G.VK.Industries Limited, Secunderabad V. ADDL.CIT, Hyderabad

ITA 1170/HYD/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1339 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 31-10-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 06-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M H NAIK
• Assessee Lawyers: V SIVA KUMAR
• Keywords: Business income
• Section: 6; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1170/HYD/2010 : ASSESSMENT YEAR 2007-2008 M/S. G.V.K.INDUSTRIES, LIMITED, SECUNDERABAD. (PAN AAACG 7499 J) V/S ADDL. COMMISSIONER OF INCOME-TAX RANGE 2, HYDERABAD. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.SIVA KUMAR RESPONDENT BY : SHRI M.H.NAIK DATE OF HEARING 02.01.2013 DATE OF PRONOUNCEMENT 22.02.2013 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-III, HYDERA BAD DATED 29.06.2010 FOR THE ASSESSMENT YEAR 2007-08. 2. THOUGH ELABORATE GROUNDS ARE RAISED, ASSESSEE S GRIEVANCE IN THIS APPEAL RELATES TO DENIAL OF RELIEF UNDER S.80I OF THE INCOME-TAX ACT, 1961, IN RELATION TO VARIOUS ITEMS OF INCOME, TREAT ING THE SAME AS NOT DERIVED FROM THE BUSINESS OF THE ASSESSEE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF GENERATION AND SALE OF P OWER, AND IN THE ASSESSMENT YEAR 2007-08, IT HAS CLAIMED 100% DEDUCT ION ON THE PROFITS UNDER S.80IA OF THE ACT. ASSESSEE COMPUTED INCOME FROM BUSINESS (GENERATION OF POWER) AT RS.52,23,65,837 WHICH WAS FULLY CLAIMED AS DEDUCTION UNDER S.80IA OF THE ACT. UNDER INCOME FR OM OTHER SOURCES, THE ASSESSEE OFFERED AN INCOME OF RS.22,70,08,899 WHIC H CONSISTS OF GUARANTEED COMMISSION OF RS.11,78,1,918 AND PROFESS IONAL SERVICES FEE ITA NO.1170/HYD/2010 M/S. G.V.K.INDUSTRIES, LIMITED, SECUNDERABAD. 2 OF RS.9,03,79,600 RECEIVED FROM MUMBAI INTERNATIONA L PVT. LTD. FOR PROVIDING CORPORATE GUARANTEE TO THE BANKS AND FOR PROVIDING CORPORATE SERVICES RESPECTIVELY. ASSESSEE ALSO OFFERED AN IN COME OF RS.1,83,75,110 AS INTEREST INCOME RECEIVED IN RESPECT OF PHASE I O F THE PROJECT, AND RS.4.,32,271 AS INTEREST INCOME FROM FIXED DEPOSITS WITH BANKS OUT OF FUNDS PHASE II PROJECT, WHICH HAS NOT COMMENCED BUS INESS DURING THE YEAR UNDER APPEAL. IN THE COURSE OF SCRUTINY ASSE SSMENT, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS CLAIMED DEDUCTI ON OF RS.52,23,65,837, UNDER S.80IA FOR PHASE-I, IN RESPE CT OF VARIOUS ITEMS OF INCOME, SOME OF WHICH CANNOT BE CATEGORIZED AS BUSI NESS INCOME, SO AS TO BE ELIGIBLE FOR DEDUCTION UNDER S.80IA OF THE AC T. HE ACCORDINGLY, RESTRICTED THE DEDUCTION UNDER S.80IA OF THE ACT TO RS.50,53,74,837, AS AGAINST THE ASSESSEES CLAIM FOR DEDUCTION OF RS.52 ,23,65,837. THE ITEMS OF MISCELLANEOUS INCOME, IN RELATION TO WHICH ALSO THE ASSESSEE CLAIMED DEDUCTION UNDER S.80IA OF THE ACT, WHICH HAS BEEN D ISALLOWED BY THE ASSESSING OFFICER, TREATING