Deputy Commissioner of Income-tax, V. Atlas Copco (India) Ltd.,

ITA 1044/PUN/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9187 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 13-12-2017
• Assessment Year: 2000-2001
• Appeal Filed On: 19-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: R MURLIDHAR
• Keywords: Revised return
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E . , , ! , ' # BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NO. 1044/PUN/2014 '% & '& / ASSESSMENT YEAR : 2000-01 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-8, PUNE. ....... / APPELLANT (% / V/S. ALTAS COPCO (INDIA) LTD. MUMBAI- PUNE ROAD, DAPODI, PUNE-411 012 PAN : AAACA4074D / RESPONDENT REVENUE BY : SHRI RAJEEV KUMAR, CIT ASSESSEE BY : SHRI R. MURLIDHAR / DATE OF HEARING : 13.12.2017 / DATE OF PRONOUNCEMENT : 07.03.2018 ) / ORDER PER VIKAS AWASTHY, JM THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE O RDER OF COMMISSIONER OF INCOME TAX (APPEALS)-I, NASHIK DATED 03.03 .2014 FOR THE ASSESSMENT YEAR 2000-01. 2 ITA NO.1044/PUN/2014 A.Y.2000-01 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE COMPANY IS ENGAGED IN MANUFACTURING OF PNEUMATIC COMPRESS ORS, SPARE PARTS ETC. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESS MENT YEAR UNDER APPEAL ON 30.11.2000 DECLARING TOTAL INCOME OF RS.14,27,83,790/ -. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS PAID COMMISSION TO THE TUNE OF RS.2,28,81,674/. THE ASS ESSEE WAS ASKED TO SUBMIT THE DETAILS OF PARTIES TO WHOM COMMISSIONS WERE PAID. THE ASSESSEE VIDE COMMUNICATION DATED 12.12.2002 SUBMITTED TH E NAMES AND ADDRESSES OF THE PARTIES TO WHOM COMMISSION AMOUNTING TO RS.1,82,13,603/- WAS PAID DURING RELEVANT PERIOD. HOWEVER, NO DETAILS OF THE PARTIES FOR THE REMAINING COMMISSION AMOUNTING TO RS.46,68,071/- WAS FURNISHE D BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS. THE ASSESSING O FFICER DISALLOWED ENTIRE PAYMENT OF COMMISSION I.E. RS.2,28,81,674/- ON THE GROU ND THAT THE ASSESSEE HAS FAILED TO PRODUCE ACTUAL SERVICES RENDERED BY COMMIS SION AGENT. APART FROM ABOVE, THE ASSESSING OFFICER DISALLOWED DEDUCTIO N OF RS.38,13,642/- CLAIMED U/S.80HHC OF THE INCOME TAX ACT, 19 61 (HEREINAFTER REFERRED TO AS THE ACT). THE ASSESSEE HAD CLAIMED DEDU CTION OF RS.92,68,728/- U/S. 80HHC OF THE ACT. IN THE REVISED RETURNS, THE ASSES SEE REDUCED CLAIM TO RS.89,29,348/-. THE ASSESSING OFFICER RESTRICTED THE ASSESSE ES CLAIM OF DEDUCTION U/S. 80HHC TO RS.51,15,706/- AFTER EXCLUDING SALE OF SCRAP, RISK INSURANCE RECOVERY AND SUNDRY NEUTRAL REVENUE ETC FROM TOTAL TURNOVER WHILE CALCULATING DEDUCTION U/S. 80HHC OF THE ACT. 