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TMI Blog2018 (9) TMI 1859X X X X Extracts X X X X X X X X Extracts X X X X ..... : Rs. 1,90,77,294/- Asstt.Year 2006-07 : Rs. 15,10,11,158/- Asstt.Year 2007-08 : Rs. 14,80,20,329/- 3. Brief facts of the case are that the assessee-company at the relevant time was engaged in trading of recycled non-ferrous metals, scrap etc. It used to import various types of scrap such as mixed metal scraps, cable scrap, transformer scrap etc. from international market and employs various processes both manual and mechanical on the imported goods. Thereafter, it re-exported these goods. In the assessment year 2002-03, it has filed its return of income on 31.10.2002 declaring total income at Rs. 51,83,600/-. It has claimed deduction under section 10B amounting to Rs. 1,57,70,098/- and deduction of Rs. 22,21,542/- under section 80IB of the Act. The assessment order was passed under section 143(3) r.w.s. 147 on 31.3.2006 in which deduction under section 10B and 80IB were partially allowed. The AO was of the view that export of scrap by the assessee did not amount to 'manufacture' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction allowable to the Respondent-assessee, M/s. International Stones India Pvt. Ltd., in the present case, the question as framed by the Revenue in the Memorandum of Appeal deserves to be reframed in the following manner:- "Whether in the facts and circumstances of the case, the Respondentassessee is entitled to deduction u/S.10B of the Act in respect of the 'Deemed Export' of goods made by it during the period in question through a third party or not?". 7. At the outset, we may note that a similar controversy came to be decided by the co-ordinate Bench of this Court in the case of Tata Elxsi Ltd. v. Asstt. CIT [2015] 127 DTR 327 (Kar), the Division Bench of this Court for the purpose of S.10A of the Act held the assessee entitled to the benefit of such deduction in respect of "Deemed Exports" made by it, while the goods in question were sold by the assessee M/s. Tata Elxsi Ltd., to another STP unit within India M/s. Texas Instruments India Pvt. Ltd., (TIIPL) for the purpose of export outside India. 8. The Division Bench of this Court discussed in detail the definition of 'Export Turnover', the Exim Policy and held that the purpose of giving the deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not have any merit and the said contention deserves to be rejected and the same is accordingly rejected." 8. Respectfully following judgments of Hon'ble Karnataka High Court, we allow this common ground raised by the assessee in all three years. The ld.AO shall grant deduction to the assessee on sales made to other EOUs by treating them as "deemed export". 9. No other issues were argued by the ld.counsel for the assessee, hence, appeals of the assessee are partly allowed. 10. We now take the appeals of the Revenue i.e. ITA No.ITA No.1072/Ahd/2010 (Asstt.Year 2002-03). 11. In this year, Revenue has taken seven grounds of appeal. Grievance relates to only two issues viz. (a) the ld.CIT(A) has erred in deleting the addition made on account of suppression of sales amounting to Rs. 15,82,45,177/-, and (b) the ld.CIT(A) has erred in deleting the addition of Rs. 1,14,36,789/- added on account of under valuation of closing stock. As observed earlier, during the pendency of assessment proceedings, after remand from the ITAT, Central Excise authorities have made an investigation and intimated the AO with a copy of show cause notice showing that the assessee was indulged in unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that, it is seen that the order passed by the Commissioner of Central Excise was challenged before the Customs &Central Excise Tribunal, Ahmedabad and vide order dtd. 12/08/09 the order of Commissioner of Central Excise was set aside because no opportunity of cross examination etc. was allowed to the appellant even by the Commissioner of Central Excise. This order was also produced before the Assessing Officer, but still the additions and adjustments were made. Since the entire order of the AO is based on the order of Commissioner of Central Excise, Ahmedabad, which no longer subsists, the entire additions and adjustments have no base at all because the entire thing is based on the finding of Central Excise Authorities. In view of the order of Customs & Central Excise Appellate Tribunal, the amounts considered as under invoicing or under valuation of stock etc. does not survive and, therefore, additions made by the AO amounting to Rs. 15,82,45,177 on account of suppressed sales, Rs.l,14,36,789 on account of under valuation of stock and adjustment on account of under invoicing amounting to Rs. 5,34,99,909 has no basis and all these additions and adjustments are directed to be delet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue on 12.8.2009 i.e, more than nine years have expired. We have confronted the ld.DR whether any steps have been taken during this period of nine years by the AO for collecting any other conclusive material. The DR was unable to supply any other information. Therefore, we are of the view that a roving inquiry cannot be allowed in the affairs of the assessee endlessly. It was for the Revenue to bring concrete material on the record on which any liability can be fastened upon the assessee. The Revenue failed to bring any evidence. We could appreciate the request of the ld.CIT-DR for remitting the file to the AO if after the order of the ld.CIT(A) in the year 2010 the Revenue was able to lay its hand on any material which could be produced before the Tribunal by way of additional evidence. It appears that proceedings remained dormant even after the order of the ld.CIT(A) when additions have been deleted. No efforts have been made to collect any further information for justifying the challenge to the order of the ld.CIT(A). In such situation, we cannot remit the issue to the file of the AO for re-investigation. We do not find any merit in these grounds of appeal. They are reject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout adjudicating on the ground of appeal taken by the revenue?" 18. On detailed analysis, Hon'ble High Court has answered question nos.1, 3 and 4 in favour of the assessee. With regard to question no.2 the Hon'ble Court has observed that the Tribunal has just remitted the issue to the file of the AO, and therefore, order of the Tribunal does not call for any interference. While dealing with question no.1, Hon'ble Court has examined scope of expression "manufacture" in detail. Hon'ble Court has held that activities undertaken by the assessee in segregating the scrap and carrying out process activities all that would amount to manufacture of article or thing whose export would entitle it for grant of deduction under section 10B as well as whose sales would entitle the assessee to claim deduction under section 80IB. 19. Similarly, with regard to the issue whether a new plea could be taken up before the Appellate Authority, Hon'ble Court has answered the question nos.3 and 4 against the Revenue and in favour of the assessee. Respectfully following the judgment of Hon'ble High Court in assessee's own case for the assessment years 2002-03, 2003-04 and 2004- 05, we do not find any m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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