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TMI Blog2014 (8) TMI 875X X X X Extracts X X X X X X X X Extracts X X X X ..... lete the remaining assessment. The object/basis for giving that finding, are that once the authority higher in rank seized with the matter pending before the subordinate authority for adjudication, the subordinate authority is ceased with the jurisdiction to proceed further in that matter - The reason for doing so is quite obvious as once the higher authority has started applying his mind to the issue in dispute, the subordinate authority cannot proceed with the matter - If it is not done, there would be chaos in the administration of justice - the DCIT has completed the one mode of assessment by issuing intimation u/s 143(1) of the Act and the CIT has initiated and completed the second mode of assessment - assessment by the higher authority may be possible even if the proceedings were initiated by the subordinate authority who is also having concurrent jurisdiction – thus, the order of the CIT(A) is upheld – Decided against assessee. Deduction u/s 80IB - duty drawback and DEPB benefits – Held that:- Following the decision in Liberty India vs. CIT [2009 (8) TMI 63 - SUPREME COURT] - receipts by way of duty drawback and DEPB benefits do not form part of the net profits derived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance of a sum of ₹ 26,51,310/- on account of interest paid in Jajmau unit and allowing the same in Banther unit in view of the fact that the deduction u/s.80IB was denied by the Assessing Officer and confirmed by the CIT(A). 3. Because the CIT(A) has erred in law and on facts in not appreciating the facts that due to non allowbility of interest in Jajmau unit instead of Banther unit, the deduction u/s.80IB has been short computed by the said amount of interest. 3. The assessee has moved an application for admission of the following additional grounds in both the appeals:- 1. Because the Notice u/s 143(2) has been issued not because the AO felt necessary and expedient but on the instructions of CBDT, the notice issued is bad in law, the assessment be annulled. 2. Because Notice u/s 143(2) issued by JCIT-1 is beyond the period as laid down therein, and served thereafter, the order passed u/s 143(3) dated 02.06.2008 by JCIT-1, Kanpur is without jurisdiction bad in law, be annulled. 3. Because no order u/s 127 having being passed by the CIT, Kanpur transferring the jurisdiction from DCIT-I to JCIT-1, Kanpur, the order passed by JCIT is without jurisdiction hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings. 7. Having given a thoughtful consideration to the rival submissions and from a careful perusal of record, we find that this issue has been examined by the Tribunal in the assessee s own case relating to assessment year 2005-06, in which it has been held that assessment by an higher authority may be possible even if the proceedings were initiated by a subordinate authority who is also having concurrent jurisdiction. In the instant case, undisputedly assessment proceedings were initiated by the DCIT and the assessment was completed by the JCIT. Therefore, we find no defect in the jurisdiction of the Assessing Officer to complete the assessment. For the sake of reference, we extract the relevant portion of the order of the Tribunal in the assessee s own case in I.T.A. No.196/LKW/2011 as under:- 5. Having given a thoughtful consideration to the rival submissions and from a careful perusal of the relevant provisions of the Act and the orders of the authorities below, we find that DCIT, Range-1 has processed the return of income u/s 143(1) of the Act by making adjustments and issued the refund. Notice u/s 143(2) was issued and assessment was framed u/s 143(3) by the Jt.CIT, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y virtue of section 2(28C) of the Act includes the Addl. Commissioner of Income Tax. Subsequent to the notification dated 17th September 2001, the CBDT issued an order dated 16th May 2007 to the effect that in view of the increasing gap between the workload and scrutiny assessment, it has been decided to entrust the Range Heads with the responsibility of making assessments in top Revenue potential cases of the range to be selected on the basis of the returned income. 