3. AGGRIEVED BY THE ASSESSMENT ORDER DATED 31.01.2003, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER PLACING RELIANCE ON THE DECISION O F THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 448/PN/2010 FOR ASSESSM ENT YEAR 2001-02 DATED 30.01.2012 WHICH HAS BEEN SUBSEQUENTLY UPHELD BY THE HON'BLE BOMBAY 3 ITA NO.1044/PUN/2014 A.Y.2000-01 HIGH COURT IN INCOME TAX APPEAL (LOD) NO. 1107 OF 2012 DE CIDED ON 1 ST FEBRUARY, 2013 ALLOWED ENTIRE CLAIM OF ASSESSEE QUA THE P AYMENT OF COMMISSION. THE COMMISSIONER OF INCOME TAX (APPEALS) FURTHE R ACCEPTED ASSESSEES CLAIM OF DEDUCTION U/S. 80HHC ON EXCLUSION OF S ALE OF SCRAP, RISK INSURANCE RECOVERY, SUNDRY NEUTRAL REVENUE AS BUSINESS PROFITS BY FOLLOWING THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT Y EAR 2001-02( SUPRA.). NOW, THE DEPARTMENT IS IN APPEAL BEFORE THE TRIBUNAL ASSA ILING FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN ALLOWING ASSESSEES C LAIM OF PAYMENT OF COMMISSION AS WELL AS EXCLUDING INCOME FROM SALE OF SCRAP, R ISK INSURANCE RECOVERY AND SUNDRY NEUTRAL REVENUE ETC FOR COMPUTING DEDUCTION U/S. 80HHC OF THE ACT. 4. SHRI RAJEEV KUMAR REPRESENTING THE DEPARTMENT SUBM ITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICE R ASKED TO SUBMIT NAMES AND ADDRESSES OF THE PARTIES TO WHOM COMMISSION W AS PAID. THE ASSESSEE COULD FURNISH DETAILS OF PARTIES TO WHOM COMMISSION TO THE TUNE OF RS.1,82,13,603/- WAS PAID. NO DETAILS WHATSOEVER IN RESPEC T OF PAYMENT OF COMMISSION AMOUNTING TO RS.46,68,071/- WAS FURNISHED BY T HE ASSESSEE. THE ASSESSEE EXPRESSED ITS INABILITY TO PRODUCE ANY CORRESPO NDENCE REGARDING COMMISSION AGENTS SPECIFYING DETAILS OF SERVICES RENDERED B Y THEM OR ANY CORRESPONDENCE REGARDING CREDIT NOTES BY ASSESSEE SPE CIFYING SERVICES RENDERED IN RESPECT OF PAYMENT RS. 46,68,071/-. THE ASSESSEE COULD NOT FURNISH COMPLETE DETAILS OF NAMES AND ADDRESS OF THE PARTIES. THE LD. DR FAIRL Y ADMITTED THAT FOR ASSESSMENT YEAR 2001-02, THE HON'BLE BOMBAY HIGH COURT HAS UPHELD THE DECISION OF TRIBUNAL IN ALLOWING ASSESSEES CLAIM OF DEDUCTION ON PAYMENT OF COMMISSION. THE LD. DR SUBMITTED THAT IN SO FAR AS PAYMENT OF COMMISSION TO RS.46,68,071/- IS CONCERNED, THE ASSESSEE HAS EVEN FAILED T O GIVE NAMES AND ADDRESS OF THE PARTIES TO WHOM COMMISSION HAS BEEN PAID . AT LEAST TO THE EXTENT OF RS.46,68,071/-, PAYMENT OF COMMISSION SHOULD BE DISALLOWED. 