THE AVERAGE CONVERSION COST TO THE AVERAGE PURCHASE PRI CE FOR EACH GRADE (ON WHICH THE DATA IS AVAILABLE) WHICH CONSTITUTES THE BULK OF THE CO ST OF PRODUCTION WHICH IT DID NOT. WE DRAW SUPPORT FOR OUR CONCLUSIONS ON THE DECISIONS L ISTED AT PARA 4.1 OF THIS ORDER AS WELL AS OTHERS AS IN THE CASE OF PATEL CHEMICAL WORKS VS. CIT (SUPRA) CLARIFYING THE LEGAL POSITION IN THE MATTER. SO HOWEVER IN VIEW OF OUR FINDING TH AT FULL FACTS INCLUDING THE DETAILS OF AND QUA THE WORKING OF THE SELLING ARRANGEMENT WITH ITS SI STER CONCERNS WHO ALSO ITS SUPPLIERS NEED TO BE BROUGHT ON RECORD AND PROPERL Y UNDERSTOOD WE CONSIDER IT PROPER IN THE INTEREST OF JUSTICE TO REMIT THE MATTER BACK T O THE FILE OF THE FIRST APPELLATE AUTHORITY TO ITA.NO.559 /COCH/2007 12 AFFORD AN OPPORTUNITY TO THE ASSESSEE TO ESTABLISH ITS BONA FIDES IN THE MATTER IN THE LIGHT OF OUR FOREGOING OBSERVATIONS/FINDINGS. WE ARE ALSO GU IDED IN OUR DECISION BY THE ABSENCE OF ANY REFERENCE BY THE ASSESSEE TO THE PRECEDING YEAR S OVER WHICH THE SAID ARRANGEMENT HAD APPARENTLY BEEN IN OPERATION. IT SHALL BE OPEN FOR THE ASSESSEE IN THE SAID PROCEEDINGS TO CONTEND FOR AN ALTERNATE BASE FOR VALUING ITS SALES TO THE SISTER CONCERNS I.E. IN PREFERENCE TO THAT ADOPTED. SIMILARLY THE REVENUE MAY CALL FO R ANY FURTHER DETAILS IT CONSIDERS NECESSARY FOR THE PURPOSE AS WELL AS MAKE ANY FURT HER INVESTIGATION IN THE MATTER IT DEEMS NECESSARY. THE LD. CIT(A) SHALL DECIDE THE MATTER A FRESH AFTER HEARING BOTH THE SIDES ISSUING DEFINITE FINDINGS OF FACT INCLUDING QUA THE ASSESSEES ALTERNATE GROUND BEFORE US AS WELL AS THE MATTERS CITED AT PARA 4.4 OF THIS OR DER. FURTHER CONSIDERING THAT THE FULL DETAILS WERE NOT BEFORE THE AO EVEN IN THE FIRST GR OUND IT WOULD BE INCUMBENT ON HIM TO CONFRONT THE MATERIALS BEING RELIED UPON BY THE ASE SSEE THERETO AND IS EQUALLY AT LIBERTY TO CALL FOR A REMAND REPORT FROM THE AO BEFORE HIS AD JUDICATION. NEEDLESS TO ADD THE ASSESSEE SHALL EXTEND FULL COOPERATION IN THE MATTE R FAILING WHICH THE REVENUE IS ENTITLED TO DRAW THE INFERENCES AVAILABLE TO IT UNDER LAW; T HE ONUS TO EXHIBIT ITS CASE BEING SQUARELY ON HER. AS WE HAVE REMITTED BACK THE MATTER WHICH MAY YIELD MATERIALS IMPACTING THE FACTUAL DETERMINATION WE MAY NOT BE CONSTRUED AS H AVING EXPRESSED ANY FINAL VIEW IN THE MATTER EXCEPT FOR CLARIFYING THE LAW AND ITS APPLI CABILITY ON THE FACTS AS FOUND. ALSO WE SEE NO REASON TO DEAL WITH THE CASE LAW RELIED BEFO RE US BY THE ASSESSEE WHICH NEVERTHELESS STANDS REVIEWED. SUFFICE TO ADD AS A LSO NOTED EARLIER THAT THE MATTER IS AS WOULD BE APPARENT PURELY FACTUAL AND EACH OF THE DECISIONS STAND RENDERED IN THE FACTUAL MATRIX OF ITS CASE. WE DECIDE ACCORDINGLY. 