M/s. SULPHUR MILLS LTD., MUMBAI V. ITO Wd. - 7(2)-4, MUMBAI

ITA 2632/MUM/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1014 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 15-07-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 04-04-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N K BALODIA
• Assessee Lawyers: K S CHOKSI
• Keywords: Business income; Bad and doubtful debts
• Section: 80HHC; 234B; 80IB

Judgement Text

ITA NO. 2631 & 2632/M/2007 A.Y : 02-03, 03-04 PAGE 1 OF 14 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI J BENCH, MUMBAI BEFORE SHRI D. K. AGARWAL, (JUDICIAL MEMBER) AND SHRI PRAMOD KUMAR (ACCOUNTANT MEMBER) ITA NO. 2631 AND 2632/MUM/2007 ASSESSMENT YEAR 2002-03 AND 2003-04 DATE OF HEARING : 15.7.2010 SULPHUR MILLS LIMITED ...... APPELLANT 604/605, 349, BUSINESS POINT WESTERN EXPRESS HIGHWAY ANDHERI (E), MUMBAI 400 069 PAN AABCS8736K VS. INCOME TAX OFFICER, WARD7(2)(4) .. RESP ONDENT AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400 020 ASSESSEE BY : SHRI K.S. CHOKSI REVENUE BY : SHRI N.K. BALODIA O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THESE APPEALS, THE ASSESSEE HAS CALLED IN TO QUESTION CORRECTNESS OF LD. CIT(A)S ORDERS OF EVEN DATED 19 TH DECEMBER 2006, FOR ASSESSMENT YEAR 2002-03 AND 2003-04. SINCE THESE AP PEALS PERTAIN TO THE SAME ASSESSEE, THEREFORE, THESE APPEALS WERE HEARD TOGETHER AND, AS A MATTER OF CONVENIENCE, THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER. ITA NO. 2631 & 2632/M/2007 A.Y : 02-03, 03-04 PAGE 2 OF 14 2. FIRST, WE TAKE UP ASSESSEES APPEAL IN ITA NO.2631/ MUM. /2007, FOR ASSESSMENT YEAR 2002-03. GRIEVANCE ARISING OUT OF GROUND NO.1, IS AS FOLLOWS:- 1. THE LEARNED ITO HAS ERRED IN CONSIDERING INTERE ST INCOME OF RS.75,90,545/- ON ACCOUNT OF FIXED DEPOSI TS AND INVESTMENTS AS INCOME FROM OTHER SOURCES AS AGAINST INCOME FROM BUSINESS. THE SAME MAY BE CONSIDERED AS INCOME FROM BUSINESS FOR ALL PURPOSE. THE ASSESSEE HAS FILED AL L THE DETAILS INDICATING THE NEXUS OF THE INCOME WITH BUSINESS AN D HENCE THE SAME BE ASSESSED AS INCOME FROM BUSINESS. WITHOUT PREJUDICE TO THE ABOVE, IT IS CLAIMED THAT 90% OF ONLY NET INTEREST BE REDUCED FROM THE PROFIT OF THE BUS INESS FOR THE PURPOSE OF CALCULATING DEDUCTION U/S 80HHC. 3. HAVING HEARD THE RIVAL SUBMISSIONS AND HAVING PERUS ED THE MATERIAL ON RECORD, WE FIND THAT THIS ISSUE IS COV ERED, AGAINST THE ASSESSEE, BY DECISION OF A CO ORDINATE BENCH, IN A SSESSEES OWN I.E. ITA NO.6872/MUM./2007, FOR THE ASSESSMENT YEAR 2004-05. LEARNED COUNSEL FOR THE ASSESSEE DOES NOT DISPUTE THIS FACT BUT REL IES UPON THE STAND TAKEN BY THE AUTHORITIES BELOW, AS ALSO THE FACT THAT THE CIT(A) HAS CATEGORICALLY NOTED THE NEXUS BETWEEN INTEREST RECEIVED AND INTER EST PAID. WE, HOWEVER, SEE NO REASONS TO TAKE ANY OTHER VIEW OF T HE MATTER THAN THE VIEW TAKEN BY THE COORDINATE BENCH IN ASSESSEES OW N CASE. RESPECTFULLY FOLLOWING THE SAME, WE REJECT THE GRIEVANCE OF THE ASSESSEE AND DECLINE TO INTERFERE IN THE MATTER. 