SYNGENTA INDIA LTD, PUNE V. DCIT 1(3), MUMBAI

ITA 2551/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8413 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Next Hearing Date: 05-11-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 01-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AJEET KUMAR JAIN
• Keywords: Business income; Depreciation; Source of fund; Question of law
• Section: 143(3); 244A; 80IB; 37(1); 80G; 154

Judgement Text

ITA NOS.7699 OF 2004 AND 2551OF 2011 SYNGENTA INDIA LTD MUMBAI PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL 'K' BENCH, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NOS. 7699/MUM/2004 & 2551/MUM/2011 (ASSESSMENT YEAR: 2001-02) SYNGENTA INDIA LTD., AMAR PARADIGM SURVEY NO.110/11/ 13, BANER ROAD, PUNE 411045 PAN: AAECS 9424 P VS. ACIT/DY.CIT-1(3), AAYAKAR BHAVAN, M.K.MARG MUMBAI 400020 (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI NIRAJ SETH DEPARTMENT BY: SHRI AJEET KUMAR JAIN, DR DATE OF HEARING: 05/11/2012 DATE OF PRONOUNCEMENT: 09/11/2012 O R D E R PER BENCH: THESE TWO APPEALS ARE BY ASSESSEE AGAINST THE ORDE RS OF THE CIT (A)-XXI AND CIT (A)-2 MUMBAI RESPETIVELY UNDER SECTION 143(3) AND U/S 154 OF AO. SINCE COMMON ISSUES ARE INVOLVED IN THESE APPEALS, THESE WERE HEARD TOGETHER AND DECIDED BY T HIS COMMON ORDER. 2. WE HAVE HEARD THE LEARNED COUNSEL AND THE LEARNED D R IN DETAIL. 3. IN THE APPEAL ON THE ORDER UNDER SECTION 143(3)( IT A 7699/M/2004), ASSESSEE RAISED SIX GROUNDS ON VARIO US ISSUES. SUBSEQUENT TO THE ORDER UNDER SECTION 143(3), AO MO DIFIED THE SAID ORDER UNDER SECTION 154 DISALLOWING THE CLAIM UNDER SECTION 35DDA. THE LEARNED CIT (A) HOWEVER GAVE RELIEF ON T HE ISSUE CONTESTED IN SECTION 154 BUT AS ASSESSEE DID NOT GE T ITS GRIEVANCES ON ALLOWING THE DEDUCTION UNDER SECTION 80IB ON THE GROSS TOTAL INCOME AND ALSO ON THE ISSUE OF REFUNDS AND THE INT EREST THEREON ITA NOS.7699 OF 2004 AND 2551OF 2011 SYNGENTA INDIA LTD MUMBAI PAGE 2 OF 10 REDRESSED, ASSESSEE RAISED GROUNDS IN THE APPEAL IN ITA NO.2551/MUM/2011 ACCORDINGLY. SINCE GROUNDS ON THE ISSUE OF GRANTING CREDIT OF TAXES PAID/ ADJUSTED AND GRANTIN G OF INTEREST UNDER SECTION 244A DOES NOT ARISE OUT OF THE ORDER UNDER SECTION 154, ASSESSEE RAISED ADDITIONAL GROUNDS IN ITA NO.7 699/MUM/2004 VIDE LETTER DATED 30.10.2012. AT THE TIME OF HEARIN G, IT WAS INFORMED THAT THESE GRIEVANCES ON THE ADDITIONAL GROUNDS HAV E BEEN SETTLED BY AO BY ISSUANCE OF REFUNDS/ INTEREST AND THEREFOR E THE LEARNED COUNSEL WITHDREW THE ADDITIONAL GROUNDS IN ITA NO.7699/MUM/2004 AS WELL AS THE RELEVANT GROUNDS IN ITA NO.2551/MUM/2011 (GROUND NOS.2, 3 & 4). THAT LEAVES US WITH SIX GROUNDS IN ITA NO.7699 AND GROUND NO.1 IN ITA NO.25 51. 