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TMI Blog2023 (2) TMI 910X X X X Extracts X X X X X X X X Extracts X X X X ..... yable at the end of the accounting period, therefore, the addition sustain by the is illegal and against the law. 4. Ground That the amount of TDS was paid later on as such should have allowed in the year in which the amount was paid, evidence thereof was before the CIT(A) and lower deduction certificate was admitted by the AO in the order. 5. Ground That the disallowances made by the Assessing Officer and sustain by CIT(A) u/s 801B is illegal and against the law. 6. Ground Without prejudice the matter of allowability of section 801B of the Income Tax Act is pending before The Honorable Supreme Court/High Court therefore the decision as pronounce may kindly be applied in the year under consideration. 7. Ground That the AO and CIT(A) should not have restricted the claim to Rs. 473840.00, because the claim was in accordance with the law. 8. Ground That the CIT (A) should have allowed the deduction u/s 80LB of the IT Act as claimed in the return of income. 9. Ground That the charging of the interest is illegal and against the law." 3. None appeared on behalf of the assessee however, the Bench decided to proceed the matter on merit based on the materials available on recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e grounds of appeal are decided hereinafter. 4.1 Grounds of appeal no. 1: this is a general ground of appeal and is not required to be adjudicated separately. 4.2 Ground of Appeal No. 2 & 3: These grounds of appeal assail the disallowance made by the AO u/s 40(a)(ia) of the Act (wrongly mentioned by the assessee as section 48(a)(ia) of the Act). The assessee had claimed deduction for exhibition expenses of INR 1,74,509/-. These expenses were paid to M/s Export Promotion Council for Handicraft. As per the relevant TDS certificate, the assessee was required to deduct TDS @0.01% on these payments. The AO noted that the assessee has not deducted TDS and therefore, the expense was not allowable as a deduction u/s 40(a)(ia) of the Act. 4.2.1 In the appellate proceedings, the assessee has not disputed the above facts but has claimed that M/s Export Promotion Council for Handicraft 'must have paid tax' on this amount. This argument of the assessee is self-serving and is not backed by any evidence. Hence this argument of the assessee is rejected. It is also seen that the submissions of the assessee do not mention any Form 26A obtained by the assessee in terms of Rule 31ACB of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertaking for the purpose of deduction under section 80IB and hence the AO reduced the claim of deduction u/s 80IB to INR 4,73,840/- only. In the written submissions the assessee has simply stated that the matter is sub judice in its case in earlier years. 5.1 The above facts have been carefully considered. It is noted that the Hon'ble Supreme Court is directly on the issue in the case of Liberty India vs. CIT 317 ITR 218 (SC) wherein it was held that, "Analyzing the concept of remission of duty drawback and DEPB, we are satisfied that the remission of duty is on account of the statutory/policy provisions in the Customs Act/Scheme(s) framed by the Government of India. In the circumstances, we hold that profits derived by way of such incentives do not fall within the expression "profits derived from industrial undertaking" in section 80-IB. In para 24 of the Supreme Court's Order, it was concluded that, "In the circumstances, we hold that duty drawback receipt/DEPB benefits do not form part of the net profits of eligible industrial undertaking for the purposes of section 80-I/80- IA/80-IB of the 1961 Act." 5.2 It is also noted that subsequent decisions of various High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l hearing on September 26, according to the order of the bench, I am sending this written argument with attachment. During the year three issues are there: 1. Disallowances charges u/s. 40(a) (ia), 2. Disallowance of deduction 80IB 3. Charging of Interest Disallowances charges u/s. 40(a) (ia), The first issue is in respect of disallowance of expenses amounting to Rs. 174509.00 u/s. 40(a) (ia), on account of Exhibition charges on account of the reason that tax has not been deducted. Regarding Exhibition charges u/s, 40(a) (ia), I am producing Balance Sheet of the assessee for the year under consideration for your kind perusal. From the perusal of the same, you will observe that there is no payable TDS or amount of expenses at the end of the financial year. Therefore, the provision of Section 40(a) (ia) of I.T. Act is not applicable. Therefore the addition is illegal and against the law. Furthermore further without prejudice to above, it is submitted that the assessee paid the amount of exhibition charges to M/s. Export Promotion Council for Handicraft. The recipient is assessed to Income Tax under PAN AAACE1747M. The assessment of the M/s. Export Promotion Council for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being attached you are therefore requested that necessary direction may kindly be issued to allow the deduction in the year of deduction of tax. The Income Tax Officer himself accepted that the certificate of LOWER DEDUCTION CERTIFICATE WAS ALLOWED. THIS FACT WAS ADMITTED BY THE AO. I AM ATTACHING A COPY OF CHALLAN, A COPY OF THE PROFIT AND LOSS ACCOUNT, A COPY OF CHALLAN, AND PROOF OF E-PAYMENT IN RESPECT OF PAYMENT OF 0.01 AMOUNTS TO RUPEES 20 DEPOSITED ON 09.07.2016. THIS WAS ALSO ATTACHED WITH THE WRITTEN SUBMISSION SUBMITTED BEFORE THE CIT (A)-III, JAIPUR DATED 04.03.2020. You are requested to direct to allow the expenses in the year of payment of TDS. Disallowance of deduction 80IB As far as the exemption of 80IB is concerned, it is submitted that the matter is pending before the Supreme Court which was decided by the ITAT against the assessee and has not been decided yet. Therefore, you are requested to order in this our's case that the order passed by the Supreme Court should be implemented this year itself also. In the earlier years, the orders of the Income Tax Appellate Tribunal are against the taxpayer and the taxpayer is in appealed in the High Court agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 473840/- by the AO and confirmed by the CIT (A). In addition, the jurisdictional High Court of Rajasthan has also taken the same view. In the case of CIT vs Garment Crafts (2016) 68 Taxmann.com 222(Raj) the HC has reiterated that Duty Drawback and DEPB are not eligible for deduction u/s 801B of the Act. Considering the above discussion, it is humbly requested that both the grounds of appeal may be dismissed and the order of the CIT(A) maybe upheld" The ld. DR has also submitted following decision for support the contentions so raised:- * Liberty India vs. CIT *\(2009) 183 taxman 349 (SC). * CIT vs. Sikandarkhan N. Tunvar (2013) 33 Taxmann.com 133 ( Gujarat H.C.). * CIT vs. Crescent Export Syndicate (2013) 33 taxmann.com 250 ( Culcutta H.C.) * CIT vs. Garments Crafts (2016) 68 taxmann.com 222 ( Raj. H.C.) 8. We have persuaded the written submission filed by both the parties and have gone through the rival contentions. We have also persuaded the decisions relied upon and also the orders of the lower authorities. This is an appeal filed by the assessee. The bench has noted that in the written submission filed and signed by the ld.AR of the assessee which is dated 26.09. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I am regularly requesting the Commissioner by one reason or the other same have not so far been decided. We have submited more than one dosen application to CIT (A) the Chief Commissioner Faceless, New Delhi was also requested vided letter dated 20.05.2022 with a copy to ITAT Jaipur Bench Jaipur. The Hon'ble Tribunal before whom appeal is now pending is also not liberal in granting the adjournment on the ground. In case the ITAT decide the appeal the assessee shall be deprived from his right. YOU ARE REQUESTED TO DIRECT THE CIT (A) TO DECIDE THE RECTIFICATION APPLICATION IN APPEAL NO 416/JPR/2016-17. Now the last date given by the Tribunal is 03.11.2022 and such you are requested to kindly directly Commissioner of Income Tax Appeals Faceless to decide the rectification application which is pending since long back.' Hope you will consider the request Thanking you, Date: 29.9.2022 &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decided based on the written submission already filed. Taking into consideration all these facts this appeal of the assessee decided based on the written submission filed by both the party. 8.3 We have persuaded the written submission, orders of the lower authorities and legal decision relied upon by both the parties to drive home their contentions. The bench noted that the assessee time and again contended that the matter was argued by him on 26.09.2022 but the same as it evident the assessee seek time on that date. Therefore, the contentions raised are far from truth and against the records. The assessee was given time to follow up for rectification application which is not upcoming and based on that fact the matter is decided based on the contentions filed in the written submission. The bench noted that the ground no. 1 is general in nature and ground no. 9 is consequential in nature and therefore, it did not require any specific adjudication. Ground no. 2, 3 & 4 relates to disallowance made u/s. 40(a)(ia) of the Act. Before us on this ground the ld. AR of the assessee contended that "For the purpose of lower deduction of tax u/s. 197 of the income tax act, the receipient M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipt which is found to be not income/profit derived from the business of the eligible undertaking has to be excluded for the purpose of computing the deduction u/s 80IB. Hence, we find that the case of the assessee does not fall in the category where the Assessing Officer has accepted the business of the assessee undertaking as eligible for deduction u/s 80IB in the initial year but has taken a difference stands in the subsequent years. Further, a year before us is not the first year in which the claim of the assessee u/s 80IB in respect of Vishesh Krishi Upaj Yojana and Drawback Duty has been denied but this was denied in the earlier 16 ITA No. 777 & 778/JP/ 2017. M/s Saraf Export, RIICO Industrial Area. years and for the Assessment Year 2008-09, the matter has been carried to the Hon'ble Jurisdictional High Court but the assessee could not succeed. Hence, we do not find any substance in the ground no. 4 of the assessee's appeal same is dismissed. Respectfully, following the order of the co ordinate bench in the case of the assessee ground no 5, 6, 7 & 8 stands dismissed. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 20/02/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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