M/S. PROCTER & GAMBLE HYGIENE & HEALTH CARE LTD., V. THE DY CIT CIR 7(1),

ITA 1500/MUM/2005

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2226 (ITAT-MUMBAI)
• Duration Of Justice: 10 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 25-02-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 23-02-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: HARESH G BUCH
• Section: 80IB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUM BAI BEFORE S/SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SANJAY GARG, JUDICIAL ME MBER . , ! ' ## , $ ! ./I.T.A. NO.8999/MUM/2004 AND ITA NO.1500/MUM/2005 ( $% & / ASSESSMENT YEAR : 2000-01) PROCTER AND GAMBLE HYGIENE AND HEALTH CARE LIMITED, PLOT NO.495, P&G PLAZA, CARDINAL GRACIAS ROAD, CHAKALA, ANDHERI (E), MUMBAI-400099 % % % % / VS. ADDL. COMMISSIONER OF INCOME TAX, RANGE 7(1), AAYAKAR BHAVAN, M K ROAD, MUMBAI-400020. ( '( / APPELLANT) .. ( )*'( / RESPONDENT) AND ITA NO.1500/MUM/2005 ( $% & / ASSESSMENT YEAR : 2001-02) PROCTER AND GAM BLE HYGIENE AND HEALTH CARE LIMITED, PLOT NO.495, P&G PLAZA, CARDINAL GRACIAS ROAD, CHAKALA, ANDHERI (E), MUMBAI-400099 % % % % / VS. DY.COMMISSIONER OF INCOME TAX, RANGE 7(1), AAYAKAR BHAVAN, M K ROAD, MUMBAI-400020. ( '( / APPELLANT) .. ( )* '( / RESPONDENT) !' ./ '+ ./PAN/GIR NO. : AAACP6332M '( , /APPELLANT BY : SHRI HARESH G BUCH )*'( - , /RESPONDENT BY : SHRI G M DOSS % - . / DATE OF HEARING : 19.8.2015 /0& - . /DATE OF PRONOUNCEMENT : 27.11.2015 I.T.A. NO.1500/MUM/2005 ITA NO.8999/M/2004 2 1 / O R D E R PER SANJAY GARG, JUDICIAL MEMBER: WITH THIS COMMON ORDER, WE WILL DISPOSE OF THE ABOV E TITLED TWO APPEALS PREFERRED BY THE ASSESSEE IN RELATION TO TH E LIMITED ISSUE AS TO WHETHER CERTAIN ITEMS OF OTHER INCOME ARE TO BE INC LUDED OR EXCLUDED FROM THE PROFITS OF ELIGIBLE UNITS FOR THE PURPOSE OF CO MPUTATION OF DEDUCTION U/S 80IB OF THE INCOME TAX ACT, 1961 (THE ACT.) 2. THE ITA NO.1500/MUM/2005 IS PERTAINING TO THE AS SESSMENT YEAR 2001-02. THE OTHER ISSUES RAISED BY THE ASSESSEE I N THIS APPEAL HAVE ALREADY BEEN DECIDED BY THE TRIBUNAL VIDE ORDER DAT ED 25.1.2012. HOWEVER, THE SAID ORDER WAS RECALLED BY THE TRIBU NAL FOR ADJUDICATION ON THIS ABOVE STATED LIMITED GROUND AS THE SAID GROUND HAD REMAINED IN ADVERTENTLY UN-ADJUDICATED. SO FAR AS THE APPEAL F OR THE ASSESSMENT YEAR 2000-01 IS CONCERNED, THE MATTER HAS BEEN RESTORED BY THE HONBLE BOMBAY HIGH COURT VIDE ORDER DATED 30.11.2013 PASS ED IN INCOME TAX APPEAL NO. 1663 OF 2011 FOR ADJUDICATION ON THE ABO VE STATED IDENTICAL GROUND. HENCE, WE PROCEED TO DECIDE THIS LIMITED IS SUE RELATING TO ELIGIBILITY OF OTHER INCOME, WHETHER IS REQUIRED TO BE EXCLUDED OR INCLUDED WHILE ARRIVING AT A PROFIT AND GAINS DERIVED FROM THE EL IGIBLE UNDERTAKING FOR THE PURPOSES OF DEDUCTION U/S 80IB OF THE ACT. IT IS PERTINENT TO MENTION HERE THAT THE HONBLE HIGH COURT HAS RESTORED THIS ISSUE WITH A DIRECTION THAT THE SAME BE DECIDED IN THE LIGHT OF DECISION OF J URISDICTIONAL HIGH COURT IN THE CASE OF ASSOCIATED CAPSULES P LIMITED V/S DY.CIT (2011)332 ITR 42(BOM) AND THE DECISION OF HONBLE APEX COURT IN T HE CASE OF LIBERTY INDIA V/S CIT REPORTED IN 317 ITR 218 (SC). 