M/s. THE HINDUSTAN SEWING & WEAVING MILLS LTD., MUMBAI V. DCIT CIR. 2(1), MUMBAI

ITA 3821/MUM/2003

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4385 (ITAT-MUMBAI)
• Duration Of Justice: 12 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2016
• Appeal Filed By: Assessee
• Bench Allotted: F
• Next Hearing Date: 24-02-2014
• Assessment Year: 1995-1996
• Appeal Filed On: 19-05-2003
• Court: TRIBUNAL
• Department Lawyers: K K VED DR
• Assessee Lawyers: N V NADKARNI
• Section: 143(3); 80HHC

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.3821/MUM/2003 ASSESSMENT YEAR: 1995-96 HIND OO STAN MILLS LTD. SIR VITHALDAS CHAMBERS 16, MUMBAI SAMACHAR MARG FORT, MUMBAI-400001 / VS. DCIT CIR - 2(1) MUMBAI (ASSESSEE ) (REVENUE) P.A. NO. AAACT4057F ITA NO.4004/MUM/2003 ASSESSMENT YEAR: 1995-96 DCIT CIR - 2(1) MUMBAI / VS. HINDOOSTAN MILLS LTD. SIR VITHALDAS CHAMBERS 16, MUMBAI SAMACHAR MARG FORT, MUMBAI-400001 ( REVENUE ) ( RESPONDENT ) P.A. NO. AAACT4057F '#$ / ASSESSEE BY SHRI N.V. NADKARNI (AR) / REVENUE BY SHRI K.K. VED (DR) % & ' ( / DATE OF HEARING : 21/12/2015 ' ( / DATE OF ORDER: 8/01/2016 HINDOOSTAN MILLS LTD 2 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF LD. COMMISSIONER OF IN COME TAX (APPEALS)-XXXII, MUMBAI {(IN SHORT LD. CIT(A)} DATE D 11.03.2015 FOR THE ASSESSMENT YEAR 1995-96, PASSED AGAINST THE QUANTUM ORDER U/S 143(3) OF THE ACT PASSED BY T HE ASSESSING OFFICER (IN SHORT AO). 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE BY SHRI N.V. NADKARNI, AUTHORISED REPRESENTATIVE (AR) ON BE HALF OF THE ASSESSEE AND BY SHRI K.K. VED, DEPARTMENTAL REPRESE NTATIVE (DR) ON BEHALF OF THE REVENUE. FIRST WE TAKE UP ITA NO.3821/MUM/2003 3. GROUND NO.1: IN THIS GROUND, THE ASSESSEE HAS CHALLENGED THE ACTION OF LD. CIT(A), DISALLOWANCE OF GUEST HOU SE EXPENSES. IT IS NOTED THAT THE AO HAS MADE DISALLOWANCE OF EX PENSES OF RS.3,37,718/- INCURRED ON MAINTENANCE OF GUEST HOUS E ON THE GROUND THAT SIMILAR DISALLOWANCE AS MADE IN THE EAR LIER YEARS. LD. CIT(A) UPHOLD THE DISALLOWANCE MADE BY THE AO. 3.1. DURING THE COURSE OF HEARING, IT HAS BEEN SHOWN BY THE LD. COUNSEL THAT THIS ISSUE CAME UP BEFORE THE TRIB UNAL DURING THE ASSESSMENT YEARS 1995-96 TO 1998-99, WHE REIN IT HINDOOSTAN MILLS LTD 3 HAS BEEN RESTORED BACK TO THE FILE OF THE AO BY THE TRIBUNAL. LD. DR RELIED UPON THE ORDERS OF THE LOWER AUTHORIT IES. 3.2. IT IS NOTED BY US THAT THIS ISSUE HAS BEEN RESTORE D BACK BY THE TRIBUNAL IN EARLIER YEARS. FACTS REMAINING SAME , RESPECTFULLY FOLLOWING THE ORDERS OF THE TRIBUNAL I N EARLIER YEARS THIS ISSUE IS RESTORED BACK TO THE FILE OF THE AO. THE AO SHALL FOLLOW THE DIRECTIONS AS WERE GIVEN IN THE EARLIER YEARS BY THE TRIBUNAL. THUS, THIS GROUND IS PARTLY ALLOWED FOR S TATISTICAL PURPOSES. 4. GROUND NO.2: THIS GROUND DEALS WITH THE DISALLOWANCE OF FOREIGN TRAVEL EXPENSES OF MR. V.M. PALECHA. 4.1. DURING THE COURSE OF HEARING IT HAS BEEN SHOWN TO US THAT THE IMPUGNED EXPENSES WERE INCURRED ON FOREIGN TRAV EL OF V.M. PALECHA, WHO IS EMPLOYEE OF THE COMPANY AND THE VIS IT WAS MADE FOR THE PURPOSE OF INSPECTION AND IMPORT OF TH E MACHINERY. 4.2. WITH THE ASSISTANCE OF BOTH THE PARTIES. IT IS NOT ED BY US THAT THE ISSUE OF FOREIGN TRAVEL EXPENSES IN CONNEC TION WITH THE OTHER EMPLOYEE I.E. MR. S. R. DALAL HAS BEEN DECIDE D BY THE LD. CIT(A), BUT WITH RESPECT TO MR. V.N. PALECHA THE IS SUE WAS LEFT TO BE DECIDED. THEREFORE, IN ALL FAIRNESS, WE FIND IT APPROPRIATE TO SEND THIS ISSUE ALSO BACK TO THE FILE OF THE AO, WHO SHALL DECIDE THE SAME AFRESH AFTER GRANTING ADEQUATE OPPO RTUNITY OF HINDOOSTAN MILLS LTD 4 HEARING TO THE ASSESSEE. THUS, THIS GROUND IS ALLOW ED FOR STATISTICAL PURPOSE. 5. GROUND NO.3: THIS GROUND DEALS WITH THE ACTION OF LOWER AUTHORITIES IN DENYING THE BENEFIT OF DEDUCTION U/S 80HHC ON THE AMOUNT OF SUBSIDY AND INTEREST RECEIVED. 5.1. DURING THE COURSE OF HEARING LD. COUNSEL HAS PLACE D RELIANCE ON THE JUDGMENT OF HONBLE PUNJAB AND HARY ANA HIGH COURT IN THE CASE OF CIT VS. ABHISHEK INDUSTRIES LTD . 217 TAXMAN 104 (P & H) AND IT WAS REQUESTED THAT THE AO MAY BE DIRECTED TO VERIFY THE NATURE OF SUBSIDY. IT HAS AL SO BEEN SUBMITTED THAT SIMILAR ISSUE CAME UP BEFORE THE TRI BUNAL IN A.Y. 1994-95 WHEREIN PART RELIEF HAS BEEN GIVEN TO THE ASSESSEE. LD. DR HAS RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. 5.2. WE HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHO RITIES AND HEARD BOTH THE PARTIES ON THIS ISSUE. WE FIND T HAT ORDERS OF LOWER AUTHORITIES ARE NON-SPEAKING AND CRYPTIC W ITH RESPECT TO DESCRIPTION OF NATURE OF THE SUBSIDY RECEIVED BY THE ASSESSEE AND THEREFORE, WE SEND THIS ISSUE BACK TO THE FILE OF THE AO. THE AO SHALL EXAMINE THE NATURE OF SUBSIDY AND KEEP ING IN VIEW THE AFORESAID JUDGMENT OF THE TRIBUNAL FOR AY !994-95 AS HAS BEEN RELIED UPON BY LD. COUNSEL OF THE ASSESSEE AND OTHER APPLICABLE JUDGMENTS AS MAY BE AVAILABLE AT THAT TI ME, HE SHALL DECIDE THIS ISSUE AFRESH, AFTER PROVIDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. HINDOOSTAN MILLS LTD 5 5.3. WITH RESPECT TO INTEREST RECEIVED ON DELAYED PAYME NTS ON THE CUSTOMERS, IT IS NOTED THAT SIMILAR ISSUE CAME UP BEFORE THE TRIBUNAL IN A.Y. 1994-95. IN ITS ORDER DATED 13 TH MAY, 2011, IT HAS BEEN HELD BY THE TRIBUNAL THAT INTERES T RECOVERED FROM THE CUSTOMERS FOR DELAY IN PAYMENTS ON ACCOUNT OF SUPPLY OF GOODS FORMS PART OF SALE PRICE. PROPER FA CTS HAVE NOT BEEN EXAMINED AND DETERMINED IN THIS YEAR FROM THIS ANGLE. THE ISSUE IS SENT BACK TO THE FILE OF THE AO FOR DE TERMINATION OF PROPER FACTS. THE AO SHALL FOLLOW THE DIRECTIONS AS HAVE BEEN GIVEN BY THE TRIBUNAL IN A.Y. 1994-95, AND SHALL DE CIDE THIS ISSUE AFRESH AFTER PROVIDING ADEQUATE OPPORTUNITY O F HEARING TO THE ASSESSEE. 5.4. WITH REGARD TO INTEREST RECEIVED FROM OTHER SOURCE S, IT IS DIRECTED THAT THE AO SHALL EXCLUDE ONLY NET INTERES T IN ACCORDANCE WITH DECISION OF THE SUPREME COURT IN TH E CASE OF ACG ASSOCIATED CAPSULES PVT. LTD VS. CIT 343 ITR 89 (SC). THUS, THIS GROUND IS PARTLY ALLOWED. NOW WE TAKE UP ITA NO.4004/MUM/2003 (DEPARTMENT APPEAL) 6. GROUND NO.1: IN THIS GROUND, THE REVENUE HAS CHALLENGED THE ACTION OF LD. CIT(A) IN DELETING THE DISALLOWAN CE MADE BY THE AO ON ACCOUNT OF FOREIGN TRAVEL OF EMPLOYEE OF THE ASSESSEEE COMPANY NAMELY MR. S. R. DALAL. HINDOOSTAN MILLS LTD 6 6.1. DURING THE COURSE OF HEARING IT HAS BEEN SUBMITTED BY THE LD. COUNSEL THAT THE EXPENSES WERE INCURRED FOR THE VISIT OF THE ABOVE SAID EMPLOYEE FOR NEGOTIATING FOR JOINT VENTU RE FOR MANUFACTURING OF FABRICS IN SRI LANKA. BUT THIS PRO POSAL DID NOT MATERIALIZE. IT WAS FURTHER SUBMITTED THIS ISSU E WAS COVERED IN FAVOUR OF THE ASSESSEE BY VARIOUS JUDGME NTS INCLUDING THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF BRALCO METAL INDUSTRIES PVT. LTD. VS. CIT 206 ITR 477. IT WAS FURTHER SUBMITTED THAT THIS ISSUE COULD BE S ENT BACK TO THE FILE OF THE AO FOR DETERMINATION OF THIS ISSUE AFTER EXAMINATION OF PROPER FACTS IN THE LIGHT OF THE ABO VE SAID DECISION. 6.2. WE FIND THAT FACTS HAVE NOT BEEN PROPERLY THRASHED OUT BY THE LD. CIT(A) WHILE DECIDING THIS ISSUE IN FAVOUR OF THE ASSESSEE. BOTH THE PARTIES AGREED FOR SENDING THIS ISSUE BACK TO THE FILE OF THE AO, THEREFORE, WE SEND THIS ISSU E BACK TO THE FILE OF THE AO TO BE DECIDED AFRESH. THE AO SHALL K EEP IN MIND AFORESAID JUDGMENT OF HONBLE BOMBAY HIGH COURT AND OTHER JUDGMENTS AS MAY BE PLACED ON RECORD BY THE ASSESSE E AND AS MAY BE AVAILABLE AT THAT TIME. THIS ISSUE SHALL BE DECIDED BY THE AO AFTER GRANTING ADEQUATE OPPORTUNITY OF HEARI NG TO THE ASSESSEE. THUS, THIS GROUND IS ALLOWED FOR STATISTI CAL PURPOSES. 7. GROUND NO.2: THIS GROUND DEALS WITH THE ACTION OF LD. CIT(A) IN EXCLUDING EXCISE DUTY AND SALES TAX FROM TOTAL TURNOVER WHILE COMPUTING DEDUCTION U/S 80HHC. HINDOOSTAN MILLS LTD 7 7.1. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. IT I S FOUND THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSE E BY THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS LAKSHMI MACHINE WORKS 290 ITR 667 AS WELL AS WITH THE JUDGMENT OF HONBLE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 1994-95. IT HAS BEEN HELD BY THE TRIBUNAL THAT THIS ISSUE STANDS COVERED WITH THE AFORESAID JUDGMENT OF HONB LE SUPREME COURT. THUS, RESPECTFULLY FOLLOWING THE SAM E, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE, AND THU S, GROUND NUMBER 2 RAISED BY THE REVENUE IS DISMISSED. 8. GROUND NO.3: IN THIS GROUND, THE REVENUE HAS CHALLENGED THE ACTION OF LD. CIT(A) IN DIRECTING THE AO TO INC LUDE SUNDRY CREDIT BALANCE WRITTEN OFF, SALES TAX REFUND, SET O FF OF SALES TAX, THE DYEING AND BLEACHING CHARGES AND INSURANCE CLAI M IN THE ELIGIBLE BUSINESS PROFITS OF THE PAYEE WHILE COMPUT ING DEDUCTION U/S 80HHC. 8.1. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. IT H AS BEEN ARGUED BEFORE US THAT SIMILAR ISSUE CAME UP BEFORE THE TRIBUNAL IN ASSESEES OWN CASE IN A.YS. 1990-91, 19 92-93, 1993-94, WHEREIN THIS ISSUE HAS BEEN SENT BACK TO T HE FILE OF THE AO. IT HAS ALSO BEEN DECIDED THAT SIMILAR ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN SOME OTHER CAS ES. WE HAVE GONE THROUGH THE ORDERS PASSED BY THE TRIBUNAL IN E ARLIER YEARS AND FIND THAT THE ISSUE INVOLVED IS IDENTICAL , AND THEREFORE, RESPECTFULLY THE FOLLOWING ORDERS OF EARL IER YEARS WE SEND THIS ISSUE BACK TO THE FILE OF THE AO. THE AO SHALL FOLLOW THE DIRECTIONS GIVEN BY THE TRIBUNAL I.E. A.YS. 199 2-93 AND HINDOOSTAN MILLS LTD 8 1993-94 AND SHALL GIVE ADEQUATE OPPORTUNITY OF HEAR ING TO THE ASSESSEE TO PLACE REQUISITE DETAILS AND EVIDENCES A ND SHALL ALSO KEEP IN MIND JUDGMENTS AS MAY PLACED ON RECORD BY T HE ASSESSEE AND AS MAY BE AVAILABLE AT THAT TIME. THIS GROUND IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 9. GROUND NO.4: IN THIS GROUND, THE REVENUE HAS CHALLENGED THE ACTION OF LD. CIT(A) IN HOLDING THAT ONLY NET I NTEREST INCOME IS TO BE CONSIDERED FOR THE PURPOSE OF EXCLU SION OF COMPUTING DEDUCTION U/S 80HHC. 9.1. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE AND F IND THAT IT IS COVERED IN FAVOUR OF THE ASSESSEE IN VIE W OF THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF ACG ASSOCIATED CAPSULES PVT. LTD . (SUPRA). IT HAS ALSO BEEN HELD BY US IN GROUND NO.3 OF ASSESSEES APPEAL THAT ONLY NET AMOUNT OF INTEREST IS TO BE EXCLUDED IN VIEW OF AFO RESAID JUDGMENT OF THE SUPREME COURT. THUS, WE FIND NO FOR CE IN THIS GROUND AND THEREFORE, IT IS DISMISSED. 10. IN THE RESULT, APPEALS OF THE ASSESSEE AND DEPARTM ENT ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JANUARY, 2016. SD/- (JOGINDER SINGH) SD/- (ASHWANI TANEJA) '# / JUDICIAL MEMBER $# / ACCOUNTANT MEMBER % & MUMBAI; * DATED ; 8/01/2016 CTX? P.S/. .. HINDOOSTAN MILLS LTD 9 %'&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. ,-. / THE APPELLANT 2. /0-. / THE RESPONDENT. 3. 1 1 % 2 ( , ) / THE CIT, MUMBAI. 4. 1 1 % 2 / CIT(A)- , MUMBAI 5. 56 /' , 1 ,( ' 7 , % & / DR, ITAT, MUMBAI 6. 8# & / GUARD FILE. / BY ORDER, 05, / //TRUE COPY// / (DY./ASSTT. REGISTRAR) , % & / ITAT, MUMBAI