5.3 On the issue of concurrent jurisdiction, the Hon'ble Calcutta High Court in the case of Berger Paints India Ltd. (supra) had explained the meaning of expression concurrent to mean two authorities having equal powers to deal with the situation, but the same work cannot be divided between them. The relevant observations of Hon'ble Calcutta High Court are extracted hereunder: Concurrent jurisdiction means a subordinate authority can deal with the matter equally with any superior authority in its entirety so that either one of such jurisdictions can be invoked. It cannot be construed as concurrent jurisdiction when one part of the assessment will be dealt with by one superior officer and the other pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e regular assessment u/s 143(3) after issuing notice u/s 143(2) of the Act. Rest of the assessments are processed u/s 143(1) of the Act. Undisputedly, maximum assessments are framed u/s 143(1) where the Assessing Officer has issued the intimation after making a prima facie adjustment. Along with the intimation the Assessing Officer either raises the demand or issues the refund but whenever case falls within the guidelines issued by CBDT, it is to be taken for scrutiny and the assessment is required to be completed u/s 143(3) of the Act and for completing the assessment u/s 143(3), the Assessing Officer is required to issue a notice u/s 143(2) within a period prescribed u/s 143(2) of the Act. Thereafter the assessment is framed u/s 143(3) after providing proper opportunity of being heard to the assessee. Therefore, there are two mode of assessment and they are independent to each other. 7. We have also carefully examined the other judgments referred to by the assessee. In all those judgments, the proceedings for assessment was initiated by the authority higher in rank and rest of the assessment is completed by the Assessing Officer who is junior to the officer who has initiated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the case of Liberty India vs. CIT [2009] 317 ITR 218, it was held that receipts by way of duty drawback and DEPB benefits do not form part of the net profits derived from the industrial undertaking. Accordingly, the order of the ld. CIT(A) was confirmed by the Tribunal. Following the aforesaid order and the judgment of the Hon'ble Apex Court in the case of Liberty India vs. CIT (supra), we dismiss the grounds of the assessee relating to deduction under section 80IB of the Income-tax Act, 1961 (hereinafter called in short the Act ). 9. With regard to other grounds relating to interest debited to Banther unit is concerned, it was pointed out by the ld. counsel for the assessee that once the assessee is not entitled for deduction under section 80IB of the Act, it would not make any difference even interest was allowed to be debited in the Banther unit. Accordingly he did not press this ground and we, therefore, reject the same being not pressed. I.T.A. NO.385 386/LKW/2012: 10. These appeals are preferred by the Revenue against the respective order of the ld. CIT(A) on common grounds except the difference in quantum. Therefore, we extract the grounds raised in I.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wance to ₹ 1 lakh to cover up the minor discrepancy. 14. Similar is the position in the other case i.e. in I.T.A. No.386/LKW/2012. We accordingly confirm the order of the ld. CIT(A) in both the cases on this issue. 15. With regard to other ground relating to disallowance on account of depreciation and vehicle maintenance, we find that the Revenue has made disallowance of vehicle maintenance, depreciation on car and telephone expenses at 1/5th of the total claim of the assessee, which was reduced to 1/10th by the ld. CIT(A). 16. Since the element of personal use of vehicle and telephone cannot be ruled out, some disallowance is required to be made and the ld. CIT(A) has restricted it to 1/10th of the total claim of the assessee which we consider to be quite reasonable. We, therefore, do not find any valid reason to interfere with the order of the ld. CIT(A). Accordingly, we confirm the same. I.T.A. NO.336/LKW/2012: 17. This appeal is preferred by the assessee against the order of the ld. CIT(A) on the following grounds:- 1. Because the CIT(A) has erred in law and on facts in confirming the disallowance made by the AO in respect of deduction u/s.80IB of the IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment framed by the ACIT is illegal and deserves to be quashed. 21. The ld. D.R., on the other hand, has submitted that the ACIT and JCIT has concurrent jurisdiction and both the Officers have jurisdiction to frame the assessment. Therefore, there is no illegality if the assessment was completed by the ACIT though it was initiated by the JCIT. 22. We have heard the arguments advanced by the ld. Representatives of both the parties and the order of the Tribunal in the assessee s own case and we find that this aspect has already been examined by the Tribunal in the assessee s own case in I.T.A. No.196/LKW/2011. In that case, we have categorically observed that if the assessment proceedings are initiated by an authority higher in rank or at any point of time an authority higher in rank is seized with the matter, an authority junior in rank is ceased with jurisdiction and cannot frame the assessment. Therefore, if the assessment is done by an Officer junior in rank where the proceedings were initiated by an Officer senior in rank, the assessment will be invalid and illegal. Though we have already reproduced the relevant observations of the Tribunal in the foregoing paras, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court as well as by the Sessions Judge in respect of the same application for anticipatory bail. 7. We have also carefully examined the other judgments referred to by the assessee. In all those judgments, the proceedings for assessment was initiated by the authority higher in rank and rest of the assessment is completed by the Assessing Officer who is junior to the officer who has initiated the process for assessment. In those cases, it was repeatedly held that once the authority higher in rank has seized with the matter, the authority lower in rank forfeits its jurisdiction to proceed with the matter in any manner and to complete the remaining assessment. The object/basis for giving that finding, according to us, are that once the authority higher in rank seized with the matter pending before the subordinate authority for adjudication, the subordinate authority is ceased with the jurisdiction to proceed further in that matter. The reason for doing so is quite obvious as once the higher authority has started applying his mind to the issue in dispute, the subordinate authority cannot proceed with the matter. If it is not done, there would be chaos in the administration of j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of interpretation of prospective or retrospective nature of amendment in the statute as laid down by the Hon'ble Supreme court in the case of CIT Vs Gold Coin Health Food Pvt. Ltd.(2008) 304 ITR 308 (sc) and CIT Vs Moser Baer India Ltd.[2009] 315 ITR 460(SC). 4. That the Ld. Commissioner of Income Tax (Appeals)-II, Kanpur has erred in law and on facts in not appreciating the fact that the services rendered by the non resident agent to procure orders from foreign buyers are purely technical or managerial in nature. Therefore, the provision of section 9(1)(vii) is clearly applicable on the assessee. 5. That the Ld. Commissioner of Income Tax (Appeals)-II, Kanpur has erred in law and on facts in not appreciating the fact that the payment by the resident assessee in connection with its business in India to a person outside the country is nothing but a fee which has been paid by the resident assessee to the non-resident for the technical services rendered by him. 6. The Ld. Commissioner of Income Tax (Appeals)-II, Kanpur has erred in law and on facts in restricting the disallowances of ₹ 10,22,153/- made by the Assessing Officer on account of repair to machiner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are paid commission in foreign exchange by remitting the amount through bank. We find that the CIT (A) has considered the alleged admission in the reply of the assessee and has also perused the agreement from which he found that there was nothing, which could demonstrate that these agents were appointed as selling agents, designers or technical advisers for invoking the provisions of Section 9 (1) (vii) of the Act. The findings recorded by the CIT (A), which have been confirmed by the ITAT is quoted as below:- 5.3.2 The A. O. has also invoked the provisions of Section 9 (1) (vii) on the premise that such payments also full under FTS. In this regard she has observed that normally the exporter appoints the agents as his selling agent, designer technical adviser for his products. He has further observed that being commission agent required managerial acumen expertise and therefore, would be covered under Section 9 (1) (vii) of the Act as managerial services. On perusal of the assessment order and assessment folder, I find that the A.O. has not brought anything on record which could demonstrate that these agents had been appointed as selling agents, designers technical ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the present case the agents appointed by the assessee had their offices situate in a foreign country and that they did not provide any managerial services to the assessee. Section 9 (1) (vii) deals with technical services and has to be read in mat context. The agreement of procuring orders would not involve any managerial services. The agreement did not show the applicability or requirement of any technical expertise as functioning as selling agent, designer or any other technical services. There are no distinguishing feature in this case, nor do we find that the ratio of the Constitution Bench decision in Commissioner of C. Ex., Bolpur v. Ratan Melting Wire Industries, (2008) (231) E.L.T. 22 (SC) (para 6) is applicable in as much as in the present case there was no decision of the Supreme Court or High Court or any statutory provision, which was contrary to the circular, which was withdrawn on 22.10.2009. The questions of law are covered by the judgments of this Court cited as above, and are decided in favour of the assessee and a against the department. 26. We, therefore, following the aforesaid judgment of the jurisdictional High Court, decide the issue in favour o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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