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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI ARUN KUMAR GARODIA & SHRI PAVAN KUMAR GADALE
M/s. Chariot International (P) Ltd., The Deputy Commissioner # 107, Agrahara Town, Next to of Income Tax, International Tech Park, vs. Circle – 11(2), Whitefield Road, Bangalore. Bangalore – 560 066. PAN: AAACC5718N APPELLANT RESPONDENT Appellant by : Shri Bharath Kumar, Advocate Respondent by : Shri M. Vijay Kumar, Addl. CIT (DR) Date of hearing : 31.12.2018 Date of Pronouncement : 31.12.2018 O R D E R
Per Shri A.K. Garodia, Accountant Member
This appeal is filed by the assessee and the same is directed against the order of ld. CIT (A)-2, Bangalore dated 05.07.2016 for Assessment Year 2011-12.
The grounds raised
by the assesseeare as under. “1. The order of the learned authorities below in so far as it is against the Appellant is opposed to law, equity, weight of evidence, probabilities and the facts and circumstances in the Appellant's case.
2. The learned CIT(A) confirmed the action of the AO ex parte without mentioning any reason for confirming the same. Under section 250(6) of the I.T. Act, the order of the learned Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision. But we find from the order of the learned CIT(A) that he has confirmed the order of the AO without deciding the same on merits. Moreover, the learned CIT (A) should have given another opportunity to the assessee to appear before him.
3. The learned AO & CIT(A) has erred in disallowing the exemption u/s.10B - Rs.90,89,680/- without appreciating that 'as per Explanation 4 to Section 10B says 'for the purposes of the section 'manufacture or produce' shall include the cutting and polishing of precious and semi- precious stone'. This clarifies that stones precious - even if only cut and polished, can be said to be have undergone manufacturing process. Thus, the Act itself recognizes such activities as manufacture.
The learned AO & CIT (A) failed to appreciate the facts of the case are similar to the activities undertaken in the case of ITO vs. Arihant Tiles and Marbles P. Ltd (320 ITR 79), wherein the Hon'ble Supreme Court, after elaborately considering all the precedents on the subjects, held that 'sawing of marble blocks into slabs and tiles and polishing amount to manufacture or production and the assessee is entitled to deduction u/s.80-IA of the Act'.
The learned AO & CIT (A) has failed to appreciate that in our own case for the A.Y. 2007-08 passed by the Hon'ble ITAT, Bangalore on 03/06/2011 vide wherein the claim of deduction u/s.10B of the Act, was allowed. 6. The learned AO & CIT (A) has erred in disallowing the Export Sales commission payment made to foreign nationals of Rs.14,33,037/- holding that, TDS was not deducted u/s.195 of the Act and therefore, disallowed u/s.40(a)(ia) of the Income Tax Act, 1961. 7. The learned AO & CIT (A) ought to have followed the decision of the Hon'ble Supreme Court in the case of CIT v. Toshoku Ltd (1980) 125 ITR 525, wherein held that, the commission amount which were earned by the non-resident assessee for the services rendered outside India cannot, therefore be deemed to be income which have either accrued or arisen in India u/s.9 (1) of the Income Tax Act, 1961. 8. The Appellant craves leave to add, alter, substitute, amend or delete any or all of the grounds of appeal
urged above.”
3. At the very outset, it was submitted by ld. AR of assessee that the impugned order of CIT (A) is ex-parte qua the assessee. He further submitted that although five dates were fixed for hearing by CIT (A) as noted by him in Para 3 of his order and the assessee could not appear on any of these dates but still the request of the assessee is this that in the interest of justice, the matter may be restored back to the file of CIT (A) for fresh decision after providing reasonable opportunity of being heard to assessee. The ld. DR of revenue supported the order of CIT(A).
4. We have considered the rival submissions. We find that this is true that ld. CIT (A) has fixed the appeal for hearing on 07.01.2015, 03.07.2015, 07.08.2015, 23.12.2015 and 28.01.2016 and on all these dates, none appeared on behalf of the assessee and thereafter, the CIT (A) has decided the issue ex-parte qua the assessee. But we find that in ground no. 4 raised before CIT (A), reliance was placed by the assessee on a judgment of Hon’ble Apex Court rendered in the case of ITO Vs. Arihant Tiles and