JBF INDUSTRIES LTD, MUMBAI V. ADDL CIT RG 4(2), MUMBAI

ITA 1874/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1269 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 27-01-2010
• Assessment Year: 1998-1999
• Appeal Filed On: 24-03-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BALAKRISHNAN B K
• Keywords: Depreciation
• Section: 80HHC; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'J' BENCH, MUMBAI BEFORE SHRI D.K. AGARWAL, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 2471/MUM/2009 (ASSESSMENT YEAR: 1998-99) DCIT - 4(2) M/S. JBF INDUSTRIES LTD. ROOM NO. 642, 6TH FLOOR EXPRESS TOWER, 8TH FLOOR AAYAKAR BHAVAN, M.K. ROAD VS. NARIMAN POINT, MUMBAI 400021 MUMBAI 400020 PAN - AAACJ 2575 J APPELLANT RESPONDENT ITA NO. 1874/MUM/2009 (ASSESSMENT YEAR: 1998-99) M/S. JBF INDUSTRIES LTD. DCIT - 4(2) EXPRESS TOWER, 8TH FLOOR ROOM NO. 642, 6TH FLOOR NARIMAN POINT, MUMBAI 400021 VS. AAYAKAR BHAVAN, M.K. ROAD PAN - AAACJ 2575 J MUMBAI 400020 APPELLANT RESPONDENT REVENUE BY: SHRI BALAKRISHNAN B.K. ASSESSEE BY: SHRI PARAS SAVLA O R D E R PER B. RAMAKOTAIAH, A.M. THESE ARE CROSS APPEALS FOR A.Y. 1998-99 BY THE REV ENUE AND ASSESSEE AGAINST THE ORDER OF THE CIT(A) IV, MUMBAI DATED 29 .01.2009. ITA NO. 1874/MUM/2009 2. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN NOT ALLOWING DEDUCTION U/S 80IA ON INCOME EARNED FROM EXPORT INCENTIVES (IN THE FORM OF DEPB I.E. DUTY ENTITLEMENT PASS BOOK) OF RS.1,42,80,229/- OF THE A SSESSEE UNITS, ON THE GROUND THAT THEY ARE NOT DERIVED FROM AN INDUST RIAL UNDERTAKING. 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THE FACT S THAT THE CLAIM U/S 80IA IN RESPECT OF EXPORT INCENTIVES WAS ALLOWED BY THE ITAT, MUMBAI IN APPELLANT OWN CASE FOR ASSESSMENT YEAR 19 99-00. ITA NO. 2471 & 1874/MUM/2009 M/S. JBF INDUSTRIES LTD. 2 3. THE LEARNED CIT(A) FAILED TO APPRECIATE THE FACT S THAT FOR COMPUTATION OF DEDUCTION U/S 80IA.80IB CUSTOM DUTY, DRAW BACK AND DUTY ENTITLEMENT PASS BOOK (DEPB) IS DERIVED FR OM INDUSTRIAL UNDERTAKING, AND LANGUAGE USED IN SECTION 80IA/IB I S MATERIALLY DIFFERENT FROM THE LANGUAGE USED IN SECTION 80HH. 4. WITHOUT PREJUDICE TO ABOVE, SOURCE OF THE DUTY E NTITLEMENT PASS BOOK (DEPB) IS THE BUSINESS OF THE UNDERTAKING WHIC H IS TO MANUFACTURE AND EXPORT GOODS OUT OF RAW MATERIAL TH AT IS IMPORTED AND ON WHICH CUSTOM DUTY IS PAID. 3. BRIEFLY STATED, THE ASSESSEES CLAIM OF DEDUCTION U NDER SECTION 80IA WHILE WORKING OUT THE BOOK PROFIT UNDER SECTION 115 JA WAS ORIGINALLY CONSIDERED AND SET ASIDE BY THE ITAT TO THE FILE OF THE CIT(A) VIDE ORDER DATED 29.06.2005 R.W. MA ORDER DATED 28 TH APRIL 2006. ONE OF THE ISSUES SET ASIDE TO THE FILE OF THE CIT(A) WAS AN AMOUNT OF RS.14,2 8,229/- OF EXPORT INCENTIVES RECEIVED TO BE DERIVED FROM INDUSTRIAL U NDERTAKING FOR ELIGIBILITY OF DEDUCTION UNDER SECTION 80IA/80IB. THE CIT(A), AFTE R CONSIDERING THE DECISION RELIED UPON BY THE ASSESSEE IN THE CASE OF SYNCROME FOUNDATIONS (I) LTD. AND HON'BLE DELHI HIGH COURT JUDGEMENT IN THE CASE OF CIT VS. ELTEK SCS (P) LTD. ANALYSED THE PROVISIONS AND HELD THAT EXPORT INCENTIVES ITSELF DOES NOT QUALIFY FOR DEDUCTION UNDER SECTION 80IA A ND SO THE SAME CANNOT BE CONSIDERED FOR COMPUTING DEDUCTION UNDER SECTION 80IA EVEN FOR THE PURPOSE OF COMPUTATION OF BOOK PROFIT UNDER SECTION 115JA. ACCORDINGLY HE DIRECTED THE A.O. TO EXCLUDE EXPORT INCENTIVES. THE ASSESSEE IS AGGRIEVED. 4. AT THE OUT SET, IT WAS SUBMITTED THAT THIS ISSUE WA S DECIDED BY THE ORDER OF THE HON'BLE SUPREME COURT IN THE CASE OF L IBERTY INDIA 317 ITR 218 WHEREIN THE HON'BLE SUPREME COURT HAS STATED THAT E XPORT INCENTIVES CANNOT BE CONSIDERED AS INCOME DERIVED FROM INDUSTRIAL UND ERTAKING FOR THE PURPOSE OF DEDUCTION UNDER SECTION 80IA/80IB. IN VI EW OF THIS, SINCE THE ORDER OF THE CIT(A) IS IN LINE WITH THE PRINCIPLES ESTABLISHED BY THE ABOVE SAID DECISION, THERE IS NO NEED TO MODIFY THE ORDER OF T HE CIT(A). THE SAME IS ACCORDINGLY CONFIRMED AND ASSESSEES APPEAL IS CONS EQUENTLY DISMISSED. ITA NO. 2471 & 1874/MUM/2009 M/S. JBF INDUSTRIES LTD. 3 ITA NO. 2471/MUM/2009 5. IN THIS APPEAL THE REVENUE IS AGGRIEVED ABOUT THE D IRECTIONS OF THE CIT(A) TO TREAT THE WASTAGE SALE AS PROFIT DERIVED FROM THE INDUSTRIAL UNDERTAKING AND FURTHER THE DIRECTION OF THE CIT(A) IN COMPUTING DEPRECIATION UNDER SECTION 80IA FOR THE PURPOSE OF ARRIVING AT THE DEDUCTION WHILE COMPUTING BOOK PROFIT UNDER SECTION 115 JA AS PER COMPANIES ACT. 6. AS BRIEFLY STATED ABOVE THE ISSUES WERE RESTORED TO THE CIT(A). ON WASTAGE SALE OF RS.1,51,065/- THE CIT(A) HAS GIVEN A FINDING THAT WASTAGE SALE IS DERIVED FROM THE BUSINESS OF THE INDUSTRIAL UNDERTAKING AND THE SAME SHALL BE CONSIDERED FOR COMPUTING DEDUCTION UNDER S ECTION 80IA WHILE COMPUTING BOOKS PROFIT UNDER SECTION 115JA. 7. ON THIS ISSUE WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED COUNSEL AND THE LEARNED D.R. AND NOTICED THAT WASTA GES ARE DIRECTLY DERIVED FROM THE MANUFACTURING ACTIVITY. SINCE WASTAGE CANN OT BE SEGREGATED FROM THE MANUFACTURING ACTIVITY ONE HAS TO CONSIDER THAT IT HAS PROXIMATE NEXUS/ SOURCE WITH ASSESSEES INDUSTRIAL ACTIVITY. ACCORDI NGLY THE PROFITS RECEIVED ON SALE OF WASTAGE CAN BE CONSIDERED AS INCOME DERIVED FROM INDUSTRIAL UNDERTAKING ELIGIBLE FOR RELIEF UNDER SECTION 80IA. ACCORDINGLY THE DIRECTIONS OF THE CIT(A) ON THIS ISSUE IS UPHELD. REVENUES GR OUND NO. 1 IS ACCORDINGLY REJECTED. 8. THE NEXT ISSUE FOR CONSIDERATION IS THE DIRECTION O F THE CIT(A) IN CONSIDERING DEPRECIATION ALLOWED UNDER COMPANIES AC T AND NOT AS PER INCOME TAX ACT WHILE COMPUTING DEDUCTION UNDER SECT ION 80IA FOR DEDUCTION IN ARRIVING THE BOOKS PROFIT UNDER SECTION 115JB. 9. BRIEFLY STATED THE ASSESSEE HAS PREPARED ITS P & L ACCOUNT IN ACCORDANCE WITH THE PROVISIONS OF PARA 2 & 3 OF SCH EDULE VI OF COMPANIES ACT. ACCORDINGLY IT HAS CALCULATED DEPRECIATION UND ER THE COMPANIES ACT. WHILE ARRIVING AT THE BOOK PROFIT THE ASSESSEE WAS ENTITLED TO CLAIM DEDUCTION OF 80IA ALLOWED. IN ARRIVING AT THE 80IA THE A.O., HOWEVER, CONSIDERED THE INCOME TAX DEPRECIATION FOR COMPUTIN G BOOK PROFIT. FOLLOWING THE DECISION IN THE CASE OF DCIT VS. SYNCOME FORMUL ATIONS LTD. 106 ITD 19, ITA NO. 2471 & 1874/MUM/2009 M/S. JBF INDUSTRIES LTD. 4 THE ITAT IN EARLIER YEARS HAS DIRECTED THE A.O. TO COMPUTE THE DEDUCTION UNDER SECTION 80IA FOR THE PURPOSE OF 115JA/115JB C ONSIDERING ONLY DEPRECIATION AS PER COMPANIES ACT. THE CIT(A), FOLL OWING THE DECISION IN EARLIER YEARS, HAS DIRECTED THE A.O. TO CONSIDER TH E BOOK PROFITS TO BE COMPUTED IN ACCORDANCE WITH THE DEPRECIATION AS PER PROVISIONS OF COMPANIES ACT WHILE CALCULATING THE DEDUCTION UNDER SECTION 80IA. THE REVENUE IS AGGRIEVED. 10. WE HAVE HEARD THE LEARNED D.R. AND THE LEARNED COUN SEL ON THIS ISSUE. 11. IT IS AN ADMITTED FACT THAT IN THE EARLIER TWO YEAR S THE ITAT HAS ALLOWED THE CLAIM OF THE ASSESSEE THAT THE DEDUCTION UNDER SECTION 80IA IS TO BE RE - CALCULATED ON THE BOOK PROFITS ONLY AND DEPRECIATIO N FOR THAT PURPOSE HAS TO BE CONSIDERED UNDER THE COMPANIES ACT AND NOT UNDER THE INCOME TAX ACT. HOWEVER, WHILE CONSIDERING THE APPEAL FOR THIS YEAR THE ITAT HAS RESTORED THE MATTER BACK TO THE FILE OF THE CIT(A) TO CONSID ER THE DECISION OF THE SPECIAL BENCH IN THE CASE OF VAHID PAPER CONVERTERS VS. ITO 98 ITD 163 (AHD) (SB). THIS ISSUE IS NOW COVERED BY THE DECISI ON OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF AJANTA PHARMA 223 CTR 441 . 12. THE LEARNED COUNSEL, HOWEVER, SUBMITTED THAT THE IS SUE BEFORE THE SPECIAL BENCH IN THE CASE OF SYNCOME FORMULATIONS 1 06 ITD 193 WAS WITH REFERENCE TO, (A) METHOD OF COMPUTATION OF DEDUCTIO N UNDER SECTION 80HHC AND (B) PERCENTAGE OF DEDUCTION ALLOWABLE IN EACH Y EAR. AS REGARDS THE PERCENTAGE OF DEDUCTION THE SPECIAL BENCH HELD THAT THE ASSESSEE WOULD BE ENTITLED TO 100% DEDUCTION. THE OBJECTION OF THE CO UNSEL IS THAT THIS VIEW WAS OVERRULED BY THE HIGH COURT IN THE CASE OF AJAN TA PHARMA BUT THE FIRST ISSUE AS TO THE METHOD OF DEDUCTION UNDER SECTION 8 0HHC WAS NOT BEFORE THE HIGH COURT AND ACCORDINGLY THE METHOD OF DEDUCT ION HAS NOT BEEN CONSIDERED BY THE HON'BLE BOMBAY HIGH COURT. SINCE THE A.O. HAS NO JURISDICTION TO GO BEHIND THE NET PROFIT SHOWN IN T HE P & L ACCOUNT EXCEPT PROVIDED IN EXPLANATION TO SECTION 115J AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF APOLLO TYRES LTD. VS. CIT 255 ITR 273. THE SPECIAL BENCH DECISION IN COMPUTING THE PROFITS ON THE BASI S OF THE BOOK PROFIT ALONE IS STILL VALID. IT WAS FURTHER SUBMITTED THAT THE S PECIAL BENCH DECISION IN THE ITA NO. 2471 & 1874/MUM/2009 M/S. JBF INDUSTRIES LTD. 5 CASE OF VAHID PAPER CONVERTERS AND THE JUDGEMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF PLASTIBLENDS INDIA LTD. V S. ACIT 318 ITR 352 ARE NOT APPLICABLE TO THE FACTS OF THE CASE. IT WAS FUR THER SUBMITTED THAT THE ITAT IN THE CASE OF DCIT VS. GLENMARK LABORATORIES LTD. 32 DTR 183 HAS ALSO CONFIRMED THE SPECIAL BENCH DECISION IN WORKING OU T THE DEDUCTION ACCORDING TO THE BOOK PROFITS AS IT IS FELT THAT TH E DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF AJANTA PHARMA IS O NLY TO THE EXTENT OF RESTRICTION OF DEDUCTION UNDER SECTION 80HHC ON CER TAIN PERCENTAGE ALLOWABLE IN EACH YEAR. THE SECOND ASPECT OF PERCEN TAGE OF DEDUCTION DECIDED BY THE SPECIAL BENCH WAS OVERRULED BY THE H ON'BLE BOMBAY HIGH COURT BUT COMPUTATION OF INCOME WAS NOT BEFORE IT A ND ACCORDINGLY THE SPECIAL BENCH DECISION IS STILL VALID. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE A.O. AND CIT(A). THE A.O. REWORKED OUT THE ELIG IBLE AMOUNT FOR DEDUCTION UNDER SECTION 80IA OF SILVASSA UNIT III A T RS.3,55,478/- AND POY UNIT AT NIL CONSEQUENT TO ALLOWING DEPRECIATION ACC ORDING TO THE PROVISIONS. THE RESULTANT COMPUTATION RESULTED IN A LOSS OF RS. 10,99,10,060/- WITH OUT ANY CLAIM UNDER SECTION 80IA BEING ALLOWED TO THE A SSESSEE IN THE NORMAL COMPUTATION. HOWEVER, WHILE COMPUTING BOOK PROFIT UNDER SECTION 115JA THE A.O. ALLOWED A REDUCTION OF THE PROFIT FROM UNI T NO. 3 OF SILVASSA AS COMPUTED BY HIM AT RS.3,55,478/- UNDER CLAUSE VI OF EXPLANATION TO SEC 115JA . IT WAS THE CONTENTION THAT THE DEPRECIATION SHOULD BE CONSIDERED UNDER THE COMPANY LAW AND DEDUCTION UNDER SECTION 8 0IA SHOULD BE ALLOWED ON THE BASIS OF PROFIT WORKED OUT ALLOWING DEPRECIATION CALCULATED AS PER COMPANY LAW. ITAT, FOLLOWING THE ORDERS IN EARL IER YEAR ALLOWED ASSESSEES CONTENTION THAT DEPRECIATION UNDER COMPA NY LAW HAS TO BE CONSIDERED WHILE WORKING OUT THE DEDUCTION UNDER SE CTION 80IA. NOW THE PRINCIPLES ARE ESTABLISHED BY THE HONBLE BOMBAY HI GH COURT AND SO THERE IS NO NEED TO FOLLOW THE EARLIER ORDER. KEEPING IN VIEW THAT THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. AJANTA PHA RMA LTD. 318 ITR 252 HAS HELD THAT MAT COMPANIES ARE ENTITLED TO THE SAM E DEDUCTION AS ANY OTHER COMPANY INVOLVED WE DECIDE THE ISSUE ACCORDIN GLY.. SINCE IN THE INSTANT CASE THE ASSESSEE HAS FILED RETURN OF INCOM E DISCLOSING LOSS THE ITA NO. 2471 & 1874/MUM/2009 M/S. JBF INDUSTRIES LTD. 6 ASSESSEE WOULD ONLY BE ELIGIBLE FOR DEDUCTION AS AV AILABLE IN THE NORMAL COMPUTATION OF INCOME. EVEN THOUGH THE SAID DECISIO N OF THE HON'BLE BOMBAY HIGH COURT IS IN THE CONTEXT OF 80HHC THE PR INCIPLES ARE EQUALLY APPLICABLE FOR PROVISIONS OF 80IA AS WELL. IN THE S AID CASE THE HON'BLE BOMBAY HIGH COURT HAS HELD AS UNDER: - WHERE THE PLAIN LITERAL INTERPRETATION OF A STATUT ORY PROVISION PRODUCES A MANIFESTLY ABSURD AND UNJUST RESULT WITH COULD NEVER HAVE BEEN INTENDED BY THE LEGISLATURE, THE COURT MAY MOD IFY THE LANGUAGE USED BY THE LEGISLATURE OR EVEN DO SOME VIOLENCE TO IT, SO AS TO ACHIEVE THE OBVIOUS INTENTION OF THE LEGISLATURE AND PRODUC E A RATIONAL CONSTRUCTION. THE STATEMENT OF THE FINANCE MINISTER WHO MOVED T HE BILL IN PARLIAMENT COULD BE LOOKED INTO ASCERTAIN THE MISCH IEF SOUGHT TO BE REMEDIED BY THE LEGISLATION AND THE OBJECT AND PURP OSE FOR WHICH THE LEGISLATION IS ENACTED. WHEN SECTION 115J OF THE INCOME-TAX ACT, 1961, WAS ORIGINALLY INTRODUCED MAT COMPANIES WERE NOT ENTITLED TO DEDUC TION OF PROFITS UNDER SECTION 80HHC WHILE WORKING OUT THE BOOK PROF ITS. THAT BENEFIT CAME TO BE INTRODUCED BY THE DIRECT TAX LAWS (AMEND MENT) ACT, 1989, WITH EFFECT FROM APRIL 1, 1989. PARLIAMENT, THEREFO RE, INITIALLY HAD EVEN DENIED TO MAT COMPANIES DEDUCTION UNDER SECTION 80H HC. WHEN SECTION 115JA WAS INTRODUCED WITH EFFECT FROM APRIL 1, 1997 , SECTION 80HHC BENEFITS WERE ONCE AGAIN NOT AVAILABLE TO MAT COMPA NIES. THE AMENDMENT BY THE FINANCE ACT, 1997, TO GIVE THE BEN EFIT WAS WITH EFFECT FROM APRIL 1, 1998. THUS, MAT COMPANIES, CONSIDERIN G SECTION 115JB(2) EXPLANATION 1(IV)M ARE NOT ENTITLED TO BE PLACED IN A BETTER POSITION THAN OTHER COMPANIES ENTITLED TO THE EXPORT DEDUCTION UN DER SECTION 80HHC THOUGH EARLIER THEY CONSTITUTED ONE CLASS. NO RULE OF CONSTRUCTION NOR THE LANGUAGE OF SECTION 80HHC READ WITH SECTION 115JB, WILL PERMIT SUCH CONSTRUCTION. IF SUCH CONSTRUCTION IS NOT POSSIBLE THEN BOTH THE CLASSES OF COMPANIES WILL BE ENTITLED TO THE SAME DEDUCTION. T HIS WOULD CONTEMPLATE THAT BOTH WOULD BE ENTITLED TO DEDUCTIO NS OF PROFITS IN TERMS OF SECTION 80HHC(1B). SO READ, IT WOULD BE A HARMON IOUS CONSTRUCTION. A CLASS OF COMPANIES COVERED BY SECTION 80HHC CANNOT BE SUB-CLASSIFIED INTO TWO CLASSES, MORE SO, WHEN FOR INTERMITTENT PE RIODS PARLIAMENT HAS EVEN DENIED THE BENEFIT OF SECTION 80HHC TO MAT COM PANIES. THE LANGUAGE USED IN SECTION 115JB IS DEDUCTION AV AILABLE UNDER SECTION 80HHC. IT IS DIFFICULT TO CONCEIVE OF ANY R ATIONAL REASON AS TO WHY THE LEGISLATURE SHOULD HAVE THOUGHT TO GIVE MAT COM PANIES ADDITIONAL BENEFIT THAN THE OTHER COMPANIES WHO ARE PAYING TAX ON THEIR TOTAL INCOME AND NOT THE TAX BASED ON BOOK PROFIT AS CALC ULATED UNDER SECTION 115JB. THE OBJECT OF SECTION 115JB OR FOR THAT MATT ER SECTION 115J OR 115JA WAS TO IMPOSE TAX ON THOSE COMPANIES WHICH OT HERWISE CONSIDERING VARIOUS EXEMPTIONS OR DEDUCTIONS AVAILA BLE UNDER THE ACT, THOUGH MAKING HUGE PROFITS AND PAYING LARGE DIVIDEN DS, WERE NOT PAYING ITA NO. 2471 & 1874/MUM/2009 M/S. JBF INDUSTRIES LTD. 7 ANY TAX. IT IS THEREFORE, NOT POSSIBLE TO ACCEPT TH E CONSTRUCTION THAT THEY SHOULD BE TREATED ON A DIFFERENT FOOTING IN COMPUTI NG EXPORT PROFITS UNDER SECTION 80HHC FOR THE PURPOSE OF SECTION 115JB. MAT COMPANIES ARE ENTITLED TO THE SAME DEDUCTION O F EXPORT PROFITS UNDER SECTION 80HHC AS ANY OTHER COMPANY INVOLVED I N EXPORT IN TERMS OF SECTION 80HHC(1B). 14. SINCE CLAUSE VIII AND CLAUSE VI OF EXPLANATION TO 1 15JA ARE SIMILAR AS FAR AS AMOUNT OF PROFITS ELIGIBLE FOR DEDUCTION UND ER 80HHC OR THE AMOUNT OF PROFIT DERIVED BY THE INDUSTRIAL UNDERTAKING U/S 80IA ARE CONCERNED, THE WORKING HAS TO BE COMPUTED AS PER THE RESPECTIVE SE CTIONS, THE PRINCIPLES ESTABLISHED BY THE HON'BLE JURISDICTIONAL HIGH COUR T ARE EQUALLY APPLICABLE. SINCE THE ISSUE OF DEDUCTION UNDER SECTION 80IA/IB WAS ALSO CONSIDERED IN ASSESSEES APPEAL THE ASSESSEE WILL BE ENTITLED TO CLAIM THE SAME DEDUCTION AS APPLICABLE UNDER NORMAL PROVISIONS OF THE ACT UN DER SECTION 115JA/JB AS WELL. WITH THESE DIRECTIONS THE A.O. IS DIRECTED TO REWORK OUT DEDUCTION ACCORDINGLY. THE ORDER OF THE CIT(A) TO THAT EXTENT STANDS MODIFIED. GROUND IS CONSIDERED ALLOWED. APPEAL IS PARTLY ALLOWED. 15. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED AND R EVENUES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JUNE 2010. SD/- SD/- (D.K. AGARWAL) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 25 TH JUNE 2010 COPY TO: THE APPELLANT 1. THE RESPONDENT 2. THE CIT(A) IV, MUMBAI 3. THE CIT IV, MUMBAI CITY 4. THE DR, J BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.