ACIT 2(1), MUMBAI V. HINDOOSTAN SPINNING & WEAVING MILLS LTD, MUMBAI

ITA 115/MUM/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5881 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 1993-1994
• Appeal Filed On: 03-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PITAMBER DAS
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Business income
• Section: 80HHC

Judgement Text

, ,P ,P,P ,P INCOME TAX APPELLATE TRIBUNAL,MUMBAI - H BENCH. , ! ! ! ! '# '# '# '# , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & AMIT SHUK LA,JUDICIAL MEMBER /. ITA NO.115/MUM/2013, $ $ $ $ % % % % / ASSESSMENT YEAR-1993-94 ACIT 2(1) R.NO.561, 5 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 VS HINDOOSTAN SPINNING & WEAVING MILLS LTD., SIR VITHALDAS CHAMBERS, 16, BOMBAY SAMACHAR MARG, MUMBAI-400001 PAN: AAACT4 057F ( &' / APPELLANT) ( ()&' / RESPONDENT) * + / REVENUE BY : SHRI PITAMBER DAS $,! $,! $,! $,! + + + + / ASSESSEE BY : SHRI K. GOPAL & JITENDRA SINGH $ $ $ $ * ** * !- !- !- !- / DATE OF HEARING : 20-03-2014 ./% * !- / DATE OF PRONOUNCEMENT : 26-03-2014 $ $ $ $ , 1961 * ** * 254 )1( !0! !0! !0! !0! ' ' ' ' ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM $ $ $ $ : CHALLENGING THE ORDER DT. 16.10.2012 OF THE CIT(A)- 4,MUMBAI, ASSESSING OFFICER (AO) HAS RAISED FOLLOWING GROUNDS OF APPEAL : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE TO THE EXTENT IMPUG NED IN THE GROUNDS ENUMERATED BELOW THE ORDER OF THE CIT(A) IS OPPOSED TO LAW AND FACTS OF THE CASE. 2.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO CONSIDER INCOME FOR DEDUCTION UNDER SECTI ON 80HHC OF THE IT ACT. FURTHER, THE CIT (A)HAS FAILED TO APPRECIATE THAT THE DECISIONS IN T HE CASES OF NIRMA INDUSTRIES LTD. AND HERO CYCLES LTD. ARE NOT APPLICABLE TO THE CASE OF THE A SSESSEE AND ARE DISTINGUISHABLE. 3.FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE DECISION OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE AO RESTORED . BRIEF HISTORY OF THE CASE : IN THIS CASE, AN ORDER U/S.143(3) WAS PASSED ON 27. 12.1995 DETERMINING THE TOTAL INCOME AT RS.2, 88,37,100/- AS AGAINST RETURNED INCOME OF RS.2,52,1 1,900/-.AGAINST THE SAID ORDER, THE ASSESSEE COMPANY PREFERRED AN APPEAL BEFORE THE FIRST APPEAL AUTHORITY (FAA),WHO DISMISSED IT.HIS ORDER WAS CHALLENGED BEFORE THE ITAT.TRIBUNAL VIDE ITS OR DER DATED RESTORED SOME ISSUES TO THE FILE OF THE ASSESSEE.DIRECTIONS GIVEN BY THE TRIBUNAL READ AS UNDER: 21.WE HAVE PERUSED THE RELEVANT PARTS OF THE ORDERS AS WELL S PAGE 37. IT IS NOTICED THAT INTEREST RECEIPTS INCLUDES VARIOUS RECEIPTS EARNED OUT OF NS CS, EMPLOYEES LOANS, FIXED DEPOSITS WITH THE BANKS, LATE PAYMENT FROM THE CUSTOMERS AND OTHERS. SO FAR AS THE LATE PAYMENTS FROM THE CUSTOMERS ARE CONCERNED, THE ISSUE HAS TO BE DECIDED IN LINE WITH THE JUDGMENT OF THE GUJARAT HIGH COURT IN THE CASE OF NIRMA INDUSTRIES LTD. AND HERO CYCLES, REFERRED ABOVE. REGARDING OTHER