4. GROUND NO. 1 IS THUS DISMISSED. 5. GRIEVANCE ARISING OUT OF GROUND NO.2, IS AS FOLL OWS:- ITA NO. 2631 & 2632/M/2007 A.Y : 02-03, 03-04 PAGE 3 OF 14 2. THE LEARNED ITO HAS ERRED IN GRANTING DEDUCTIO N U/S 80IB ON AMOUNT OF PROFITS AFTER REDUCING OTHER INCO ME OF RS.31,52,606/- AS FOLLOWS:- PARTICULARS AMOUNT (RS.) INTEREST RECEIVED FROM CUSTOMERS 80,634.00 INTEREST ON FIXED DEPOSITS AND INVESTMENTS 24,15,300.00 SUNDRY CREDITORS 84,486.00 DIVIDEND RECEIVED (GROSS) 3,435.00 DOUBTFUL DEBTS RECOVERED 2,602.00 EXPORT EXCHANGE RATE DIFFERENCE PROFIT 1,49,572.00 PREVIOUS YEARS EXPENSES WRITTEN BACK 19,440.00 CASH DISCOUNT RECEIVED 3,97,137.00 TOTAL:- 31,52,606.00 6. HAVING HEARD THE RIVAL SUBMISSIONS AND HAVING PE RUSED THE MATERIAL ON RECORD, WE FIND THAT THE ISSUES ARISING OUT OF THE ABOVE GROUNDS (EXCLUDING PREVIOUS YEARS EXPENSES WRITTEN BACK AND CASH DISCOUNT RECEIVED) ARE MUTATIS MUTANDIS IDENTICAL T O THE ISSUES RAISED BY THE REVENUE IN ASSESSEE OWN CASE VIDE GROUND NO.2 I N THE APPEAL IN ITA NO.2533 AND 6536/ MUM./2004 FOR ASSESSMENT YEARS 20 00-01 AND 2001- 02, WHEREIN, THE TRIBUNAL HAS DECIDED THESE ISSUES AGAINST THE ASSESSEE AND IN FAVOUR OF REVENUE FOR THE REASONS STATED THE REIN. SIMILAR DIRECTIONS ARE ISSUED ON THIS GROUND ALSO. WE DIREC T ACCORDINGLY. HOWEVER, AS FAR AS THE WRITE BACK OF PREVIOUS YEARS EXPENSES AND CASH DISCOUNTS ARE CONCERNED, WE AGREE WITH THE LEARNED COUNSEL THAT THESE ITEMS CANNOT BE VIEWED IN ISOLATION WITH BUSINESS O F THE ASSESSEE. CASH DISCOUNT HAS THE EFFECT OF ONLY REDUCING THE EFFECT IVE PURCHASE PRICE, AND IT IS THUS A INTEGRAL PART OF THE PURCHASES. SIMILA RLY, AS FAR AS WRITE BACK OF EXPENSES IS CONCERNED, THIS RELATES TO WRITE BAC K OF ONLY SUCH AMOUNTS WHICH HAVE ADMITTEDLY BEEN INCURRED FOR BUSINESS, A ND ALLOWED AS A ITA NO. 2631 & 2632/M/2007 A.Y : 02-03, 03-04 PAGE 4 OF 14 DEDUCTION IN BUSINESS INCOME. TO THE EXTENT OF THES E TWO ITEMS, THEREFORE, WE UPHOLD THE GRIEVANCE OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER NOT TO EXCLUDE THE SAME FROM INCOME ELIGIBLE FOR DE DUCTION UNDER SECTION 80 IB. 7. GROUND NO. 2 IS THUS PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. 8. IN GROUND NO.3, THE GRIEVANCE OF THE ASSESSEE IS AS FOLLOWS:- 3. THE LD. ITO HAS ERRED IN NOT GRANTING DEDUCTION OF 10% OF EXPORT INCENTIVES, DUTY DRAWBACK AND EXCISE DUTY REFUND FROM THE TOTAL INDIRECT COST WHILE COMPUTING THE IN DIRECT COST ATTRIBUTABLE TO EXPORT OF TRADING GOODS. 9. LEARNED REPRESENTATIVES AGREE BEFORE US THAT THI S ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY HONBLE SUPREME COURT S JUDGMENT IN THE CASE OF HERO EXPORTS VS CIT (295 ITR 454), WHEREIN IT IS HELD THAT THE ENTIRE INDIRECT COSTS CANNOT BE ATTRIBUTED TO EXPOR T OF TRADING GOODS AND A PART THEREOF, WHICH MUST BE TAKEN AT 10% OF SUCH RE CEIPTS AND THAT IS THE STANDARD APPLIED BY THE LEGISLATURE, SHOULD BE ATTR IBUTED TO ACTIVITIES GIVING RISE TO RECEIPTS OTHER THAN RECEIPTS BY WAY OF EXPORT OF TRADING GOODS, IS TO BE UPHELD. RESPECTFULLY FOLLOWING ESTE EMED VIEWS OF HONBLE SUPREME COURT, WE SET ASIDE THE IMPUGNED ORDER OF T HE LEARNED CIT(A) AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 10. GROUND NO. 3 IS THUS ALLOWED. 11. IN GROUND NO.4, THE ASSESSEE HAS RAISED FOLLOWI NG GRIEVANCE:- ITA NO. 2631 & 2632/M/2007 A.Y : 02-03, 03-04 PAGE 5 OF 14 4. THE LD. ITO HAS ERRED IN ADDING THE IMPORT EXCH ANGE RATE DIFFERENCE FOR RS.5,164/- TO TOTAL TURNOVER FO R CALCULATION OF DEDUCTION U/S 80HHC. 12. LEARNED REPRESENTATIVES AGREE THAT THIS ISSUE I S COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF THIS TRIBUNAL IN ASS ESSEES OWN CASE DECIDED IN ITA NO.2186 AND 6128/MUM./2004, FOR ASSE SSMENT YEARS 2000-01 AND 2001-02, WHEREIN, THE TRIBUNAL GRANTED RELIEF TO THE ASSESSEE BY OBSERVING AS FOLLOWS:- WE HAVE HEARD THE PARTIES. IN THE FACTS OF THE CAS E, WE DIRECT THE ASSESSING OFFICER TO VERIFY AND IF THE EXCHANGE RATE DIFFERENCE OF RS.1,49,028/- RELATES TO IMPORT, THE SAME CANNOT BE PART OF THE TURNOVER AND BE EXCLUDED FROM THE TU RNOVER ACCORDINGLY. 13. RESPECTFULLY FOLLOWING THE AFORESAID DECISION O F THE TRIBUNAL, WE SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(A) AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 14. GROUND NO. 4 IS THUS ALLOWED. 15. IN GROUND NO.5, THE ASSESSEE HAS RAISED FOLLOWI NG GRIEVANCE:- 5. THE LD. ITO HAS ERRED IN REDUCING 90% OF THE FO LLOWING RECEIPT FROM THE PROFIT OF BUSINESS FOR CALCULATING DEDUCTION U/S 80HHC OF THE ACT. DIVIDEND RS.10,800/- 16. THIS ISSUE WAS NOT PRESSED IN EARLIER YEARS, NO R ANY SPECIFIC ARGUMENTS ARE RAISED IN SUPPORT OF THE GRIEVANCE TH IS YEAR EITHER. THE GRIEVANCE IS, THEREFORE, DISMISSED AS NOT PRESSED. ITA NO. 2631 & 2632/M/2007 A.Y : 02-03, 03-04 PAGE 6 OF 14 17. GROUND NO. 5 IS, THEREFORE, DISMISSED. 18. IN GROUND NO.6, THE GRIEVANCE OF THE ASSESSEE I S AS FOLLOWS:- 6. THE LEARNED ITO ERRED IN NOT REDUCING AN AMOUNT OF RS.22,98,141/- IN RESPECT OF SALES SHIPPED AFTER 31 .3.2002, FROM TOTAL TURNOVER BUT CONSIDERED IT AS LOCAL TURNOVER FOR CALCULATION OF 80HHC OF THE ACT. 19. LEARNED COUNSEL POINTS OUT THAT SIMILAR ISSUE W AS DECIDED IN FAVOUR OF THE ASSESSEE BY THE CIT(A) IN THE ASSESSMENT YEA R 2000-01 AND THAT THE ORDER OF THE CIT(A) WAS NOT CHALLENGED BY THE ASSES SING OFFICER IN FURTHER APPEAL. IN ANY EVENT, IT IS DIFFICULT TO UNDERSTAN D AS TO HOW A EXPORT SHIPMENT IN TRANSIT CAN BE TREATED AS DOMESTIC TURN OVER FOR THE PURPOSES OF SECTION 80 HHC. WHEN SHIPMENT HAS NOT TAKEN PLAC E, THE GOODS UNDER SHIPMENT CONTINUES TO BE A PART OF STOCK OF THE