4. ASSESSEE RAISED THE FOLLOWING GROUNDS IN ITA NO.769 9/MUM/ 2004: 1. THE COMMISSIONER OF INCOME TAX (APPEALS)-XXI MUMBAI (HEREINAFTER REFERRED TO AS THE CIT (A) ERRE D IN HOLDING THE ACTION OF THE ADDITIONAL COMMISSIONER O F INCOME-TAX, RANGE 1(3) MUMBAI (AO) IN DISALLOWING A N AMOUNT OF ` .10,00,000/- CLAIMED BY THE APPELLANT ON THE GROUND THAT IT IS NOT ALLOWABLE AS A DEDUCTION EITHER UNDER SECTION 35(1)(II) OR UNDER SECTION 37(1) OF T HE INCOME-TAX ACT, 1961. 2. THE CIT (A) ERRED IN UPHOLDING THE ACTION OF AO IN ADJUSTING THE LOSS ON EXPORT OF MANUFACTURED GOODS FROM THE AMOUNT OF EXPORT INCENTIVES COMPUTED UNDER THE PROVISO TO SECTION 80HHC(3) AND THEREBY DENYING THE APPELLANT THE BENEFIT OF DEDUCTION UNDER SECTIO N 80HHC. 3. THE CIT (A) ERRED IN UPHOLDING THE ACTION OF AO IN REDUCING MISCELLANEOUS INCOME OF ` .17,27,566/- FROM THE AMOUNT OF PROFIT ELIGIBLE FOR DEDUCTION UNDER S ECTION 80IB ON THE GROUND THAT THE SAID INCOME CANNOT BE S AID TO BE DERIVED BY THE INDUSTRIAL UNDERTAKING. 4. THE CIT (A) ERRED IN UPHOLDING THE ACTION OF AO IN DISALLOWING AN AMOUNT OF ` .34,000/- ON ACCOUNT OF PAYMENT TO THE STAFF SPORTS CLUB UNDER SECTION 40A( 9) OF THE ACT. 5. THE CIT (A) ERRED IN HOLDING THAT THE DEDUCTION UNDER SECTION 80-IB IS TO BE RESTRICTED TO THE AMOUNT OF INCOME ITA NOS.7699 OF 2004 AND 2551OF 2011 SYNGENTA INDIA LTD MUMBAI PAGE 3 OF 10 DETERMINED UNDER THE HEAD BUSINESS INCOME AND NOT THE GROSS TOTAL INCOME NOTWITHSTANDING THE FACT T HAT THE PROFITS ELIGIBLE FOR DEDUCTION UNDER SECTION 80 -IB EXCEED THE AMOUNT OF BUSINESS INCOME. 6. THE CIT (A) ERRED IN UPHOLDING THE ACTION OF AO IN LEVYING INTEREST UNDER SECTION 234D OF THE INCOME T AX ACT. 5. THE GROUND NO.5 ON THE ISSUE OF ALLOWING DEDUCTION UNDER SECTION 80IB TO THE EXTENT OF GROSS TOTAL INCOME WA S ALSO RAISED IN THE OTHER APPEAL NO.2551 AS GROUND NO.1. IF THIS IS SUE IS DECIDED, OTHER GROUNDS BECOME ACADEMIC IN NATURE AS ASSESSEE S CLAIM OF 80IB IS MORE THAN THE GROSS TOTAL INCOME AVAILABLE FOR SET OFF. 6. THE GRIEVANCE OF ASSESSEE ARISES AS UNDER. IN THE O RDER UNDER SECTION 143(3) OF THE I.T. ACT, AO MADE CERTAIN DIS ALLOWANCES AND ARRIVED AT THE PROFIT AND GAINS OF THE BUSINESS AT ` .8,33,80,662/-. HOWEVER, THIS INCOME FROM PROFITS AND GAINS OF BUSI NESS WAS TAKEN AS GROSS TOTAL INCOME AND VARIOUS DEDUCTIONS UNDER SECTION 80G AND 80IB WERE ALLOWED ON THIS AMOUNT DETERMINING TH E BUSINESS INCOME AT NIL. THE ELIGIBLE AMOUNT FOR DEDUCTION U/ S 80IB WAS ARRIVED AT ` .13,14,38,514/-. THE SAME WAS HOWEVER RESTRICTED TO THE INCOME FROM BUSINESS, WRONGLY TAKEN AS GROSS TOTAL INCOME. THEREAFTER, AO COMPUTED THE INCOME FROM HOUSE PROPE RTY AND DETERMINED THE TOTAL INCOME AT ` .80,32,500/-. IN THE COMPUTATION, AO MENTIONS THAT DEDUCTION UNDER CHAPTER VIA WAS RE STRICTED TO GROSS TOTAL INCOME. HOWEVER, AS SEEN FROM THE ORDER INSTEAD OF RESTRICTING TO GROSS TOTAL INCOME, AO RESTRICTED TO PROFITS AND GAINS OF BUSINESS. THE SAME WAS REPEATED IN THE ORDER UND ER SECTION 154 (SUBJECT MATTER OF APPEAL IN ITA NO.2551/MUM/2011) WHEREIN EVEN AFTER DISALLOWING THE DEDUCTION UNDER SECTION 35DDA AND ARRIVING AT THE GROSS TOTAL INCOME AT ` .3,98,36,297/- THE RESTRICTION UNDER SECTION 80IB WAS STILL DETERMINED AT ` .3,20,53,797/- THEREBY REVISED THE TOTAL INCOME (INCOME FROM HOUSE PROPERTY) WAS A GAIN DETERMINED AT ` .77,82,500/-. ASSESSEE CONTESTED THE ACTION OF AO BEFORE THE CIT (A)-XXI AND THE CIT (A) VIDE HIS ORD ER DATED ITA NOS.7699 OF 2004 AND 2551OF 2011 SYNGENTA INDIA LTD MUMBAI PAGE 4 OF 10 12.8.2004 REJECTED THE CONTENTIONS STATING THAT THE DEDUCTION UNDER SECTION 80IB IS TO BE ALLOWED TO THE EXTENT OF PROF ITS AND GAINS DERIVED FROM THE INDUSTRIAL UNDERTAKING OF THE ACT. ACCORDINGLY HE DID NOT ALLOW ASSESSEES CLAIM, NOR DECIDED THE GRO UNDS WHEN ASSESSEE AGAIN CONTESTED IN APPEAL AGAINST THE ORDE R UNDER SECTION 154. 7. AFTER CONSIDERING THE RIVAL CONTENTIONS AND LEGAL P RINCIPLES ON THE ISSUE, WE ARE OF THE OPINION THAT EVEN THOUGH A O CORRECTLY STATED THAT THE DEDUCTION UNDER SECTION 80IB HAS TO BE RESTRICTED TO THE GROSS TOTAL INCOME WHILE ALLOWING THE SET OFF, HE WRONGLY RESTRICTED IT TO PROFITS AND GAINS OF THE BUSINESS. THE GROSS TOTAL INCOME HAS TO BE ARRIVED AT AFTER COMPUTING THE INC OME UNDER VARIOUS HEADS AND ALLOWING THE CARRY FORWARD AND SE T OFF OF LOSSES AND DEPRECIATION ETC. BUT BEFORE ALLOWING THE DEDUC TION UNDER CHAPTER VIA. WHAT AO DID WAS TO EXCLUDE THE HOUSE P ROPERTY INCOME WHICH WAS TAXED SEPARATELY, WHEREAS THE INCO ME FROM HOUSE PROPERTY WOULD ALSO FORM PART OF GROSS TOTAL INCOME . EVEN THOUGH THE LEARNED CIT (A) REFERRED TO SECTION 80IB(1), TH ERE IS NO DISPUTE IN THIS CASE WITH REFERENCE TO QUANTIFICATION OF ELIGI BLE AMOUNT UNDER SECTION 80IB ON THE PROFITS OF THE UNITS WHICH AO H IMSELF HAS WORKED OUT AT ` .13,14,38,514/-. AS AGAINST THE ELIGIBLE AMOUNT UNDER SECTION 80IB, ASSESSEE GROSS TOTAL INCOME (IN CLUDING THE INCOME FROM HOUSE PROPERTY) WAS AT ` .9,14,13,162/-. INSTEAD OF ALLOWING THE DEDUCTION UNDER SECTION 80IB INVOKING THE PROVISIONS OF SECTION 80A(2), AO RESTRICTED THE AMOUNT TO ` .8,33,80,662/- IE. INCOME FROM BUSINESS ONLY. THEREFORE, THE COMPUTATI ON MADE BY AO IS FACTUALLY NOT CORRECT. ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 80IB ON THE GROSS TOTAL INCOME WHICH SHOULD INCLUDE INCOME FROM HOUSE PROPERTY AND INCOME FROM BUSINESS AND OT HER INCOMES UNDER OTHER HEADS BEFORE ALLOWING THE DEDUCTION UND ER CHAPTER VIA. THEREFORE, ON FACTS ASSESSEES CONTENTIONS ARE CORRECT. ITA NOS.7699 OF 2004 AND 2551OF 2011 SYNGENTA INDIA LTD MUMBAI PAGE 5 OF 10 8. NOT ONLY THAT, THIS ISSUE WAS ALSO DECIDED BY THE H ON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. M/S ESKAY KNIT (INDIA) LTD IN ITA NO.184 OF 2007 DATED 25 TH MARCH, 2010 WHEREIN ON SIMILAR CONTENTIONS THE HON'BLE HIGH COURT HELD AS UNDER: 3. SECTION 80-IA AS IT STOOD AT THE MATERIAL TIME PROVIDED THAT WHERE THE GROSS TOTAL INCOME OF ASSES SEE INCLUDED ANY PROFITS AND GAINS DERIVED FROM THE ELI GIBLE BUSINESS, TO WHICH THE SECTION APPLIES, HE WOULD IN ACCORDANCE WITH, BUT SUBJECT TO THE PROVISIONS OF T HE SECTION BE ALLOWED IN COMPUTING THE TOTAL INCOME, A DEDUCTION FROM SUCH PROFITS AND GAINS OF AN AMOUNT EQUAL TO THE AMOUNT SPECIFIED IN SUB SECTION (5) AN D FOR THE ASSESSMENT YEAR SPECIFIED IN SUB SECTION (6). B Y THE PROVISIONS OF SECTION 80-A(2) THE AGGREGATE AMOUNT OF THE DEDUCTIONS UNDER CHAPTER VI-A SHALL NOT, IN ANY CAS E, EXCEED THE GROSS TOTAL INCOME. IT WAS IN VIEW OF TH E PROVISIONS OF SECTION 80-A(2) THAT ASSESSEE RESTRIC TED ITS CLAIM OF DEDUCTION UNDER SECTION 80-IA TO THE GROSS TOTAL INCOME. THERE WAS NO BASIS OR JUSTIFICATION FOR AO TO CONFINE THE DEDUCTION ONLY TO THE EXTENT OF THE PRO FITS AND GAINS OF BUSINESS. IN THIS REGARD OUR ATTENTION HAS BEEN DRAWN TO A JUDGMENT OF THIS COURT DATED 4 TH FEBRUARY, 2010 IN THE COMMISSIONER OF INCOME TAX V. M/S TRIDO SS LABORATORIES LTD (ITA 2432 OF 2009). SECTION 80-IA ALLOWS A DEDUCTION IN COMPUTING THE TOTAL INCOME OF ASSESSEE AND THE EXPRESSION TOTAL INCOME IS AS DE FINED IN SECTION 2(45) VIZ., THE TOTAL AMOUNT OF INCOME R EFERRED TO IN SECTION 5 COMPUTED IN THE MANNER LAID DOWN IN THE ACT. FOLLOWING THE VIEW WHICH WE HAVE TAKEN IN TRID OSS LABORATORIES, WE ANSWER THE QUESTION OF LAW WHICH H AS BEEN RAISED IN THE PRESENT APPEAL AGAINST THE REVEN UE AND IN FAVOUR OF ASSESSEE. THE APPEAL IS ACCORDINGL Y DISPOSED OF. 9. FURTHER IN THE ABOVE REFERRED CASE OF CIT VS. TRIDO SS LABORATORIES LTD, 328 ITR 448, THE HON'BLE BOMBAY H IGH COURT HAS CONSIDERED THE ISSUE AS UNDER: SECTION 80-IA OF THE INCOME-TAX ACT, 1961, CONTEMPLATES A DEDUCTION OF AN AMOUNT REPRESENTING HUNDRED PER CENT OF THE PROFITS AND GAINS DERIVED F ROM THE ELIGIBLE BUSINESS IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. THE EXPRESSION 'GROSS TOTAL INCOME' IS DE FINED BY SECTION 80-B(5), FOR THE PURPOSES OF CHAPTER VI- A, TO MEAN THE TOTAL INCOME COMPUTED IN ACCORDANCE WITH T HE PROVISIONS OF THE ACT BEFORE MAKING ANY DEDUCTION ITA NOS.7699 OF 2004 AND 2551OF 2011 SYNGENTA INDIA LTD MUMBAI PAGE 6 OF 10 UNDER THE CHAPTER. THE EXPRESSION 'TOTAL INCOME' HA S BEEN DEFINED IN SECTION 2(45) TO MEAN THE TOTAL AMO UNT OF INCOME REFERRED TO IN SECTION 5, COMPUTED IN THE MANNER LAID DOWN IN THE ACT. SECTION 5(1) ENUNCIATE S THAT SUBJECT TO THE PROVISIONS OF THE ACT, THE TOTA L INCOME OF ANY PREVIOUS YEAR OF A PERSON WHO IS A RESIDENT, INCLUDES ALL INCOME FROM WHATEVER SOURCE DERIVED. I N COMPUTING THE TOTAL INCOME OF THE ASSESSEE, THERE I S NO BASIS IN THE PROVISIONS OF SECTION 80-IA TO RESTRIC T THE EXPRESSION TO TOTAL INCOME DERIVED FROM AN ELIGIBLE BUSINESS. HELD, ALLOWING THE APPEAL, THAT THE TRIBUNAL HAD NO TED THAT THE GROSS TOTAL INCOME OF THE ASSESSEE, AFTER SETTING OFF THE LOSSES FROM ALL OTHER SOURCES OF INCOME WAS RS. 14,57,200, WHILE THE PROFIT OF THE ELIGIBLE UNIT WA S COMPUTED AT RS. 98.43 LAKHS. THE TRIBUNAL HAS RESTRICTED THE DEDUCTION TO THE EXTENT OF THE GROSS TOTAL INCOME, NAMELY, RS. 14,57,200. THE DECISION OF THE TRIBUNAL WAS IN ACCORDANCE WITH THE PROVISIONS OF T HE ACT. 10. THE ABOVE ALSO FOLLOWED THE DECISION OF THE HON'BL E BOMBAY HIGH COURT IN THE CASE OF SYNCO INDUSTRIES LTD VS. AO, 254 ITR 608 (BOM.). THE PROVISIONS OF 80IA AND 80IB ARE PARI MATERIA AND THE PRINCIPLES WILL APPLY EQUALLY. IN VIEW OF THE ABOVE LEGAL PROPOSITION ACCORDING TO THE PROVISIONS OF THE ACT, ASSESSEES CONTENTIONS ARE TO BE ALLOWED. AO IS DIRECTED TO ALLOW SECTION 80IB DE DUCTION TO THE EXTENT OF GROSS TOTAL INCOME AVAILABLE WORKED OUT A CCORDING TO THE LAW. THE GROUNDS ON THE ISSUE (GROUND NO.5 IN ITA N O.7669 AND GROUND NO.1 IN ITA NO.2551) ARE ACCORDINGLY CONSIDE RED AS ALLOWED. 11. SINCE THIS ISSUE IS ALLOWED, OTHER DISALLOWANCES MA DE BY AO AND CONFIRMED BY THE CIT (A) BECOMES ACADEMIC IN NA TURE AS ALLOWING OR DISALLOWING THE ABOVE AMOUNTS DOES NOT MAKE ANY DISTINCTION TO THE ULTIMATE DETERMINATION OF TOTAL INCOME AS ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IB IS MORE THAN THE AVAILABLE GROSS TOTAL INCOME. HOWEVER, FOR THE SAKE OF RECORD, THE GROUNDS ARE CONSIDERED AND DISCUSSED AS UNDER: 12. GROUND NO.1. THE ISSUE IN THE IS WITH REFERENCE TO NOT ALLOWING AN AMOUNT OF ` .10.00 LAKHS CLAIMED BY ASSESSEE. ASSESSEE ITA NOS.7699 OF 2004 AND 2551OF 2011 SYNGENTA INDIA LTD MUMBAI PAGE 7 OF 10 PAID AN AMOUNT OF ` .10.00 LAKHS TO THE 88 TH SESSION OF INDIAN SCIENCE CONGRESS OF ICAR TOWARDS PLACING OF SIGNAGE S AS A SPONSOR. ASSESSEE WROTE A LETTER TO THE ADG (TC), ICAR, KRIS HI BHAVAN VIDE LETTER DATED 15 TH DECEMBER, 2000 STATING THAT IT WOULD LIKE TO SPONSOR THE SIGNAGES AND WOULD LIKE EACH PANEL AND BOARD TO BEAR THE CAPTION PROMINENTLY SYNGENTA- GLOBAL LEADERS I N AGRIBUSINESS. ALONG WITH THAT ASSESSEE FORWARDED L ETTER TO FACILITATE MATCHING OF THE COLOUR COMBINATION AND DEPICTION OF THE LOGO. AS THE TOTAL SPONSORSHIP FOR THE SIGNAGES WAS ` .10.00 LAKHS, ASSESSEE PAID THE ENTIRE AMOUNT OF ` .10.00 LAKHS BY WAY OF A DEMAND DRAFT DRAWN ON 29.12.2000. THE SAME WAS ACKNOWLEDGED BY THE REC EIPT NO.19. HOWEVER, THE RECEIPT PROVIDED DID NOT SPECIFY SIGNA GES BUT MENTIONS THE AMOUNT TOWARDS ORGANIZING THE 88 TH SESSION OF INDIAN SCIENCE CONGRESS 2001. THE SAID RECEIPT ALSO HAS A STAMP IN TIMATING THAT THE CONTRIBUTIONS TO THE ACADEMY ARE EXEMPTED FROM INCOME TAX IN TERMS OF SECTION 35(1)(II) OF THE I.T ACT UPTO 31.3 .2000. INSTEAD OF CLAIMING THE AMOUNT UNDER SECTION 37(1) AS PART OF ADVERTISEMENT EXPENDITURE, ASSESSEE IN THE COMPUTATION OF INCOME CLAIMED THE DEDUCTION UNDER SECTION 35(1)(II). AT THE RELEVANT POINT OF TIME. SECTION 35(1)(II) WAS ELIGIBLE FOR DEDUCTION AT 125 % OF THE AMOUNT PAID. HOWEVER, ASSESSEE CLAIMED ` .10.00 LAKHS PAID TO ICAR ONLY. AO DID NOT ALLOW THE DEDUCTION ON THE REASON THAT T HE ELIGIBILITY UNDER SECTION 35(1)(II) HAS EXPIRED ON 31.3.2000. THE ALTERNATE CLAIM UNDER SECTION 37(1) WAS ALSO NOT ACCEPTED. TH E CIT (A) ALSO HAS CONFIRMED THE SAME. 13. AFTER CONSIDERING THE RECEIPTS AND CORRESPONDENCE O N THE SUBJECT PLACED IN THE PAPER BOOK AND THE ORDERS OF THE AUTHORITIES, WE ARE OF THE OPINION THAT THE AMOUNT IS ELIGIBLE F OR DEDUCTION UNDER SECTION 37(1). THERE IS NO DISPUTE WITH REFERENCE T O THE SPONSORING SIGNAGES FOR AN AMOUNT OF ` .10.00 LAKHS WHICH WAS PAID BY ASSESSEE AND ACKNOWLEDGED BY THE ICAR TOWARDS 88 TH SESSION OF INDIAN SCIENCE CONGRESS. JUST BECAUSE ASSESSEE CLAI MED WRONGLY UNDER SECTION 35(1)(II), THE CLAIM CANNOT BE REJECT ED AS THERE IS NO ITA NOS.7699 OF 2004 AND 2551OF 2011 SYNGENTA INDIA LTD MUMBAI PAGE 8 OF 10 DISPUTE WITH REFERENCE TO THE PAYMENT TOWARDS SPONS ORING THE INDIAN SCIENCE CONGRESS. THE EXPENDITURE IS IN THE NATURE OF ADVERTISEMENT OF ASSESSEE BUSINESS AND IS LAID OUT AND EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSIN ESS. IN VIEW OF THIS GROUND NO.1 IS ALLOWED. 14. GROUND NO.2 IS ON THE ISSUE OF ADJUSTING THE LOSS O N EXPORT OF MANUFACTURED GOODS FROM THE AMOUNT OF EXPORT INCENT IVES COMPUTED UNDER THE PROVISO TO SECTION 80HHC(3). THE FACTS OF THE ISSUE ARE THAT ASSESSEE HAD LOSS ON EXPORT OF MANUF ACTURED GOODS WHICH AO SET OFF TO THE BENEFIT DERIVED BY EXPORT, WHICH THE CIT (A) HAS CONFIRMED. IT WAS FAIRLY CONCEDED BY THE LEARNE D COUNSEL THAT THE ISSUE IS AGAINST ASSESSEE AND IN FAVOUR OF THE REVENUE BY THE ORDER OF THE HON'BLE SUPREME COURT IN THE CASE OF I PCA LABORATORIES LTD VS. DCIT, 266 ITR 521 (SC) WHICH WAS IN TURN FO LLOWED BY THE BOMBAY HIGH COURT IN THE CASE OF ROHAN DYES AND INT ERMEDIATES LTD. VS COMMISSIONER OF INCOME-TAX, 270 ITR 350 (BO M.). ACCORDINGLY THIS GROUND IS REJECTED. 15. GROUND NO.3 IS ON THE ISSUE OF TREATING CERTAIN AMO UNTS CLAIMED AS ELIGIBLE FOR DEDUCTION UNDER SECTION 80I B. AO TREATED THEM AS MISCELLANEOUS INCOME OR UNDER OTHER SOURCE S THEREBY EXCLUDING THE AMOUNTS FROM THE PROFITS OF THE INDUS TRIAL UNDERTAKING. THE FACTS ARE THAT ASSESSEE REPORTED M ISCELLANEOUS INCOME OF ` .21,13,848/- AS PART OF THE INDUSTRIAL UNDERTAKING. AO EXCLUDED THE ABOVE INCOME STATING THAT THIS IS NOT INCIDENTAL TO THE BUSINESS OF THIS UNIT. HE FOLLOWED THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF STERLING FOODS LTD VS. DCIT 237 ITR 777 AND PANDIAN CHEMICALS LTD. VS COMMISSIONER OF I NCOME-TAX, 262 ITR 278. BEFORE THE CIT(A) ASSESSEE REITERATED THE SAME CONTENTIONS AND THE CIT (A) WHILE ALLOWING THE AMOU NT OF ` .3,86,282/- TOWARDS SCRAP SALE AS PART OF THE UNIT INCOME, CONFIRMED THE ACTION OF AO. ITA NOS.7699 OF 2004 AND 2551OF 2011 SYNGENTA INDIA LTD MUMBAI PAGE 9 OF 10 16. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND EXAMIN ED THE FACTS OF THE CASE. AN AMOUNT OF ` .12,92,994/- RELATES TO EXCHANGE DIFFERENCE AND PREMIUM RELATING TO IMPORT LICENSE. FOLLOWING THE PRINCIPLES LAID DOWN BY THE HON'BLE SUPREME COURT I N THE CASE OF LIBERTY INDIA VS COMMISSIONER OF INCOME-TAX, 317 IT R 218 THE INCOME FROM PREMIUM RELATING TO IMPORT LICENSE CANN OT BE CONSIDERED AS INCOME DERIVED FROM THE UNDERTAKING. THERE ARE NO DETAILS OF INCOME EARNED ON ACCOUNT OF EXCHANGE DIF FERENCE AND WHETHER THE FOREIGN EXCHANGE EARNED WAS ON THE UNIT RECEIPTS OR OTHERWISE ARE NOT PLACED BEFORE US. THEREFORE, WE A RE UNABLE TO GIVE ANY FINDING ON THE ISSUE AS NECESSARY DETAILS ARE N OT PLACED ON RECORD. IN VIEW OF THIS, THE FINDING OF THE CIT (A) THAT THE INCOME HAS NOT ARISEN OUT OF THE INDUSTRIAL UNDERTAKING WAS UP HELD. SIMILARLY MISCELLANEOUS INTEREST TO THE EXTENT OF ` .2,55,367/-, WHICH CONSISTS OF INTERESTS ON LOANS GIVEN TO THE EMPLOYEES, ALSO CANNOT BE CONSIDERED AS INCOME FROM THE UNIT AS ADVANCING LOA NS TO THE EMPLOYEES IS NOT THE BUSINESS OF ASSESSEE. WITH REF ERENCE TO THE MISCELLANEOUS INCOME OF ` .1,69,189/- NO DETAILS WERE PLACED EVEN BEFORE THE AUTHORITIES AND THE SPECIFIC FINDING WAS GIVEN BY THE CIT (A) THAT NO DETAILS WERE FILED. IN VIEW OF THIS, HI S ORDER IS AFFIRMED. 17. ON INSURANCE CLAIM RECEIPT OF ` .10,016/-, IT WAS SUBMITTED THAT THE INSURANCE CLAIMS RECEIVED WERE IN RESPECT OF CLAIMS RELATING TO THE PLANT & MACHINERY ETC., BUT NO DETAILS WERE PLACED TO EXAMINE WHETHER THOSE CLAIMS ARE ARISING FROM THE UNIT ITSE LF. AS SEEN FROM THE SUBMISSIONS BEFORE AO, ASSESSEE HAS PROPORTIONA TELY ATTRIBUTED THIS TO THE PLANT AND MACHINERY. SINCE ATTRIBUTION OF INCOME IS NOT POSSIBLE WHEN THE SECTION SPECIFIES THAT THE INCOME S ARE TO BE DERIVED, THE ACTION OF AO AND THE CIT (A) ON THIS I SSUE IS TO BE CONFIRMED ON THE FACTS OF THE CASE. ACCORDINGLY GRO UND IS REJECTED. 18. GROUND NO.4 PERTAINS TO REIMBURSEMENT OF EXPENDITUR E OF ` .34,000/- TO THE SPORTS CLUBS. AO INVOKED THE PROVI SIONS OF SECTION 40A(9) TO DISALLOW THE AMOUNT. THIS ISSUE IS COVERE D IN FAVOUR OF ITA NOS.7699 OF 2004 AND 2551OF 2011 SYNGENTA INDIA LTD MUMBAI PAGE 10 OF 10 ASSESSEE VIDE THE JURISDICTIONAL HIGH COURT JUDGMEN T IN THE CASE OF CIT VS. BHARAT PETROLEUM CORPORATION LTD, 252 ITR 4 3, THEREFORE, THE GROUND IS ALLOWED. 19. AO IS DIRECTED TO RE-WORKOUT THE GROSS TOTAL INCOME , ELIGIBLE PROFITS UNDER SECTION 80IB AND SET OFF THE INCOME A CCORDINGLY. 20. GROUND NO.6 PERTAINS TO THE CALCULATION OF INTEREST UNDER SECTION 234D WHICH IS CONSEQUENTIAL IN NATURE. AO I S DIRECTED TO KEEP THIS IN MIND AND THE AMENDED PROVISIONS OF LAW WHILE GIVING EFFECT TO THIS ORDER. 21. IN THE RESULT APPEALS FILED BY ASSESSEE IN ITA NOS. 7699/MUM/2004 & 2551/MUM/2011 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH NOVEMBER, 2012. SD/- SD/- ( AMIT SHUKLA ) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 9 TH NOVEMBER, 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, K BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI