GODREJ CONSUMER PRODUCTS LTD, MUMBAI V. DCIT CIR 14(1)(1), MUMBAI

ITA 1074/MUM/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4337 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Assessment Year: 2011-2012
• Appeal Filed On: 02-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Transfer pricing; Opportunity of being heard; International transaction; Earning of tax free income; Revised return; TDS; Rule 8D
• Section: 143(3); 92B; 14A; 115JB; 251; 80IC; 80IC; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBERAND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER IT (TP) A NO. 1074 / MUM . /201 6 ( ASSESSMENT YEAR : 20 11 12 ) GODREJ CONSUMER PRODUCTS LTD. KALYANIWALLA & MISTRY 3 RD FLOOR, ARMY & NAVY BUILDING 148, M.G. ROAD, FORT MUMBAI 400 001 PAN AABCG3365J . APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CIRCLE 14(1)(1), MUMBAI . RESPONDENT ITA NO. 1003 /MUM. /2016 ( ASSESSMENT YEAR : 20 11 12 ) DY. COMMISSIONER OF INCOME TAX CIRCLE 14(1)(1), MUMBAI . APPELLANT V/S GODREJ CONSUMER PRODUCTS LTD. KALYANIWALLA & MISTRY 3 RD FLOOR, ARMY & NAVY BUILDING 148, M.G. ROAD, FORT MUMBAI 400 001 PAN AABCG3365J . RESPONDENT ASSESSEE BY : SHRI FARROKH V. IRANI MS. YASMIN DASTUR REVENUE BY : SHRI ANAND MOHAN DATE OF HEARING 27.11.2019 DATE OF ORDER 25.02.2020 2 GODREJ CONSUMER PRODUCTS LTD. O R D E R PER SAKTIJIT DEY. J.M. TH ESE CROSS APPEAL S ARISE OUT OF THE ASSESSMENT ORDER DATED 31 ST DECEMBER 2015, PASSED UNDER SECTION 143(3) R/W SECTION 144C(13) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) IN PURSUANCE TO THE DIRECTIONS OF THE DISPUTE RESOLUTION PANEL 1 (DRP), MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 2011 12 . IT (TP) A NO.10 74 /MUM./2016 ASSESSEES APPEAL 2. IN G ROUND NO.1, THE ASSESSEE HAS CHALLENGED PART DISALLOWANCE OF DEDUCTION CLAIMED UNDER SECTION 80IC OF THE ACT. 3. BRIEF FACTS ARE, THE ASSESSEE , A RESIDENT COMPANY , IS ENGAGED IN MANUFACTURE AND SALE OF CONSUMER GOODS, TOILETRIES, INSEC TICIDES, AIR CARE, BODY CARE, HOUSEHOLD AND RELATED PRODUCTS. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 29 TH NOVEMBER 2011, DECLARING TOTAL INCOME OF ` 42,50,70,569, UNDER THE NORMAL PROVISIONS OF THE ACT. WHEREAS, T HE ASSESSEE DISCLOSED BOOK PROFIT OF ` 550,61,38,928, UNDER SECTION 115JB OF THE ACT. SUBSEQUENTLY, THE ASSESSEE FILED A REVISED RETURN OF INCOME ON 30 TH MARCH 2018, REVISING THE CLAIM OF TDS. WHILE EXAMINING ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80I C OF THE ACT, IN THE COURSE OF 3 GODREJ CONSUMER PRODUCTS LTD. ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT IN THE PROFIT & LOSS ACCOUNT OF ELIGIBLE UNITS CLAIMED DEDUCTION UNDER SECTION 80IC OF THE ACT, THE ASSESSEE HAS INCLUDED VARIOUS ITEMS OF INCOME , SUCH AS , SCRAP SALE S, CLAIMS RECEIVED, MISC. INCOME, SUNDRY BALANCE WRITTEN BACK, DISCOUNT ON PURCHASES, ETC. BEING OF THE VIEW THAT SUCH INCOME CANNOT FORM PART OF THE PROFIT DERIVED BY THE ELIGIBLE UNIT F ROM ITS MANUFACTURING ACTIVITY , THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO EXPLAIN WHY SUCH INCOME SHOULD NOT BE EXCLUDED FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 80IC OF THE ACT. THOUGH, THE ASSESSEE OBJECTED TO THE PROPOSED DISALLOWANCE, HOWEVER, THE ASSESSING OFFICER RELYING UPON THE DECISION OF THE HO N'BLE SUPREME COURT IN LIBERTY INDIA V/S CIT, [2009] 317 ITR 218 (SC) EXCLUDED CERTAIN ITEMS OF INCOME AS REFERRED TO ABOVE FROM THE PROFIT OF THE ELIGIBLE UNIT FOR COMPUTING DEDUCTION UNDER SECTION 80IC OF THE ACT. THIS RESULTED IN PARTIAL REDUCTION IN THE QUANTUM OF DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80IC OF THE ACT. THOUGH, THE ASSESSEE OBJECTED TO THE PART DISALLOWANCE OF DEDUCTION CLAIMED UNDER SEC TION 80IC OF THE ACT, BEFORE LEARNED DRP, HOWEVER, RELYING UPON THEIR DECISION IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2010 11, LEARNED DRP UPHELD THE DECISION OF THE ASSESSING OFFICER. 4. SHRI FAROOKH V. IRANI, THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED , WHILE DECIDING IDENTICAL ISSUE IN ASSESSEES OWN CASE FOR THE 4 GODREJ CONSUMER PRODUCTS LTD. ASSESSMENT YEAR S 2009 10 AND 2010 11, THE TRIBUNAL HAS RESTORED THE ISSUE TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION WITH CERTAIN DIRECTIONS. THUS, HE SUBMITTED , THE ISSUE MAY BE RESTORED BACK TO THE ASSESSING OFFICER WITH SIMILAR DIRECTION. 5. SHRI ANAND MOHAN, THE L EARNED DEPARTMENTAL REPRESENTATIVE AGREED WITH THE AFORESAID SUBMISSIO NS OF LEARNED SR. COUNSEL FOR THE ASSESSEE. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE BEFORE US IS, WHETHER CERTAIN ITEMS OF INCOME , SUCH AS , CL AIMS RECEIVED, MISC. INCOME, SUNDRY BALANCE WRITTEN BACK, ETC., CAN BE CONSIDERED AS PART OF THE PROFITS OF THE ELIGIBLE UNIT FOR COMPUTING DEDUCTION UNDER SECTION 80IC OF THE ACT. NOTABLY, IDENTICAL ISSUE CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN A SSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009 10. WHILE DECIDING THE ISSUE IN ITA NO.1299/MUM./2013, DATED 20 TH APRIL 2016, THE TRIBUNAL HAS RESTORED THE ISSUE TO THE ASSE SSING OFFICER WITH CERTAIN DIRECTIONS. 7. PERTINENTLY, WHILE DECIDING SAME ISSUE IN A SSESSEES OWN CASE IN ASSESSMENT YEAR 2010 11 IN IT(TP)A NO.1899/MUM./2015, DATED 5 TH SEPTEMBER 2019, THE TRIBUNAL FOLLOWING ITS EARLIER DECISION AGAIN RESTORED THE ISSUE TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION. FACTS BEING IDENTICAL, FOLLOWING THE DECISIONS OF THE CO ORDINATE BENCH IN 5 GODREJ CONSUMER PRODUCTS LTD. ASSESSEES OWN CASE AS REFERRED TO ABOVE, WE RESTORE THE ISSUE TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION WITH SIMILAR DIRECTION S . THE ASSESSING OFFICER MUST DECIDE THE ISSUE AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN GROUNDS NO.2 TO 8, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE MADE UNDER SECTION 14A R/W RULE 8D, BOTH UNDER THE NORMAL PROVISIONS AS WELL AS WHILE COMPUTING BOOK PROFIT UNDER SECTION 115JB OF THE ACT. 9. BRIEF FACTS ARE, IN THE COURSE OF ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER NOTICING THAT THE ASSESSEE HAS EARNED DIVIDEND INCOME OF ` 98,15,965, WHEREAS , IT HAS DISALLOWED AN AMOUNT OF ` 7,70,250, UNDER SECTION 14A OF THE ACT CALLED UPON THE ASSESSEE TO EXPLAIN WHY DISALLOWANCE SHOULD NOT BE MADE AS PER RULE 8D. IN RESPONSE TO THE QUERY RAISED BY THE ASSESSING OFFICER, THE ASSESSEE FILED ITS SUBMISSIONS STATING THAT NO FURTHER DISALLOWANC E CAN BE MADE, HOWEVER, REJECTING THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSING OFFICER PROCEEDED TO COMPUTE THE DISALLOWANCE UNDER RULE 8D FOR AN AMOUNT OF ` 94,93,127. THE ASSESSEE HAVING ALREADY DISALLOWED AN AMOUNT OF ` 7,70,000, THE ASSESSING OFFICER MADE A NET DISALLOWANCE OF ` 87,23,127, UNDER SECTION 14A R/W RULE 8D , BOTH , UNDER THE NORMAL 6 GODREJ CONSUMER PRODUCTS LTD. PROVISIONS AS WELL AS WHILE COMPUTING BOOK PROFIT UNDER SECTION 115JB OF THE ACT. THE AFORESAID DISALLOWANCE MADE BY THE ASSESSING O FFICER WAS ALSO CONFIRMED BY LEARNED DRP. 10. THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED , DURI NG THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME BY WAY OF DIVIDEND. HE SUBMITTED , THE DIVIDEND INCOME EARNED BY THE ASSESSEE WAS FROM A FOREIGN COMPANY, HEN CE, TAXABLE IN INDIA. ACCORDINGLY, THE ASSESSEE HAS OFFERED THE DIVIDEND EARNED TO TAX. THUS, HE SUBMITTED , IN THE ABSENCE OF ANY EXEMPT INCOME EARNED DURING THE YEAR UNDER CONSIDERATION, NO DISALLOWANCE UNDER SECTION 14A OF THE ACT CAN BE MADE. FURTHER, H E SUBMITTED THAT NO DISALLOWANCE UNDER SECTION 14A OF THE ACT CAN BE MADE WHILE COMPUTING BOOK PROFIT UNDER SECTION 115JB OF THE ACT. THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED , WHILE DECIDING IDENTICAL ISSUE IN ASSESSMENT YEAR 2009 10, THE TRIBUNA L HAS RESTORED THE ISSUE TO THE ASSESSING OFFICER TO EXAMINE WHETHER ANY EXEMPT INCOME WAS EARNED BY THE ASSESSEE DURING THE YEAR UN DER CONSIDERATION AND IN CASE NO EXEMPT INCOME WAS EARNED, NO DISALLOWANCE IS TO BE MADE UNDER SECTION 14A OF THE ACT. FURTH ER, THE TRIBUNAL HAS ALSO DIRECTED THAT IF SURPLUS FUND IS AVAILABLE WITH THE ASSESSEE, THERE CANNOT BE ANY DISALLOWANCE OF INTEREST EXPENDITURE. THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED , SIMILAR DIRECTION MAY BE ISSUED TO THE ASSESSING 7 GODREJ CONSUMER PRODUCTS LTD. OFFICER I N THE IMPUGNED ASSESSMENT YEAR AS WELL. IN SUPPORT, HE RELIED UPON THE FOLLOWING DECISIONS: I) CHEMINVEST LTD., ITA NO.749/2014 (DEL. HC) II) BALLARPUR INDUSTRIES LTD., ITA NO.51/2016 (BOM. HC); AND III) VIREET INVESTMENT PVT. LTD., 82 TAXMANN.COM 415 (DEL.) (SB). 11. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , THE ISSUE MAY BE RESTORED BACK TO THE ASSESSING OFFICER FOR VERIFYING ASSESSEES CLAIM. 12. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , THE ISSUE MAY BE RESTORED BACK TO THE ASSESSING OFFICER FOR VERIFYING THE ASSESSEES CLAIM. 13. WE HAVE CONSIDERED RIVAL SUBMISSIONS IN THE LIGHT OF THE DECISIONS RELIED UPON AND PERUSED THE MATERIAL ON RECORD. AS DISCUSSED EARLIER, IT IS THE SPECIFIC CONTEN TION OF THE LEARNED SR. COUNSEL FOR THE ASSESSEE BEFORE US THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME WHATSOEVER AND THE DIVIDEND INCOME REFERRED TO BY THE ASSESSING OFFICER WAS EARNED FROM A FOREIGN COMPANY AND OFFERED TO TAX IN INDIA. IN O UR CONSIDERED OPINION, IF IN THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME, NO DISALLOWANCE UNDER SECTION 14A R/W RULE 8D CAN BE MADE. THEREFORE, THE ASSESSING OFFICER IS DIRECTE D TO DELETE THE DIS ALLOWANCE 8 GODREJ CONSUMER PRODUCTS LTD. AFTER VERIFYING ASSESSEES CLAIM. EVEN OTHERWISE ALSO, IT IS NOW FAIRLY WELL SETTLED THAT WHILE COMPUTING BOOK PROFIT, THE ASSESSING OFFICER CANNOT MAKE ANY ADJUSTMENT BY INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT. THE ONLY ADJUSTMENT WHIC H THE ASSESSING OFFICER CAN MAKE IS AS PER EXPLANATION 1(F) TO SECTION 115JB OF THE ACT. THEREFORE, IF THERE IS NO EXEMPT INCOME EARNED DURING THE YEAR, THEN THERE IS NO QUESTION OF MAKING ANY DISALLOWANCE UNDER SECTION 14A OF THE ACT. SUBJECT TO FACTUAL V ERIFICATION OF ASSESSEES CLAIM, THESE GROUNDS ARE ALLOWED. 14. IN GROUND NO.9, THE ASSESSEE HAS RAISED TH E ISSUE AS TO WHETHER PROVISION OF CORPORATE GUARANTEE WOULD COME WITHIN THE PURVIEW OF INTERNATIONAL TRANSACTION UNDER SECTION 92B OF THE ACT. WHEREAS, IN GROUNDS NO.10 TO 15, THE ASSESSEE HAS CHALLENGED THE QUANTIFICATION OF ARM'S LENGTH RATE OF CORPORATE GUARANTEE COMMISSION @ 2.5% PER ANNUM. 15. BRIEF FACTS ARE, IN THE COURSE OF PROCEEDINGS BEFORE HIM, THE TRANSFER PRICING OFFICER NOTICED THAT THE ASSESSEE COMPANY HAS PROVIDED CORPORATE GUARANTEE TO LENDERS WHICH ENABLE D ITS OVERSEAS SUBSIDIARY TO BORROW FUNDS FROM BANK. FURTHER, HE NOTICED THAT FOR PROVIDING SUCH CORPORATE GUARANTEE, THE ASSESSEE HAS CHARGED CORPORATE GUARANTEE FEE @ 0.5%. BEING OF THE VIEW THAT THE GUARANTEE 9 GODREJ CONSUMER PRODUCTS LTD. COMMISSION CHARGED @ 0.5% IS NOT AT ARM'S LENGTH, THE ASSESSING OFFICER PROCEEDED TO COMPUTE THE ARMS LENGTH PRICE OF THE CORPORATE GUARANTEE COMMISSION BY APPLYING THE RATE OF 2.5% PER ANNUM. IN RESPECT OF ALL THE ASSOCIATED ENTERPRISES ( AES ) , EXCEPT , GODREJ, SRI LANKA. LEARNED DRP ALSO UPHELD THE ADJUSTMENT MADE BY THE TRANSFER PRICING OFFICER IN RESPECT OF GUARANTEE COMMISSION. 16. THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED, WHILE CONSIDERING IDENTICAL ISSUE IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR S 2009 10 AND 2010 11, THOUGH , THE T RIBUNAL HAS HELD THAT PROVISION OF CORPORATE GUARANTEE COMES WITHIN THE PURVI EW OF INTERNATIONAL TRANSACTION AS DEFINED UNDER SECTION 92B OF THE ACT. HOWEVER, THE TRIBUNAL HAS ALSO HELD THAT GUARANTEE COMMISSION CHARGED @ 0.5% IS AT ARM'S LENGTH. THUS, HE SUBMITTED , THE ADJUSTMENT MADE SHOULD BE DELETED. 