4 ITA NO.1044/PUN/2014 A.Y.2000-01 4.1 IN RESPECT OF GROUND NO. 3 AND 4 RELATING TO INCLUSION OF INCOME FROM SCRAP SALES, RISK INSURANCE RECOVERY, SUNDRY NEURAL REVEN UE ETC, THE LD. DR SUBMITTED THAT COMMISSIONER OF INCOME TAX (APPEALS) HAS E RRED IN ALLOWING INCLUSION OF ALL THE AFORESAID ITEMS IN TOTAL TURNOVER WHILE COM PUTING DEDUCTION U/S. 80HHC OF THE ACT. THE LD. DR SUBMITTED THAT THE HON'BLE SUPREM E COURT OF INDIA IN RECENT DECISION RENDERED IN THE CASE OF CIT VS. PUNJAB STAINLESS STEEL INDUSTRIES HAS HELD THAT TURN OVER IN SECTION 80HHC D OES NOT INCLUDES SALE PROCEEDS OF SCRAP. THE WORD TURNOVER MEANS SOLELY THE AMOUN T OF SALE PROCEEDS RECEIVED IN RESPECT OF GOODS IN WHICH ASSESSEE IS DEALING. T HUS, IN VIEW OF RECENT DECISION, INCOME OF ASSESSEE FROM SALE OF SCRAP HAS TO BE EXCLUDED WHILE COMPUTING TOTAL TURNOVER FOR DETERMINING DEDUCTION U/S. 80HHC OF THE ACT. 5. ON THE OTHER HAND, SHRI R. MURLIDHAR APPEARING ON BEHA LF OF ASSESSEE SUBMITTED THAT ISSUE RAISED BY THE DEPARTMENT IN GROUND NO. 1 AND 2 R ELATING TO PAYMENT OF COMMISSION IS SQUARELY COVERED BY THE DECISIO N OF TRIBUNAL IN ASSESSEE OWN CASE IN ITA NO.448/PN/2010 FOR ASSESSMENT YEAR 2001-02 (SUPRA.) AND THE DECISION OF TRIBUNAL IN ITA NO. 2285/PN/2014 FOR ASSESSMENT YEAR 1996-97 DECIDED ON 06.12.2016. THE HON'BLE BOMBAY H IGH COURT IN INCOME TAX APPEAL (LOD) NO. 1107 OF 2012 (SUPRA.) HAS UPH ELD THE FINDINGS OF TRIBUNAL ON PAYMENT OF COMMISSION. THE LD. AR SUBMITTED THAT THE ASSESSEE HAD GIVEN APPROXIMATELY 80% OF THE DATA IN RESPECT OF C OMMISSION PAID. THE ASSESSING OFFICER DID NOT TEST CHECK TO VERIFY THE PAYMEN T OF COMMISSION AND THEREFORE, NO DISALLOWANCE IN RESPECT OF RS.46,68,071/- I.E. REMAINING 20% OF DATA WHICH WAS NOT SUPPLIED TO THE ASSESSING OFFICER SHOULD BE MADE. 5.1 IN RESPECT OF GROUND NO. 3 AND 4 RAISED IN APPEAL QU A INCLUSION OF INCOME FROM SALE OF SCRAP, RISK INSURANCE RECOVERY AND SUNDRY NE UTRAL REVENUE ETC FROM BUSINESS PROFITS FOR THE PURPOSE OF COMPUTING DEDUCTION U/ S. 80HHC OF THE ACT, 5 ITA NO.1044/PUN/2014 A.Y.2000-01 THE LD. AR PLACED RELIANCE ON THE DECISION OF TRIBUNAL FOR T HE ASSESSMENT YEAR 2001-02 (SUPRA.). THE LD. AR SUBMITTED THAT THE TRIBUNAL HAS REMITTED THE ISSUE BACK TO THE FILE OF COMMISSIONER OF INCOME TAX (APPEALS) TO ADJUDICATE THE MATTER IN LINE WITH THE JUDGMENT OF HON'BLE BOMBAY HIGH CO URT IN THE CASE OF CIT V. PFIZER LTD. REPORTED AS 42 DTR 32 (BOM.) AND DRESS ER RAND INDIA PVT. LTD. ITA 2186 OF 2009 DECIDED ON 08.04.2010. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIV ES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. THE DE PARTMENT IN APPEAL HAS RAISED TWO ISSUES. THE GROUND NO. 1 AND 2 RAISED IN A PPEAL IS WITH RESPECT TO PAYMENT OF COMMISSION TO THIRD PARTIES BY ASSESSEE AMOUNTING TO RS.2,28,81,674/-. THE ASSESSING OFFICER HAS DISALLOWED PAYMENT OF ENTIRE COMMISSION ON THE GROUND THAT THE ASSESSEE HAS