Commissioner vs Unknown on 19 October, 2011

0
125
Gujarat High Court
Commissioner vs Unknown on 19 October, 2011
Author: Akil Kureshi, Gokani,
  
 Gujarat High Court Case Information System 
    
  
    

 
 
    	      
         
	    
		   Print
				          

  


	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	


 


	 

TAXAP/98/2011	 4/ 4	ORDER 
 
 

	

 

IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
 

 


 

TAX
APPEAL No. 98 of 2011
 

 
 
=========================================================

 

COMMISSIONER
OF INCOME TAX-I - Appellant(s)
 

Versus
 

M/S
MARUTI PACKAGING - Opponent(s)
 

=========================================================
 
Appearance
: 
MRS
MAUNA M BHATT for
Appellant(s) : 1, 
None for Opponent(s) :
1, 
=========================================================


 
	  
	 
	  
		 
			 

CORAM
			: 
			
		
		 
			 

HONOURABLE
			MR.JUSTICE AKIL KURESHI
		
	
	 
		 
		 
			 

and
		
	
	 
		 
		 
			 

HONOURABLE
			MS JUSTICE SONIA GOKANI
		
	

 

 
 


 

Date
: 19/10/2011 

 

 
 
ORAL
ORDER

(Per
: HONOURABLE MR.JUSTICE AKIL KURESHI)

Revenue
is in appeal against judgement of the Tribunal dated 11.8.2010
raising following questions for our consideration :

Whether
the Appellate Tribunal is right in law and on facts in canceling the
penalty of Rs.6,56,990/- levied u/s.271(1)(c) of the Act?

Issue
pertains to penalty levied by the Assessing Officer under Section
271(1)(c) of the Income Tax Act, 1961.

Assessee
filed income of returns. While processing such returns, the
Assessing Officer found that assessee’s claim for exemption under
Section 10A of the Act was not justified since the assessee did not
export any article or thing. There were certain other disallowances
also made by the Assessing Officer. On this ground, penalty
proceedings were initiated. Ultimately, the Assessing Officer
imposed penalty of Rs.6,56,000/- under Section 271(1)(c) of the Act.

The
assessee carried the issue in appeal before the CIT(Appeals) . With
respect to claim under Section 10A of the Act, assessee contended
that its unit was located in Kandla Special Economic Zone (SEZ for
short). As per EXIM policy of Government of India, sales made by the
assessee to other units located in the said area were treated to be
deemed export. On that basis assessee had made claim for exemption
under Section 10A of the Act. CIT(Appeals) however, was of the
opinion that such export was wholly far-fetched. Provision under
Section 10A requires actual exports and would not cover deemed
exports. He was of the opinion that the concept of deemed export
contained in EXIM policy cannot be imported for the purpose of
Section 10A exemption which did not contain any such concept. He
observed as under :

“(cg) The
appellant might have had its own understanding for claiming
exemption in respect of deemed export. As per it, its unit was
granted permission under EXIM policy. So, whatever sales it made to
other unit in the same zone should be taken as discharge of export
obligation as per the policy. The term Export’ was not defined in
the Income Tax Act, but that does not mean that the appellant could
import some definition which could suit its need. The Income Tax Act
never stated in Section 10A by way of any explanation or a proviso
that an assessee could adopt the meaning of ‘Export’ as defined in
the EXIM policy. That means, the appellant has got only one option,
that is, to follow the true meaning conveyed in Section 10A of the
Act. Section 10A stipulated certain condition as per which, an
assessee could claim exemption under Section 10A. They were very
clear and mandatory. The appellant cannot introduce its own meaning
for the word ‘Export’ and it cannot go to an extent of saying that
the goods manufactured and sold by it and exported (not by
appellant) by other inter-zone units should also be considered as
‘Exports’ as though the appellant exported the material. On the top
of it, the appellants claim that the money received in foreign
exchange by the other units on the sales made of the goods
manufactured and supplied by the appellants should also be
considered as thought the appellant satisfied the conditions of
Section 10A is not acceptable.”

Resultantly,
CIT(Appeals) dismissed the appeal. On further appeal by the
assessee, the Tribunal deleted the penalty holding that admittedly
the assessee had not given any information in returns which was
found to be inaccurate or incorrect. Assessee therefore, cannot be
stated to have furnished inaccurate particulars. With respect to the
Revenue’s stand that assessee had raised an incorrect claim, the
Tribunal was of the opinion that assessee can be imposed to penalty
only if case is strictly covered by provisions of Section 271(1)(c).
Tribunal observed that assessee had made claim for exemption under
Section 10A with respect to certain amount with supporting documents
produced on record. Such claim however, was not found allowable by
the Assessing Officer. That by itself would not be sufficient to
impose penalty. Tribunal noted that as per the policy of the
Government, unit of the assessee was situated in SEZ and assessee
was not allowed to sell its product in local market but had to sell
to other unit of SEZ who in turn exported the final product and
earned foreign exchange on such exports. On this basis, Tribunal
deleted the penalty.

With
respect to other ground of penalty, Tribunal found that Assessing
Officer had only estimated gross profit by increasing the profit
rate to 27% which was later on reduced by the CIT(Appeals) to 20%.
On such estimation, penalty was not justified. We do not find any
question of law arising. Tribunal found that assessee had not
supplied any inaccurate particulars. Explanation of assessee for the
claim made was reasonable. Assessee has based its claim for
exemption under Section 10A on it being located in SEZ and its sale
to other unit of SEZ being treated as deemed exports. The assessee
had formed a bona fide belief that its claim was sustainable under
Section 10A of the Act.

We
see not reason to interfere. Appeal is therefore, dismissed.

(Akil
Kureshi,J.)

(Ms.

Sonia Gokani,J.)

(raghu)

   

Top

LEAVE A REPLY

Please enter your comment!
Please enter your name here

* Copy This Password *

* Type Or Paste Password Here *