DCIT 2 (3), MUMBAI V. TATA SONS LTD, MUMBAI

ITA 3852/MUM/2014

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0245 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 1990-1991
• Appeal Filed On: 29-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D G
• Assessee Lawyers: AARTI VISSANJI LD
• Keywords: Business income
• Section: 143(3); 154

Judgement Text

ITA.NOS.3852/MUM/2014 M/S. TATA SONS LTD. ASSESSMENT YEAR-1990-91 1 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , ./I.T.A. NO.3852/MUM/2014 ( / ASSESSMENT YEAR: 1990-91) D EPUTY C OMMISSIONER OF INCOME TAX-2(3) ROOM NO.552, 5 TH FLOOR AAYKAR BHAVAN, M.K. ROAD MUMBAI-400 020. / VS. M/S. TATA SONS LTD. BOMBAY HOUSE, 24, HOMI MODI STREET FORT, MUMBAI-400 020. ./ ./PAN/GIR NO. AAACT-4060-A ( /APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : MS. AARTI VISSANJI- LD. AR REVENUE BY : SHRI D.G. PANSARI-LD. DR / DATE OF HEARING : 24/10/2018 / DATE OF PRONOUNCEMENT : 11/12/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 1990-91 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-6, MUMBAI, [CIT(A)], APPEAL NO.CIT(A)-6/IT-26/RG.2(3)/12-13 DATED 17/02/2014 BY RAISING FOLLOWING EFFECTIVE GROUNDS O F APPEAL / ADDITIONAL GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT (APPEAL) HAS ERRED IN DIRECTING THE A.O TO ALLOW DE DUCTION U/S 80-O OF THE IT ACT AS PER THE COMPUTATION OF THE ASSESSEE AT RS.6.62 CROR E AND TO DEDUCT ONLY DIRECT ITA.NOS.3852/MUM/2014 M/S. TATA SONS LTD. ASSESSMENT YEAR-1990-91 2 EXPENSES FOR COMPUTATION OF DEDUCTION U/S 80-0 OF T HE IT ACT, WITHOUT APPRECIATING THAT THE DEDUCTION U/S 80-O CANNOT BE MORE THAN THE BUSINESS INCOME OF THE ASSESSEE. FOR THE RELEVANT ASSESSMENT YEAR ONLY 50% OF FOREIGN INCOME IS ALLOWABLE AS DEDUCTION AFTER REDUCING DIRECT EXPENS ES. THE BUSINESS INCOME OF THE ASSESSEE IS DETERMINED AT RS.81,63,115/- AS PER ORD ER DATED-04.12.2006. 2. WHETHER THE LD. CIT(A) IS RIGHT IN ALLOWING A DE DUCTION U/S. 80-O OF THE IT ACT, 1961 TO THE ASSESSEE AGGREGATING TOTAL CHAPTER VI-A DEDUCTION AT RS. 961.94 LACS WITHOUT CONSIDERING THE FACT THAT AS PER PROVISIONS OF SECTION 80A(2) OF THE IT ACT, 1961, THE AGGREGATE AMOUNT OF DEDUCTIONS UNDER CHAP TER VI-A SHALL NOT, IN ANY CASE EXCEED THE GROSS TOTAL INCOME OF THE ASSESSEE. GROUND NUMEBR-2 IS AN ADDITIONAL GROUND RAISED BY T HE REVENUE ON 18/06/2018. SINCE THE SAME IS LEGAL ISSUE AND DO NO T REQUIRE APPRECIATION OF NEW FACTS, THE SAME IS ADMITTED. TH IS IS SECOND ROUND OF LITIGATION SINCE THE MATTER IN THE FIRST ROUND WAS SET ASIDE BY THE TRIBUNAL TO THE FILE OF LD. CIT(A) VIDE ITA NO. 5742/MUM/2002 ORDER DATED 20/06/2006 WITH THE FOLLOWING DIRECTIONS: - 11. GROUND NO.5 RELATES TO DISALLOWANCE OF DEDUCTIO N U/S 80-O WITH RESPECT TO FOREIGN EXCHANGE RECEIVED BY THE ASSESSEE AFTER DED UCTING DIRECT AND INDIRECT EXPENSES. THE LD. AR POINTED OUT THAT THIS ISSUE HA S BEEN DECIDED AGAINST THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE RENDERED IN ITA NO. 629/MUM/2003 FOR A.Y.1995-96 IN WHICH MUMBAI SPECIA L BENCH DECISION IN CASE OF PETROLEUM INDIA INTERNATIONAL REPORTED IN 71 ITD 31 HAS BEEN CONSIDERED. IN THIS RESPECT, THE LD. AR FURTHER ADVERTED THAT WHILE CAL CULATING DEDUCTION U/S 80-O ONLY DIRECT EXPENSES SHOULD BE DEDUCTED AND NO ALLOCATIO N OF EXPENDITURE SHOULD BE DONE ON ESTIMATE BASIS. IN THIS RESPECT, THE LD. AR REFERRED TO THE DECISION OF THE TRIBUNAL IN ITA NO. 629/MUM/2003 POINTING OUT THAT ISSUE HAS BEEN DECIDED IN FAVOR OF ASSESSEE AND IN THIS CASE, DECISION OF BANGALORE TRIBUNAL IN CASE OF WIPRO LTD. VS DCIT HAS BEEN CONSIDERED. THE LD. DEPARTMENTAL R EPRESENTATIVES RELIED ON THE ORDER OF AUTHORITIES BELOW. 12. HAVING CONSIDERED THE JUDGMENTS CITED BY THE LD . AR AND THE ISSUES INVOLVED IN IT, WE CONSIDER IT FAIR TO RESTORE THIS ISSUE BA CK TO THE CIT(A) FOR DECIDING AFRESH AFTER CONSIDERING THE JUDGMENT CITED BY LD. AR. 2. THE BRIEF BACKGROUND OF THE MATTER IS THAT THE A SSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. DEPUTY COMMISSIONER OF INCOME TAX- SPECIAL RANGE-1, MUMBAI [AO] U/S. 143(3) ON 10/03/1993 DETERMINING THE INCOME AT RS.648.83 LACS AFTER CERTAIN ADDITION S AS AGAINST RETURNED ITA.NOS.3852/MUM/2014 M/S. TATA SONS LTD. ASSESSMENT YEAR-1990-91 3 INCOME OF RS.562.66 LACS FILED BY THE ASSESSEE ON 3 1/12/1990. AS EVIDENT FROM GROUNDS OF APPEAL, THE ONLY ISSUE UNDE R APPEAL IS RELATED WITH QUANTUM OF DEDUCTION U/S 80-O. 3. DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED THA T THE ASSESSEE CLAIMED DEDUCTION U/S 80-O AGAINST FOREIGN REMITTAN CES OF RS.1846.13 LACS IN RESPECT OF 93 CONTRACTS IN RESPECT OF WHICH STATUTORY APPROVAL WAS RECEIVED. TO ARRIVE AT THE SAID FIGURES, ONLY D IRECT EXPENSES ALLOCABLE TO FOREIGN CONTRACTS WERE DEDUCTED AND IN DIRECT EXPENSES WERE IGNORED. THE LD. AO, FOLLOWING AY 1989-90, REWORKED THE SAME BY TAKING INTO ACCOUNT DIVISION WISE PROFIT & LOSS ACC OUNT AND ARRIVED AT DEDUCTION OF RS.184.76 LACS. THE WORKING OF THE SAM E HAS ALREADY BEEN PROVIDED AT PARA-13 OF THE QUANTUM ASSESSMENT ORDER. THE QUANTUM OF DEDUCTION WAS RECTIFIED TO RS.247.19 LACS ON 21/12/ 1994 U/S 154. THIS GROUND IS STATED TO BE NOT PRESSED BEFORE FIRST APPELLATE AUTHORITY IN ORDER DATED 20/08/2002. HOWEVER, THE ASSESSEE SUBSE QUENTLY CONTESTED THE SAME AS GROUND NUMBER-5 BEFORE THIS TRIBUNAL VI DE ITA NO. 5742/MUM/2002 DATED 20/06/2006 WHEREIN THE MATTER GOT REMITTED BACK TO THE FILE OF LD. CIT(A) WITH CERTAIN DIRECTIONS, WHICH HAVE ALREADY BEEN EXTRACTED IN PRECEDING PARA-1. UPON PERUSAL OF THE SAME, IT IS EVIDENT THAT THE MATTER WAS REMITTED BACK TO FIRST APPELLAT E AUTHORITY TO CONSIDER THE DECISION OF THE TRIBUNAL RENDERED IN ASSESSEES OWN CASE FOR AY 1995-96 ITA NO.629/MUM/2003. 4.1 DURING SET ASIDE PROCEEDINGS BEFORE FIRST APPEL LATE AUTHORITY, IT WAS CLARIFIED BY THE ASSESSEE THAT AGAINST THE FINDINGS OF FIRST APPELLATE AUTHORITY IN THE FIRST ROUND, THE ASSESSEE MOVED AN APPLICATION DATED 17/10/2002 U/S 154 FOR THE RECTIFICATION OF THE SAM E. THE LD. CIT(A) ITA.NOS.3852/MUM/2014 M/S. TATA SONS LTD. ASSESSMENT YEAR-1990-91 4 DISPOSED-OFF THE SAME ON 05/03/2003 BY HOLDING THAT THE ISSUE WAS COVERED AGAINST THE ASSESSEE BY THE DECISION OF PETROLEUM INDIA INTERNATIONAL VS. DCIT. 4.2 PURSUANT TO THE DIRECTIONS OF THE TRIBUNAL, LD. CIT(A), AFTER CONSIDERING THE SUBMISSIONS AND CITED ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR 1995-96, CONCLUDED THE MATT ER IN THE FOLLOWING MANNER: - 7. I HAVE CONSIDERED THESE FACTUAL ASPECTS STATED B Y THE LD. ARS OF THE APPELLANT. THEREFORE, I AM IN AGREEMENT WITH THE AP PELLANT THAT THE PARTLY FAVORABLE DECISION OF HONBLE ITAT IN APPELLANTS OWN CASE IN ASSESSMENT YEAR 1995-96 HAS TO BE APPLIED IN CURRENT YEAR ALSO, AS PER THE DIRECTI ONS OF THE HONBLE TRIBUNAL. IN ASSESSMENT YEAR 1995-96, HONBLE TRIBUNAL HAS HELD THAT WHILE COMPUTING THE NET INCOME FOR THE PURPOSE OF DEDUCTION U/S 80-O, ONLY DIRECT EXPENSES ARE LIABLE TO BE DEDUCTED. HENCE, THE AO ID DIRECTED ACCORDINGLY. TH E APPELLANT HAS COMPUTED THE ENTITLEMENT OF DEDUCTION U/S 80-C AT RS.6.67 CRORES , BY DEDUCTING ONLY THE DIRECT EXPENSES. THE AO SHALL VERIFY THIS COMPUTATION AND ACCORDINGLY GRANT DEDUCTION UNDER SECTION 80-O OF THE ACT TO THE APPELLANT. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 5. THE LD. COUNSEL FOR ASSESSEE [AR], MS. AARTI VISSANJI , SUBMITTED THAT THE ISSUE STOOD COVERED IN ASSESSEES FAVOR BY THE DECISION OF THIS TRIBUNAL RENDERED FOR AY 1995-96 AND FIRST APPELLAT E AUTHORITY HAS SIMPLY FOLLOWED THE SAME. PER CONTRA, LD. DR SUBMITTED THAT QUANTUM OF DEDUCTION U/S 80-O COULD NOT EXCEED GROSS TOTAL INC OME OF THE ASSESSEE IN TERMS OF SECTION 80A(2). 6. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. SO FAR AS THE METHOD OF COMPUTA TION OF IMPUGNED DEDUCTION IS CONCERNED, WE FIND THAT FIRST APPELLAT E AUTHORITY HAS MERELY FOLLOWED THE ORDER OF THIS TRIBUNAL IN ASSESSEES O WN CASE FOR AY 1995- 96. NOTHING ON RECORD SUGGEST THAT THE AFORESAID DE CISION HAS EVEN BEEN ITA.NOS.3852/MUM/2014 M/S. TATA SONS LTD. ASSESSMENT YEAR-1990-91 5 OVER-RULED BY ANY HIGHER JUDICIAL AUTHORITY OR THE SAME HAS NO APPLICATION FOR IMPUGNED AY. THEREFORE, THE STAND OF LD. CIT(A) , IN THIS REGARD, COULD NOT BE FAULTED WITH. GROUND NUMBER-1 STANDS DISMISS ED. 7. SO FAR AS THE SUBMISSIONS OF LD. DR IS CONCERNED , WE CONCUR WITH THE SAME THAT OVERALL DEDUCTION UNDER CHAPTER-VIA C OULD NOT EXCEED GROSS TOTAL INCOME OF THE ASSESSEE IN TERMS OF SECT ION 80A(2). THEREFORE, THE AFORESAID DEDUCTION SHALL BE GRANTED BY LD. AO WITHIN THIS OVERALL LIMIT PROVIDED U/S 80A(2). THE IMPUGNED ORD ER STAND MODIFIED TO THAT EXTENT. GROUND NUMBER-2 STANDS ALLOWED. 8. FINALLY, THE APPEAL OF THE REVENUE STANDS PARTLY ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 11TH DECEMBER , 2018. SD/- SD/- (JOGINDER SINGH) (MAN OJ KUMAR AGGARWAL) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI; DATED : 11/12/2018 SR.PS:-MS. JAISY VARGHESE / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. $ ( ) / THE CIT(A) 4. $ / CIT CONCERNED 5. #% &###' , #' , / DR, ITAT, MUMBAI 6. & ()* / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.