The DCIT, Circle-4, Ahmedabad V. Jindal Worldwide Limited, Ahmedabad

ITA 4238/AHD/2007

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9722 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 09-09-2010
• Assessment Year: 1995-1996
• Appeal Filed On: 30-11-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P M MEHTA; S N SOPARKAR
• Keywords: Business income; Question of law; Set aside
• Section: 143(3); 80HHC; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'B' (BEFORE S/SHRIBHAVNESH SAINI, JM AND N. S. SAINI, A M) ITA NO.4238/AHD/2007 A. Y.:1995-96 THE D. C. I. T., CIRCLE-4, NAVJIVAN TRUST BUILDING, OFF ASHRAM ROAD, AHMEDABAD V/S JINDAL WORLDWIDE LTD., 1 ST FLOOR, SURYARATH BUILDING, PANCHVATI FIRST LANE, AHMEDABAD PA/GIR NO.31-111-CX-7248 (APPELLANT) (RESPONDENT) APPELLANT BY SHRI K. MADHUSUDAN, DR RESPONDENT BY SHRI S. N. SOPARKAR AND SHRI P. M. MEHTA, AR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-VIII, AHME DABAD DATED 24-09-2007 FOR ASSESSMENT YEAR 1995-96 ON THE FOLLO WING GROUND: 1. THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN ALLOWING SET OFF OF INTEREST INCOME TO THE EXTENT OF RS.31,19,882/- AGAINST INTEREST EXPENDITURE AD DIRECTING THAT 90% OF INTEREST INCOME OF RS.3,22,665/- ONLY IS REQUIRED TO BE REDUCED FROM PROFITS AND GAINS OF THE BUSINESS FOR THE PURPOSE OF DEDUCTION U/S. 80 HHC, WHEN THE ASSESSEE HAD FAILED TO ESTABLISH THE NEXUS BETWEEN THE INTEREST INCOME AND THE INTEREST EXPENDITURE, AS MANDATED BY HONBLE SPECIAL BENCH, ITAT DELHI IN THE CASE OF LALSON ENTERPRISES 89 ITD 25. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH T HE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIALS AVAILABLE ON RECORD. ITA NO.4238/AHD/2007 DCIT CIR-4, AHMEDABAD VS JINDAL WORLDWIDE LTD. 2 3. BRIEFLY THE FACTS OF THE CASE ARE THAT IT WAS CO NTENDED BEFORE THE LEARNED CIT(A) THAT THE AO HAS WHILE GRA NTING DEDUCTION U/S 80 HHC OF THE IT ACT ERRED IN HOLDING THAT GROSS INTEREST INCOME IS REQUIRED TO BE REDUCED FROM THE PROFIT AND GAIN OF BUSINESS FOR THE PURPOSE OF DEDUCTION U/S 8 0 HHC OF THE IT ACT AS AGAINST THE CLAIM OF THE ASSESSEE FOR NET INTEREST INCOME. THE AO IN PARA 5 OF HIS ORDER HAS OBSERVED THAT ITAT AHMEDABAD C BENCH HAS DIRECTED HIM TO DECIDE THE ISSUE RELATING TO GROSS INTEREST OR NET INTEREST FOR THE PURPOSE OF DEDUCTION U/S 80 HHC OF THE IT ACT AS PER DECISION OF ITAT SPECIAL BENCH, DELHI IN CASE OF LALSONS ENTERPRISES REPORTED IN 89 ITD 25. THE AO OBSERVED THAT THE ASSESSEE DID NOT FILE ANY DETAILS SO AS TO VERIFY THE CLAIM OF THE ASSESS EE REGARDING