ASS ESSEE AND IT IS TO BE ENTIRELY IGNORED FOR THE PURPOSES OF COMPUTING PROF ITS. HOWEVER, FOR THE SAKE OF CONSISTENCY IN TREATMENT OF THESE ENTRIES W HICH AFFECT MORE THAN ONE YEAR, WE DEEM IT FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE MATTER AFRESH AND C ONSISTENT TO THE TREATMENT GIVEN IN THE OTHER YEARS. WITH THESE DIRE CTIONS, THE MATTER STANDS RESTORED TO THE FILE OF THE ASSESSING OFFICE R. 20. GROUND NO. 6 IS THUS ALLOWED FOR STATISTICAL PU RPOSES IN THE TERMS INDICATED ABOVE. 21. IN GROUND NO.7, THE GRIEVANCE OF THE ASSESSEE I S AS FOLLOWS:- 7. THE LEARNED ITO HAS ERRED IN NOT ADDING PROFIT ON FORWARD EXCHANGE RATE OF RS.2,016/- ARISING OUT OF EXPORT ITA NO. 2631 & 2632/M/2007 A.Y : 02-03, 03-04 PAGE 7 OF 14 REALIZATION TO TOTAL TURNOVER AND TOTAL EXPORT TURN OVER FOR THE PURPOSE OF DEDUCTION U/S 80HHC. 22. LEARNED COUNSEL FOR THE ASSESSEE DID NOT WISH T O PRESS THIS GROUND BEFORE US, THEREFORE, THIS GROUND OF APPEAL IS DISM ISSED AS SUCH. 23. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. 24. NOW, WE TAKE UP ASSESSEES APPEAL IN ITA NO.263 2/MUM./2007, FOR ASSESSMENT YEAR 2003-04. 25. GRIEVANCE ARISING OUT OF GROUND NO.1, IS AS FOL LOWS:- 1. THE LEARNED INCOME TAX OFFICER HAS ERRED IN CON SIDERING INTEREST INCOME OF RS.63,42,626/- ON ACCOUNT OF FIX ED DEPOSITS AND INVESTMENTS AS INCOME FROM OTHER SOURCES AS AGA INST INCOME FROM BUSINESS. THE SAME MAY BE CONSIDERED AS INCOME FROM BUSINESS FOR ALL PURPOSE. THE ASSESSEE HAS FIL ED ALL THE DETAILS INDICATING THE NEXUS OF THE INCOME WITH BUS INESS AND HENCE THE SAME BE ASSESSED AS INCOME FROM BUSINESS. WITHOUT PREJUDICE TO ABOVE, IT IS CLAIMED THAT 90% OF ONLY NET INTEREST BE REDUCED FROM THE PROFIT OF THE BUSINES S FOR THE PURPOSE OF CALCULATING DEDUCTION U/S 80HHC. 26. HAVING HEARD THE RIVAL SUBMISSIONS AND HAVING P ERUSED THE MATERIAL ON RECORD, WE FIND THAT THIS ISSUE IS COV ERED, AGAINST THE ASSESSEE, BY DECISION OF A CO ORDINATE BENCH, IN A SSESSEES OWN I.E. ITA NO.6872/MUM./2007, FOR THE ASSESSMENT YEAR 2004-05. LEARNED COUNSEL FOR THE ASSESSEE DOES NOT DISPUTE THIS FACT BUT REL IES UPON THE STAND TAKEN BY THE AUTHORITIES BELOW, AS ALSO THE FACT THAT THE CIT(A) HAS CATEGORICALLY NOTED THE NEXUS BETWEEN INTEREST RECEIVED AND INTER EST PAID. WE, HOWEVER, SEE NO REASONS TO TAKE ANY OTHER VIEW OF T HE MATTER THAN THE VIEW TAKEN BY THE COORDINATE BENCH IN ASSESSEES OW N CASE. RESPECTFULLY ITA NO. 2631 & 2632/M/2007 A.Y : 02-03, 03-04 PAGE 8 OF 14 FOLLOWING THE SAME, WE REJECT THE GRIEVANCE OF THE ASSESSEE AND DECLINE TO INTERFERE IN THE MATTER. 27. GROUND NO. 1 IS THUS DISMISSED. 