3. THE LD.AR OF THE ASSESSEE, AT THE OUTSET, HAS IN VITED OUR ATTENTION TO A CHART SUBMITTED BY HIM, WHEREIN THE DETAILS OF TH E NATURE OF ITEMS OF OTHER INCOME HAVE BEEN MENTIONED WHICH WE WILL DEAL HEREBY ONE BY ONE. THE FIRST FOUR ITEMS ARE RELATED TO THE FOLLOWING I NTEREST INCOME: I.T.A. NO.1500/MUM/2005 ITA NO.8999/M/2004 3 A) INTEREST INCOME AND OTHER; B) INTEREST ON BANK DEPOSITS: C) INTEREST ON ICD; AND D) INTEREST INCOME ON EEFC. 4. THE LD.AR, AT THE TIME OF HEARING HAS VERY FAIRL Y ADMITTED THAT THE ISSUE RELATING TO INTEREST INCOME IS SQUARELY COVER ED AGAINST THE ASSESSEE BY THE DECISION OF HONBLE SUPREME COURT RENDERED I N THE CASE OF LIBERTY INDIA (SUPRA). SINCE THE INTEREST INCOME IS NOT DE RIVED FROM THE INDUSTRIAL ACTIVITY OF THE ASSESSEE, THE SAME IS NOT ALLOWABLE FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 80IB. 5. THE NEXT ITEM IS RELATING TO FOREIGN EXCHANGE G AIN. BOTH THE REPRESENTATIVES OF THE PARTIES FAIRLY STATED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S SYNTEL LIMITED (INCO ME TAX APPEAL NO.1974, 1976 AND 1978 OF 2009) DECIDED VIDE ORDER DATED 15.12.2009. FOLLOWING THE SAID DECISION, THE HONBLE HIGH COUR T FURTHER IN THE CASE OF CIT V/S RACHNA UDHYOG (2010) 230 CTR 72 (BOM) HAS HELD THAT THE EXCHANGE RATE DIFFERENCE DUE TO EXCHANGE RATE FLUC TUATION IS DIRECTLY RELATED TO THE SALE TRANSACTION INVOLVING THE EXPOR T OF GOODS OF THE INDUSTRIAL UNDERTAKING. SINCE THE ISSUE IS DIRECTLY COVERED BY THE DECISION OF JURISDICTIONAL HIGH COURT, THIS ISSUE IS ACCORDINGL Y, DECIDED IN FAVOUR OF THE ASSESSEE. 6. THE NEXT ITEM IS OTHER OPERATING INCOME (SCRAP A ND OTHER MISCELLANEOUS ITEMS). THE LD. AR HAS SUBMITTED THA T THIS INCOME IS IN THE NATURE OF SALE OF SCRAP ARISING FROM THE MANUFACTUR ING ACTIVITIES, THEREFORE, THE SAID INCOME IS DIRECTLY RELATED TO THE ELIGIBLE UNDERTAKING AND THEREFORE IS TO BE INCLUDED FOR THE PURPOSE OF DEDUCTION U/S 80IB OF THE ACT. I.T.A. NO.1500/MUM/2005 ITA NO.8999/M/2004 4 7. WE AGREE WITH THE CONTENTION OF THE LD. AR THAT THE SCRAP IS WASTE PRODUCT OUT OF THE MANUFACTURING ACTIVITY AND THE I NCOME DERIVED FROM THE SAME IS RELATING TO THE INDUSTRIAL ACTIVITY OF THE ASSESSEE. THIS ISSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE. 8. WITH REGARD TO THE INCLUSION OF MISCELLANEOUS IT EMS OF INCOME, THE DETAILS HAVE NOT BEEN FILED, THEREFORE, THE LD. AR SUBMITTED THAT HE IS NOT PRESSING THIS ISSUE FOR WANT OF SPECIFIC DETAILS. ACCORDINGLY, WE DISMISS THIS ISSUE AS NOT PRESSED. 9. THE OTHER ITEMS PERTAIN TO EARNEST MONEY FROM S CRAP VENDORS, OTHER UNALLOCABLE OPERATING INCOME BRANDISED/ALLOCA TED TO PLANT AND WRITE BACK OF OLD PROVISIONS AND STALE CHEQUES. 10. BOTH THE REPRESENTATIVE OF THE PARTIES HAVE SUB MITTED THAT THESE ISSUES ARE REQUIRED TO BE RE-EXAMINED BY THE AO AN D HENCE WE RESTORE THESE ISSUES TO THE FILE OF THE AO FOR FRESH DECIS ION IN ACCORDANCE WITH LAW IN THE LIGHT. 11. IN VIEW OF ABOVE DISCUSSIONS, THE ALLOWABILITY OF THE ITEMS PERTAINED TO OTHER INCOME IS DECIDED ACCORDINGLY. 12. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOV, 2015 1 - /0& 2 3 %4 27 TH NOV. 2015 0 - # 5 SD/- SD/- ( D. KARUNAKARA RAO/ . ) ( SANJAY GARG/ ' ## ) JUDICIAL MEMBER / $ ! ACCOUNTANT MEMBER/ ! MUMBAI; 3 % DATED: 27 TH NOV,2015 . $% . ./ SRL , SR. PS I.T.A. NO.1500/MUM/2005 ITA NO.8999/M/2004 5 1 1 1 1 - -- - )$.67 )$.67 )$.67 )$.67 8 8 8 87&. 7&.7&. 7&. / COPY OF THE ORDER FORWARDED TO : 1. '( / THE APPELLANT 2. )*'( / THE RESPONDENT. 3. 9. ( ) / THE CIT(A)- 4. 9. / CIT 5. 7:# )$.$% , , / DR, ITAT, MUMBAI 6. # / GUARD FILE. 1% / BY ORDER, ; ' (ASSTT. REGISTRAR) , /ITAT, MUMBAI