THE SAME AS NOT PARTAKI NG THE CHARACTER OF BUSINESS INCOME ARE AS FOLLOWS- 1. REFUND OF EXCESS BANK CHARGES (RTGS) DEBITED BY FEDERAL BANK LTD. IN PREVIOUS YEAR RS. 1,19,854 2. SALE OF SCRAP MATERIAL ETC. 8.67,209 3. R E FUND RECEIV E D FROM MCH AGAINST TRAFFIC ISLAND ADOPTION 10,000 4, CREDIT BALANCES WRITTEN BACK 1,87,124 5. REFUND OF B.G. COMMISSION DEBITED IN F.Y. 04-05 2,49,755 6. EXCESS PROVISION IN EARLIER YEARS WRITTEN BACK INSURANCE CLAIM 29,60,159 7. INSURANCE CLAIM RECEIVED AGAINST BREAKDOWN OF GT-III GENERATOR 9,50,921 8. LEASE OF FRUITS BEARING TREES 95,000 9. REFUND OF EXCESS PREMIUM 80,50,058 10. SUPPLY OF LIST OF SHARE HOLDERS 1,890 11. FOREIGN EXCHANGE VARIATION ON IMPORTED SPARES BETWEEN DATE OF RECEIPTS OF GOODS AN DATE OF PAYMENT OF THE SUPPLIER 34,99,030 ITA NO.1170/HYD/2010 M/S. G.V.K.INDUSTRIES, LIMITED, SECUNDERABAD. 3 4. ON APPEAL, THE CIT(A), THOUGH CONFIRMED THE VIE W TAKEN BY THE ASSESSING OFFICER WITH REGARD TO VARIOUS ITEMS NOTED ABOVE AND HELD AS NOT DERIVED FROM THE INDUSTRIAL UNDERTAKING AND CONSEQUENTLY NOT QUALIFYING FOR RELIEF UNDER S.80IA OF THE ACT, HE H ELD OTHERWISE ONLY IN RESPECT A SUM OF RS.15,62,500 RELATING TO EXCESS PR OVISION OF GRATUITY CREDITED TO THE ACCOUNT, WHICH IS INCLUDED IN THE EXCESS AMOUNT OF PROVISIONS OF EARLIER YEARS WRITTEN BACK, SUM OF RS .29,60,159. IN RELATION TO THIS AMOUNT ALSO, HE DIRECTED THE ASSESSING OFFI CER TO EXCLUDE THE SAID ITEM FROM THE DISALLOWABLE ITEMS, AFTER VERIFICATIO N OF THE DETAILS FROM THE COMPUTATION OF INCOME FILED BY THE ASSESSEE ALONG W ITH THE RETURN OF INCOME. IN RESPECT OF ALL OTHER ITEMS, THE CIT(A), OBSERVING THAT THE SAME HAVE NOT ARISEN OUT OF THE BUSINESS ACTIVITY, VIZ. GENERATION OF POWER, OF THE ASSESSEE, UPHELD THE DISALLOWANCE MAD E BY THE ASSESSING OFFICER. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), ASSESSEE PREFERRED THIS SECOND APPEAL BEFORE US. 6. WE HEARD BOTH SIDES AND PERUSED THE ORDERS OF T HE LOWER AUTHORITIES AND OTHER MATERIAL ON RECORD. FOR CLARI TY, WE SHALL CATEGORISE THE ABOVE ITEMS INTO VARIOUS GROUPS AS FOLLOWS- GROUP I (A) REFUND OF EXCESS BANK CHARGES RS.1,19,854 (B) SALE OF SCRAP RS.8,67,209 (C) REFUND RECEIVED FROM MCH RS. 10,000 (D) CREDIT BALANCES WRITTEN BACK RS.1,87,124 (E) REFUND OF B.G. COMMISSION DEBITED IN FY 2004-05 RS.2, 49,755 (F) EXCESS PROVISION OF EARLIER YEARS WRITTEN BACK RS.2 9,60,159 ITA NO.1170/HYD/2010 M/S. G.V.K.INDUSTRIES, LIMITED, SECUNDERABAD. 