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TMI Blog2019 (10) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... in mind the decision of the Tribunal and the Hon ble High Court in assessee s own case.- Appeal filed by the assessee is allowed for statistical purpose. - ITA No.5359/Del/2018 - - - Dated:- 26-9-2019 - Sh. R. K. Panda, Accountant Member For the Appellant : Sh. Satyajeet Goel, CA For the Respondent : Sh. S. L. Anuragi, Sr. DR ORDER PER R.K. PANDA, AM: This appeal filed by the assessee is directed against the order dated 16.05.2018 of the CIT(A)-42, New Delhi relating to A.Y. 2011-12. 2. Facts of the case, in brief, are that the assessee is a company and engaged in the business of manufacturer and exporter of readymade garments. It filed its return of income on 29.09.2011 declaring total income of ₹ 2,95,330/-. During the course of assessment proceedings the Assessing Officer noted that the assessee company has claimed deduction of ₹ 46,22,783/- u/s. 10 B of the IT Act. He observed that an order dated 27.09.2013 was received from the Development Commissioner, Noida, Special Economic Zone that a penalty of ₹ 40 lacs was imposed on the assessee under the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hievement of positive Net Foreign Exchange (NFE) in terms of the provisions of para of the FTP; that they failed to draw entitlement for DTA sale; if any, of finish products/scraps/waste products/by-products in terms of the provisions of para 6.8 of FTP. In view of above, since the assessee company has not followed the rules regulations meant for 100% Export Oriented Unit (EOU), therefore, deduction of ₹ 46,22,783/- claimed u/s.10B of the IT Act is disallowed. 3. Similarly the Assessing Officer made addition of ₹ 46,82,369/- on account of duty drawback on the ground that (a) it is only the profit and gains derived by 100% export oriented under taking eligible for deduction u/s. 10B. (b) Receipt of duty drawback is attributable to but is no way derived from the export of article or things. (c) It is an ancillary profit of the exporter and it is not derived from export business within the ordinary meaning in the course of a business. (d) The duty drawback income is not earned on account of export of articles or things and further no foreign exchange can be brought into India by earning sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (v) The duty drawback against the exports as well as duty on D.T.A clearances and any other benefits availed during the period of operation as on EOU may be looked into by the appropriate jurisdictional authorities; and (vi) I impose of penalty of ₹ 40,00,000/-(Rupees Forty Lakhs Only) under the provisions of section 11 of the FTDR Act, 1992 read with the Para 6.6.1(c) of Foreign Trade Policy 2009- 14 for the misuse of the LOP and other deeds discussed above. The unit should pay this penalty immediately on receipt of this order. 5.5 The appellant took a position that the aforesaid order of Development Commissioner was issued beyond the jurisdictional power of the said authority. The appellant clarified that the duty drawback is allowable as export income u/s 10B of the Act as decided by CIT(A)/Hon'ble ITAT for FY 2008-09 2009-10. Further, the appellant emphasized that the letter of permission is sufficient to claim deduction u/s 10B of the Act. The assessee company reiterated that it has not taken any direct/ I indirect benefit in the scheme under reference except for claiming the exemption u/s 10B of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be not compliant to the provisions of Foreign Trade Pplicy. Accordingly, as per the order of the Development Commissioner, NOIDA Special Economic Zone, Noida, the EOU status is in dispute in view of the cancellation of LOP in terms of rule 10 of Foreign Trade(Regulation rules 1993 read with Section 9(4) of FTDR Act 1994 and in terms of para 6 of LUT executed by the unit read with para 6.6.1(c) of the Foreign Trade Policy. 5.9 In the backdrop of the discussion above, I find that the decision of Hon'ble Delhi High Court in the case of the assessee is distinguishable on facts as the findings of Development Commissioner were not on record at the time of decision of Hon'ble Delhi High Court. Accordingly, I hold that the AO has rightly disallowed exemption under section 10B of I. T. Act by relying upon the order of Development Commissioner dated 27.09.2013 in this case. Hence, the ground of appeal is dismissed. 6. Statistically, the appeal stands, dismissed. 5. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds of appeal :- 1. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of deduction solely on the basis of the order dated 27.09.2013 passed by the Development Commissioner, Noida Special Economic Zone as per which the assessee was allegedly found to be violating provisions of the Customs Act. 1962. However, the Assessing Officer has never disputed the manufacturing and export activity of the assessee company which is the pre-requisite condition for claiming deduction u/s.10B of the IT Act. He submitted that the conclusion of the Assessing Officer is based mainly on the order of Development Commissioner. He submitted that the assessee has been duly granted the LOP which was operative during the year under reference. Relying on various decisions he submitted that in the case of special deductions, Principle of consistency must be applied and followed. Further he submitted that the order of the Development Commissioner, SEZ Noida is in the context of violation of Customs Act 1962 and the same has no relevance or bearing to the issue of claim of deduction u/s.10B of the IT Act. Relying on various decisions he submitted that the provisions of Income Tax Act 1961 and Customs Act are independent of each other and any violation of Custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions cited before me. I find the Assessing Officer in the instant case disallowed the claim of deduction u/s.10B of the Act on the ground that the assessee has not followed rules and regulations for 100% export oriented unit (EOU). Similarly he also rejected the claim of deduction of duty drawback amounting to ₹ 42,80,369/- on the ground that such duty drawback are not eligible for deduction u/s. 10B of the IT Act. I find the Ld. CIT(A) upheld the action of the AO, the reasons of which are already reproduced in the preceding paragraph. It is the submission of the Ld. Counsel for the assessee that the provisions of customs Act and income tax act are different and violation of the provisions of the Customs Act will not disentitle the assessee to claim the deduction u/s. 10B of the IT Act. It is also the submission of the Ld. Counsel for the assessee that the order of the Development Commissioner, Noida SEZ is under challenge and it has not attained finality. It is also the submission of the Ld. Counsel for the assessee that the orders of the Tribunal for the preceding assessment years has been upheld by the Hon ble High court in assessee s own case for A. Y. 2008-09 and 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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