9911796707
TMI Blog2024 (12) TMI 381X X X X Extracts X X X X X X X X Extracts X X X X ..... violations to the principles of natural justice, in our considered view the same is liable to be set aside. Secondly, even otherwise, on merits we observe that the assessee has placed on record several judicial precedents in support of the contention that the case of Liberty [ 2009 (8) TMI 63 - SUPREME COURT] is not applicable for computation of claim of exemption under section 10AA. Further, even on the basis of facts placed on record is seen that the assessing officer had specifically enquired into the aspect of computation of claim of exemption u/s 10AA of the Act and after taking into consideration the written submissions/legal arguments placed by the assessee on record, took a legally plausible view and decided not to disturb the claim of deduction u/s 10AA of the Act. We also observe that several judicial precedents have held that once the assessee has opted for VSV scheme, and paid due taxes thereon, then the tax proceedings for this year would come to a close and thereafter, the same issues cannot be re-agitated by taking recourse to 263 proceedings. In the point to be noted is that this is the 9th year of claim of deduction by the assessee and therefore, even from point o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his regard, the appellant had relied on the direct decision of the Hon'ble Mumbai ITAT in case of Barclays Bank PLC vs. CIT 139 taxmann.com 503 (Mumbai), wherein the Hon'ble ITAT has clearly held that an assessment order passed in accordance with the directions issued by DRP, cannot be revised by the Commissioner u/s. 263. 4. That the learned PCIT grievously erred in not considering the merits of the elaborate submissions filed by the appellant in response to the Notice u/s 263 highlighting the fact that the learned A.O. had, while finalizing the original assessment u/s. 143(3), after due consideration taken a conscious decision not to make any addition or disallowance on the account as sought to be suggested by the learned PCIT in her notice u/s. 263. 5. Without prejudice to the legal challenge as referred to hereinabove, even on the merits of the case, the learned PCIT was not justified in holding that the Assessing Officer had erred in allowing claim of the appellant u/s. 10AA in respect of income from Export incentives of Rs. 5,74,38,113/- and other income of Rs. 8,85,67,574 (comprised of income from sale of scrap of Rs. 10,64,295 and Misc. Income of Rs. 8,75,03,279). T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in which the unit begins production or provision of services. For the next five assessment years, the deduction is reduced to 50%. Principal CIT was of the view that the Supreme Court, in its ruling in the case of Liberty India vs. CIT (317 ITR 218) held that the words derived from are narrower than attributable to and intended to cover only the first degree of connection with the eligible profits. In this case, the Supreme Court stated that Duty Drawback and the sale of DEPB licenses were incentives from government schemes and did not constitute profits derived from the industrial undertaking. Based on this ruling, Principal CIT was of the view that the export incentives and other income claimed by the assessee were not eligible for the exemption under Section 10AA. On perusal of the calculation, Principal CIT was of the view that the assessee had claimed excess exemption under Section 10AA by a sum of Rs. 7,08,83,828. This excess exemption was due to the inclusion of noneligible income, like export incentives which were part of government schemes like Duty Drawback and the sale of Duty Entitlement Pass Book (DEPB) licenses, in the calculation of 10AA claim. The profit before ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act specifically Section 80-IA rather than Section 10AA, which deals with a different calculation and framework for deductions. The assessee relied on the ruling in the case of ITO vs. Maker Marts (50 Taxmann.com 106), where the Income Tax Appellate Tribunal distinguished the Liberty India case in the context of Section 10AA. In that case, the Tribunal allowed the exemption claim for export incentives like Duty Drawback, explaining that the reasoning in Liberty India did not apply to Section 10AA. The Tribunal clarified that the section under consideration in Liberty India (Section 80- IA) did not prescribe a formula for computing profits, whereas Section 10AA provides a specific formula for determining profits derived from export business. This distinction was important in determining that export incentives should be included in the exemption calculation under Section 10AA. The assessee also drew the attention of Principal CIT to the decision of the Hon ble Bombay High Court in the case of CIT vs. Arts Craft Exports (22 Taxmann.com 53), where the Revenue had raised a similar issue based on Liberty India, but the learned Standing Counsel for the Department conceded in Court tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sponse to which the assessee had filed its replies and the assessing officer took a well informed decision taking into consideration the assessee s particular set of facts, then the assessment order cannot be held to be erroneous insofar as prejudicial to the interests of the Revenue. 7. The third argument taken by the assessee during the course of 263 proceedings was that the assessee had settled this matter by opting for resolution under the Vivad Se Vishwas (VSV) Act. As a result of this resolution, the assessee submitted that no revision proceedings under Section 263 can be initiated. The assessee had applied under VSV Scheme and had received a certificate in Form-3 dated March 12, 2021, under the VSV Act, issued by the Hon'ble Principal Commissioner of Income-tax, Ahmedabad-3, certifying the settlement of the dispute for the relevant A.Y. 2016-17. Additionally, the assessee was granted an Order for Full and Final Settlement of Tax Arrears under Section 5(2) and Section 6 of the VSV Act, which calculated that the 'Amount of Tax Arrear' for A.Y. 2016-17 was zero. The assessee placed reliance on the ruling of the Hon'ble Gujarat High Court in the case of PCIT v. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of mind by the assessing officer on the claim of deduction under section 10AA of the Act and hence was not erroneous and prejudicial to the interest of the Revenue, secondly the assessee had opted for VSV scheme and hence in the light of various judicial precedents which have held that once the assessment year under consideration has been settled in the VSV scheme then that assessment order cannot be subject matter of revision under section 263 of the Act, thirdly the assessee had given detailed written submissions in which it was submitted that the Liberty decision on which reliance was sought to be placed by Principal CIT was rendered on a different set of facts and involving different sections under the Act which are differently worded and hence have no applicability of to assessee s set of facts and finally the assessee had also submitted in the 263 proceedings that an assessment order passed pursuant to directions of DRP (consisting of panel three Commissioners) cannot be subject matter revision under section 263 of the Act. However, from the contents of the order passed under section 263 of the Act, it is seen that Principal CIT has not discussed or rebutted any of the afor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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