FIRESTONE TRADING PVT. LTD., MUMBAI V. DCIT CC-6(4), MUMBAI

ITA 2611/MUM/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1730 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2001-2002
• Appeal Filed On: 11-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R KIRTANE
• Assessee Lawyers: SUNIL HIRAVAT
• Section: 143(3); 80HHC; 153A; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER ITA NO.2611/MUM/2016 (ASSESSMENT YEAR 2001-02) M/S. FIRESTONE TRADING PVT. LTD., 1110 PRASAD CHAMBERS, OPERA HOUSE, MUMBAI 400004 PAN: AAACF 3313J ...... APPEL LANT VS. DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE.6(4), 19 TH FLOOR, AIR INDIA BLDG., NARIMAN POINT, MUMBAI 400021 .... RESPON DENT APPELLANT BY : SHRI SUNIL HIRAVAT RESPONDENT BY : MR. S.R.KIRTANE DATE OF HEARING : 01/12/2016 DATE OF PRONOUNCEMENT : 09/12/2016 ORDER THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERT AINING TO ASSESSMENT YEAR 2001-02 IS DIRECTED AGAINST AN ORDER PASSED BY CIT(A)-54, MUMBAI DATED 08/01/2016, WHICH IN TURN, ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 154 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 29/03/2011. 2. IN THIS APPEAL, THE SOLITARY GRIEVANCE OF THE AS SESSEE IS AGAINST THE ACTION OF THE ASSESSING OFFICER IN INVOKING THE PRO VISIONS OF SECTION 154 OF THE 2 ITA NO.2611/MUM/2016 (ASSESSMENT YEAR 2001-02) ACT TO REDUCE THE DEDUCTION ALLOWABLE UNDER SECTION 80HHC OF THE ACT BY A SUM OF RS.2,88,385/-. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT AN ASSESSM ENT UNDER SECTION 143(3) R.W.S. 153A OF THE ACT WAS COMPLETED ON 20/03/2008 DETERMINING THE TOTAL INCOME AT RS.32,35,050/-, WHEREIN DEDUCTION UNDER S ECTION 80HHC OF THE ACT WAS ALLOWED AT RS.78,81568/-. THE ASSESSING OFFICE R OBSERVED THAT WHILE DETERMINING THE PROFITS OF THE BUSINESS IN TERMS OF EXPLANATION (BAA) TO SECTION 80HHC OF THE ACT, 90% OF THE INTEREST RECEI PTS OF RS.3,20,428/- WAS NOT REDUCED THEREBY RESULTING IN EXCESS DEDUCTION UNDER SECTION. 80HHC OF THE ACT. THE ASSESSING OFFICER ISSUED A NOTICE UNDER S ECTION 154 OF THE ACT DATED 07/12/2011 AND POINTED OUT TO THE ASSESSEE THAT THE DEDUCTION UNDER SECTION 80HHC OF THE ACT WAS TO BE REWORKED AFTER REDUCING 90% INTEREST OF RS.3,20,428/- IN TERMS OF EXPLANATION (BAA) TO SECT ION 80HHC OF THE ACT. AFTER CONSIDERING THE REPLIES OF THE ASSESSEE, THE ASSESS ING OFFICER TREATED THE AFORESAID AS A MISTAKE APPARENT FROM RECORD AND ACC ORDINGLY SCALED DOWN THE ALLOWABLE DEDUCTION TO THE ASSESSEE UNDER SECTION 8 0HHC OF THE ACT TO THE EXTENT OF RS.2,88,385/- I.E. 90% OF RS.3,20,428/-. THE SAID DECISION OF THE ASSESSING OFFICER HAS ALSO BEEN AFFIRMED BY THE CIT (A). 