6. THE ASSESSEE HAS RAISED ONE MORE ISSUE PER GROUN D NO. 3 OF ITS APPEAL CLAIMING THE BENEFIT OF DEDUCTION UNDER SECTION 80HHC ON THE PROFIT ASSESSED PLACING RELIANCE ON THE DECISION IN THE CASE OF BAWA SKIN CO. (SUPRA) THE LD. CIT(A) DISALLOWED THE CLAIM RAISED BEFORE HIM ON THE BASIS THAT IN THE FACTS OF THE CASE THERE HAS BEEN NO DISCLAIMER BY THE EXPORTERS I..E OF THE BENEFIT U/S. 80HHC I N RESPECT OF THE ASSESSEES SALE TO THEM. IN THE CITED CASE THE ASSESSEE HAD CLAIMED AND STO OD ALLOWED DEDUCTION U/S. 80HHC ON ITS EXPORTS. ON AN ADDITION BEING EFFECTED TO ITS T RADING ACCOUNT QUA ITS EXPORT BUSINESS IT CLAIMED A CORRESPONDING INCREASE IN THE DEDUCTION U /S. 80HHC ON THE GROUND THAT THE ITA.NO.559 /COCH/2007 13 ADDITION SUSTAINED ONLY AMOUNTS TO AN INCREASE IN T HE PROFITS OF THE YEAR WHICH STOOD UPHELD BY ALL THE APPELLATE AUTHORITIES. THE ARGUME NT IS UNEXCEPTIONAL AS STANDS ALSO EXPLAINED BY THIS BENCH OF THE TRIBUNAL IN ITS ORDE R IN THE CASE OF ASSTT. CIT V. SKYLINE BUIDERS (IN ITA NOS. 989 & 990/COCH/2008 DATED 14/12/2010) . THE SAID DECISION IS HOWEVER NOT APPLICABLE IN THE PRESENT CASE; THERE HAS BEEN FIRSTLY NO CLAIM FOR DEDUCTION U/S. 80HHC BY THE ASSESSEE EITHER PER ITS RETURN OR REVISED RETURN OF INCOME. FURTHER AS POINTED OUT BY THE LD. CIT(A) THERE HAS BEEN NO DI SCLAIMER OF THE EXPORT BENEFIT U/S. 80HHC BY THE ASSESSEES BUYER IN ITS FAVOUR AS A SU PPORTING MANUFACTURER FOR IT TO BE EVEN ENTITLED TO THE SAID DEDUCTION I.E. NOTWITHS TANDING ITS NON-CLAIM AFORESAID. SO HOWEVER AS WE HAVE REMITTED THE MATTER BACK OT THE FILE OF THE FIRST APPELLATE AUTHORITY WITH REGARD TO THE PRINCIPAL ISSUE WE CONSIDER IT JUST AND PROPER TO DO LIKE-WISE FOR THIS GROUND AS WELL SO AS TO ENABLE THE ASSESSSEE TO PR ESENT ITS CASE IN THE MATTER BEFORE HIM. WE DECIDE ACCORDINGLY. 7. IN THE RESULT THE ASSESSEES APPEAL IS ALLO WED FOR STATISTICAL PURPOSES. SD/- SD/- (N.VIJAYAKUMARAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 18TH MARCH 2011 GJ COPY TO: 1 . SMT. T.C.USHA PROP. CHETHANA CASHEW CORPORATION K OCHUPILAMMOODU KOLLAM. 2. THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL C IRCLE KOLLAM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I KOCH I 4. THE COMMISSIONER OF INCOME-TAX CENTRAL KOCHI. 5. D.R. I.T.A.T. COCHIN BENCH COCHIN. 6. GUARD FILE. BY ORDER (ASSI STANT REGISTRAR) ITA.NO.559 /COCH/2007 14