17. THE LEARNED DEPARTMENTAL REPRESENTATIVE , THOUGH , AGREED THAT THE ISSUE S ARE COVER BY THE EARLIER DECISION OF THE TRIBUNAL, HOWEVER, HE RELIED UPON THE OBSERVATIONS OF THE TRANSFER PRICING OFFICER AND LEARNED DRP. 18. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. NOTABLY, IDENTICAL ISSUE CAME UP FOR CONSIDERATIO N BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 2009 10. WHILE DECIDING THE ISSUE IN 10 GODREJ CONSUMER PRODUCTS LTD. ITA NO.1299/MUM./2013, DATED 20 TH APRIL 2016, THOUGH , THE TRIBUNAL HAS HELD THAT THE PROVISION OF CORPORATE GUARANTEE TO THE AE COMES WITHIN THE PURVIEW OF INTERNATIONAL TRANSACT ION AS DEFINED UNDER SECTION 92B OF THE ACT. HOWEVER , NOTIC ING THAT IN ASSESSEES OWN CASE THE REVENUE HAS ACCEPTED THE ARM'S LENGTH PRICE OF CORPORATE GUARANTEE COMMISSION @ 0.5% IN ASSESSMENT YEAR 2006 07 AND 2007 08, THE TRIBUNAL HAS HELD THAT ARMS LEN GTH PRICE OF THE CORPORATE GUARANTEE COMMISSION SHOULD BE FIXED @ 0.5%. THE SAME VIEW WAS REITERATED BY THE TRIBUNAL WHILE DECIDING IDENTICAL ISSUE IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2010 11 IN APPEAL BEING IT(TP)A NO.1899/MUM./ 2015, DATED 5 TH SEPTEMBER 2019. FACTS BEING IDENTICAL, RESPECTFULLY FOLLOWING THE AFORESAID DECISIONS OF THE CO ORDINATE BENCH IN ASSESSEES OWN CASE , THOUGH , WE HOLD THAT THE PROVISION OF CORPORATE GUARANTEE TO THE AES IS AN INTERNATIONAL TRANSACTION WITHIN THE MEANING OF SECTION 92B OF THE ACT, HOWEVER, WE ARE OF THE VIEW THAT GUARANTEE COMMISSION CHARGED BY THE ASSESSEE @ 0.5% IS AT ARM'S LENGTH REQUIRING NO FURTHER ADJUSTMENT. THEREFORE, WE DELETE THE ADJUSTMENT MADE BY THE TRANSFER PRIC ING OFFICER AND CONFIRMED BY LE ARNED DRP. GROUND NO.9, IS DISMISSED AND GROUNDS NO.10 TO 15, ARE ALLOWED. 19. IN GROUND NO.16, THE ASSESSEE HAS CHALLENGED THE ADJUSTMENT MADE ON ACCOUNT OF INT EREST ON LOAN ADVANCED TO THE A E. 11 GODREJ CONSUMER PRODUCTS LTD. 20. BRIEF FACTS ARE, NOTICING THAT THE ASS ESSEE HAS ADVANCE LOAN TO THE AE, THE TRANSFER PRICING OFFICER CALLED FOR NECESS ARY DETAILS. ON PERUSAL OF THE DETAILS HE FO UND THAT THE ASSESSEE HAS BENCH MARKED THE INT EREST ON LOAN PROVIDED TO THE AE BY CHARGING INTER E ST @ SIX MONTHS LIBOR PLUS 100 BASIS POINT S AS A COMPARABLE UNCONTROLLED PRICE (CUP). TO JUSTIFY THE AFORESAID BENCH MARKING, TH E ASSESSEE SUBMITTED THAT THE AE HAD AVAILED A LOAN FACILITY FROM ICICI BANK, U.K., AT THREE MONTHS LIBOR PLUS 120 BASIS POINT S . THE TRANSFER PRICING OFFICER, HO WEVER, DID NOT ACCEPT THE BENCH MARKING OF THE ASSESSEE AND PROCEEDED TO DETERMINE THE ARMS LENGTH PRICE OF THE INTEREST ON LOAN ADVANCED @ SIX MONTHS LIBOR PLUS 3%. 21. LEARNED DRP ALSO UPHELD THE DECISION OF THE TRANSFER PRICING OFFICER. 22. THE LEARNED SR. COUNSEL FOR T HE ASSESSEE SUBMITTED , IDENTICAL ISSUE CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2010 11 AND THE TRIBUNAL HAS RESTORED THE ISSUE TO THE ASSESSING OFFICER WITH CERTAIN DIRECTION S . 23. THE LEARNED DEPARTMENTAL REPRESENTATIVE , THOUGH , AGREED THAT THE ISSUE IS COVERED BY THE EARLIER DECISION OF THE TRIBUNAL, HOWEVER, 12 GODREJ CONSUMER PRODUCTS LTD. HE RELIED UPON THE OBSERVATIONS OF THE TRANSFER PRICING OFFICER AND THE DRP. 24. HAVING CONSIDERED RIVAL SUBMISSIONS , WE FIND THAT WHILE DECIDING IDENTI CAL ISSUE IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2010 11 IN APPEAL BEING IT(TP)A NO.1899/MUM./2015, DATED 5 TH SEPTEMBER 2019, THE TRIBUNAL AFTER FOLLOWING CERTAIN JUDICIAL PRECEDENTS HAS RESTORED THE ISSUE TO THE ASSESSING OFFICER WITH A DIRECTION TO AP PLY THE RATE OF INTEREST PREVAILING IN THE COUNTRY WHERE THE LOAN HAS BEEN GIVEN/ CONSUMED. FACTS BEING IDENTICAL, RESPECTFULLY FOLLOWING THE AFORESAID DECISIONS OF THE CO ORDINATE BENCH IN ASSESSEES OWN CASE, WE RESTORE THE ISSUE TO THE FILE OF THE ASSESS ING OFFICER WITH A DIRECTION TO COMPUTE THE ARMS LENGTH PRICE OF THE INTEREST ON LOAN ADVANCED BY APPLYING THE RATE OF INTEREST PREVAILING IN THE COUNTR Y WHERE THE LOAN HAS BEEN GIVEN/ CONSUMED. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 25. IN THE RESU LT, ASSESSEES APPEAL IS PARTLY ALLOWED. ITA NO.1003/MUM./2016 REVENUES APPEAL 26. IN GROUND NO.1, THE REVENUE HAS CHALLENGE D CERTAIN DIRECTIONS OF LEARNED DRP WITH REGARD TO DEDUCTION CLAIMED UNDER SECTION 80IC OF THE ACT. 13 GODREJ CONSUMER PRODUCTS LTD. 27. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. AS COULD BE SEEN, THE DIREC TIONS OF LEARNED DRP WHICH HAVE BEEN ASSAILED BEFORE US RELATE TO ALLOCATION OF CERTAIN EXPENDITURE BETWEEN ELIGIBLE AND NON ELIGIBLE UNDERTAKING S . ON A PERUSAL OF THE DIRECTIONS OF THE DRP, IT IS VERY MUCH CLEAR THAT FOLLOWING THE DECISION OF THE TRIBUNAL IN G ODREJ HOUSEHOLD PRODUCTS LTD. FOR THE ASSESSMENT YEAR 2006 07 AND IN ASSESSEES OWN CASE FOR THE ASSESS MENT YEAR 2005 06 AS WELL AS THE DRPS ORDER FOR THE ASSESSMENT YEAR 2010 11, LEARNED DRP HAS DIRECTED THE ASSESSING OFFICER TO RE COMPUTE THE PROFITS OF THE ELIGIBLE UNIT ON THE BASIS ADOPTED BY THE ASSESSEE. THUS, FROM THE AFORESAID FACTS, IT IS CLEAR THAT THE DIRECTION OF LEARNED DRP IS CONSISTENT WITH THE EARLIER DIRECTION PASSED BY IT IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2010 11 AS WELL AS THE DECISION S OF THE TRIBUNAL FOR EARLIER ASSESSMENT YEARS. THAT BEING THE CASE, WE DO NOT FIND MERIT IN THIS GROUND. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 28. IN GROUND NO.2, THE REVENUE HAS CHALLENGED THE DIRECTIONS OF LEARNED DRP NOT TO CONSIDER THE INTEREST ON TERM LOAN FOR COMPUTING DISALLOWANCE UNDER SECTION 14A R/W RULE 8D. 29. WHILE DECIDING IDENTICAL ISSUE AR ISING IN ASSESSEES APPEAL SUPRA, WE HAVE HELD THAT IN CASE NO EXEMPT INCOME IS EARNED BY THE AS SESSEE 14 GODREJ CONSUMER PRODUCTS LTD. DURING THE YEAR, NO DISALLOWANCE UNDER SECTION 14A OF THE ACT CAN BE MADE. THAT BEING THE CASE, THE GROUND RAISED BY THE REVENUE HAS BECOME REDUNDANT. SUFFICE TO SAY , IF THE ASSESSEE HAD SUFFICIENT IN TEREST FREE FUND AVAILABLE WITH IT TO TAKE CARE OF T HE INVESTMENT, DISALLOWANCE OF INTEREST EXPENDITURE CANNOT BE MADE. FOR THIS REASON ALSO, NO DISALLOWANCE UNDER SECTION 14A R/W RULE 8D(2)(II) CAN BE MADE. IN VIEW OF THE AFORESAID, WE DISMISS THE GROUND RAISED BY THE REVENUE. 30. IN GROUND NO.3, THE REVENUE HAS CHALLENGED THE DELETION OF DISALLOWANCE OF LEASE RENTALS. 31. BRI EF FACTS ARE, IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS REDUCED AN AMOUNT OF ` 3,88,927, FROM THE TOTAL INCOME TO WARDS LEASE RENTALS PAID FOR LEASE OF CARS. BEING OF THE VIEW THAT THE LEASE IN QUESTION IS A FINANCE LEASE AND THE ASSESSEE IS THE OWNER OF THE VEHICLE, THE ASSESSING OFFICER DISALLOWED THE LEASE RENTALS. HOWEVER, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, LEARNED DRP HAVING FOUND THAT SIMILAR DISALLOWANCE MADE IN PRECEDING ASSESSMENT YE AR WAS DELETED , FOLLOWED THE SAME AND DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 15 GODREJ CONSUMER PRODUCTS LTD. 32. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS OBSERVED , IDENTICAL ISSUE CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN ASSESSE E OWN CASE FOR THE ASSESSMENT YEAR 2009 10. WHILE DECIDING THE ISSUE IN ITA NO.1299/MUM./2013, DATED 20 TH APRIL 2016, THE TRIBUNAL FOLLOWING ITS EARLIER DECISION ALLOWED ASSESSEES CLAIM. FACTS BEING IDENTICAL, RESPECTFULLY FOLLOWING THE EARLIER DECISION S OF THE CO ORDINATE BENCH IN ASSESSEES OWN CAS E, WE UPHOLD THE DECISION OF LEARNED DRP ON THE ISSUE. GROUND RAISED IS DISMISSED. 33. IN GROUND NO.4, THE REVENUE HA S CHALLENGED THE DECISION OF LEARNED DRP IN DI RECTING THE ASSESSING OFFICER NOT TO ADD BACK PRO VISIONS FOR WEALTH TAX WHILE CALCULATING BOOK PROFIT UNDER SECTION 115JB OF THE ACT. 34. B RIEF FACTS ARE, WHILE COMPUTING THE BOOK PROFIT UNDER SECTION 115JB OF THE ACT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT , THOUGH , THE WEALTH TAX LIABILITY OF ` 5.42 LAKH WAS PROVIDED IN THE ACCOUNT S , THE SAME WAS NOT ADDED BACK TO ARRIVE AT THE BOOK PROFIT. ACCORDINGLY, HE ADDED BACK THE AFORESAID AMOUNT WHILE COMPUTING BOOK PROFIT UNDER SECTION 115JB OF THE ACT. THE ASSESSEE CHALLE NGED THE ADJUSTMENT MADE BY THE ASSESSING OFFIC ER TO THE BOOK PROFIT BEFORE LEARNED DRP. 16 GODREJ CONSUMER PRODUCTS LTD. 35. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, LEARNED DRP HELD THAT AS PER SECTION 115JB R/W ITS E XPLANATION, ONLY PROVISION FOR I NCOME TAX CAN BE ADDED , WHEREAS , NO SUCH ADJUS TMENT ON ACCOUNT OF PROVISION FOR HEALTH TAX CAN BE MADE. ACCORDINGLY, THEY DELETED THE ADJUSTMENT MADE BY THE ASSESSING OFFICER. 36. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , EXPLANATION 1(A) TO SECTION 115JB(2) OF THE ACT ALSO COVER S WEALTH TAX LIABILITY AS THE EXPRESSION INCOME T AX WOULD ALSO INCLUDE WEALTH TAX. WITHOUT PREJUDICE, HE SUBMITTED , EVEN OTHERWISE ALSO, THE WEALTH TAX LIAB ILITY WOULD BE COVERED UNDER EXPLANATION 1(C) OF SECTION 115JB(2) OF THE ACT, AS IT IS AN UNASCERT AINED LIABILITY. THUS, HE SUBMITTED , THE ADJUSTMENT MADE BY THE ASSESSING OFFICER SHOULD BE RESTORED. 37. THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED , WEALTH TAX LIABILITY CANNOT COM E WITHIN THE PURVIEW OF INCOME T AX AS EXPLANATION 1(A) TO SECTION 115 JB(2) OF THE ACT ONLY CONTEMPLA TES INCOME TAX PAID OR PAYABLE. T HEREFORE, WEALTH TAX IS NOT COVERED UNDER THE SAID EXPLANATION. FURTHER, HE SUBMITTED , WEALTH TAX LIABILITY IS AN ASCERTAINED LIABILITY, HENCE, NOT COVERED UNDER EXPLANATION 1(C) TO SECTION 11 5JB(2) OF THE ACT. IN SUPPORT OF HIS SUBMISSIONS, THE LEARNED COUNSEL RELIED UPON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S ECHJAY FORGINGS PVT. LTD., [2001] 251 ITR 51 (BOM.). 17 GODREJ CONSUMER PRODUCTS LTD. 38. WE HAVE CONSIDERED RIVAL SUBMISSIO NS IN THE LIGHT OF TH E DECISION RELIED UPON AND PERUSED THE MATERIAL ON RECORD. ON A READING OF EXPLANATION 1(A) TO SE CTION 115JB(2) OF THE ACT, IT BECOMES CLEAR THAT IT ONLY SPEAKS ABOUT INCOME TAX PAID OR PAYABLE OR ANY PROVISIONS MADE FOR INCOME TAX. THERE IS NO REFERENCE T O WEALTH TAX LIABILITY UNDER EXPLANATION 1(A) TO SECTION 115JB(2) OF THE ACT. EVEN OTHERWISE ALSO, THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S ECHJAY FORGINGS PVT. LTD. (SUPRA), WHEREIN WHILE CON SIDERING PARI MATERIA PROVISIONS CONTAINED UNDER SECTION 115J(IA) OF THE ACT, THE HONBLE HIGH COURT HAS HELD THAT WEALTH TAX IS NOT CONTEMPLATED IN INCOME TAX PAID OR PAYABLE. IN VIEW OF THE AFORESAID, WE HAVE NO HESITATION IN HOLDING THAT WEALT H TAX LIABILITY DOES NOT COME WITHIN THE PURVIEW OF EXPLANATION 1(A) TO SECTION 115 JB(2) OF THE ACT. INSOFAR AS LEARNED DEPARTMENTAL REPRESENTATIVES CONTENTION THAT WEALTH TAX IS AN UNASCERTAINED LIABILITY, HENCE, COVERED UNDER EXPLANATION 1(C) TO SECTION 115 JB(2) OF THE ACT, WE ARE UNABLE TO ACCEPT THE SAME. WEALTH TAX PAYABLE IS CERTAINLY AN ASCERTAINED LIABILITY, HENCE, CANNOT BE TREATED AS UNASCERTAINED LIABILITY. THEREFORE, IT IS NOT COVERED UNDER EXPLANATION 1(C) TO SECTION 115JB(2) OF THE ACT. IN VI EW OF THE AFORESAID , WE UPHOLD THE DIRECTION OF LEARNED DRP ON THE ISSUE. GROUND RAISED BY THE REVENUE IS DISMISSED. 18 GODREJ CONSUMER PRODUCTS LTD. 39. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 40. TO SUM UP, ASSESSEES APPEAL IS PARTLY ALLOWED AND REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN C OURT ON 25.02.2020 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 25.02.2020 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI