TMI Blog2015 (11) TMI 637X X X X Extracts X X X X X X X X Extracts X X X X ..... venue and respectfully following the judgment of Hon'ble jurisdictional High Court in the case of Rajarani Exports P. Ltd. (2013 (5) TMI 410 - CALCUTTA HIGH COURT ) we confirm the order of CIT(A) in deleting the disallowance. - ITA Nos. 942 & 943/Kol/2009, ITA Nos.1384&1385/Kol/2009 - - - Dated:- 7-10-2015 - Mahavir Singh, JM And M Balaganesh, AM For the Petitioner : Shri R P Agarwal J M Thard, Adv For the Respondent : Shri Sanjay Mukherjee, JCIT ORDER Per Bench These four cross appeals - two by assessee and two by Revenue, are arising out of separate orders of CIT(A)-IV Kolkata in appeal Nos.185, 188/CIT(A)-IV/07- 08 dated 03.03.2009. Assessments were framed by ACIT, Circle-4, Kolkata u/s 143(3)/147 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') vide separate orders dated 20.12.2007 for assessment years 2002-03 and 2003-04 respectively. 2. The first common issue in both the appeals of assessee as well as the appeals of revenue is against the order of CIT(A) denying the exemption u/s 10B of the Act in respect to tea blended and exported by it, by holding that even though assesseecompany is a 100% Exported Oriented Unit (EOU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that it was a 100% Export Oriented Undertaking (EOU) w.e.f. 14.12.2001 and was entitled to the exemption for part of the year from 14.12.2001 to 31.03.2002 and accordingly deduction u/s. 80HHC had been claimed for the part of the year only up to 13.12.2001. 4.2. I find that similar claim for exemption u/s. 10B was made by the group Companies (i) V. N. Enterprises Ltd. (ii) Northern Projects Ltd. in the Asst. Yr. 2003-2003. After examining the claim in detail in the assessments of these companies, the AO had rejected the claim of those Companies. On appeal the CIT(A)-IV, Kolkata (my predecessor in office) by his order dtd. 23.05.2008 in the case of Northern Projects Ltd. in appeal No. 47/CIT(A)-IV/06-07 has also upheld the action of the AO after dealing with all aspects of the issue in extensor. This issue is dealt with in Paras 3 4 of the appellate order for the said Asst. Yr. 2003- 04 in the case of Northern Projects Ltd. The appellant's submissions in this case are identical to those made in the appeal of the said group company Northern Projects Ltd. for Asst. Yr. 2003-04. I find myself in complete agreement with the said decision of my predecessor. Respectfully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was exclusively engaged in blending and packing of tea for export and was not manufacturing or producing any other article or thing. It was recognised as a 100% EOU division and the Department had no case that the assessee's unit engaged in export of tea bags and tea packets was not a 100% EOU. If exemption was denied on the ground that products exported were not produced or manufactured in the industrial unit of the assessee's 100% EOU, it would defeat the very object of sections 10B of the Act. 36. We, in view of the above, hold that when the products for which the assessee's unit is recognized as a 100% EOU are tea bags, tea in packets and tea in bulk packs and the assessee is exclusively engaged in blending and packing of tea for export may not be manufacturer or producer of any other article or thing in common parlance. However, for the purpose of Section 10A, 10AA and 10B, we have to consider the definition of the word manufacture as defined in Section 2(r) of SEZ Act, Exim Policy, Food Adulteration Rules, 1955, Tea (Marketing) Control Order, 2003, etc. We also find that the definition of 'manufacture' as per Section 2(r) of the SEZ Act, 2005 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03/2007, which is given in assessee's paper book at pages 255 to 263 and particularly he drew our attention to following para of the remand report, wherein the AO has discussed the fact as under:- The facts of the case - as they emerge from the records as well as the assessee's submission in the form of a paper book - are that the appellant company purchases tea from auction centres located in various parts of the country and then the teas of different qualities / grades as selected are laid down on the floor of the Warehouse. Thereafter, the tea of one type/grade are mixed/blended with another type/grade of tea to achieve the required standard of tea - on the basis of Blendsheets as selected by experts. Subsequently, after completion of each blend the tea is then packed, as per buyers' requirement in the packing materials procured from different suppliers and even imported and then stuffed in containers for onward transmission to port for shipment to overseas buyers. In the background of these facts, the assessee has pleaded that such mixing / blending /packing amounts to processing of goods. Mentioning further that the expressions 'manufacture' and / ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39; programme in Iraq. Explanation to Sec. 37(1) is squarely applicable here. Illegal business expenses for legal business are not allowable. 7. 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 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 payme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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