ITO 14(3)(3), MUMBAI V. MAHESH GUPTA (HUF), MUMBAI

ITA 2496/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1664 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 02-01-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 30-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMAR SINGH
• Keywords: Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI I.P.BANSAL,JUDICIAL MEMBER & SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO. 2495/MUM/2011(A.Y.2006-07) ITA NO.2496/MUM/2011(A.Y.2007-08) ITA NO.7102/MUM/2011(A.Y.2008-09) THE INCOME TAX OFFICER 14(3)(3), 6 TH FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI 400 021. (APPELLANT) VS. M/S. MAHESH GUPTA (HUF), 18,SURTI CHAMBER, 2 ND DHOBI TALAO LANE, MUMBAI - 02. PANAAEHM 8728B (RESPONDENT) APPELLANT BY : SHRI PRADEEP KUMAR SINGH RESPONDENT BY : S/SHRI K .SHIVRAM & AJAY SINGH DATE OF HEARING : 02/01/2013 DATE OF PRONOUNCEMENT : 04/01/2013 ORDER PER I.P.BANSAL, J.M ALL THESE APPEALS ARE FILED BY THE REVENUE AND TH EY ARE DIRECTED AGAINST THREE SEPARATE ORDERS, TWO ORDERS DATED 31/1/2011 I N RESPECT OF ASSESSMENT YEARS 2006-07 AND 2007-08 AND ONE ORDER DATED 16/8 /2011 FOR A.Y 2008-09. THE GROUNDS OF APPEAL IN ALL THE YEARS ARE IDENTICA L EXCEPT DIFFERENCE IN FIGURES. THE GROUNDS OF APPEAL FOR A.Y 2006-07 READ AS UNDER : 1) THE ORDER OF CIT(A) IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. THE LD.CIT(A) ERRED IN LAW IN HOLDING THAT INTER EST INCOME RECEIVED FROM TRADE DEBTORS AMOUNTING TO RS.10,85,316/- IS DERIVE D FROM AN INDUSTRIAL UNDERTAKING QUALIFYING FOR DEDUCTION U/S 801B OF TH E I. T. ACT. 3. THE LD.CIT(A) ERRED IN LAW THAT INCOME ON ACCOUN T OF INTEREST RECEIVED OF RS.10,85,316/- IS QUALIFYING FOR DEDUCTION U/S 801B OF THE I. T. ACT IGNORING THE FACT THAT SUCH INTEREST INCOME CANNOT SAID TO HAVE DERIVED ITA NO. 2495/MUM/2011(A.Y.2006-07) ITA NO.2496/MUM/2011(A.Y.2007-08) ITA NO.7102/MUM/2011(A.Y.2008-09) 2 FROM INDUSTRIAL UNDERTAKING BUT ONLY ATTRIBUTABLE T O SUCH INDUSTRIAL UNDERTAKING. 4. THE LD.CIT(A) ERRED IN LAW THAT INCOME ON ACCOUN T OF INTEREST RECEIVED OF RS.10,85,316/- IS QUALIFYING FOR DEDUCTION U/S 801B OF THE I. T. ACT IGNORING THE RATIO LAID DOWN IN THE HONBLE SUPREM E COURTS DECISION IN THE CASE OF LIBERTY INDIA VS. COMMISSIONER OF INCOME T AX [(2009) 183 TAXMAN 349 (SC)] DATED 31-08-2009. 5. FOR THESE AND ANY OTHER REASONS THAT MAY BE URGE D AT THE TIME OF HEARING, IT IS REQUESTED THAT THE ORDER OF THE CIT( A) BE QUASHED AND THAT OF THE A.O. BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND, WHICH MAY BE NECESSARY. FIGURES FOR OTHER ASSESSMENT YEARS ARE AS UNDER: ASSESSMENT YEAR 2007-08 - RS. 21,41,795/- ASSESSMENT YEAR 2008-09 - RS. 10,72,523/-. 2. IT CAN BE SEEN FROM THE GROUNDS OF APPEAL THAT T HE ONLY ISSUE INVOLVED IN THE PRESENT APPEALS IS REGARDING INCLUSION OF INTER EST RECEIVED BY THE ASSESSEE FROM TRADE DEBTORS FOR THE PURPOSE OF COMPUTING DE DUCTION UNDER SECTION 80 IB. 3. THE ASSESSEE IN THE PRESENT CASE IS MANUFACTURE R AND TRADER OF FABRICS AND IT HAS RECEIVED INTEREST FROM ITS CUSTOMERS ON DELAYED PAYMENTS IN RESPECT OF SALES MADE BY IT FROM ELIGIBLE UNIT. THE SAID A MOUNT HAS BEEN EXCLUDED BY THE AO FOR THE PURPOSE OF COMPUTING DEDUCTION UNDE R SECTION 80 IB IN RESPECT OF ASSESSMENT YEAR 2006-07. SIMILARLY THE AMOUNT S TATED IN THE GROUNDS OF APPEAL FOR A.Y 2007-08 AND 2008-09 ARE ADDED TO THE INCOME OF THE ASSESSEE. 4. LD. CIT(A) HAS DIRECTED THE AO TO INCLUDE THE SA ID AMOUNT FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 80IB. RELYING UPON THE DECISION OF GUJARAT HIGH COURT IN THE CASE OF NIRMA INDUSTRIES LTD. VS. DCIT,283 ITR 402 (GUJ), WHEREIN AFTER CONSIDERING T HE DECISION OF HONBLE ITA NO. 2495/MUM/2011(A.Y.2006-07) ITA NO.2496/MUM/2011(A.Y.2007-08) ITA NO.7102/MUM/2011(A.Y.2008-09) 3 SUPREME COURT IN THE CASE OF PANDIAN CHEMICALS LTD. VS. CIT, 262 ITR 278 (SC) IT WAS HELD THAT INTEREST RECEIVED FROM TRADE DEBTORS ON BELATED PAYMENT OF SALE CONSIDERATION IS AN INCOME DERIVED FROM IND USTRIAL UNDERTAKING. THE DEPARTMENT IS AGGRIEVED WITH SUCH DIRECTION OF LD. CIT(A) AND HAS FILED AFOREMENTIONED GROUNDS OF APPEAL IN RESPECT OF ALL THE THREE ASSESSMENT YEARS. 5. LD. DR RELIED UPON THE ORDER OF AO AND PLEADED T HAT INTEREST RECEIVED BY THE ASSESSEE FROM TRADE DEBTORS CANNOT BE CONSIDERE D TO BE INCOME DERIVED FROM ELIGIBLE INDUSTRIAL UNDERTAKING OF THE ASSESS EE AND, THEREFORE, LD. CIT(A) HAS WRONGLY GRANTED RELIEF TO THE ASSESSEE. 6. ON THE OTHER HAND IT WAS SUBMITTED BY LD. AR THA T THIS ISSUE IS NOW COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF JU RISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. VIDYUT CORPORATION, 324 ITR 221 (BO M), IN WHICH IT HAS BEEN HELD THAT INTEREST ON DELAYED PAYMENT OF PRICE OF G OODS SOLD IS PART OF SALE PRICE AND IS AN INCOME DERIVED FROM INDUSTRIAL UNDERTAKI NG, THEREFORE, ELIGIBLE FOR DEDUCTION UNDER SECTION 80 IB. THUS IT WAS PLEADED BY LD. AR THAT RELIEF HAS RIGHTLY BEEN GIVEN BY LD. CIT(A) AND HIS ORDER SHOU LD BE UPHELD. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF MATERIAL PLACED BEFORE US. THE DEPARTMENT IN ITS G ROUNDS OF APPEAL IS ASSAILING THE ORDER OF LD. CIT(A) ON THE BASIS OF DECISION OF HONBLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS. CIT(SUPRA). WE HAVE CARE FULLY GONE THROUGH THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT VS. VIDYUT CORPORATION(SUPRA). AFTER CONSIDERING THE SAID DEC ISION OF HONBLE SUPREME COURT IN THE CASE OF LIBERTY INDIA (SUPRA) THEIR LO RDSHIP HAVE HELD THAT AMOUNT RECEIVED BY THE ASSESSEE AS INTEREST ON DELAYED PA YMENTS OF THE SALE PRICE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80 IB. REFERE NCE CAN BE MADE TO THE FOLLOWING OBSERVATIONS: THE FACTS, AS ADMITTED BEFORE THE COURT, WOULD DE MONSTRATE THAT IN SUBSTANCE AND IN ESSENCE, WHAT IS RECEIVED BY THE ASSESSEE FROM THE ITA NO. 2495/MUM/2011(A.Y.2006-07) ITA NO.2496/MUM/2011(A.Y.2007-08) ITA NO.7102/MUM/2011(A.Y.2008-09) 4 PURCHASER IS A COMPONENT OF INTEREST TOWARDS DELAY ED PAYMENT OF THE PRICE OF THE GOODS SOLD, SUPPLIED AND DELIVERED BY THE ASSESSEE. THERE CAN BE NO DISPUTE ABOUT THE POSITION THAT THE PRICE RE ALISED BY THE ASSESSEE FROM THE SALE OF GOODS MANUFACTURED BY THE INDUSTR IAL UNDERTAKING CONSTITUTES A COMPONENT OF THE PROFITS AND GAINS D ERIVED FROM THE ELIGIBLE BUSINESS. THE PURCHASER, ON ACCOUNT OF THE DELAY I N PAYMENT OF THE SALE PRICE ALSO PAYS TO THE ASSESSEE INTEREST. THIS FOR MS A COMPONENT OF THE SALE PRICE AND IS PAID TOWARDS THE LAG WHICH HAS O CCURRED IN THE PAYMENT OF THE PRICE OF THE GOODS SOLD BY THE ASSESSEE. ON THESE FACTS, THEREFORE, THE PAYMENT OF INTEREST ON ACCOUNT OF THE DELAY IN PAYMENT OF THE SALE PRICE OF THE GOODS SUPPLIED BY THE UNDERTAKING PAR TAKES OF THE SAME NATURE AND CHARACTER AS THE SALE CONSIDERATION. THE DELAYED PAYMENT CHARGES CONSEQUENTLY SATISFY, TOGETHER WITH THE SAL E PRICE, THE FIRST DEGREE TEST WHICH HAS BEEN LAID DOWN BY THE SUPREME COURT IN LIBERTY INDIA. FOR THESE REASONS, THE FIRST QUESTION OF LAW, IS ANSWER ED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. 8. AS IN THE PRESENT CASE ALSO IT IS NOT DISPUTED T HAT WHAT HAS BEEN EXCLUDED BY THE AO IS INTEREST ON DELAYED PAYMENTS OF SALE PRICE, THE RATIO OF THE AFOREMENTIONED DECISION WILL BE FULLY APPLICABL E. THEREFORE, THERE IS NO INFIRMITY IN THE RELIEF GRANTED BY LD. CIT(A) IN R ESPECT OF ALL THE YEARS. WE DECLINE TO INTERFERE. THE DEPARTMENTAL APPEALS ARE DISMISSED. 9. IN THE RESULT, ALL THESE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 4 TH DAY OF JAN.2013 SD/- SD/- (RAJENDRA ) (I.P.BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 4 TH JAN.2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.R B BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM.