ACIT, Cir-16(3), Hyderabad V. M/s. PVR Industries Ltd, Hyderabad

ITA 322/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59365 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 04-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS NIVEDITA BISWAS
• Assessee Lawyers: RAVI SESHAGIRI
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I.T.A. NO. 322/HYD/2011 (ASSESSMENT YEAR : 2006-07) THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-16(3) HYDERABAD VS. M/S. PVR INDUSTRIES LTD. HYDERABAD PAN: AABCP2555P APPELLANT RESPONDENT APPELLANT BY: MRS. NIVEDITA BISWAS RESPONDENT BY: MR. RAVI SESHAGIRI DATE OF HEARING: 27 .03.2012 DATE OF PRONOUNCEMENT: 27.03.2012 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-V, HYDERABAD DATED 24.12.2010. 2. THE FIRST GROUND RAISED BY THE REVENUE IS AS FOLLOW S: 1. THE LEARNED CIT(A) ERRED IN FACTS AND IN LAW IN HOLDING INCOME FROM SALE OF SCRAP AS INCOME FROM BUSINESS. THE CIT(A) IGNORED THE FACT THAT THE ASS ESSEE ITSELF SUBMITTED IN THE NOTE TO THE COMPUTATION OF TOTAL INCOME FILED BY ASSESSEE (VIDE HIGHLIGHTED PORTION OF ANNEX-1) THAT DURING THE CURRENT FINANCIAL YEAR I.E ., 2005-06 IT WAS ENGAGED ONLY IN THE BUSINESS OF DEVELOPING, MAINTAINING AND OPERATING TWO INFRASTRUCTURE BOT ENTERPRISES AND NOT IN ANY OTHER ACTIVITIES. 3. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPINI ON THAT SIMILAR ISSUE CAME FOR CONSIDERATION BEFORE THIS TR IBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2006-07 IN I.T.A. NO. 295/HYD/2011. THE TRIBUNAL VIDE ORDER DATED 9 TH SEPTEMBER, 2011 HELD IN PARA 5 AS FOLLOWS: I.T.A. NO. 322/HYD/2011 M/S. PVR INDUSTRIES LTD. =================== 2 '5. WE HAVE HEARD BOTH THE PARTIES AND ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. THE SALE PROCEE DS RECEIVED FROM SALE OF SCRAP GENERATED DURING THE CO URSE OF MANUFACTURE ACTIVITY OF AN ASSESSEE IN THE ELIGI BLE INDUSTRIAL UNDERTAKING HAS TO BE CONSIDERED AS PROF IT AND GAINS OF BUSINESS OF AN INDUSTRIAL UNDERTAKING AND HAS TO BE CONSIDERED FOR DEDUCTION U/S. 80IA OF THE ACT. THE SCRAP GENERATED FROM A MANUFACTURE ACTIVITY OF AN INDUSTRIAL UNDERTAKING IS HAVING DIRECT NEXUS BETWE EN THE SALE OF THESE ITEMS AND CARRYING ON OF BUSINESS OF INDUSTRIAL UNDERTAKING. ACCORDINGLY, THIS ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THE INCOME OUT OF SALE OF SCRAP GENERATED FROM THE MANUFACTURING ACTIVITY FOR DEDUCTION U/S. 80IA OF THE ACT.' 4. IN VIEW OF THE ABOVE DECISION OF THE TRIBUNAL, WE A LLOW THIS GROUND TAKEN BY THE REVENUE. 5. GROUND NO. 2 RAISED BY THE REVENUE IS AS UNDER: '2. THE LEARNED CIT(A) ERRED IN FACTS AND IN LAW IN HOLDING INTEREST INCOME AS INCOME FROM BUSINESS.' 6. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPINI ON THAT SIMILAR ISSUE CAME FOR CONSIDERATION BEFORE THE TRI BUNAL IN ASSESSEES OWN CASE IN EARLIER ASSESSMENT YEAR IN I .T.A. NO. 117/HYD/2007 AND THIS TRIBUNAL VIDE ORDER DATED 8.6 .2011 HELD IN PARA 12 AS FOLLOWS: '12. THE OTHER GROUND RAISED BY THE ASSESSEE REMAI NED TO BE ADJUDICATED UPON IS WITH REGARD TO THE TREAT MENT OF INTEREST ON DEPOSITS AS INCOME FROM OTHER SOURC ES AND NOT AS BUSINESS INCOME AND ALSO WITH REGARD TO THE BENEFIT OF NETTING THE INTEREST INCOME. ON SIMI LAR AND IDENTICAL ISSUE, THIS BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2000-01 VIDE ORDER DATED 30-11-2000 IN ITA NO. 340/HYD/2006 HELD AGAINST THE ASSESSEE AND IN FAVOUR OF THE DEPARTMENT. FOLLOWING THE REASONING GIVEN IN THE O RDER OF THE TRIBUNAL MENTIONED ABOVE, WE REJECT THE GROU ND RAISED BY THE ASSESSEE ON THIS ISSUE AND HOLD THAT THE INTEREST RECEIVED BY THE ASSESSEE REPRESENTS INCOME FROM OTHER SOURCES AND THE BENEFIT OF NETTING OF IN TEREST ALSO CANNOT BE EXTENDED TO THE ASSESSEE BY FOLLOWIN G I.T.A. NO. 322/HYD/2011 M/S. PVR INDUSTRIES LTD. =================== 3 THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2000-01 DATED 30-11-2007. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE STAN DS REJECTED.' 7. IN VIEW OF THE ABOVE FINDINGS OF THE TRIBUNAL, WE A RE INCLINED TO ALLOW THE GROUND TAKEN BY THE REVENUE. 8. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH MARCH, 2012. SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 27 TH MARCH, 2012 COPY FORWARDED TO: 1. THE ASST. COMMISSIONER OF INCOME - TAX, CIRCLE - 16(3), 6 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2. M/S. PVR INDUSTRIES LTD., 6 - 3 - 249/2/A, PVR CHAMBERS, BANJARA HILLS, HYDERABAD. 3. THE C IT(A) - V , HYDERABAD 4. THE CIT - I V , HYDERABAD. 5. THE DR A BENCH, ITAT, HYDERABAD. TPRAO