28. IN GROUND NO.2, THE GRIEVANCE OF THE ASSESSEE I S AS FOLLOWS:- 2. THE LEARNED ITO HAS ERRED IN GRANTING DEDUCTION U/S 80IB ON AMOUNT OF PROFITS AFTER REDUCING OTHER INCO ME OF RS.21,36,463/-. PARTICULARS AMOUNT (RS.) INTEREST RECEIVED FROM CUSTOMERS 1,37,141 INTEREST ON FIXED DEPOSITS 18,22,895 SUNDRY CREDITORS WRITTEN BACK 878 DIVIDEND RECEIVED 4,733 EXPORT EXCHANGE DIFFERENCE 868 SALES TAX REFUND 1,59,564 CASH DISCOUNT RECEIVED 10,384 29. HAVING HEARD THE RIVAL SUBMISSIONS AND HAVING P ERUSED THE MATERIAL ON RECORD, WE FIND THAT THE ISSUES ARISING OUT OF THE ABOVE GROUNDS (EXCLUDING CASH DISCOUNT RECEIVED) ARE MUTA TIS MUTANDIS IDENTICAL TO THE ISSUES RAISED BY THE REVENUE IN AS SESSEE OWN CASE VIDE GROUND NO.2 IN THE APPEAL IN ITA NO.2533 AND 6536/ MUM./2004 FOR ASSESSMENT YEARS 2000-01 AND 2001-02, WHEREIN, THE TRIBUNAL HAS DECIDED THESE ISSUES AGAINST THE ASSESSEE AND IN FA VOUR OF REVENUE FOR THE REASONS STATED THEREIN. SIMILAR DIRECTIONS ARE ISSUED ON THIS GROUND ALSO. WE DIRECT ACCORDINGLY. HOWEVER, AS FAR AS CAS H DISCOUNT IS CONCERNED, WE AGREE WITH THE LEARNED COUNSEL THAT I T CANNOT BE VIEWED IN ITA NO. 2631 & 2632/M/2007 A.Y : 02-03, 03-04 PAGE 9 OF 14 ISOLATION WITH BUSINESS OF THE ASSESSEE. CASH DISCO UNT HAS THE EFFECT OF ONLY REDUCING THE EFFECTIVE PURCHASE PRICE, AND IT IS THUS A INTEGRAL PART OF THE PURCHASES. TO THE EXTENT OF THESE TWO ITEMS, THEREFORE, WE UPHOLD THE GRIEVANCE OF THE ASSESSEE AND DIRECT THE ASSESS ING OFFICER NOT TO EXCLUDE THE SAME FROM INCOME ELIGIBLE FOR DEDUCTION UNDER SECTION 80 IB. 30. GROUND NO. 2 IS THUS PARTLY ALLOWED IN THE TERM S INDICATED ABOVE. 31. IN GROUND NO.3, GRIEVANCE OF THE ASSESSEE, IS A S FOLLOWS:- 3. THE LD. ITO HAS ERRED IN NOT GRANTING DEDUCTION OF 10% OF EXPORT INCENTIVES, DUTY DRAWBACK AND EXCISE DUTY REFUND FROM THE TOTAL INDIRECT COST WHILE COMPUTING THE IN DIRECT COST ATTRIBUTABLE TO EXPORT OF TRADING GOODS. THE SAME M AY BE GRANTED. WITHOUT PREJUDICE TO ABOVE, THE ASSESSEE CLAIMS THA T THE DEDUCTION BE MADE ONLY IN RESPECT OF PROFITS OF PAN OLI UNIT (ELIGIBLE UNITS) ON WHICH DEDUCTION U/S 80IB IS ENC LOSED. 32. LEARNED REPRESENTATIVES AGREE BEFORE US THAT T HIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY HONBLE SUPREME COURT S JUDGMENT IN THE CASE OF HERO EXPORTS VS CIT (295 ITR 454), WHEREIN IT IS HELD THAT THE ENTIRE INDIRECT COSTS CANNOT BE ATTRIBUTED TO EXPOR T OF TRADING GOODS AND A PART THEREOF, WHICH MUST BE TAKEN AT 10% OF SUCH RE CEIPTS AND THAT IS THE STANDARD APPLIED BY THE LEGISLATURE, SHOULD BE ATTR IBUTED TO ACTIVITIES GIVING RISE TO RECEIPTS OTHER THAN RECEIPTS BY WAY OF EXPORT OF TRADING GOODS, IS TO BE UPHELD. RESPECTFULLY FOLLOWING ESTE EMED VIEWS OF HONBLE SUPREME COURT, WE SET ASIDE THE IMPUGNED ORDER OF T HE LEARNED CIT(A) AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 33. GROUND NO. 3 IS THUS ALLOWED. ITA NO. 2631 & 2632/M/2007 A.Y : 02-03, 03-04 PAGE 10 OF 14 34. IN GROUND NO.4, THE GRIEVANCE OF THE ASSESSEE I S AS FOLLOWS:- 4. THE LEARNED ITO HAS ERRED IN ADDING DOUBTFUL DE BTS RECOVERED FOR RS.2,04,968/- TO TOTAL TURNOVER FOR C ALCULATION OF DEDUCTION U/S 80HHC WITHOUT CONSIDERING THE FACTS A ND CIRCUMSTANCES OF THE CASE. 35. LEARNED REPRESENTATIVES AGREE THAT THIS ISSUE I S COVERED AGAINST THE ASSESSEE BY TRIBUNALS ORDER IN ASSESSE ES OWN CASE FOR THE ASSESSMENT YEAR 1997-98. RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE ORDER OF THE CIT(A) AND DECLINE TO INTER FERE IN THE MATTER. 36. GROUND NO. 4 IS THUS DISMISSED. 37. IN GROUND NO.5, THE ASSESSEE HAS RAISED FOLLOWI NG GRIEVANCES:- 5. THE LEARNED ITO HAS ERRED IN REDUCING 90% OF TH E FOLLOWING RECEIPTS FROM THE PROFITS OF THE BUSINESS FOR CALCULATING DEDUCTION U/S 80HHC OF THE ACT. DIVIDEND RS. 16,754/- SALE OF EXPORT LICENSE RS.36,27,386/- 38. INSOFAR AS THE ISSUE OF DIVIDEND IS CONCERNED, THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT WISH TO PRESS THIS GROUND AND, HENCE, THE SAME IS DISMISSED AS NOT PRESSED . ITA NO. 2631 & 2632/M/2007 A.Y : 02-03, 03-04 PAGE 11 OF 14 39. WITH REGARD TO ISSUE OF SALE OF EXPORT LICENSE, BOTH THE LEARNED REPRESENTATIVES AGREE BEFORE US THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE RECENT DECISION OF THE HONBLE BOMB AY HIGH COURT RENDERED IN THE CASE OF CIT VS KALPATARU COLOURS & CHEMICALS, 2010- TIOL-482-HC-MUM-IT. RESPECTFULLY FOLLOWING THE SAI D DECISION, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND REJECT THE G ROUND OF APPEAL RAISED BY THE ASSESSEE. 40. GROUND NO. 5 IS THUS DISMISSED. 41. IN GROUND NO.6, THE ASSESSEE HAS RAISED FOLLOWI NG GRIEVANCE:- 6. THE LEARNED INCOME TAX OFFICER HAS ERRED IN GRA NTING DEDUCTION U/S 80IB @ RS.31,24,401/- AND U/S 80HHC @ RS.87,67,962/- IN PLACE OF AS CLAIMED AND AS ENHANC ED BY ADDITION. 42. LEARNED REPRESENTATIVES AGREE BEFORE US THAT TH IS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THIS TRIBUN AL IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 1999-2000, WHEREIN, THE T RIBUNAL, IN AN APPEAL FILED BY THE REVENUE IN ITA NO.4662/MUM./2003, VIDE ORDER DATED 6 TH DECEMBER 2007, HAS DECIDED THIS ISSUE AGAINST THE A SSESSEE BY OBSERVING AS FOLLOWS:- THE LD. DR SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE REVENUE WITH THE DECISION OF CHENNAI SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS ROGINI GARMENTS, RE PORTED IN 108 ITD 49 (CHEN.) (SB). TH LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE WAS DECIDED IN FAVOUR OF T HE ASSESSEE BY THE TRIBUNAL IN EARLIER ASSESSMENT YEAR 1998-99. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT SPE CIAL BENCH DECISION IN THE CASE OF ROGINI GARMENTS IS NOT APPL ICABLE AS THAT WAS A REVERSE CASE. WE HAVE CONSIDERED THE RIV AL ITA NO. 2631 & 2632/M/2007 A.Y : 02-03, 03-04 PAGE 12 OF 14 SUBMISSIONS. WE FIND THAT THE DECISION OF SPECIAL B ENCH OF CHENNAI TRIBUNAL IN THE CASE OF ACIT VS ROGINI GARM ENTS (SUPRA) SQUARELY COVERS THE ISSUE OF REDUCTION OF D EDUCTION FROM SEC. 80IA PROFITS FOR DEDUCTION GRANTED U/S 80 HHC OF THE ACT IN FAVOUR OF THE REVENUE AND ACCORDINGLY, THE I SSUE IS DECIDED IN FAVOUR OF THE REVENUE AND THE GROUND OF APPEAL NO.3 IS ALLOWED. 