NATIONAL BULK HANDLING CORPORATION LTD, NAVI MUMBAI V. DCIT CEN CIR 46, MUMBAI

ITA 303/MUM/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9810 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 10-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Keywords: Business income
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO.303/MUM/2014, (A.Y. 2009-10) M/S. NATIONAL BULK HANDLING CORPORATION LTD. B-901-902, EVEREST NIRVANA INFOTECH PARK-1, PLOT NO.D-3, TTC INDUSTRIAL AREA TURBHE, MIDC, NAVI MUMBAI 400 705, PAN :AACCN 1186B ...... APPELLANT VS. THE DCIT, CENTRAL CIR.46, MUMBAI ..... RESPONDENT APPELLANTS BY : SHRI NEERAJ SHETH RESPONDENT BY : SHRI SUMAN KUMAR DATE OF HEARING : 16/03/2018 DATE OF PRONOUNCEMENT : 23/03/2017 ORDER PER BENCH: THE CAPTIONED APPEAL FILED BY THE ASSESSEE PER TAINING TO ASSESSMENT YEAR 2009-10 IS DIRECTED AGAINST AN ORDE R PASSED BY CIT(A)-38, MUMBAI DATED 26/12/2013, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 250 OF T HE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 15/10/2012. 2. IN THIS APPEAL ASSESSEE HAS RAISED THE FOLLOWI NG GROUNDS OF APPEAL:- 2 ITA NO.303/MUM/2014, (A.Y. 2009-10) 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE ACTION OF THE ASSESSING OFFICER IN RESTRICTING THE DEDUCTION U/S 80IB(11A) TO BUSINESS INCOME OF THE ASSESSEE INSTEAD OF RESTRICTING THE SAME TO GROSS TOTAL INCOME OF THE ASSESSEE. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN APPLY ING PROVISIONS OF 80AB OF THE ACT WHICH IS NOT RELEVANT TO THE FACTS OF THE C ASE AND ERRED IN NOT APPLYING PROVISIONS OF SECTION 80A OF THE ACT. 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN FOLLO WING JUDICIAL DECISIONS, THE FACTS OF WHICH ARE TOTALLY DIFFERENT FROM FACTS OF THE ASSESSEE. 4) THE APPELLANT PRAYS THAT: I) DEDUCTION U/S SOIB(LLA) BE ALLOWED FROM G ROSS TOTAL INCOME OF THE ASSESSEE AND NOT RESTRICTING THE SAME T O PROFITS AND GAIN FROM BUSINESS AND PROFESSION; II) ANY OTHER RELIEF Y OUR HONOURS MAY DEEM FIT. 3. AS THE AFORESTATED GROUNDS OF APPEAL REVEAL THE SOLITARY ISSUE RELATES TO THE GRIEVANCE OF THE ASSESSEE THAT THE I NCOME-TAX AUTHORITIES HAVE WRONGLY RESTRICTED THE DEDUCTION U/S.80IB(11A) OF THE ACT TO THE BUSINESS INCOME OF THE ASSESSEE INSTEAD OF RESTRICT ING THE SAME TO THE GROSS TOTAL INCOME. 4. BRIEFLY PUT, THE RELEVANT FACTS ARE THAT THE APP ELLANT IS, INTER-ALIA, ENGAGED IN THE BUSINESS OF PROVIDING VARIOUS SERVIC ES IN THE NATURE OF HANDLING OF FOOD GRAINS AND AGRICULTURAL PRODUCE EN TAILING HANDLING OF SUCH ITEMS, TRANSPORTATION, WAREHOUSING AND DISTRIBUTION THEREOF. THE ASSESSEE HAD QUANTIFIED ITS DEDUCTION U/S 80IB (11A ) OF THE ACT OF RS.13,66,43,375/-, BUT HAD RESTRICTED ITS CLAIM IN THE RETURN OF INCOME TO RS.11,12,65,675/-, WHICH WAS THE GROSS TOTAL INCOME . IN THE ASSESSMENT FINALIZED U/S. 143(3) OF THE ACT DATED 12/12/2011, THE GROSS TOTAL INCOME WAS COMPUTED AT RS.11,76,21,841/- AND THE ASSESSING OFFICER RESTRICTED 3 ITA NO.303/MUM/2014, (A.Y. 2009-10) THE CLAIM OF DEDUCTION U/S. 80IB(11A) OF THE ACT TO RS.6,51,07,858/-, WHICH WAS EQUIVALENT TO THE BUSINESS INCOME ASSESSED BY H IM. THE CIT(A) VIDE HIS ORDER DATED 30/12/2012 ALLOWED CERTAIN RELIEF A ND, THEREAFTER, THE DEDUCTION U/S. 80IB(11A) OF THE ACT CAME TO RS.12,7 6,67,701/-. IN THE IMPUGNED ORDER PASSED BY THE ASSESSING OFFICER GIVI NG EFFECT TO THE ORDER OF THE CIT(A), THE GROSS TOTAL INCOME HAS BEEN ARRI VED AT RS.11,12,65,675/- AND THE DEDUCTION U/S. 80 IB(11A) OF THE ACT HAS BE EN RESTRICTED TO THE BUSINESS INCOME ASSESSED THEREOF, WHICH IS RS.10,22 ,65,300/-. THIS ACTION OF THE ASSESSING OFFICER HAS SINCE BEEN UPHELD BY T HE CIT(A), AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. BEFORE US THE SHORT POINT RAISED BY THE ASSESSEE IS THAT THE CLAIM OF DEDUCTION U/S. 80 IB(11A) OF THE ACT IS ALLOWABLE TO THE EXTENT OF THE AVAILABILITY OF GROSS TOTAL INCOME, WHICH IS RS.11, 12,65,675/- AND THAT RESTRICTING IT TO THE EXTENT OF BUSINESS INCOME ASS ESSED OF RS.10,22,65,300/- IS ERRONEOUS. THE LD. REPRESENTA TIVE FOR THE ASSESSEE VEHEMENTLY POINTED OUT THAT THE CIT(A) IS WRONG I N RELYING ON SECTION 80AB OF THE ACT IN AFFIRMING THE ACTION OF THE ASSE SSING OFFICER. THE LD. REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT I N FACT ASSESSEES CLAIM IS IN ACCORDANCE WITH SECTION 80AB OF THE ACT , INA SMUCH AS, THE DEDUCTION AMOUNTS TO RS.12,76,67,101/- BUT ASSESSEE HAS RESTR ICTED THE CLAIM TO THE AVAILABLE GROSS TOTAL INCOME I.E. RS.11,12,65,655/- . IT IS POINTED OUT THAT THE STAND OF THE ASSESSEE IS FULLY COVERED BY THE R ATIO OF THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF V.M.SA LGAONKAR & BROTHERS (P) LTD. VS. ACIT, 81 TAXMANN.COM 357(BOM). 4 ITA NO.303/MUM/2014, (A.Y. 2009-10) 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE HAS DEFENDED THE ORDER OF THE CIT(A) AND POINTED OUT TH AT THE RESTRICTION PLACED IN SECTION 80AB OF THE ACT IS FULLY APPLICAB LE AND, THEREFORE, ASSESSEES CLAIM OF DEDUCTION U/S.80IB(11A) OF THE ACT HAS BEEN CORRECTLY RESTRICTED TO THE EXISTENCE OF BUSINESS INCOME. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN THE INSTANT CA SE, IN PRINCIPLE THERE IS NO DISPUTE BETWEEN THE ASSESSEE AND THE REVENUE THA T THE BENEFIT OF SECTION 80IB(11A) OF THE ACT IS AVAILABLE TO THE AS SESSEE. THE ONLY POINT MADE OUT BY THE APPELLANT IS THAT ONCE THE QUANTUM OF DEDUCTION ENTITLED TO THE ASSESSEE IS MORE THAN THE ASSESSED GROSS TOTAL INCOME, IT IS WRONG ON THE PART OF THE INCOME-TAX AUTHORITIES T O RESTRICT THE DEDUCTION TO THE EXTENT OF PROFITS OF BUSINESS. THE CIT(A) HA S RELIED ON THE RESTRICTION CONTAINED IN SECTION 80AB OF THE ACT TO SCALE DOWN ASSESSEES CLAIM FOR DEDUCTION. OSTENSIBLY, THE PROVISIONS OF SECTION 8 0AB OF THE ACT HAD BEEN PRESSED INTO SERVICE BY THE ASSESSING OFFICER ALSO , THOUGH THE SAME HAS NOT BEEN EXPLICITLY STATED SO IN THE IMPUGNED ORDE R PASSED BY HIM DATED 15/10/2012 GIVING EFFECT TO THE ORDER PASSED BY THE CIT(A) DATED 30/08/2012. BE THAT AS IT MAY, WE FIND THAT THE MA NNER IN WHICH THE PROVISIONS OF SECTION 80AB OF THE ACT ARE TO BE UN DERSTOOD IN THE CONTEXT OF THE INSTANT CONTROVERSY, CAME UP BEFORE THE HON BLE BOMBAY HIGH COURT IN THE CASE OF V.M.SALGAONKAR & BROTHERS (P) LTD.(SUPRA). THE ISSUE BEFORE THE HONBLE HIGH COURT WAS AS TO WHETHER DED UCTION ALLOWABLE U/S. 80 HHC OF THE ACT CAN BE RESTRICTED TO THE EXT ENT OF BUSINESS PROFITS AND NOT TO THE EXTENT OF THE GROSS TOTAL INCOME IN VIEW OF THE CONSTRUCTION 5 ITA NO.303/MUM/2014, (A.Y. 2009-10) OF SECTION 80HHC, 80A(2), 80AB AND 80B(5) OF THE A CT. THE HONBLE HIGH COURT NOTED THAT WHILE COMPUTING THE DEDUCTION U/S. 80HHB, 80HHC, 80HHD, 80I,80IB, 80IA, ETC. ONE WOULD HAVE TO APPLY SECTION 80 B OF THE ACT . SO HOWEVER, ACCORDING TO THE HONBLE HIGH CO URT, THE RESTRICTION IN TERMS OF SECTION 80AB(2) IS TO THE GROSS TOTAL INCO ME AND NOT TO THE TOTAL PROFITS OF BUSINESS. HONBLE HIGH COURT CAME TO SU CH CONCLUSION AFTER REFERRING TO ITS EARLIER JUDGMENTS IN: (I) CIT V. TRIDOS LABORATORIES LIMITED, 328 ITR 44 8(BOM) (II) CIT V. ESKAY KNIT INDIA LTD. ITA NO.184 OF 200 7 DATED 25/03/2010)(BOM) (III)CIT V. J.B. BODA & CO. PVT. LTD., ITA NO.3224 OF 2009, DATED 18/10/2010(BOM) 7.1 IN OUR CONSIDERED OPINION, THE AFORESAID RULING OF THE HONBLE BOMBAY HIGH COURT CLEARLY COVERS THE CONTROVERSY IN FAVOUR OF THE ASSESSEE AND THE INCOME-TAX AUTHORITIES ARE NOT JUS TIFIED IN RESTRICTING ASSESSEES CLAIM FOR DEDUCTION U/S. 80IB(11A) OF TH E ACT TO THE EXTENT OF BUSINESS INCOME; AND, RATHER THE CLAIM OF THE ASSES SEE IS ALLOWABLE TO THE EXTENT OF THE ASSESSED GROSS TOTAL INCOME. THUS, A SSESSEE SUCCEEDS ON THIS ASPECT. 7.2 BEFORE PARTING, WE MAY REFER TO THE DECISIONS R ELIED UPON BY THE CIT(A) IN PARA 5.1 OF HIS ORDER. NOTABLY, THE DECIS IONS REFERRED THEREIN DO NOT HELP THE CASE OF THE REVENUE IN THE INSTANT CAS E. IN THE CASE OF CHEMICAL & METALLURGICAL DESIGN CO. LTD. VS. CIT, 1 14 TAXMANN 463(DEL), RELIED UPON BY THE CIT(A), THE ISSUE RELATED TO AS TO WHETHER THE DEDUCTION U/S 80-O OF THE ACT WAS TO BE COMPUTED ON GROSS OR NET BASIS. IT WAS HELD 6 ITA NO.303/MUM/2014, (A.Y. 2009-10) THAT THE DEDUCTION WAS TO BE COMPUTED ON NET BASIS AFTER ALLOWING THE EXPENSES INCURRED. THE SAID DECISION IS OF NO CONS EQUENCE, SO FAR AS THE INSTANT CONTROVERSY IS CONCERNED, SINCE THE ONLY IS SUE BEFORE US IS AS TO WHETHER THE DEDUCTION U/S. 80IB(11A) OF THE ACT O NCE COMPUTED IS TO BE RESTRICTED TO GROSS TOTAL INCOME OR BUSINESS INCOME . SECONDLY, THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F H.H. SIR RAMA VARMA V. CIT, 71 TAXMANN, 237 (SC) RELIED UPON BY THE CI T(A) IS ALSO OF NO AVAIL AS THE ISSUE THEREIN WAS WHETHER CAPITAL GAINS WERE REQUIRED TO BE SET-OFF AGAINST CAPITAL LOSS BEFORE ALLOWING RELIEF U/S. 8O T OF THE ACT. OSTENSIBLY, THE ISSUE BEFORE US IS NOT RELATING TO THE SET-OFF OF ANY LOSS AGAINST ELIGIBLE INCOME. THUS, THE SAID DECISION HAS NO APPLICATION TO THE INSTANT CONTROVERSY BEFORE US. THIRDLY, THE JUDGMENT OF TH E HONBLE BOMBAY HIGH COURT IN THE CASE OF GRASIM INDUSTRIES LTV. V ACI T, 158 TAXMANN 278(BOM), RELIED UPON BY THE CIT(A) MERELY HELD THA T THE DEDUCTION COMPUTABLE U/S. 80HH WAS WITH REFERENCE TO THE PROF ITS AFTER MAKING DEDUCTIONS AVAILABLE U/S.30 TO 43A OF THE ACT. OST ENSIBLY, THE CONTROVERSY BEFORE US IS ON A DIFFERENT FOOTING AND THE SAID JU DGMENT IS OF NO HELP TO THE REVENUE IN THE INSTANT CASE. FOURTHLY, REFEREN CE MADE BY THE CIT(A) OF THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF R.P.G. TELECOMS LTD. VS. CIT, 160 TAXMANN 365 (KAR) IS FOR THE PROPOSITION THAT THE PROVISIONS OF SECTION 80AB WOULD OVERRIDE ALL O THER SECTIONS FOR THE PURPOSES OF DEDUCTIONS SPECIFIED IN CHAPTER VI-A OF THE ACT. THERE IS NO QUARREL WITH THE SAID PROPOSITION, INASMUCH AS, WHI LE UPHOLDING ASSESSEES PLEA IN THE INSTANT CASE, IT IS ONLY DUE TO THE OPE RATION OF SECTION 80AB OF THE ACT THAT THE DEDUCTION U/S. 80IB(11A) OF THE AC T HAS BEEN FOUND TO BE RESTRICTED TO THE ASSESSED GROSS TOTAL INCOME. THE REFORE, THE SAID DECISION 7 ITA NO.303/MUM/2014, (A.Y. 2009-10) DOES NOT HELP THE CASE OF THE REVENUE IN THE INST ANT CASE. THUS, IN OUR VIEW, THE DECISIONS RELIED UPON BY THE CIT(A) DO N OT HELP THE SUSTENANCE OF THE ORDER PASSED BY THE ASSESSING OFFICER DATED 15/10/2012 RESTRICTING THE DEDUCTION U/S 80IB 11(A) OF THE ACT TO THE EXTE NT OF BUSINESS INCOME ONLY. 7.3 IN VIEW OF THE AFORESAID DISCUSSION, WE HEREBY SET-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO ALLO W THE DEDUCTION U/S.80 IB(11A) OF THE ACT TO THE EXTENT OF ASSESSED GROSS TOTAL INCOME. THUS, ON THIS ASPECT, ASSESSEE SUCCEEDS. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED , AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 23/03/2018. SD/- SD/- (SANDEEP GOSAIN) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 23/03/2018 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