M/s. Sunstar Overseas Ltd., Delhi V. ACIT, New Delhi

ITA 3834/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0065 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 16-03-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 11-08-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SURJANI MOHANTY
• Section: 143(3); 14A; 80IB

Judgement Text

ITA NO. 3834(DEL)/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G DELHI BEFORE SHRI C.L. SETHI AND SHRI K.G. BANSAL I.T.A.NO.3834(DEL)/2010 ASSESSMENT YEAR: 2007-08 SUNSTAR OVERSEAS LTD., ADDIT IONAL COMMISSIONER OF 4119/7, FIRST FLOOR, VS. INC OME-TAX, RANGE-9, NEW DELHI. NAYA BAZAR, DELHI. PAN-AAACS9693J (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : M S. SURJANI MOHANTY, DR ORDER PER K.G. BANSAL : AM THIS APPEAL OF THE ASSESSEE EMANATES FROM THE O RDER OF CIT(APPEALS)- XII, NEW DELHI, PASSED ON 03.06.2010 IN APPEAL NO. 101/09-10, AND IT PERTAINS TO ASSESSMENT YEAR 2007-08. THE CORRES PONDING ASSESSMENT ORDER WAS FRAMED BY THE ADDITIONAL COMMISSIONER OF INCOME-TAX, RANGE- 9, NEW DELHI ON 29 TH DECEMBER, 2009, UNDER THE PROVISIONS OF SECTION 143(3) OF THE INCOME-TAX ACT, 1961. THE ASSESSEE H AS TAKEN FOLLOWING GROUNDS IN THE APPEAL:- (1) THAT THE LD. ADDITIONAL COMMISSIONER OF INCOME-TA X (APPEALS) HAS ALSO FAILED TO APPRECIATE THAT THE APPELLANT ITA NO. 3834(DEL)/2010 2 HAD MADE THE CLAIM OF DEDUCTION U/S 80IB OF THE INCOME-TAX ACT IN RESPECT OF THE INCOMES WHICH HAD PROXIMA TE NEXUS WITH THE INDUSTRIAL UNDERTAKING AND WAS DERIVED FROM ITS OPERATIONS. (2) THAT IN ANY CASE AND WITHOUT PREJUDICE, THE LD. ADDITIONAL COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO H AVE HELD THAT THE INCOME COMPUTED EXCEPT THE DECLARED INCOME, WAS EXCEPT THE DECLARED INCOME, NOT ELIGIBLE TO TAX, SINCE THE PROFITS DERIVED WERE FULLY ELIGIBLE FOR DEDUC TION U/S 80IB OF THE ACT. (3) THAT THE LD. ADDITIONAL COMMISSIONER OF INCOME-T AX (APPEALS) FURTHER WENT WRONG IN HOLDING THAT T HE PREMIUM ON DEPB OF RS. 26,97,807/- IS NOT ELIGIBLE TO TH E CLAIM OF DEDUCTION U/S 80IB OF THE ACT. SUCH A FINDIN G IS UNTENABLE, UNSUSTAINABLE AND THE INTERPRETATION PLACED ON SUCH PROVISIONS BY THE LD. COMMISSIONER OF INCOME -TAX (APPEALS) IS ERRONEOUS, BOTH ON FACTS AS WEL L AS IN LAW. (4) THAT THE LD. ADDITIONAL COMMISSIONER OF INCOME-TA X (APPEALS) FURTHER ERRED IN LAW IN CONFIRMING THE DISALLOWANCE OF RS. 34,26,512/- MADE U/S 14A OF THE INCOME-TAX ACT. 2. THE CASE WAS FIXED FOR HEARING ON 12.10.2 010, WHEN THE BENCH DID NOT FUNCTION. THEREAFTER, A NOTICE DATED 19 .11.2010 WAS ISSUED TO THE ASSESSEE FIXING THE CASE FOR HEARING ON 24.12. 2010. THE BENCH DID NOT FUNCTION ON THAT DATE ALSO. FINALLY, THE CAS E WAS FIXED FOR HEARING ON 16.03.2011 IN TERMS OF NOTICE ISSUED ON 25 TH JANUARY, 2011. NONE ATTENDED ON BEHALF OF THE ASSESSEE IN RESPONSE T O THIS NOTICE. HOWEVER, ITA NO. 3834(DEL)/2010 3 THE LD. DR EXPLAINED THE FACTS OF THE CASE. ON HEARING HER, WE ARE OF THE VIEW THAT THE APPEAL CAN WELL BE DISPOSED OFF EVEN IN ABSENCE OF REPRESENTATION FROM THE ASSESSEE. THEREFORE, WE PROCEED TO DETERMINE VARIOUS GROUNDS TAKEN BY THE ASSESSEE. 3. GROUND NOS. 1, 2 AND 3 ARE AGAINST DENIAL OF DEDUCTION U/S 80IB ON PREMIUM OF RS. 26,97,807/- RECEIVED BY THE ASSESS EE ON TRANSFER OF DEPB BENEFITS. THE LD. DR POINTED OUT THAT THE ISS UE STANDS COVERED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS. CIT, (2009) 317 ITR 218. IN THIS CASE, IT HAS BE EN DECIDED THAT THE BENEFIT CANNOT BE SAID TO BE THE PROFITS DERIVED FROM T HE ELIGIBLE UNDERTAKING AND, THEREFORE, DEDUCTION U/S 80IB IS NOT ADMISS IBLE ON THE PREMIUM RECEIVED BY THE ASSESSEE. RESPECTFULLY FOLLOWING THIS DECISION, THESE GROUNDS ARE DECIDED IN FAVOUR OF THE REVENUE A ND AGAINST THE ASSESSEE. THUS, THESE GROUNDS ARE DISMISSED. 4. GROUND NO. 4 IS AGAINST DISALLOWANCE OF RS. 34 ,26,512/-, MADE BY THE AO BY INVOKING THE PROVISION CONTAINED IN SECTION 14A OF THE ACT. IT IS SEEN THAT THE LD. CIT(APPEALS) INVOKED THE PR OVISION CONTAINED IN RULE 8D BY RELYING ON THE DECISION OF SPECIAL BENCH O F MUMBAI TRIBUNAL IN THE ITA NO. 3834(DEL)/2010 4 CASE OF DAGA CAPITAL MANAGEMENT LTD., 117 ITD 16 9. THE LD. DR FAIRLY SUBMITTED THAT THE ISSUE NOW STANDS COVERED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. VS. DCIT, (2010) 194 TAXMAN 203. IN THIS CASE, IT HAS BEEN HELD THAT SECTION 14A AND RULE 8D ARE NOT ULTRA-VIR ES. IT HAS BEEN FURTHER HELD THAT RULE 8D OPERATES PROSPECTIVELY AND IS APPLICABLE TO ASSESSMENT YEAR 2008-09 AND ONWARDS. IT HAS ALSO BEEN HELD THAT THE ASSESSING OFFICER CAN EXAMINE ALL THE FACTS AND MAKE REAS ONABLE DISALLOWANCE IN RESPECT OF EXPENDITURE INCURRED FOR EARNING IN COME WHICH IS NOT INCLUDIBLE IN THE TOTAL INCOME OF THE ASSESSEE. T HE LD. DR FURTHER SUBMITTED THAT SIMILAR MATTER IS PENDING BEFORE HO NBLE DELHI HIGH COURT, WHOSE DECISION IS AWAITED. CONSIDERING THE FAC TS OF THE CASE AND THE SUBMISSIONS MADE BEFORE US, WE THINK IT FIT TO RESTORE THE MATTER TO THE FILE OF THE AO TO RECOMPUTE THE DISALLOWANCE ON T HE BASIS OF THE DECISION IN THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. (SUPRA). IT MAY BE EMPHASIZED THAT RULE 8D IS NOT APPLICABLE TO THE PROCEEDINGS OF THIS YEAR. IT MAY ALSO BE MENTIONED THAT IN CASE ANY OTHER DECISION OF THE HIGH COURT INCLUDING HONBLE DELHI HIGH COURT IS RECEIVED BE FORE PASSING THE ORDER OF THE AO, THE SAME SHALL ALSO BE TAKEN INTO ACCO UNT BY HIM. IN OTHER WORDS, THIS GROUND SHALL BE ADJUDICATED AGAIN AS PER LAW AFTER HEARING ITA NO. 3834(DEL)/2010 5 THE ASSESSEE. THUS, THIS GROUND IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, THE APPEAL IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 2 5 MARCH, 2011. SD/- SD/- (C.L. SETHI) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 25TH MARCH, 2011. SP SATIA COPY OF THE ORDER FORWARDED TO: SUNSTAR OVERSEAS LTD., NAYA BAZAR, DELHI. ADDITIONAL CIT, RANGE-9, NEW DELHI. CIT(A) CIT THE DR, ITAT, NEW DELHI. ASSISTANT REG ISTRAR.