43. THE SAME IS THE VIEW TAKEN BY SPECIAL BENCH IN THE CASE OF ACIT VS HINDUSTAN MINT & AGRO PRODUCTS PVT LTD (119 ITD SB 107). IN VIEW OF THESE JUDICIAL PRECEDENTS, INCLUDING IN ASSESSEES OWN CASE, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND REJECT THE GROUND O F APPEAL RAISED BY THE ASSESSEE. 44. GROUND NO. 6 IS THUS ALSO DISMISSED. 45. IN GROUND NO.7, THE GRIEVANCE OF THE ASSESSEE I S AS FOLLOWS:- 7. THE LD. ITO HAS ERRED IN NOT GRANTING DEDUCTION U/S 80HHC OF THE ACT IN RESPECT OF DEPB LICENCE SALE OF RS.36,27,387/- BY NOT CONSIDERING AS EXPORT INCENTI VE FOR THE PURPOSE OF PROFITS OF THE BUSINESS. THE SAME MAY BE DELETED. 46. HAVING HEARD THE RIVAL SUBMISSIONS AND HAVING P ERUSED THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THIS ISS UE NOW STANDS COVERED BY THE AGAINST THE ASSESSEE BY THE RECENT DECISION OF THE HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF CIT VS KALPATARU COLOURS & CHEMICALS, 2010-TIOL-482-HC-MUM-IT. RESPECTFULLY FOLLOWING TH E SAID DECISION, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND REJECT THE G ROUND OF APPEAL RAISED BY THE ASSESSEE. 47. GROUND NO. 7 IS ACCORDINGLY DISMISSED. 48. THE LAST GROUND RAISED BY THE ASSESSEE, READS A S UNDER:- ITA NO. 2631 & 2632/M/2007 A.Y : 02-03, 03-04 PAGE 13 OF 14 8. THE LEARNED ITO ERRED IN CHARGING INTEREST U/S 234B OF THE ACT AT RS.5,11,343/-. 49. THIS ISSUE BEING CONSEQUENTIAL IN NATURE, THERE FORE, WE ARE NOT REQUIRED TO ADJUDICATE THIS ISSUE SEPARATELY. THE A SSESSING OFFICER IS DIRECTED TO GIVE CONSEQUENTIAL EFFECT IN VIEW OF OU R AFORESAID DECISIONS AND IN ACCORDANCE WITH LAW. 50. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. 51. TO SUM UP, BOTH THE APPEAL ARE PARTLY ALLOWED I N TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF JULY 2010. SD/XX SD/XX (D. K. AGARWAL) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; 23 RD DAY OF JULY 2010. COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX, MUMBAI 4. COMMISSIONER (APPEALS) , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, J BENCH, ITAT, MUMB AI 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR PRADEEP J. CHOWDHURY INCOME TAX APPELLATE TRIBUNAL SR. PRIVATE SECRETARY MUMBAI BENCHES, MUMBAI ITA NO. 2631 & 2632/M/2007 A.Y : 02-03, 03-04 PAGE 14 OF 14 DATE INITIAL 1. DRAFT DICTATED ON 15.7.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 19.7.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 19.7.2010 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 19.7.2010 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 23.7.2010 SR.PS/PS 6. DATE OF PRONOUNCEMENT 23.7.2010 SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER