Ita/44/2009 Of K S Ramakrishna v. Deputy Commissioner Of Income Tax

IN THR HIGH COURT OF KARNATAKA AT BANGALOREDATED THIS THE 25[‘T]DAY OF NOVEMBER 2014 PRESENT THR HON BLE MR. JUSTICE N. KUMAR. AND THR HON’BLE MR. JUSTICE B. MANOHAR| ITA NO.44 OF 2009C/wITA NO.45 OF 2009 BETWEEN; K.S.Ramakrishna|Prop: Kays Roses|Apt No.204, Embassy CentreNo.11, Crescent RoadBangalore - 560 OO1. APPRLLANT(COMMON) (By Smt.S.R.Anuradha, Advocate) — AND: Deputy Commissioner of Income TaxKarnataka - IICentral Revenue Building.Queens RoadBangalore — 1. — RBSPONDEBENT(COMMON), (By Shri.K.V.Aravind, Advocate) ITA No.44/2009 is filed under Section 260-A of ITAct, 1961 arising out of order dated 26-09-2008 passed1nNITA.No.17/7/Bang/2006and1n ITANo.115/Bang/2006 and orders dated 31.03.2005, forthe Assessment Year 2002-03 by the Income TaxAppellateTribunalandAssessmentOrderdated 29.03.2005 passed by the Income Tax Officer, CentralCircle 2(1), praying to formulate the substantialquestions of law stated therein and to allow the appealand set aside the order dated 26.09.2008 passed in MP.No.53/Bang/2008 in ITA No.177/Bang/2006 and inITA No.115/Bang/2006 and orders dated 31.03.2008for the Assessment years 2002-03 by the ITAT and etc. ITA No.49/2009 is filed under Section 260-A of ITAct, 1961 arising out of order dated 26-9-2008 passed1n ITA.No.17/7/Bang/2006andInITANo.115/Bang/2006 and orders dated 31.03.2005, forthe Assessment Year 2002-03 by the Income TaxAppellateTribunal|andAssessmentOrder.dated29/03/2005 passed by the Income Tax Officer, CentralCircle (2) praying to formulate the substantial questions.of law stated therein and allow the appeal and set asidetheorderdated26.09.2008passedin.ITANo.177/Bang/2006 and in MP No.119/Bang/2006 andorders dated 31.03.2005 for the Assessment years2002-03 by the ITAT and etc. These ITAS coming on tor Hearing, this day,N. KUMAR, J.delivered the following:- COMMON JUDGMENT The assessee preferred these appeals challengingthe orders passed by the Tribunal. These two appealsare taken up for consideration together as one is anappeal against the original order and another is anappeal against the order of dismissing the reviewpetition of the original order. Therefore, both theappeals are disposed of by this common judgment. 2.The assessee is a Proprietor of M/s.Kays—Roses. He is in the business of export of cut flowers tocountries such as the United Kingdom, Australia andNetherlands. The income is exempted under Section10B of the Income Tax Act, 1961. The AssessingAuthority denied the exemption claimed by the assesseeholding that the assessee cannot claim any deductionunder Section 10B of the Act merely on the basis of aletter of intent received by the Government. Then theassessee in the course of assessment proceedings, orallysubmitted that the case of the assessee could be'considered under Section SOHHCG. That was notacceded to on the ground that prescribed Audit Reportin Form No.1OCCAC was not enclosed to the claim. —Further it was held that the assessee had not made anyclaim under the provision at all in the return filed andtherefore, the claim under both grounds was disallowed. —Agegrieved by the said order, the assessee preferred anappeal to the Commissioner of Income Tax (Appeals). —Before the Appellate Authority, the Audit Report wasfiled. Taking note of the same, the Appellate Authorityheld that while the Assessing Officer herself recorded in the body of the order that the appellant has producedevidences of foreign inward remittances, at the sametime has used the words like shadow of doubt and rejected the claim under Section 80HHC. When genuineexports have been undertaken and the assessee hasfurnished the evidences, it is not understood how the.AssessingOfficer|has|rejected theclaimOf]presumptions and surmises. Therefore, he allowed theappeal and directed the Assessing Officer to allow thededuction under Section 80HHC. Aggrieved by the saidorder, the assessee preferred an appeal challenging thedenial of a claim under Section l10B whereas therevenue preferred an appeal challenging the ordereranting relief under Section SOHHC. The Tribunaldismissed the appeal filed by the assessee and allowedthe appeal filed by the revenue relying on the judgmentof this Court in the case ot!M/S.NATURAL STONEEXPORTS LITD.,where it is held that the audit reporteven though is not enclosed to the returns filed, thesame ought to be produced before the completion of theassessment. Aggrieved by the said orders, the assessee 5 is before this Court. As the review petition is alsodismissed, against that order also, appeal is filed. 