Calcutta H.C : Where it was not apparent from records that assessee was a 100 per cent EOU or not, matter was to be remanded back for deciding issue of deduction under section 10B

High Court Of Calcutta

CIT, Kolkata –I Vs. J. E. Enterprises (P.) Ltd.

Section 10B

Girish Chandra Gupta And Arindam Sinha, JJ.

ITAT No. 156 Of 2013

Ga No.3108 Of 2013

May  2, 2014

JUDGMENT

1. The Court : The subject matter of challenge in this appeal is a judgment and order dated 30th April, 2013 by which the learned Tribunal, following an earlier decision allowed the claim of the assessee for exemption under section 10B of the Income Tax Act. Aggrieved by the order of the learned Tribunal, the Revenue has come up in appeal.

2. Mr. Saraf, learned Advocate appearing for the Revenue submitted that the view taken by the learned Tribunal is patently contrary to the Statute. In order to claim benefit under section 10B of the Income Tax Act, one of the requirements is to be found in Clause (iv) of Explanation-II under sub-section (8) of Section 10B of the Income Tax Act which reads as follows:

” ‘hundred per cent export-oriented undertaking’ means an undertaking which has been approved as a hundred per cent export-oriented undertaking by the Board appointed in this behalf by the Central Government in exercise of the powers conferred by section 14 of the Industries (Development and Regulation) Act, 1951 (65 of 1951), and the rules made under that Act;”

3. Mr. Saraf contended that the assessee does not admittedly have approval as 100% Export Oriented Undertaking by the Board appointed by the Central Government in exercise of powers conferred by Section 14 of the Industries (Development and Regulation) Act, 1951 and the Rules made thereunder. He drew our attention to the notification being S.O. 25(E) dated January 13, 1981 by which the Board for granting approval was re-constituted, which reads as follows:

“Board of Approval for Hundred per cent Export Oriented Undertakings.

Chairman

(1) Secretary, Ministry of Commerce.

Members

(2) Secretary, Department of Industrial Development or his nominee.

(3) Secretary, Department of Company Affairs or his nominee.

(4) Secretary, Planning Commission or his nominee.

(5) Secretary, Ministry of Finance, Department of Economic Affairs or his nominee.

(6) Secretary, Department of Science & Technology or his nominee.

(7) Secretary, Technical Development, Directorate General of Technical Development or his nominee.

(8) Chairman, Central Board of Excise and Customs or his nominee.

(9) Development Commissioner, Small Scale Industries or his nominee.

(10) Chief Controller of Imports & Exports or his nominee.

(11) Secretary of the administrative Ministry concerned or his nominee.

Member-Secretary

(12) Joint Secretary incharge of Secretariat for Industrial Approvals.”

The assessee has relied upon, as would appear from the assessment order, the following:

“A letter was written to the General Manager, District Industries Center, Directorate of Cottage and Small Scale Industries requesting them to state whether they have the authority to issue certificate for the purpose of deduction us/10B of the I.T. Act, 1961. In response the General Manager, District Industries Center, vide his letter dated 04.07.2005 categorically stated that the General Manager is merely the registering authority for allowing permanent/final Small Scale Industries Registration Certificate to the SSI units approached for this purpose and is not authorised in any other way. He also referred to the point No. 7 on the overleaf of the said registration certificate which reads as “this certificate does not confer or accrue any right to the applicant and it cannot be treated as proof in any statutory requirement”.

5. It is, therefore, crystal clear that the requisite approval was not possessed by the assessee.

6. Mr. Saraf contended that the view taken by the learned Tribunal amounts to re-writing the law which the learned Tribunal has no competence to do. Therefore, the view taken by the learned Tribunal that the assessee could get the advantage even without the requisite approval is altogether bad according to him.

7. Mr. Ananda Sen, learned advocate appearing for the assessee made two fold submissions – (a) that there can be no doubt that the assessee is hundred percent export oriented undertaking. The assessee is not claiming any benefit which is not contemplated by Section 10B. There has been substantial compliance and, therefore, this Court should not interfere with the order under challenge; (b) In the event, this Court is inclined to set aside the order, the matter should be remanded to the Assessing Officer to examine whether the assesse is entitled to any other benefit under the provisions of the Income Tax Act, regard being had to the fact that the assessee is a hundred percent export oriented undertaking.

8. The first submission of Mr. Sen cannot obviously be accepted. Mr. Saraf is right in contending that the learned Tribunal could not have rewritten the law nor could have accepted anything in lieu of what was required by the statute. Therefore, the view of the learned Tribunal is wrong and is, therefore, set aside.

9. The second submission advanced by Mr. Sen was not seriously disputed by Mr. Saraf. The order under challenge and the order passed by the CIT (Appeal) and the Assessing Officer are all set aside. The matter is remanded to the Assessing Officer to consider whether the assessee was entitled to any other benefit under the Act on the basis that cent percent profits were earned from exports.

10. We, however, should not be deemed to have expressed any opinion either on the fact or on law or on the premise that the assessee is a hundred percent export oriented undertaking. All questions would remain open to be considered by the authorities.

[Citation : 366 ITR 571]