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TMI Blog2025 (4) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the Hon'ble ITAT was justified in allowing Site Transfer Income of Rs. 19,61,98,000/- eligible for computing deduction u/s.10B without appreciating the fact that the expenses were incurred on account of material, labour and overheads by the assessee and also reimbursed by the AE alongwith mark-up could not be said to be receipts out of export of goods. Further, these expenses were incurred on various accounts in connection with seeking approval of US FDA, but the same though reimbursed by the AE was not on account of export of goods out of India. (iii) Whether the ITAT impugned order is bereft of reasons, and therefore, liable to be set aside ?" Question No. (i) 2. The petitioner is a wholly owned subsidiary of M/s. Watson Lab., USA and is engaged in the business of manufacturing and R & D facilities in India and also renders contract manufacturing services to its associate enterprises. 3. During the year under consideration, the assessee wrote off various advances which were given in earlier years in the course of its business and same could not be recovered. The claim was made under Section 36(1)(vii) of the Income-tax Act, 1961 ('the Act') and in the alternati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the respondent-assessee. 7. Question No.(i) therefore, is answered against the appellant-revenue and in favour of the respondent-assessee. Question Nos.(ii) & (iii) 8. Question Nos. (ii) and (iii) are related and, therefore, are disposed of by common reasoning. The respondent-assessee is eligible for deduction under Section 10B of the Act with respect to its Goa unit and Ambarnath unit. The respondent-asseessee has claimed deduction under Section 10B on "Site Transfer Income" of Rs. 19,61,98,000/- with respect to these two units. The DRP denied the deduction under section 10b on "Site Transfer Income" on the ground that same does not represent the income derived from the business of eligible unit. The Tribunal has allowed the claim in paragraphs 31 to 34 of its order. 9. Mr. Suresh Kumar, learned counsel for the appellant-revenue submitted that the tribunal has not given any reasons for allowing the claim of deduction under section 10b on "Site Transfer Income" and, therefore, the relief given by the tribunal without giving any reason would be contrary to the well settled principle that the appellate authority has to give reason which constitutes the heart of the decision. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded by the same Presiding Judge who authors the judgment. This certainly does not mean that when an appeal lies on facts, the appellate court is not competent to reverse a finding of fact arrived at by the trial Judge. As a matter of law if the appraisal of the evidence by the trial Court suffers from a material irregularity or is based on inadmissible evidence or on conjectures and surmises, the appellate court is entitled to interfere with the finding of fact. (See Madhusudan Das v. Narayanibai [(1983) 1 SCC 35 : AIR 1983 SC 114] ) The rule is - and it is nothing more than a rule of practice - that when there is conflict of oral evidence of the parties on any matter in issue and the decision hinges upon the credibility of witnesses, then unless there is some special feature about the evidence of a particular witness which has escaped the trial Judge's notice or there is a sufficient balance of improbability to displace his opinion as to where the credibility lie, the appellate court should not interfere with the finding of the trial Judge on a question of fact. (See Sarju Pershad Ramdeo Sahu v. Jwaleshwari Pratap Narain Singh [1950 SCC 714 : AIR 1951 SC 120]). Secondly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a, learned counsel for the respondent-assessee submitted that the Tribunal in paragraph 25 agreed with the submission of the assessee that the issue is covered by Special Bench and the same constitutes reasons for giving relief by the Tribunal and, therefore, the submission made by the appellant-revenue is not justified. 11. We have heard learned counsel for the appellant-revenue and respondent-assessee. The operative part of the Tribunal on this issue reads as under:- "We have heard the counsels for both the parties at length and we have also perused the orders passed by respective authorities, judgments relied by the parties and while taking into consideration the facts of the case, we are of the considered view that the Site Transfer Income is a part of business income earned by the assessee and is eligible for deduction while computing deduction u/s 10B of the Income Tax Act." 12. The Tribunal has discussed this issue from paragraph 31 onwards. In paragraph 31, the nature of the "Site Transfer Income" is mentioned. In paragraphs 32 and 33, the reasoning given by the AO and DRP is mentioned. In paragraph 34, the arguments of the assessee are reproduced and finally after rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Recording of reasons would also benefit the appellate court. As arguments bring things hidden and obscure to the light of reasons, reasoned judgment, where the law and factual matrix of the case are discussed, provides lucidity and foundation for conclusions or exercise of judicial discretion by the courts. The reason is the very life of the law. When the reason for a law once ceases, the law itself generally ceases. Such is the significance of reasoning in any rule of law. Giving reasons furthers the cause of justice and avoids uncertainty. 17. The Court held that the absence of reasons essentially introduces an element of uncertainty and dissatisfaction and gives entirely different dimensions to the questions raised before the higher/appellate courts. The principle is that when reasons are announced and can be weighed, the public can be assured that the correction process is in place and working. Reasons for an order would ensure and enhance public confidence and would provide due satisfaction to the consumer of justice under our justice dispensation system. Procedural law and established practice impose an unqualified obligation upon the Courts to record reasons. The Court no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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