INTEREST RECEIPTS, WE HAVE NO BASIC INFORMATION AS TO WHETHE R THE SAID AMOUNTS CONSTITUTE OPERATIONAL 2 ITA NO. 115/MUM/2013 HINDOOSTAN SPINNING & WEAVING MILLS LTD INCOME OF THE ASSESSEE. IN THE ABSENCE OF THE BASIC FACTS AND FOF WANT OF SPEAKING ORDER FROM THE REVENUE AUTHORITIES. IN THIS REGARD, THIS PART OF T HE GROUND IS REFERRED TO THE FILES OF THE ASSESSING OFFICER WITH THE DIRECTION THAT A DETAILED / SPEAKI NG ORDER MAY BE PASSED BRINGING THE LOGIC AND REASONING FOR DISALLOWANCE. ACCORDINGLY, THIS PART OF THE GROUND IS SET ASIDE AND ASSESSING OFFICER IS DIRECTED TO ALLOW REASONABLE OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE, NEEDLESS TO SAY ASSESSEE WOULD CO-OPERATE WITH THE ASSESSING OFFICER IN THIS REGARD. DETAILS OF THE INTEREST RECEIVED DURING THE YEAR UN DER CONSIDERATION - REFER APPENDIX F. AS IS EVIDENT FROM THE SAID DETAILS AND THE AFORESA ID PARAGRAPH OF THE TRIBUNALS ORDER THE MAJOR PORTION OF THE SAID INTEREST IS RECEIVED AS LATE PA YMENTS FROM CUSTOMERS WHICH THE TRIBUNAL HAS ALREADY DIRECTED TO BE CONSIDERED AS A PART OF THE BUSINESS INCOME.THE REMAINING INTERESTS AS IS EVIDENT FROM THEIR NATURE ARE ALSO ONES WHICH ARISE DURING THE COURSE OF THE BUSINESS OF THE ASSESSEE AND ARE HENCE CANNOT BE REDUCED FROM BUSIN ESS PROFITS FOR THE PURPOSES OF COMPUTING DEDUCTION U/S. 80HHC. AS PER THE AO,IN PURSUANCE OF THE ORDER OF THE TRIB UNAL,HE FIXED THE MATTER FOR HEARING AND THE ASSESSEE WAS ACCORDED OPPORTUNITY TO GIVE DETAILS O F THE INTEREST INCOME.AS PER THE AO NO SPECIFIC SUBMISSIONS WERE PUT FORWARD BY THE ASSESSEE DURING THE COURSE OF SET-ASIDE ASSESSMENT PROCEEDINGS.HE HELD THAT THE INTEREST FROM CUSTOMER S CONSTITUTED PROFITS FROM BUSINESS,THAT THE ASSESSEE WAS ENTITLED FOR DEDUCTION U/S.80HHC OF TH E ACT,THAT IN ABSENCE OF ANY SUBMISSION FROM THE ASSESSEE, THE ACTUAL AMOUNT OF INTEREST RECEIVE D FROM CUSTOMERS COULD NOT BE DETERMINED. FINALLY,HE HELD THAT THE ASSESSEE WAS NOT ENTITLED FOR THE DEDUCTION. IN THE APPELLATE PROCEEDINGS,FIRST APPELLATE AUTHOR ITY(FAA)HELD THAT THE TRIBUNAL HAD CLEARLY DIRECTED THAT ISSUE REGARDING INTEREST FROM CUSTOME RS HAD TO BE DECIDED IN LINE WITH THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF NIRMA INDUSTRIES LTD. AND HERO CYCLES,THAT THE HONBLE GUJARAT HIGH COURT AND HONBLE PUNJAB HIGH COURT HAD HELD THAT INTEREST RECEIVED FROM CUSTOMERS WAS A BUSINESS INCOME,THAT THE ASSESSEE W AS ELIGIBLE FOR DEDUCTION U/S.80HHC ON ACCOUNT OF INTEREST RECEIVED FROM CUSTOMERS AS BUSI NESS INCOME,THAT IT DID NOT REQUIRE ANY FURTHER DETAILS,THAT SAME WAS AVAILABLE EVEN DURING THE INI TIAL ASSESSMENT PROCEEDINGS WITH THE AO, FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH COUR T AND HONBLE PUNJAB AND HARAYANA HIGH COURT IN THE ABOVE SAID CASES,FAA HELD THE INTEREST RECEIVED FROM CUSTOMERS WAS BUSINESS INCOME FOR THE PURPOSE OF DEDUCTION U/S.80HHC OF THE ACT.A CCORDINGLY,HE DIRECTED THE AO TO