Income Tax Appellate Tribunal - Delhi
Arts & Crafts Valley, New Delhi vs Department Of Income Tax on 30 August, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH : A : NEW DELHI
BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT
AND
SHRI I.P. BANSAL, JUDICIAL MEMBER
ITA No.4842/Del/2011
Assessment Year : 2008-09
DCIT, Vs. Arts & Crafts Valley,
Circle 30(1), 272, Garhiya Street,
Drum shape Building, Matia Mahal, Jama Masjid,
New Delhi. New Delhi.
PAN : AAGFA4438G
C.O. No.391/Del/2011
(ITA No.4842/Del/2011)
Assessment Year : 2008-09
Arts & Crafts Valley, Vs. DCIT,
272, Garhiya Street, Circle 30(1),
Matia Mahal, Jama Masjid, Drum shape Building,
New Delhi. New Delhi.
PAN : AAGFA4438G
(Appellant) (Respondent)
Assessee by : Shri B.S. Chauhan &
Shri P.K. Rustogi,
Revenue by : Mrs. Anusha Khurana, Sr. DR
ORDER
PER I.P. BANSAL, JUDICIAL MEMBER
The appeal is filed by the department and the Cross Objections by the assessee. Both of them are directed against the order passed by the CIT (A) dated 30th August, 2011 for assessment Year 2008-09. The grounds of appeal by the revenue read as under:-
2 ITA No.4842/Del/2011 C.O. No.391/Del/2011"1. On the facts and in circumstances of the case, Ld. CIT (A) XXV, New Delhi has erred in allowing exemption u/s 10B of the IT Act.
2. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground (s) of appeal at any time before or during the hearing of this appeal."
1.1 The grounds of Cross Objections by the assessee read as under:-
"On the facts and circumstances of the case the Ld. CIT (A)-XXV, New Delhi allowed the deduction u/s 10B of the Income Tax Act, 1961. The respondent has followed all the requirement as mentioned in the Section 10B of the Income Tax Act, 1961.
1. The respondent has got LOP (Letter of Permission) date 07.07.2006 which was valid till 06.07.2009 (Copy enclosed as per page 1 to 2)
2. When the Income Tax Department have enquired from NSEZ (Noida Special Economic Zone) they have mentioned wrongly in its letter dated 03.12.2010 "the LOP was issued on 07.07.206 was valid till 06.07.2006."
There was typing error in the above letter which was issued on 07.07.2006 for a period of three years and was valid till 06.07.2009 instead of 06.07.2006.
3. The Respondent has written a letter to the Development Commissioner of NSEZ on 09.12.2010 regarding furnishing wrong information to income tax department (Copy of that letter enclosed on page 3) then Mr. A.K. Singh, Assistant Development Commissioner, NSEZ, Noida has written a letter to respondent dated 14.12.2010 mentioning that " I am directed to refer to your letter dated 09.12.2010 on the above mentioned subject and to say that due to typing error, the validity of LOP was mentioned as 06.07.2006 instead of 06.07.2009 in this office letter dated 03.12.2010 addressed to Assistant Commissioner, Income Tax Department. It is once again clarified that the LOP issued to the unit was valid upto 06.07.2009." (Copy enclosed on page 4).
As per above letter it is clear that LOP (Letter of Permission) was valid for three years and A.Y. 2008-09 respondent was entitled to get deduction and relief u/s 10B of the Income Tax Act, 1961.
Your Honour this is covered matter as per the last year i.e., Assessment Year 2007-08 department raised the same issue and filed an appeal before Hon'ble ITAT. The Hon'ble ITAT 3 ITA No.4842/Del/2011 C.O. No.391/Del/2011 allowed deduction u/s 10B and decided the case in favour of assessee a copy of the order enclosed herewith as per page 5 to
9. In the ITAT order on page 4 point no.4 it is mentioned that "The Revenue is in now appeal before us against the aforesaid findings of the learned CIT (A). The learned DR supported the order of the A.O. on the other hand, the learned AR on behalf of the assessee while inviting our attention to circular no.68 dated 14th May, 2009 of the Export Promotion Council for EOUs and SEZs contended that approval granted by Development Commissioner under delegated powers of Board of approval, is valid for granting the exemption u/s 10Bof the Act." A copy of this circular is enclosed as per page 10.
Now your honour hereby requested to give the relief to the respondent and allow the deduction u/s 10B of the Income Tax Act, 1961 and confirm the order passed by CIT (A)-XXV, New Delhi."
2. At the outset, it was pointed out by the learned AR of the assessee that the issue raised by the revenue is covered in favour of the assessee by the decision of ITAT in the case of the assessee for Assessment Year 2007-08 whereby it was held that exemption has rightly been granted to the assessee u/s 10B of the Act. The learned AR submitted that copy of the said order of the Tribunal is filed at pages 5-9 of the paper book filed with Cross Objections. It is an order dated 5th October, 2011 passed in ITA No.3782/Del/2011 and CO No.321/Del/2011, the appeal being filed by the revenue. In that appeal the revenue had agitated the decision of the CIT (A) vide which the assessee was held to be entitled for exemption u/s 10-B. He submitted that the letter of approval which was issued to the assessee was valid upto 6th July, 2009 which cover the present year as well. He, therefore, submitted that the issue is covered in favour of the assessee.
3. On the other hand, it was vehemently pleaded by the learned DR that the facts of the present case are different. For this purpose, she invited our attention towards the observations of the Assessing Officer 4 ITA No.4842/Del/2011 C.O. No.391/Del/2011 in the assessment order at page 2 where he has mentioned that the new plant and machinery which has been added in the year under consideration is only 1.5% and, thus, she pleaded that the assessee does not qualify for the exemption to be granted to the assessee u/s 10B of the Act. Thus, she pleaded that the facts of the present case are different from the facts of earlier year. Hence, the earlier order of the Tribunal should not be followed.
4. We have carefully considered the rival submissions in the light of the material placed before us. It will be relevant to reproduce the relevant observations of the Tribunal from the aforementioned order:-
"5. We have heard both the parties and gone through the facts of the case. The only issue raised in the ground before us by the Revenue is that Deputy Development Commissioner, Noida (SEZ) in their letter dated 3rd December, 2010 mentioned that the assessee did not apply for extension of validity of letter of permission, which expired on 06.07.2006. However, a mere glance at the letter dated 07.07.2006 issued by Noida (SEZ) placed on page 4 and 5 of the paper book, reveals that approval was for three years. Subsequently, vide letter dated 14th December, 2010 it was clarified by the Asstt. Development Commissioner, Noida, SEZ that approval was valid upto 6th July, 2009 and not 6th July, 2006 as mentioned in their earlier letter addressed to the A.O. In the light of these undisputed facts, especially when the revenue have not placed before us any material, controverting the aforesaid findings of the learned CIT (A), we are not inclined to interfere. Therefore, ground raised by the Revenue is dismissed. Since ground raised in the cross objection is merely supportive, accordingly, cross objective becomes infructuous."
6. In result, both the appeal of the Revenue and the corresponding CO by the assessee are dismissed."
5. Now, the only objection of the revenue is that during the year under consideration the assessee has only added new plant and machinery to the extent of 1.5%. Section 10B is a special provision in respect of newly established 100% Export Oriented Undertaking whereby subject to provisions of that Section a deduction of such 5 ITA No.4842/Del/2011 C.O. No.391/Del/2011 profits and gains as are derived by a 100% export oriented undertakings from the export of articles or things or computer software for a period of 10 consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce article or things or computer software, as the case may be, shall be allowed from the total income of the assessee. Therefore, for examining the allowability or otherwise of exemption u/s 10B, it has to be examined in the initial year that whether or not the assessee is fulfilling the conditions laid down in Section 10B and if the assessee is found to be eligible in the initial year, then, particular criteria of adding new plant and machinery will not be applicable for subsequent years. Therefore, the ground on which the learned DR is agitating the allowability of exemption u/s10B is not material for the year under consideration. We have gone through the assessment order and we find that the main ground on which the exemption has been denied to the assessee has been spelt out by the Assessing Officer in the following para:-
" In its submission dated 09.12.2010, the A.R. submitted that they have asked clarification from the Dy. Development Commissioner and further that there has been a typing error in the letter since the LOP issued on 07.07.2006 was valid upto
06.07.2009 and how it can expire before issue. The arguments put forward by the A.R. have been examined in the light of the above. The facts are that the assessee has not satisfied the conditions laid in the I.T. Act, 1961for claiming exemption under Sec.10B. It is also evident that the assessee has not complied with the conditions as mentioned in the letter of permission dated 07.07.2006 issued by the Asstt. Development Commissioner. Therefore, the exemption claimed by the assessee under sec.10B is not allowed."
6. In view of the above discussion, we find that the matter is covered in favour of the assessee so as it relates to the allowability of exemption u/s 10B. Since we have held that the assessee is entitled for exemption u/s 10B, the cross objections which are only supporting 6 ITA No.4842/Del/2011 C.O. No.391/Del/2011 the order of the CIT (A) have become infructuous and the same are also dismissed.
7. In the result, the appeal filed by the revenue as well as the Cross Objections filed by the assessee are dismissed in the manner aforesaid.
The order pronounced in the open court on 13.01.2012.
Sd/- Sd/-
[G.D. AGRAWAL] [I.P. BANSAL]
VICE PRESIDENT JUDICIAL MEMBER
Dated, 13.01.2012.
dk
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT
TRUE COPY
By Order,
Deputy Registrar,
ITAT, Delhi Benches