TMI Blog2015 (8) TMI 845X X X X Extracts X X X X X X X X Extracts X X X X ..... commission in consideration of services rendered. The CIT(A) held that the commission on export activity was fully disclosed in all correspondence and activities in relation to export, the commission was paid through banking channels with the Reserve Bank approval and it was paid pursuant to an agreement approved by the Government of India and the United Nations, that the payment of commission was for business consideration and there was no illegality in it, that besides this, nothing was brought on record to show that the transaction relating to payment of commission were not genuine or that the payments were excessive or unreasonable, that the Volker Committee report had discussed the utilisation of money by the recipient of the commission and stated that neither the assessee nor the Government of India was involved in parting with some of the funds so received as commission under a pact between the Iraq Government and the United Nations. - Decided against revenue. - I. TA No.1777/Kol/2008, C.O. No. 121/Kol/2008, ITA No.1818/Kol/2009, ITA No. 1761/Kol/2009, ITA No.1379/Kol/2008 - - - Dated:- 14-8-2015 - Shri Mahavir Singh and Shri B. P. Jain, JJ. For The Revenue : Dr. Adh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judice before the Appellate Tribunal. Ground for Appeal: 1a) That the Ld. CIT(A) erred in upholding the rejection of the claim for exemption u/s. 10B of the I. T. Act of ₹ 1,62,00,753/- by relying on his decision for the Asst. Yr. 2003- 04. b) That the decision of the Ld. CIT(A) rejecting the claim for exemption u/s. 10B in Asst. Yr. 2003-04 is still subjudice before the ITAT, and the submission made in respect of the said appeal will apply mutatis mutandis for this year also. 5. Briefly stated facts are that assessee claimed exemption u/s 10B of the Act in respect of 100% EOU and in support of its claim, assessee filed report in Form No. 56G u/s 10B of the Act. But AO denied exemption to the assessee. Aggrieved, assessee preferred appeal before CIT(A), who also confirmed the action of AO and denied the exemption u/s 10B of the Act by observing in para-4 as under:- 4. The appellant has made detailed submissions in the Statement of Facts and Notes of arguments submitted on 12.02.2007 in Paras-1 to 63 thereof at Pages 4 to29 of the Paper Book. The submissions made are very detailed and have referred to numerous documents Copies of which are i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has filed this appeal and cross objection. 6. At the outset, Ld. counsel for assessee, Shri R.P. Agarwal, Senior advocate stated that the issue now stands covered by the order of Special Bench of ITAT Kolkata in the case of Madhu Jayanti International Ltd. v. Dy. CIT (2012) 137 ITD 377 (Kol) (SB) and he referred to relevant para 35 to 37 of the order, which reads as under:- 35. We find from the above facts and circumstances and case laws relied on by both the sides that the assessee was exclusively engaged in blending, packaging and export of tea bags, tea packets and bulk tea packs. The assessee s division enjoys recognition as a 100% EOU, which is granted by the Development Commissioner, Ministry of Commerce Industry, Govt. of India. The assessee claimed exemption u/s. 10B of the Act for AYs 2000-01 onwards, which was granted upto the AY 2003-04. However, for the AY 2004-05, exemption was declined for the reasons that by the Finance Act 2000, the definition of manufacture which included processing contained in section 10B of the Act was deleted w. E. F. 01.04.2001. The argument of the department is that manufacture or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Kerala High Court in the case of Girnar Industries (supra) had held such amendment in Section 10AA to be of clarificatory in nature. The definition of manufacture under the SEZ Act, Exim Policy, Food Adulteration Rules and Tea (Marketing) Control Order is much wider than what is the meaning of the term manufacture under the common parlance, and it includes processing, blending, packaging etc. In view of the above and respectfully following the decision of Hon ble Kerala High Court in the case of Girnar Industries (supra) and Tata Tea Limited (supra), we hold that the assessee is entitled for exemption under Section 10B of the Act on account of blending of tea. Similarly, in our view, the industrial units engaged in the very same activity i. E. blending, packing and export of tea in the free trade zone shall also be entitled to enjoy tax exemption under Section 10A of the Act. 37. Accordingly, we answer the question referred in favour of the assessee by holding that the assessees who are in the business of blending and processing of tea and export thereof, in 100% EOUs are manufacturer/ producer of the tea for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efined in the Income Tax Act 1961 in an exhaustive manner, the assessee has argued in its paper book hat for the purposes of section 100B of the Income Tax Act 1961 an exclusive definition has been given in respect of the said two words and that the expression manufacture has been defined to include inter alia any process for the purposes of section 10B of the Income Tax Act 1961. Placing reliance on various judicial pronouncements, the assessee has pleaded that the activity of blending carried out by it leads to production of tea and is, therefore, eligible for benefit of deduction u/s. 10B of the Income Tax Act 1961. In view of the above remand report of AO, Ld. counsel for assessee argued that assessee has submitted complete procedure of blending of tea along with blend sheets during the remand proceedings and once the AO has admitted that there is blending and this is exactly in line with order of ITAT Kolkata Special Bench in the case of Madhu Jayanti International Ltd. (supra). On query from the Bench, Ld. CIT-DR Shri Adhir Kumar Bar relied on the order of AO. 7. We find that factual there is a blending of tea in the present case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ol/2008 for AY 2002-03, reads as under:- 3) That under the facts and circumstances of the assessee, ld. CIT(A) had erred in deleting the addition of ₹ 63,55,889/- made by the AO based on the fact that such payment of the commission brokerage, made by the assessee, was not wholly and exclusively for the purpose of business. 12. We have heard rival submissions and gone through the facts and circumstances of the case. At the outset, we find that issue is covered in favour of assessee and against Revenue exactly on identical facts and circumstances of Hon'ble jurisdictional High Court in the case of CIT v. Rajarani Exports P. Ltd. (2014) 361 ITR 152 (Cal). Further, we find that Hon'ble jurisdictional High Court has considered that assessee made payment of commission in consideration of services rendered. The CIT(A) held that the commission on export activity was fully disclosed in all correspondence and activities in relation to export, the commission was paid through banking channels with the Reserve Bank approval and it was paid pursuant to an agreement approved by the Government of India and the United Nations, that the payment of commission was for bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Department has come up in appeal. Mrs. Smita Das De, learned advocate, appearing in support of the appeal, could not satisfy us as to why were the findings indicated above as recorded by the Commissioner (Appeals) and the Tribunal incorrect either on fact or in law. There is, as such, no reasons why the appeal should be entertained. 13. We find that this issue stands covered in favour of assessee and against Revenue and respectfully following the judgment of Hon'ble jurisdictional High Court in the case of Rajarani Exports P. Ltd. (supra) we confirm the order of CIT(A) in deleting the disallowance. This issue of revenue s appeals are dismissed. 14. The next issue in the appeal in ITA No. 1379/K/2008 filed by assessee is against the order of CIT(A) in holding that the surplus of ₹ 1,09,33,433/- arising from the valuation of foreign currency balance in the EEFC Account of the assessee as on 31.03.2003 was liable to be included in the taxable income of the assessee. For this, assessee has raised following ground no.2: 2. That on the facts and in the circumstances of the case the Ld. CIT(A) erred in holding that the surplus of ₹ 1,09,33,433 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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