RECALCULATE THE DEDUCTION U/S.80HHC. 2 . BEFORE US,DEPARTMENTAL REPRESENTATIVE(DR) RELIED UPON THE ORDER OF THE AO.HE RELIED UPON THE JUDGMENT OF LIBERTY INDIA(317ITR218).AUTHORISED REP RESENTATIVE(AR)SUBMITTED THAT TRIBUNAL HAD CLEARLY HELD THAT INTEREST RECEIVED FROM THE CU STOMERS WAS BUSINESS INCOME OF THE ASSESSEE AND IT WAS ENTITLED TO CLAIM DEDUCTION U/S.80HHC WITH R EGARD TO THE SAID INTEREST,THAT THE ASSESSEE HAD FILED ALL THE DETAILS,THAT ORDER OF THE FAA WAS AS PER THE GUIDE LINES ISSUED BY THE TRIBUNAL, THAT THE IN THE JUDGMENT OF LIBERTY INDIA(SUPRA)HONBLE APEX COURT HAD NOT DEALT WITH THE ISSUE OF 80HHC. 3 .WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL BEFORE US.WE FIND THAT THE TRIBUNAL HAD SPECIFICALLY HELD THAT ISSUE OF LATE P AYMENTS FROM THE CUSTOMERS HAD TO BE DECIDED IN LINE WITH THE JUDGMENT OF THE GUJARAT HIGH COURT IN THE CASE OF NIRMA INDUSTRIES LTD. AND HERO CYCLES.WE FIND THAT IN THE CASE OF LIBERTY INDIA(SU PRA)HONBLE SUPREME COURT HAS DEALT WITH THE DEDUCTION AVAILABLE U/S.80-I, 80-IA(1),(4)AND 80-IB .IT HAS NOTHING TO DO WITH THE 80 -HHC DEDUCTION.FAA,IN THE APPELLATE PROCEEDINGS,HAS GIVE N A FINDING OF FACT THAT ALL THE DETAILS WERE AVAILABLE WITH THE AO EVEN AT THE INITIAL STAGE.IN THESE CIRCUMSTANCES,WE ARE UNABLE TO UNDERSTAND THE REASONS FOR DISALLOWANCE MADE BY THE AO.IN PURS UANCE OF THE ORDER OF THE ITAT HE WAS 3 ITA NO. 115/MUM/2013 HINDOOSTAN SPINNING & WEAVING MILLS LTD EXPECTED TO INCLUDE THE INTEREST AMOUNT WHILE RECAL CULATING THE DEDUCTION U/S.80HHC OF THE ACT.BUT,HE DISALLOWED THE CLAIM FOR THE REASONS BES T KNOWN TO HIM.NOT ONLY THIS,HE HAS FILED AN APPEAL AGAINST THE ORDER OF THE FAA WHO HAD DIRECTE D HIM TO FOLLOW THE ORDER OF THE TRIBUNAL. IN OUR OPINION,ATTITUDE OF THE AO IS BEYOND COMPREHENS ION.BEFORE CHALLENGING THE ORDER OF THE FAA,WHO IS VERY SENIOR OFFICER OF THE DEPARTMENT,HE SHOULD HAVE GONE THROUGH THE ORDER OF THE TRIBUNAL PROPERLY.ANYHOW,IN OUR OPINION,ORDER OF TH E FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY.EFFECTIVE GROUND OF APPEAL IS DECIDED AGA INST THE AO.WE DIRECT THE AO THAT IF HE HAS NOT GIVEN APPEAL EFFECT TO THE ORDER OF THE FAA TILL DA TE,HE SHOULD RE-CALCULATE THE 80HHC DEDUCTION AS DIRECTED BY HIM. AS A RESULT,APP EAL FILED BY THE AO STANDS DISMISSED. 1!2 $,! - * $ 3 * ! 45. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH MARCH, 2014 . ' * ./% 7 8$ 26 EKPZ EKPZ EKPZ EKPZ , 201 4 / * 0 9 SD/- SD/- ( ! '# / AMIT SHUKLA) ( / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 8$ /DATE: 26 TH MARCH,2014. SK ' ' ' ' * ** * (!: (!: (!: (!: ;:%! ;:%! ;:%! ;:%! / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / &' 2. RESPONDENT / ()&' 3. THE CONCERNED CIT(A)/ < = , 4. THE CONCERNED CIT / < = 5. DR H BENCH, ITAT, MUMBAI / :>0 (!$ ,P ,P,P ,P , . . . 6. GUARD FILE/ 0 1 ):! ):! ):! ):! (! (!(! (! //TRUE COPY// '$ / BY ORDER, ? / 4 DY./ASST. REGISTRAR , /ITAT, MUMBAI