4. IN THIS CONTEXT, THE LD. REPRESENTATIVE FOR THE ASSESSEE EXPLAINED THAT WHAT WAS REQUIRED TO BE EXCLUDED IN TERMS OF CLAUS E (1) OF EXPLANATION (BAA) TO SECTION 80HHC OF THE ACT WAS THE NET INTEREST RECEIPTS AND IN THE PRESENT CASE, ASSESSEE HAD PAID INTEREST OF RS.6,06,284/- A ND AFTER REDUCING THE INTEREST RECEIPT OF RS.3,28,428/-, THERE REMAINS A NET DEBIT TO THE P&L ACCOUNT OF RS.2,85,856/-, THEREBY SHOWING THAT THERE WAS NO POSITIVE INTEREST INCOME 3 ITA NO.2611/MUM/2016 (ASSESSMENT YEAR 2001-02) SO AS TO BE EXCLUDED FROM PROFITS OF THE BUSINESS A S PER EXPLANATION (BAA) TO SECTION 80HHC OF THE ACT. THE LD. REPRESENTATIVE F OR THE ASSESSEE VEHEMENTLY EMPHASIZED THAT WHETHER GROSS INTEREST OR NET INTER EST ( I.E. AFTER REDUCING THE OUT-FLOW OF INTEREST) HAS TO BE REDUCED IS A DEBATA BLE ISSUE AND SUCH A CONTROVERSY COULD NOT HAVE BEEN ADDRESSED BY THE AS SESSING OFFICER IN THE PROCEEDINGS UNDER SECTION 154 OF THE ACT. IN THIS CONTEXT, LD. REPRESENTATIVE FOR THE ASSESSEE POINTED THAT THE NOTWITHSTANDING T HE MERITS OF THE CASE, THE IMPUGNED ACTION OF THE ASSESSING OFFICER WAS IMPERM ISSIBLE IN TERMS OF SECTION 154 OF THE ACT ITSELF. 5. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND CONTENDED THAT REWORKING THE DEDUCTION ALLOWABLE UNDER SECTION 80HHC OF THE ACT, IN VIEW OF THE EXPLANATION(BAA) TO SECTION 80HHC OF THE ACT WAS A MISTAKE RECTIFIABLE WITHIN THE MEANING OF SECTION 154 OF THE ACT. 6. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION S. OSTENSIBLY, SECTION 154 PERMITS THE ASSESSING OFFICER TO RECTIFY ANY MISTAK E APPARENT FROM THE RECORD BY AMENDING AN ORDER. QUITE CLEARLY, IN THE PRESEN T CASE, THE ISSUE REVOLVES AROUND THE AMOUNT OF INTEREST WHICH IS LIABLE TO BE EXCLUDED FROM THE PROFITS OF THE BUSINESS IN TERMS OF CLAUSE(1) OF EXPLANATIO N (BAA) TO SECTION 80HHC OF THE ACT. AS PER THE ASSESSEE, WHAT IS EXCLUDIBLE I S NET INTEREST AND FOR THAT MATTER HE HAS ALSO REFERRED TO THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE ACG ASSOCIATED CAPSULES PVT. LTD V. CIT , 343 ITR 89 (SC). BE THAT AS IT MAY, WHAT IS RELEVANT IS THAT THE IMPUGNED DECISION COUL D NOT HAVE BEEN TAKEN BY THE ASSESSING OFFICER IN A SUMMARY MANNER SO AS TO SUGGEST THAT THERE IS A 4 ITA NO.2611/MUM/2016 (ASSESSMENT YEAR 2001-02) MISTAKE APPARENT FROM RECORD. NOTABLY, A MISTAKE A PPARENT FROM RECORD IS ONE WHICH IS PATENT AND OBVIOUS, ON WHICH NO TWO VIEWS ARE POSSIBLE. THEREFORE, WITHOUT GOING INTO THE MERITS OF THE ADJUSTMENT MAD E BY THE ASSESSING OFFICER, IN MY VIEW, THE ACTION OF THE ASSESSING OFFICER IS BEYOND THE SCOPE AND AMBIT OF SECTION 154 OF THE ACT AND THE SAME IS HEREBY SE T-ASIDE AND ASSESSEE SUCCEEDS. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 09/12/2016 SD/- (G.S.PANNU) ACCOCUNTANT MEMBER MUMBAI, DATED 09/12/2016 VM , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI