Income Tax Officer, Ward-32(3), New Delhi Vs M/s K. K. Accessories, H-9, Lajpat Nagar-1, New Delhi-110024
August, 08th 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `D', NEW DELHI
Before Sh. S. V. Mehrotra, AM And Sh. Joginder Singh, JM
ITA No. 6352/Del/2012 : Asstt. Year : 2009-10
Income Tax Officer, Ward-32(3), Vs M/s K. K. Accessories,
New Delhi H-9, Lajpat Nagar-1,
C.O No. 29/Del/2013 : Asstt. Year : 2009-10
M/s K. K. Accessories, Vs Income Tax Officer, Ward-32(3),
H-9, Lajpat Nagar-1, New Delhi
PAN No. AAFFK4131R
Assessee by : Premlata Bansal, Adv.
Revenue by : Sh. S. N. Bhatia, DR
Date of Hearing : 6.8.2014 Date of Pronouncement :7.8.2014
Per Joginder Singh, JM:
The Revenue is aggrieved by the impugned order dated 31.10.2012
passed by the ld. CIT(A), New Delhi. The assessee has also preferred
2. First we shall take up the appeal of the Revenue wherein the first
ground raised pertains to inclusion of Duty drawback in Export Sale of
the assessee while calculating deduction u/s 10B of the Act. During
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K. K. Accessories
hearing the ld. Senior DR Shri S. N. Bhatia contended that in spite of the
fact that the Auditor of the assessee himself has certified the Export
Sale, without inclusion of Duty drawback in Report u/s 10B in form no.
56G, submitted during assessment proceedings, relief has been granted
by the ld. CIT(A). Broadly the assessment order was defended. On the
other hand, the ld. Counsel for the assessee M/s Premlata Bansal
defended the conclusion drawn by the ld. CIT(A).
3. We have considered the rival submissions, perused the material
available on record. The facts in brief are that the assessee declared
income from business of manufacturing and export of Garments. The
assessee claimed exemption u/s 10B of the Act to the tune of Rs.
1,18,56,646/-. The assessee was asked by the Assessing Officer to
furnish the Audit Report and also certificate from Auditor for claiming
of exemption u/s 10B. The assessee filed the Audit Report duly certified
by the Auditor. On perusal of details, the ld. Assessing Officer observed
that the amount of Rs. 91,70,681/-, pertaining to 16 invoices was not
received within a period of 6 months from the end of the relevant
previous year. The assessee was asked to explain as to why this payment
be treated as Export Sale for the year under consideration. It was
claimed by the assessee that 100% EOU are allowed to bring export
payments within 12 months form the date of export as per RBI circular.
Unconvinced by this claim the ld. Assessing Officer reduced deduction
u/s 10B by the amount of Rs. 19,12,743/-. The assessee preferred appeal
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K. K. Accessories
before the ld. CIT(A) wherein by impugned order it was held that Duty
drawback is an incentive and do not have any element of turnover,
meaning-thereby, the amount of Duty drawback is to be included in both
total turnover as well as export turnover or from both and granted relief
to the assessee. The Revenue is aggrieved and is an appeal before this
4. Uncontrovertedly the assessee is a 100% export oriented
undertakings, claimed exemption u/s 10B of the Act at Rs. 118,56,546/-.
The denial of exemption by the Assessing Officer was that the amount
of Rs. 91,70,681/- received in the form foreign remittance was not
realized within a period of 6 months from the end of the relevant
previous year and also the assessee did not apply for extension of time
beyond 30.9.2009 as per Circular No. 25/2004. The assessee was
permitted to bring export payment within 12 months. We note that sec.
10B was introduced by the Finance Act, 1988 w.e.f 1.4.1989. As stated
in Circular No. 528 dated 16.12.1988 (176 ITR ST. 154), tax holiday u/s
10A was not available to 100% EOU and thus, such undertakings were
eligible only for deduction u/s 80HHC out of their export profit. The
Government with a view to provide further incentives for earning
foreign exchange, by the Finance Act, 1988, a new section in form of
10B was inserted so as to ensure that income of 100% EOU shall be
exempted from tax for a period of 5 consecutive assessment years. Duty
drawback is an incentive. In view of the aforementioned circular the
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K. K. Accessories
assessee is allowed to realize and repatriate full value of export proceeds
within a period of 12 months from the date of export. Since, the assessee
received a sum of Rs. 14,31,796/- out of Rs. 31,84,755/- within one year
from the date of exports, thus, the deduction relating to the amount of
Rs. 14,31,796/- cannot be disallowed. The amount of Duty drawback
either is to be included in both total turnover as well as export turnover
or to be excluded from both. If the figures of export turnover and total
turnover are analyze the deduction u/s 10B would come to Rs.
1,18,56,646/-. Thus, we find no infirmity in the conclusion drawn by the
ld. CIT(A). It is upheld, resulting into dismissal of appeal of the
5. Now we shall take up the Cross Objection raised by the assessee
wherein the foreign remittance of Rs. 14,31,796/- only was allowed and
not allowing the amount of Rs. 17,52,959/-. While disposing of the
appeal of the Revenue we have already upheld the stand of the ld.
CIT(A). On consideration of argument from both sides we do not find
merit in the assertion of the assessee, therefore, this Cross Objection of
the assessee is also dismissed.
6. Finally appeals of the Revenue as well as Cross Objection of the
assessee are dismissed.
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K. K. Accessories
7. This order was pronounced in the open court in the presence of ld.
Representative from both sides at the conclusion of the hearing on
(S. V. Mehrotra) (Joginder Singh)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Copy forwarded to:
1. Draft dictated on 6.8.2014 PS
2. Draft placed before author 6.8.2014 PS
3. Draft proposed & placed before the JM/AM
4. Draft discussed/approved by Second JM/AM
5. Approved Draft comes to the Sr.PS/PS PS/PS
6. Kept for pronouncement on PS
7. File sent to the Bench Clerk PS
8. Date on which file goes to the AR
9. Date on which file goes to the Head Clerk.
10. Date of dispatch of Order.