3.The substantial question of law that arises| for consideration in these appeals is as under:- “Whether the assessee is entitled toclaim the benefit of Section SOHHC when|such a claim is not made in the returns filed|and when audit report is filed before the firstAppellate Authority?” | 4ThisCourt1NtheCASEOT|THE COMMISSIONER OF INCOME-TAX AND ANOTHER VS.M/S.WIPRO LTD., IN ITA NO.3204/2005, DECIDED ON)IS RREBRUARY DODdealing with the aforesaidquestion held that if the assessee is entitled to thebenefit under Section 80HHC, that cannot be denied onthe ground that the benefit had not been claimed orsuch a claim had not been put forth originally. That isthe benefit extended by the Parliament to an assessee.If he satisfies the requirement as contemplated underthe provision even without putting forth a claim eitherby inadvertence, etc and such a claim is made at theTimeoT|assessmentyproceedings|OTbeforetheassessment order is passed, the Assessing Authority is duty bound to look into the claim and find out as towhether the assessee has complied with the legalrequirement so as to claim the said benefit and if hesatisfies the requirement of law, to extend the benefit ofsaid provision. On the ground that such a claim is notmade in the returns filed, relief cannot be denied.Therefore, the first Appellate Authority was justified inallowing the said claim. 5.In so far as non-production of the auditors|report is concerned, this Court had an occasion toconsider the said question in the case of|THECOMMISSIONER OF [INCOME-TAX AND ANOTHER VS.M/S.AMERICAN DATA SOLUTIONS INDIA PVT. LTD., IN|ITANO.587/ 2007ANT)CONNECTEDMATTERS,DECIDED ON 18 DECEMBER 2O13, where it was held|that the proceedings before the first Appellate Authorityis a continuation of the assessment proceedings and ifthe audit report is produced at that stage, the firstAppellate Authority was duty bound to take note of thesaid audit report and grant benefit, if the assessee isentitled to. 6.Therefore, in the instant case, the firstAppellate Authority taken note of the audit report andthen granted relief to the assessee, which waserroneously interfered with by the Tribunal. Therefore,we do not see any justification in the order passed bythe Tribunal. T However,the|learnedCounsel]fortherevenue submitted that, before the benefit undersection 8OHHC could be granted, the assessee has tosatisfy the requirement of law. Hence, the very matterrequires to be remitted back to the Assessing Authorityto find out as to whether all the requirement of law toseek exemption under Section 8OHHC has beencomplied with by the assessee or not and then only thesaid benefit can be granted. | 3.We do find some substance in the said|contention. | 6.Therefore, in the instant case, the firstAppellate Authority taken note of the audit report andthen granted relief to the assessee, which waserroneously interfered with by the Tribunal. Therefore,we do not see any justification in the order passed bythe Tribunal. T However,the|learnedCounsel]fortherevenue submitted that, before the benefit undersection 8OHHC could be granted, the assessee has tosatisfy the requirement of law. Hence, the very matterrequires to be remitted back to the Assessing Authorityto find out as to whether all the requirement of law toseek exemption under Section 8OHHC has beencomplied with by the assessee or not and then only thesaid benefit can be granted. | 3.We do find some substance in the said|contention. | Q Accordingly, appeals are allowed in part. —The substantial question of law is answered in favour ofthe assessee and against the revenue. The order passedby the authorities are hereby set aside and the matter remitted back to the Assessing Authority with adirection to examine whether the assessee has fulfilled|the requirement stipulated in law to be eligible for thebenefit under Section SOHHC and thereafter, passappropriate orders in accordance with law. | Sd/- JUDGE Sd/- JUDGE Prs*