FAILED TO GIVE DETAILS OF SERVICES RENDERED. A PERUSAL OF ASSESSMENT ORDER SHOWS THAT OU T OF TOTAL COMMISSION PAID RS. 2,28,81,674/-, THE ASSESSES HAS FURNISHED DETAILS OF COMMISSION PAID RS.1,82,13,603/-. NO DETAILS HAVE BEEN FURNISHED BY ASSESSE E WITH REGARD TO RS. 46,68,071/-. WE FIND THAT IN THE PAST I.E. ASSESSMENT YEARS 1985-86, 1 986-87, 1988- 89, 1991-92, 1993-94,1995-96 AND 1996-97, THE TRIBUNAL H AS ALLOWED PAYMENT OF COMMISSION. THE DEPARTMENT HAS NEVER CHALLENGED THE OR DER OF THE TRIBUNAL ON THIS ISSUE BEFORE THE HON'BLE HIGH COURT. THE CO-ORDINA TE BENCH OF TRIBUNAL IN ASSESSMENT YEAR 2001-02 IN ITA NO. 448/PN/2010 (SUP RA) AGAIN ALLOWED THE CLAIM OF ASSESSEE WITH REGARD TO PAYMENT OF COMMISSION. THE DEPARTMENT CARRIED THE MATTER IN APPEAL BEFORE THE HON'BLE BOMBAY H IGH COURT IN INCOME TAX APPEAL (LOD) NO. 1107 OF 2012 (SUPRA). THE HON'BLE HIG H COURT DISMISSED THE GROUND RAISED BY THE REVENUE. 6 ITA NO.1044/PUN/2014 A.Y.2000-01 THUS, FOLLOWING THE DECISION OF CO-ORDINATE BENCH WHICH HAS BEEN UPHELD BY THE HON'BLE BOMBAY HIGH COURT, THE PAYMENT OF COMMISS ION TO THE EXTENT OF RS.1,82,13,603/- IS ALLOWED. IN SO FAR AS PAYMENT OF COMMISSION OF RS.46,68,071/- IS CO NCERNED, WE FIND THAT THE ASSESSING OFFICER HAS CATEGORICALLY OBSERVED THAT THE ASSESSEE HAS NOT EVEN FURNISHED THE COMPLETE NAMES AND ADDRESSES OF THE PARTIES. THE LD. AR HAS NOT REBUTTED THESE FINDINGS OF ASSESSING OFFICER. THE C OMMISSIONER OF INCOME TAX (APPEALS) IS ALSO SILENT ON THE OBSERVATIONS OF A SSESSING OFFICER QUA COMMISSION PAYMENT OF RS.46,68,071/-. NO DOUBT, THE PAYMEN T OF COMMISSION HAS BEEN ALLOWED BY THE TRIBUNAL IN PAST WHICH HAS NOW BE EN UPHELD BY THE HON'BLE HIGH COURT IN THE CASE OF ASSESSEE FOR ASSESSMEN T YEAR 2001-02, BUT THE FACT OF ACTUAL PAYMENT OF COMMISSION HAS TO BE VERIFIE D. THE DUTY IS CAST UPON THE ASSESSEE TO FURNISH BASIC DETAILS VIZ. NAMES, ADD RESSES ETC. OF THE RECIPIENTS OF COMMISSION. THUS, WE ARE OF CONSIDERED VIEW THAT THE ISSUE RELATING T O PAYMENT OF COMMISSION TO THE EXTENT OF RS.46,68,071/- NEEDS REVISIT TO THE FILE OF ASSESSING OFFICER FOR VERIFICATION AND GENUINENESS OF PARTIES TO WHOM C OMMISSION HAS BEEN PAID. IN THE RESULT, GROUND NO. 1 AND 2 RAISED BY THE DEP ARTMENT ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 7. THE SECOND ISSUE RAISED IN GROUND NO. 3 AND 4 OF THE APPEAL RELATING TO EXCLUSION OF INCOME FROM SALE OF SCRAP, RISK INSURANCE RECOVE RY AND SUNDRY NEUTRAL REVENUE ETC, FROM THE BUSINESS PROFITS FOR THE PUR POSE OF COMPUTING DEDUCTION U/S. 80HHC. WE OBSERVE THAT IDENTICAL ISSUE WAS RAISED BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2001 -02 (SUPRA). THE TRIBUNAL RESTORED THE ISSUE BACK TO ASSESSING OFFICER. THE RELEVANT EXTRACT OF THE ORDER READS AS UNDER: 7 ITA NO.1044/PUN/2014 A.Y.2000-01 46. IN GROUND NO.9, THE REVENUE HAS URGED THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIO NER OF INCOME-TAX (APPEALS) ERRED IN NOT EXCLUDING FOREIGN EXCHANGE G AIN, MISCELLANEOUS RECEIPTS (SALE OF SCRAP, RISK INSURANCE RECOVERY, S UNDRY NEUTRAL REVENUE, RECOVERY OF DOUBTFUL ACCOUNTS, REFUND FROM CUSTOMS, INCOME DUE TO ORDER CANCELLATION & OTHERS) FROM ELIGIBLE BUSINESS PROFITS FOR THE PURPOSE OF CALCULATING DEDUCTION UNDER SECTION 80HH C AS PER EXPLANATION (BAA) TO SEC.80HHC OF THE ACT. 47. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. IN THE ASSESSEE'S APPEAL, VIDE ITA NO.448/PN/2010, SIMILAR ISSUE RELATING TO ASSESSEE'S CLAIM UNDER SECTION 80HHC OF THE ACT IN RESPECT OF CERTAIN OTHER ITEMS OF INCOME, HAS BEEN CONSIDERED BY US VIDE PARA 16 ABOVE, WHEREIN WE HAVE EXTRACTED THE FINDINGS OF OUR CO-ORDINATE BENCH IN ITS ORDER DATED 30.11.2010 (SUPRA) REGARDI NG EXCLUSION OF SERVICE CHARGES FROM THE PROFITS OF BUSINESS AS PER EXPLANATION (BAA) TO SECTION 80HHC OF THE ACT. FOLLOWING THE SAID PRE CEDENT AS THE CIRCUMSTANCES ARE IDENTICAL IN THIS YEAR, WE SET AS IDE THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AND REMIT THE MATTER BACK TO HIS FILE TO BE ADJUDICATED AFRESH IN LINE WITH THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF PFIZER LTD . (SUPRA) AND DRESSER RAND INDIA P LTD. ITA NO 2186 OF 2009 (HC) WE HOLD SO. AS A RESULT, GROUND NO.9 OF APPEAL OF THE REVENUE IS PARTLY ALLOWED . SINCE THE ISSUE INVOLVED IN THE PRESENT APPEAL IS IDENTI CAL, WE DEEM IT APPROPRIATE TO REMIT THE GROUND NO. 3 AND 4 RAIS ED IN APPEAL BACK TO THE FILE OF THE ASSESSING OFFICER TO FOLLOW THE DIRECT ION OF TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2001-02. ACCORDIN GLY, GROUND NO. 3 AND 4 RAISED IN APPEAL BY THE DEPARTMENT ARE ALLOWED FOR STATISTICAL PURPOSES . 8. GROUND NO. 5 RAISED IN APPEAL IS GENERAL IN NATUR E AND HENCE, REQUIRES NO ADJUDICATION. 9. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLO WED IN THE AFORESAID TERMS. ORDER PRONOUNCED ON WEDNESDAY, THE 07 TH DAY OF MARCH, 2018. SD/- SD/- ( . / D. KARUNAKARA RAO ) ( ! /VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; !' / DATED : 07 TH MARCH, 2018. SB 8 ITA NO.1044/PUN/2014 A.Y.2000-01 ) * +',- . ', / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-1, NASHIK. 4. THE CIT-V, PUNE. 5. %&' () , * () , +,- , / DR, ITAT, A BENCH, PUNE. 6. './ 01 / GUARD FILE. // % // TRUE COPY // *2 / BY ORDER, 3 (- / PRIVATE SECRETARY * () , / ITAT, PUNE.