Tribunal partially allows appeals, orders reassessment post High Court decision. Penalties deleted, turnover exclusion upheld.

The Tribunal partly allowed the appeals, directing re-adjudication by the Assessing Officer post High Court decision. Penalties under Section 271(1)(c) were deleted due to related issues being restored. The exclusion of freight and insurance from turnover calculations was upheld, with verification for disallowance under Section 14A. The case outcome favored the assessee and Revenue for statistical purposes, pending further assessment by the Assessing Officer.

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Issues Involved:
1. Denial of exemption under Section 10B of the Income Tax Act due to belated filing of returns.
2. Alteration of nomenclature from suppression in export turnover to increase in value of closing stock.
3. Exclusion of freight, insurance, etc., from export turnover and total turnover while computing deduction under Section 10B.
4. Disallowance under Section 14A of the Act.
5. Computation of book profit under Section 115JB of the Act.
6. Levy of penalty under Section 271(1)(c) of the Act.

Detailed Analysis:

1. Denial of Exemption under Section 10B:
The primary issue in the appeals for the assessment years 2008-09 and 2009-10 was the denial of exemption under Section 10B due to the belated filing of returns. The returns were filed late by 4 months and 50 days, respectively. The denial was based on the 4th proviso to Section 10B, which mandates filing within the time prescribed under Section 139(1). The assessee had sought condonation of delay from the CBDT, which was rejected, and the matter was pending before the High Court. The Tribunal decided to restore the issue to the Assessing Officer for re-adjudication after the High Court's decision.

2. Alteration of Nomenclature:
The Revenue's appeal also contested the CIT(A)'s direction to alter the nomenclature from suppression in export turnover to an increase in the value of closing stock. The Tribunal restored this issue to the Assessing Officer for re-adjudication, contingent on the High Court's decision regarding Section 10B.

3. Exclusion of Freight, Insurance, etc.:
The CIT(A) had directed the exclusion of freight, insurance, etc., from both export turnover and total turnover while computing the deduction under Section 10B. This was in line with the Supreme Court's decision in CIT vs. HCL Technologies Ltd. and the Special Bench of Chennai Tribunal in ITO vs. Sak Soft Ltd. The Tribunal found no reason to interfere with the CIT(A)'s order on this issue, dismissing the Revenue's grounds.

4. Disallowance under Section 14A:
For assessment year 2009-10, the issue of disallowance under Section 14A was raised. The Tribunal directed the Assessing Officer to verify whether the assessee had earned any exempt income. If no exempt income was earned, no disallowance under Section 14A was warranted, following the Delhi High Court's decision in Joint Investment Pvt. Ltd. vs. CIT.

5. Computation of Book Profit under Section 115JB:
The computation of book profit under Section 115JB was also restored to the Assessing Officer for re-adjudication after deciding on the issue of deduction under Section 10B.

6. Levy of Penalty under Section 271(1)(c):
The appeals also involved the levy of penalty under Section 271(1)(c) for concealment of income. The Tribunal noted that the foundation of the penalty was the denial of deduction under Section 10B and other related issues, which were restored to the Assessing Officer. Consequently, the penalties were deemed infructuous and were deleted.

Conclusion:
The appeals of the Revenue and the assessee were partly allowed for statistical purposes, with directions for re-adjudication by the Assessing Officer after the High Court's decision. The penalties under Section 271(1)(c) were deleted as they became infructuous. The Tribunal upheld the CIT(A)'s order regarding the exclusion of freight and insurance from turnover calculations and directed verification for disallowance under Section 14A.

Order Pronounced on 07th November, 2019, at Chennai.

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