4 (G) INSURANCE CLAIM RECEIVED AGAINST BREAK DOWN OF GT0III GENERATOR RS. 9,50,921 GROUP II (A) LEASE OF FRUIT BEARING TREES RS. 95,00 0 GROUP -III (A) AMOUNT RECEIVED ON SUPPLY OF LIST OF SHARE HOLDERS RS. 1,890 GROUP IV (A) GAIN ON ACCOUNT OF FOREIGN EXCHANGE VARIATION ON IMPORTED SPARES BETWEEN DATE OF RECEIPT OF GOODS AND DATE OF PAY- MENT TO THE SUPPLIER RS.34,99,030 GROUP V (A) REFUND OF EXCESS PREMIUM R S.80,50,058 7. AS FOR THE ITEMS FALLING UNDER THE FIST GROUP A RE CONCERNED, WE ARE UNABLE TO UNDERSTAND WHETHER THESE ITEMS HAVE A NY DIRECT/INDIRECT LINK WITH THE BUSINESS OPERATIONS OF THE ASSESSEE I N ITS UNDERTAKING. IT IS NOT ESTABLISHED EVEN BEFORE US BY THE LEARNED AUTHO RISED REPRESENTATIVE THAT THESE ITEMS HAVE DIRECT NEXUS WITH THE BUSINES S ACTIVITIES OF THE ASSESSEE UNDERTAKING, SO AS TO CLAIM THE INCOME FRO M THOSE SOURCES AS DERIVED FROM THE BUSINESS OPERATIONS OF THE ASSESSE E. FURTHER, CREDIT BALANCES WRITTEN OFF ARE DIRECTLY CONNECTED TO THE BUSINESS ACTIVITIES OF THE ASSESSEE, IF THE SAME WERE CLAIMED AS REVENUE EXPEN DITURE AGAINST THE PROFIT OF THE INDUSTRIAL UNDERTAKING. SIMILARLY, I F THE SCRAP IS GENERATED FROM THE OPERATIONAL ACTIVITY OF THE INDUSTRIAL UND ERTAKING, THEN INCOME ON SALE OF THE SAME SHOULD BE CONSIDERED AS INCOME DER IVED FROM THE INDUSTRIAL UNDERTAKING. IF IT IS FOUND OTHERWISE, IT IS MERELY INCIDENTAL TO THE ASSESSEES BUSINESS AS A WHOLE, AND AS SUCH IT CANNOT BE CONSIDERED AS INCOME DERIVED FROM THE INDUSTRIAL UNDERTAKING. THEREFORE, FOR VERIFYING THE NEXUS BETWEEN THESE ITEMS WITH THE BU SINESS OPERATIONS/ACTIVITY OF THE ASSESSEE, WE REMIT THE M ATTER TO THE FILE OF THE ITA NO.1170/HYD/2010 M/S. G.V.K.INDUSTRIES, LIMITED, SECUNDERABAD. 5 ASSESSING OFFICER, FOR FRESH CONSIDERATION OF THE I SSUE IN RELATION TO THESE ITEMS, IN ACCORDANCE WITH LAW AND AFTER GIVING REA SONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE IS DIRECTED TO FURNISH NECESSARY EVIDENCE AND MATERIAL IN SUPPORT OF ITS CLAIM THAT THESE ITEMS ARE DIRECTLY CONNECTED TO THE OPERATIONAL ACTIVITIES OF THE BUSI NESS OF THE ASSESSEES UNDERTAKING, AS OTHERWISE; OR THAT THE OTHER INCOME BY WAY OF WRITE BACK, ARE THOSE WHICH ARE WRITTEN OFF IN THE BOOKS OF ACC OUNT, AND WERE EARLIER ALLOWED AS DEDUCTION WHILE COMPUTING THE INCOME OF THE ASSESSEE FORM THE INDUSTRIAL UNDERTAKING, SO AS TO CLAIM THE SAME AS ELIGIBLE FOR DEDUCTION UNDER S.80IA OF THE ACT. IN THE ABSENCE OF EVIDENCE FURNISHED BY THE ASSESSEE OR INADEQUACY OF THE EVIDENCE THAT MAY BE FURNISHED BY THE ASSESSEE, TO SUBSTANTIATE ITS CLAIM, THE ASSES SING OFFICER IS AT LIBERTY TO DISALLOW THE CLAIM OF THE ASSESSEE FOR RELIEF IN RELATION TO THOSE ITEMS UNDER S.80IA OF THE ACT. WE DIRECT ACCORDINGLY. 8. AS FOR THE INCOME OF RS.95,000 FROM LEASE OF FR UIT BEARING TREES, THE LEARNED AUTHORISED REPRESENTATIVE PLEADE D THAT AT LEAST THIS INCOME SHOULD BE SET OFF AGAINST THE EXPENDITURE IN CURRED AND IT IS ONLY THE NET AMOUNT WHICH SHOULD BE EXCLUDED FROM THE BU SINESS INCOME TAKEN INTO CONSIDERATION FOR COMPUTING THE RELIEF U NDER S.80IA OF THE ACT. 9. ON CAREFUL CONSIDERATION OF THE MATTER, WE FIND THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF PANDIAN CHEMICALS (262 ITR 278 ). IN THIS VIEW OF THE MATTER, WE ARE NOT INCLINED TO HOLD THAT INCOME FROM LEASE OF FRUIT BEARING TREES CANNOT BE TREATED AS HAVING BEEN DERI VED FROM THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE. EVEN THE P LEA OF THE ASSESSEE FOR TELESCOPING THIS ITEM OF INCOME AGAINST EXPENDITURE INCURRED FOR RAISING THE TREES IS DEVOID OF MERIT AND CANNOT BE ACCEPTED . WE ACCORDINGLY, HOLD THAT BOTH THE INCOME AS WELL AS EXPENDITURE SH OULD BE EXCLUDED FROM ITA NO.1170/HYD/2010 M/S. G.V.K.INDUSTRIES, LIMITED, SECUNDERABAD. 6 THE PURVIEW OF COMPUTATION OF RELIEF UNDER S.80IA O F THE ACT. WE THEREFORE, UPHOLD THE ORDER OF THE REVENUE AUTHORIT IES ON THIS ASPECT. 10. EVEN WITH REGARD TO THE INCOME OF RS.1,890 EARNED BY THE ASSESSEE BY SUPPLYING THE LIST OF SHAREHOLDERS, FAL LING UNDER GROUP III, THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F PANDIAN CHEMICALS (SUPRA) IS AGAINST THE ASSESSEE. WE ACCORDINGLY HOL D THAT THIS INCOME CANNOT BE HELD TO HAVE BEEN DERIVED FROM THE INDUST RIAL UNDERTAKING OF THE ASSESSEE. WE THEREFORE, UPHOLD THE ORDER OF THE REVENUE AUTHORITIES ON THIS ASPECT. 11. NOW, COMING TO THE NEXT ITEM OF RS.34,99,030, BEING GAIN ON ACCOUNT OF FOREIGN EXCHANGE VARIATION ON IMPORTED SPARES BETWEEN DATE OF RECEIPT OF GOODS AND DATE OF PAYMENT TO THE SUPP LIER, FALLING UNDER GROUP IV, WE FIND THAT THIS ISSUE IS COVERED IN FAV OUR OF THE ASSESSEE WITH THE CONSOLIDATED ORDER OF THE TRIBUNAL IN ASSESSEE S OWN CASE, INTER-ALIA FOR ASSESSMENT YEAR 2003-04 IN ITA NO.889/HYD/2008, WHEREIN THE TRIBUNAL VIDE ITS ORDER DATED 18.5.2012, WHILE DEAL ING WITH THIS ITEM ALONGWITH OTHER ITEMS INVOLVED IN THAT YEAR, HELD A S FOLLOWS- 11. WE HEARD BOTH THE PARTIES. THE MAIN QUESTION BEFORE US IS WHETHER THE SPECIFIC ITEMS OF RECEIPTS MENTIO NED AT (A) TO (F) ABOVE. CONSTITUTE THE INCOME DERIVED FROM THE INDUS TRIAL UNDERTAKING, ELIGIBLE FOR DEDUCTION UNDER S.80IA OF THE ACT, OR NOT. DESPITE THE FINDING OF THE REVENUE AUTHORITY WITH R EGARD TO OTHER RECEIPTS THAT THEY ARE NOT DERIVED FROM THE BUSINES S OF THE UNDERTAKING, THERE IS NO CLARITY AS TO WHETHER THE SAID ITEMS OF INCOME FALL AS OPERATIONAL INCOME OR INELIGIBLE ANC ILLARY PROFIT, WHICH IS THE EXPRESSION USED BY THE APEX COURT IN T HE CASE OF LIBERTY INDIA (SUPRA). WE FIND THAT THE JUDGMENT O F THE APEX COURT IN THE CASE OF LIBERTY INDIA (SUPRA) WAS NOT IN EXISTENCE AT THE RELEVANT POINT OF TIME. IN THIS VIEW OF THE MA TTER AND IN VIEW OF THE MUTUALLY AGREED POSITION, WE ARE OF THE OPIN ION THAT THIS ISSUE MUST ALSO BE SET ASIDE TO THE FILE OF THE ASS ESSING OFFICER FOR WANT OF CLEAR FINDING AS TO WHETHER THE SPECIFIC IT EMS OF INCOME OF THE ASSESSEE CONSTITUTE OPERATIONAL INCOME OF THE A SSESSEE ELIGIBLE FOR RELIEF UNDER S.80IA OF THE ACT OR INELIGIBLE AN CILLARY PROFITS OF THE ASSESSEE. WE DO SO ACCORDINGLY, AND SET ASIDE THIS ISSUE TO THE ITA NO.1170/HYD/2010 M/S. G.V.K.INDUSTRIES, LIMITED, SECUNDERABAD. 7 FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO R EDECIDE THE SAME IN THE LIGHT OF OUR OBSERVATIONS, IN ACCORDANCE WIT H LAW AND AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASS ESSEE. CONSISTENT WITH THE VIEW TAKEN FOR THE ASSESSMENT Y EAR 2003-04, EVEN FOR THE YEAR UNDER APPEAL, VIZ. 2007-08, WE SET ASIDE T HE IMPUGNED ORDER OF THE CIT(A) ON THIS ISSUE, AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO VERIFY WHETHE R THIS SPECIFIC ITEM OF INCOME CONSTITUTES OPERATIONAL INCOME OF THE ASSESS EE, SO AS TO BE ELIGIBLE FOR RELIEF UNDER S.80IA OF THE ACT, OR INE LIGIBLE ANCILLARY PROFITS OF THE ASSESSEE. THE ASSESSING OFFICER SHALL ACCORDING LY REDECIDE THIS ISSUE IN ACCORDANCE WITH LAW AND IN CONSONANCE WITH THE V IEW TAKEN FOR THE ASSESSMENT YEAR 2003-04 IN PURSUANCE OF THE DIRECTI ONS OF THIS TRIBUNAL NOTED ABOVE, OF COURSE, AFTER GIVING REASONABLE OPP ORTUNITY OF HEARING TO THE ASSESSEE. 12. NOW, COMING TO THE NEXT ITEM OF REFUND OF EXCE SS PREMIUM RS.80,50,058, FALLING UNDER GROUP V, WE FIND THAT T HIS ISSUE IS COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2002-03, IN THE CONTEXT OF REVENUES APPEAL ITA NO. 1579/HYD/2008, WHEREIN, THE TRIBUNAL, VIDE ITS ORDER DATED 30 TH MARCH, 2012, DECIDED THIS ISSUE IN THE FOLLOWING MANNER- 19. WE PERUSED THE FACTS OF THE CASE AND ISSUES RA ISED BY THE PARTIES BEFORE US. ON UNDERSTANDING THE ISSUE, WE FIND THAT THE ORDERS DO NOT SPEAK OF THE BASIC FINDINGS RELEVANT FOR ADJUDICATI ON OF THIS TAX REFUND AND IF IT CONSTITUTES AN ELIGIBLE PROFIT OR INELIGIBLE ANCILLARY PROFIT IN VIEW OF THE SUPREME COURT DECISION IN THE CASE OF LIBERTY I NDIA 217 ITR 218. IT IS ALSO EVIDENT THAT THE AUTHORITIES AT RELEVANT POINT OF TIME DID NOT HAVE THE BENEFIT OF THE SAID JUDGMENT OF THE APEX COURT IN T HE CASE OF LIBERTY INDIA (SUPRA), WHICH IS DATED AUGUST 2009. WE HAVE ALSO P ERUSED THE OPERATIONAL PORTION OF THE SAID DECISION GIVEN ON P AGE 219 OF THE REPORTED SAID ITR WHICH READS AS FOLLOWS:- INCENTIVE PROFITS ARE NOT PROFITS DERIVED FROM ELI GIBLE BUSINESS UNDER SECTION 80-IB: THEY BELONG TO THE CATEGORY OF ANCILLARY PROFITS OF SUCH UNDERTAKING. PROFITS DERIVED BY WAY OF INCE NTIVES SUCH AS DEPB/ DUTY DRAWBACK CANNOT BE CREDITED AGAINST THE COST OF ITA NO.1170/HYD/2010 M/S. G.V.K.INDUSTRIES, LIMITED, SECUNDERABAD. 8 MANUFACTURE OF GOODS DEBITED IN THE PROFIT AND LOSS ACCOUNT AND THEY DO NOT FALL WITHIN THE EXPRESSION PROFITS DER IVED FROM INDUSTRIAL UNDERTAKING UNDER SECTION 80-IB. 20. FROM THE ABOVE, IT IS EVIDENT THAT EVERY RECEIP T OF THE INDUSTRIAL UNDERTAKING IS NOT AN ELIGIBLE PROFITS DERIVED FROM THE SAID UNDERTAKING. WITH THE CATEGORIZATION DONE BY THE SUPREME COURT B ASED ON A LOGIC IE ELIGIBLE PROFITS AND INELIGIBLE ANCILLARY PROFITS, THE SAID DISTINCTION HAS TO BE LOOKED INTO BY THE AO WHILE ADJUDICATING THE ISSUE. THE RECEIPT IN QUESTION BEING INSURANCE PREMIA PAID AND THE SAME I S OPERATIONAL INCOME OF THE ASSESSEE. DESPITE THE FINDING OF THE REVENUE AUTHORITY THAT IT IS NOT DERIVED FROM THE BUSINESS OF THE UNDERTAKING, THERE IS NO CLARITY AS TO WHETHER THE SAID INCOME FALLS AS OPERATIONAL INCOME OR INELIGIBLE ANCILLARY PROFI T, WHICH IS THE EXPRESSION USED BY THE APEX COURT IN THE CASE OF LI BERTY INDIA (SUPRA). ACCORDINGLY, THE A.O IS DIRECTED TO GATHER THE RELE VANT FACTS AND DECIDE THE ISSUE AFRESH AFTER GRANTING REASONABLE O PPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, THIS PART OF TH E GROUND IS SET ASIDE. 21. GROUND NO.4 OF THE REVENUE RELATES NETTING OF THE EXCESS PREMIUM RECEIVED AGAINST THE INSURANCE PREMI UM AMOUNT PAID DURING THE YEAR, FOR TAKING INTO ACCOUNT ONLY THE DIFFERENTIAL AMOUNT FOR EXCLUSION FROM THE INCOME ELIGIBLE FOR R ELIEF UNDER S.80IA OF THE ACT. WE FIND THAT THE CIT(A) HAS AC CEPTED THE PLEA OF THE ASSESSEE FOR THE BENEFIT OF NETTING RELYING ON THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF LALSONS ENTERPRISES (89 ITD 25). IN THE ABSENCE OF ANY DECISION TO THE CONTRARY BROUGHT TO OUR NOTICE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) IN THIS BEHALF. WE ACCORDINGLY UPHOLD THE SA ME, AND REJECT THE GROUND OF THE REVENUE IN THIS BEHALF. CONSISTENT WITH THE VIEW TAKEN FOR THE ASSESSMENT Y EAR 2002-03, EVEN FOR THE YEAR UNDER APPEAL, VIZ. 2007-08, WE SET ASIDE T HE IMPUGNED ORDER OF THE CIT(A) ON THIS ISSUE, AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO VERIFY WHETHE R THIS SPECIFIC ITEM OF INCOME CONSTITUTES OPERATIONAL INCOME OF THE ASSESS EE, SO AS TO BE ELIGIBLE FOR RELIEF UNDER S.80IA OF THE ACT, OR INE LIGIBLE ANCILLARY PROFITS OF THE ASSESSEE. THE ASSESSING OFFICER SHALL ACCORDING LY REDECIDE THIS ISSUE IN ACCORDANCE WITH LAW, AFTER GIVING REASONABLE OPP ORTUNITY OF HEARING TO THE ASSESSEE. 13. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALL OWED FOR STATISTICAL PURPOSES. ITA NO.1170/HYD/2010 M/S. G.V.K.INDUSTRIES, LIMITED, SECUNDERABAD. 9 ORDER PRONOUNCED IN THE COURT ON 22.02.2013 SD/ - ( ASHA VIJAYARAGHAVAN ) SD/ - ( CHANDRA POOJARI ) JUDICIAL MEMBER. ACCOUNTANT MEMBER. DT/- 22 ND FEBRUARY, 2013 COPY FORWARDED TO: 1. M/S. G.V.K. INDUSTRIES, LIMITED, 156 - 159, PAIGAH HOSUE, S.P.ROAD, SECUNDERABAD. 2. ADDL. COMMISSIONER OF INCOME-TAX RANGE 2, HYDERA BAD 3. 4. 5. COMMISSIONER OF INCOME - TAX(APPEALS) III, HYDERABAD COMMISSIONER OF INCOME-TAX II HYDERABAD THE DEPARTMENTAL REPRESENTATIVE, ITAT HYDERABAD B.V.S.