DEDUCTION U/S 80 HHC OF THE IT ACT AND HENCE, HE FO LLOWED HIS FINDING IN THE ORIGINAL ORDER AND HAS HELD THAT GRO SS INTEREST INCOME IS REQUIRED TO BE REDUCED FROM THE PROFITS & GAINS FROM BUSINESS FOR THE PURPOSE OF DEDUCTION U/S 80 HHC OF THE IT ACT AND DEDUCTION U/S 80 HHC OF THE IT ACT WAS GRAN TED AS PER ORDER U/S 143(3) OF THE IT ACT ON 25-03-1997 AT RS.6,16,37,430/- AS AGAINST CLAIM OF THE ASSESSEE F OR RS.6,43,80,487/-. BEFORE THE LEARNED CIT(A) THE LEA RNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ORIGINAL AS SESSMENT ORDER WAS PASSED U/S 143 (3) OF THE IT ACT ON 25-03 -1997 WHERE THE DISPUTE WAS IN RESPECT OF THE AMOUNT TO B E TAKEN INTO ACCOUNT FOR GRANTING DEDUCTION U/S 80 HHC OF T HE IT ACT BEING EITHER THE GROSS AMOUNT OR THE NET AMOUNT OF THE INTEREST. IT WAS FURTHER STATED THAT THE NET INTERE ST IN THE CASE OF THE ASSESSEE WAS COMPUTED AS UNDER: ITA NO.4238/AHD/2007 DCIT CIR-4, AHMEDABAD VS JINDAL WORLDWIDE LTD. 3 PARTICULARS AMOUNT RS. TEXTILE DIVISIONS INTEREST INCOME 34,42,547 LESS: INTEREST EXPENDITURE (PACKING CREDIT AND BILL DISCOUNTING) 33,35,012 NET INTEREST INCOME 1,07,535 DYES DIVISION INTEREST ON FDR 45,933 TOTAL INTEREST 1,53,468 THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS REDUCED THE NET INTEREST INCOME OF RS. 1,53,468/- WHILE COMPUTING DEDUCTION U/S 80 HHC OF THE IT ACT. THE AO IN THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE IT ACT HELD THAT GROSS INTEREST INCOME OF RS.34,42,547/- IN TEX TILE DIVISION INCLUDES INTEREST INCOME OF RS.31,19,882/- ON ACCOU NT OF BUSINESS AND OTHER INTEREST ON ACCOUNT OF INVESTMEN T FOR RS.3,22,665/- WHICH WAS CONSIDERED AS INCOME FROM O THER SOURCES. IN VIEW OF SUCH FACTS, 90% OF GROSS INTERE ST OF RS.31,19,882/- TREATING AS BUSINESS INCOME WAS REDU CED WHILE COMPUTING DEDUCTION U/S 80 HHC OF THE IT ACT BY THE AO. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER STATED THA T INTEREST EXPENDITURE OF RS.33,35,012/- PERTAINS TO LOAN TAKE N BY THE ASSESSEE FROM VIJAYA BANK FOR THE PURPOSE OF BILL D ISCOUNTING AS WELL AS PACKING CREDIT AND THESE LOANS WERE SECU RED AGAINST HYPOTHECATION OF RAW MATERIALS, WORK-IN-PROGRESS, F INISHED GOODS ETC. IT WAS FURTHER STATED THAT THE FINANCIAL STATEMENTS REVEALED THAT INCREASE IN BORROWED FUNDS HAS BEEN U TILIZED FOR THE PURPOSE OF ADVANCING LOANS AND ADVANCES FROM WH ICH THE ASSESSEE HAS RECEIVED INTEREST INCOME. THE SAID DET AILS ARE AS UNDER: ITA NO.4238/AHD/2007 DCIT CIR-4, AHMEDABAD VS JINDAL WORLDWIDE LTD. 4 PARTICULARS BALANCE AS ON 31/3/95(RS.) BALANCE AS ON 31/03/94(RS .) INCREASE/DEC REASE IN FUNDS (RS.) INTEREST RECEIPT/PAY MENT (RS.) LOAN FUNDS 7,90,02,615 4,14,82,656 3,75,19,959 -33,35,012 LOANS & ADVANCES 8,19,47,135 6,06,35,315 2,13,11,820 +34,42,547 IT WAS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASS ESSEE THAT INCREASE IN LOAN FUNDS ON WHICH THE ASSESSEE HAS PA ID INTEREST OF RS.33,35,012/- HAS BEEN UTILIZED FOR GRANTING AD VANCES ON WHICH IT HAS RECEIVED INTEREST INCOME OF RS.34,42,5 47/- AND HENCE THERE WAS DIRECT RELATION BETWEEN UTILIZATION OF BORROWED FUNDS TOWARDS GRANTING OF LOANS & ADVANCES AND FOLL OWING THE DECISION OF ITAT DELHI BENCH IN THE CASE OF LALSONS ENTERPRISES, ONLY NET INTEREST WAS REQUIRED TO BE R EDUCED FROM PROFIT & GAINS FROM BUSINESS FOR THE PURPOSE OF DED UCTION U/S 80 HHC OF THE IT ACT. IT WAS FURTHER SUBMITTED BY T HE LEARNED COUNSEL FOR THE ASSESSEE THAT IN PARA 5 PAGE 3 OF T HE ORIGINAL ORDER U/S 143(3) DATED 25-03-1997, IT WAS STATED TO THE EFFECT THAT WHILE THE GROSS AMOUNT OF INTEREST RECEIVED BY THE ASSESSEE WAS OF RS.34,42,547/- AND THE DEPARTMENT H AD FOUND THAT THE SAID FIGURE WAS CONSISTING OF TWO DIFFEREN T AMOUNTS I.E. ONE BEING THE INTEREST EARNED BY THE ASSESSEE FROM ITS BUSINESS OF RS.31,19,882/- AND OTHER REMAINING INTE REST WHICH WAS EARNED BY THE ASSESSEE IN RESPECT OF ITS INVESTMENT FOR RS.3,22,665/- AND SAME HAS BEEN CONSIDERED AS I NCOME FROM OTHER SOURCES. IT WAS STATED THAT HENCE, INTER EST EXPENDITURE OF RS.33,35,012/- WAS REQUIRED TO BE NE TTED OFF AGAINST INTEREST INCOME OF RS.31,19,882/- WHICH HAS BEEN TREATED AS BUSINESS INCOME BY THE AO. IT WAS FURTHE R STATED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT PROFITS F ROM BUSINESS INCLUDE CERTAIN RECEIPTS WHICH HAS CORRESP ONDING COSTS OR IF THE PROFITS INCLUDE CERTAIN CREDITS AND THE BUSINESS ITA NO.4238/AHD/2007 DCIT CIR-4, AHMEDABAD VS JINDAL WORLDWIDE LTD. 5 HAS DEBITS OF SIMILAR NATURE, THEN ONLY NET INCOME WAS REQUIRED TO BE CONSIDERED. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE FOLLOWING DECISIONS IN SUP PORT OF HIS CONTENTIONS: 1. KANITLAL CHOTALAL 68 ITD 395 (ITAT MUMBAI BENCH) 2. PINK STAR VS DCIT 72 ITD 137(ITAT MUMBAI BENCH) 3. R. PRAKASH VS ACIT 75 TTJ 546 (ITAT COCHIN BENCH) 4. DCIT VS INFOTECH ENTERPRISES 100 TTJ 610 (HYD) 5. DIAMOND CREEK 82 ITD 291 (ITAT MUMBAI BENCH) 6. CIT VS. SSC SHOES LTD. 275 ITR 46 (MAD.) 7. CIT VS SHRI RAM HONDA POWER EQUIPMENT 289 ITR 475(DELHI) 8. ACIT VS RANG INTERNATIONAL 277 ITR (AT) 148 (AHD) 4. THE LEARNED CIT(A) CONSIDERING THE SUBMISSIONS O F THE PARTIES DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE IN THE LIGHT OF THE DECISION OF ITAT DELHI SPECIAL BENCH IN THE CASE OF LALSONS ENTERPRISES (SUPRA). HIS FINDINGS IN PARA 3 .2 ARE REPRODUCES AS UNDER: 3.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. WHILE PASSING THE ORIGINAL ASSESSMENT ORDER U/S 143(3) OF THE ACT ON 25/3/1997, AT PARA 5, THE ASSESSING OFFICER HAS OBSERVED THAT THE APPELLANT HAS RECEIVED GROSS INTEREST AMOUNT OF RS.34,42,547/- AND OUT OF SAME, INTEREST EARNED DURING THE COURSE OF BUSINESS OF TH E APPELLANT IS OF RS.31,19,882/- AND OTHER INTEREST INCOME FROM INVESTMENT IS OF RS.3,22,665/- WHICH IS INCOME FROM OTHER SOURCES. SUCH FACTS HAVE NOT BEEN DISPUTED BY THE ASSESSING OFFICER WHILE PASSING THE IMPUGNED ASSESSMENT ORDER U/S 143(3) R. W. S. 254 OF THE ACT. THE ASSESSING OFFICER HAS CONSIDERED BOTH, INTEREST INCOME TO THE EXTENT OF RS.31,19,882 /- AND INTEREST EXPENDITURE TO THE EXTENT OF RS.33,35,012/- UNDER THE HEAD INCOME FROM BUSINESS. ONCE THE BUSINESS INCOME HAS BEEN DETERMINED BY APPLYING ACCOUNTING STANDARDS AS WELL AS THE PROVISIONS CONTAINED IN THE ACT, THE APPELLANT WOULD BE PERMITTED IN TERMS OF SECTION 37 ITA NO.4238/AHD/2007 DCIT CIR-4, AHMEDABAD VS JINDAL WORLDWIDE LTD. 6 OF THE ACT TO CLAIM, AS DEDUCTION FOR EXPENDITURE WHICH IS LAID DOWN FOR THE PURPOSE OF EARNING SUCH BUSINESS INCOME. AS INTEREST INCOME TO THE EXTENT O F RS.31,19,882/- HAS BEEN CONSIDERED AS BUSINESS INCOME, IN CASE OF APPELLANT, INTEREST EXPENDITURE IS REQUIRED TO BE REDUCED FROM SUCH INCOME. THE WORD INTEREST IN CLAUSE (BAA) OF THE EXPLANATION TO 80HHC CONNOTES NET INTEREST AND NOT GROSS INTEREST. SIMILAR VIEW HAS BEEN HELD BY DELHI HIGH COURT IN CASE OF CIT VS SHRI RAM HONDA POWER EQUIP 289 ITR 475. EVEN IN THE CASE OF THE APPELLANT, I T CAN BE SEEN FROM FINANCIAL STATEMENTS THAT INCREASE IN BORROWED FUNDS HAS BEEN USED FOR ADVANCING LOANS. THUS THERE IS NEXUS BETWEEN BORROWED FUNDS AND EARNING OF INTEREST INCOME. AS SUCH RATIO LAID DOWN BY DELHI TRIBUNAL IN CASE OF LALSONS ENTERPRISES (89 ITD 25) IS FULFILLED. RESPECTFULLY FOLLOWING THE AFORESAID DECISIONS, THE ASSESSING OFFICER IS DIRECTED TO ALLOW SET OFF OF INTEREST IN COME TO THE EXTENT OF RS.31,19,882/- AGAINST INTEREST EXPENDITURE AND 90% OF INTEREST INCOME OF RS.3,22,665/- ONLY WHICH HAS BEEN TREATED AS INCOME FROM OTHER SOURCES IS REQUIRED TO BE REDUCED FROM PROFITS AND GAINS FROM BUSINESS FOR THE PURPOS E OF DEDUCTION U/S 80 HHC. THUS, THIS GROUND OF APPEAL IS ALLOWED IN FAVOUR OF THE APPELLANT. 5. THE LEARNED DR SUBMITTED THAT THE LEARNED CIT(A) APPLIED THE DECISION OF HONBLE DELHI HIGH COURT IN THE CAS E OF SHRI RAM HONDA POWER EQUIPMENTS (SUPRA) AS WELL AS ORDER OF ITAT DELHI SPECIAL BENCH IN THE CASE OF LALSONS ENT ERPRISES (SUPRA) WHILE GRANTING RELIEF TO THE ASSESSEE. THE LEARNED DR SUBMITTED THAT WHILE GRANTING DEDUCTION U/S 80 HHC OF THE IT ACT THE GROSS INTEREST INCOME IS TO BE CONSIDERED A ND THAT PRINCIPLE OF NETTING OF INTEREST INCOME IS NO LONGE R A GOD LAW IN VIEW OF THE RECENT DECISION OF THE HONBLE BOMBAY H IGH COURT IN THE CASE OF CIT VS M/S. ASIAN STAR CO. LTD. IN I NCOME TAX APPEAL NO.200/2009 DATED 18/19/03-2010 IN WHICH THE HONBLE BOMBAY HIGH COURT CONSIDERING SEVERAL DECIS IONS INCLUDING THE DECISION IN THE CASE OF SHRI RAM HOND A POWER ITA NO.4238/AHD/2007 DCIT CIR-4, AHMEDABAD VS JINDAL WORLDWIDE LTD. 7 EQUIPMENTS AND LALSONS ENTERPRISES (SUPRA) HELD THA T THE TRIBUNAL WAS NOT JUSTIFIED IN COMING TO THE CONCLUS ION THAT THE NET INTEREST ON FDR IN THE BANK RECEIVED BY THE ASS ESSEE SHOULD BE CONSIDERED FOR THE PURPOSE OF WORKING OUT DEDUCTION U/S 80 HHC OF THE IT ACT AND NOT THE GROSS INTEREST . THE LEARNED DR, THEREFORE, SUBMITTED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE REVERSED. 6. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SSESSEE RELIED UPON THE ORDER OF THE LEARNED CIT(A) AND REFERRED T O PB-1 WHICH IS EARLIER ORDER OF THE ITAT AHMEDABAD C BENCH IN THE CASE O F THE SAME ASSESSEE FOR SAME ASSESSMENT YEAR 1995-96 UNDER APPEAL IN IT A NO.1673/AHD/1998 DATED 29-07-2005 IN WHICH THE TRIB UNAL RESTORED THE ISSUE BACK TO THE FILE OF THE AO WITH DIRECTION TO DECIDE THE ISSUE IN ACCORDANCE WITH THE DECISION OF THE ITAT SPECIAL BE NCH DELHI IN THE CASE OF LALSONS ENTERPRISES (SUPRA). THE LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT IT BEING SET ASIDE PROCEE DINGS IN THE MATTER, THE AUTHORITIES BLOW WERE BOUND TO FOLLOW THE ORDER OF THE TRIBUNAL UNLESS THE ORDER OF THE TRIBUNAL IS REVERSED BY THE HIGH C OURT AND AS SUCH RECENT DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF M/S. ASIAN STAR CO. LTD. (SUPRA) WOULD NOT APPLY IN THE CASE OF THE ASSESSEE. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND THE MAT ERIAL AVAILABLE ON RECORD.THE AO IN THIS CASE HAS TAKEN UP THE MATT ER AFRESH WITH REGARD TO DEDUCTION U/S 80 HHC OF THE IT ACT AS PER DIRECT ION OF THE TRIBUNAL IN ITA NO.1673/AHD/1998 DATED 29-07-2005. COPY OF THE ORDER OF THE ITA NO.4238/AHD/2007 DCIT CIR-4, AHMEDABAD VS JINDAL WORLDWIDE LTD. 8 TRIBUNAL IS FILED IN THE PAPER BOOK IN WHICH THE IS SUE INVOLVED IN THE DEPARTMENTAL APPEAL REGARDING DEDUCTION U/S 80 HHC OF THE IT ACT, THE TRIBUNAL DIRECTED THE AO TO DECIDE THE SAME ISSUE I N ACCORDANCE WITH THE DECISION OF THE ITAT DELHI SPECIAL BENCH IN THE CAS E OF LALSONS ENTERPRISES (SUPRA). THE LEARNED DR HAS NOT BROUGHT TO OUR NOTICE IF THE SAID DECISION OF THE TRIBUNAL IS CHALLENGED BY THE REVENUE DEPARTMENT BEFORE THE HONBLE GUJARAT HIGH COURT. UNLESS THE O RDER OF THE TRIBUNAL IS REVERSED BY THE HONBLE HIGH COURT, IT IS BINDIN G UPON BOTH THE PARTIES. THE AUTHORITIES BELOW HAVE DECIDED THE ISS UE IN THE LIGHT OF THE DIRECTION OF THE TRIBUNAL AND IN THE LIGHT OF THE D ECISION IN THE CASE OF LALSONOS ENTERPRISES (SUPRA). THEREFORE, THE ISSUE BEFORE THE AUTHORITIES BELOW IN THE SET ASIDE PROCEEDINGS WAS LIMITED TO T HE POINT ONLY THAT THE ISSUE IS TO BE DECIDED IN ACCORDANCE WITH THE DECIS ION IN THE CASE OF LALSONS ENTERPRISES (SUPRA). THE AUTHORITIES BELOW THUS COULD NOT HAVE TAKEN UP THE MATTER ON OTHER ISSUES WHICH HAVE NOT BEEN DIRECTED BY THE TRIBUNAL. THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF PULIPATI SUBBARAO AND CO. VS AACIT 35 ITR 673 HELD AS UNDER: THE PETITIONER FIRM, WHICH WAS PREVIOUSLY ASSESSED IN THE STATUS OF A REGISTERED FIRM, WAS ASSESSED FOR THE YEAR 1952-53 AS AN UNREGISTERED FI RM, ON THE GROUND THAT IT DID NOT FILE AN APPLICATION F OR REGISTRATION. THE PETITIONER APPEALED TO THE APPELL ATE ASSISTANT COMMISSIONER NOT ON THE ACTUAL ASSESSMENT BUT ONLY WITH REGARD TO THE REFUSAL OF THE INCOME-T AX OFFICER TO TREAT THE FIRM AS A REGISTERED FIRM. THE APPELLATE ASSISTANT COMMISSIONER WAS SATISFIED THAT THERE WAS AN APPLICATION FOR REGISTRATION. HE, THER EFORE, SET ASIDE THE ASSESSMENT AND DIRECTED THE INCOME-TA X OFFICER TO RECEIVE A DUPLICATE APPLICATION AND TO D EAL ITA NO.4238/AHD/2007 DCIT CIR-4, AHMEDABAD VS JINDAL WORLDWIDE LTD. 9 WITH IT ACCORDING TO LAW. THE INCOME-TAX OFFICER CA LLED UPON THE PETITIONER TO PRODUCE ITS ACCOUNT BOOKS TO MAKE A FRESH ASSESSMENT. THE PETITIONER APPLIED TO THE HIGH COURT FOR THE ISSUE OF A WRIT OF PROHIBITION RESTRAINING THE INCOME-TAX OFFICER FROM MAKING A DE NOVO ASSESSMENT: HELD, THAT THE ORDER OF THE APPELLATE ASSISTANT COMMISSIONER DID NOT CONTAIN A DIRECTION THAT THE INCOME-TAX OFFICER SHOULD PROCEED TO MAKE A FRESH ASSESSMENT SUCH AS ENVISAGED UNDER SECTION 31(3) (B ) OF THE INCOME-TAX ACT, THE ORDER WAS SPECIFIC AND ALL THAT THE APPELLATE ASSISTANT COMMISSIONER DIRECTED THE OFFICER TO DO WAS TO RECEIVE A DUPLICATE COPY OF TH E APPLICATION FOR REGISTRATION AND DISPOSE OF IT ACCO RDING TO LAW, AND THEREFORE IT WAS NOT OPEN TO THE OFFICE R TO CONDUCT A FRESH ENQUIRY AND PROCEED TO MAKE A FRESH ASSESSMENT. THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF KATI HAR JUTE MILLS (P) LTD VS CIT 120 ITR 861 HELD AS UNDER: HELD, THAT THE ENTIRE ASSESSMENT WAS NOT SET ASIDE BY THE AAC. ON THE CONTRARY, HIS ORDER SET AS IDE ONLY THAT PART OF THE ORDER OF THE ITO WHICH WAS APPEALED AGAINST AND THAT ALSO WITH SPECIFIC DIRECT IONS TO THE ITO TO CONSIDER THE MATTER ON THAT PART ONLY . AS THERE WAS NO DISPUTE WITH REGARD TO THE ASSESSABILI TY OF THE SALE PROCEEDS OF THE LOOM HOURS AT ANY STAGE OF THE PROCEEDINGS, THE AAC DID NOT CONSIDER THAT QUESTION AT ALL. THE ORDER OF THE AAC, IF READ AS A WHOLE, IN I TS PROPER CONTEXT WOULD CLEARLY SHOW THAT IT WAS NEITH ER THE INTENT NOR THE PURPOSE NOR THE IMPORT OF THE OR DER THAT THE WHOLE ASSESSMENT SHOULD BE SET ASIDE AND EVERYTHING SHOULD BE KEPT AT LARGE SO AS TO ALLOW T HE ITO TO MAKE A FRESH ASSESSMENT ON ALL THE ASPECTS O F THE CASE AND GIVE A FREE HAND TO THE ASSESSEE TO MA KE ALL CLAIMS AND ALL ARGUMENTS IN THAT ASSESSMENT. IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS RIGHT IN HOLDING THAT IN THE CASE OF AN APPEAL FROM AN ASSESSMENT MADE AFTER BEING SET ASIDE WITH THE DIRECTION BY THE AAC, THE AAC WAS PRECLUDED FROM ENTERTAINING A NEW PLEA, BASED ON THE LATEST DECISI ON OF THE SUPREME COURT, IN THE SUBSEQUENT APPEAL. ITA NO.4238/AHD/2007 DCIT CIR-4, AHMEDABAD VS JINDAL WORLDWIDE LTD. 10 THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF S. P. KOCHHAR VS ITO 145 ITR 255 HELD AS UNDER: WHEN THE TRIBUNAL SETS ASIDE THE ASSESSMENT AND REMANDS THE CASE FOR MAKING A FRESH ASSESSMENT, THE POWER OF THE ITO IS CONFINED TO THE SUBJECT-MATTER OF APPEAL BEFORE THE TRIBUNAL. HE CANNOT TAKE UP THE QUESTION WHICH WAS NOT TH0E SUBJECT-MATTER OF APPEAL BEFORE THE TRIBUNAL, EVEN THOUGH NO SPECIFIC DIRECTION HAS BEEN GIVEN BY THE TRIBUNAL. THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SRI VINDHYA BASINI PRASAD GUPTA VS CIT (186 ITR 253) HELD AS UN DER: HELD, (I) THAT IT WAS CLEAR FROM THE ORDER OF THE APPELLATE AUTHORITY THAT THE REMAND TO THE INCOME-TAX OFFICER WAS LIMITED ONLY TO ONE ISSUE. THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE INCOME-TAX OFFICER COULD NOT CONSIDER OTHER QUESTIONS OR ENLARGE THE SCOPE OF THE PROCEEDINGS. NO QUESTION OF LAW AROSE FROM THE ORDER OF THE TRIBUNAL. THE HONBLE MADHYA PRADESH HIGH COURT, INDORE BENCH IN THE CASE OF CIT VS HOPE TEXTILES LTD. (225 ITR 993) HEL D AS UNDER: IT IS WELL SETTLED THAT AN APPELLATE AUTHORITY WHILE REMANDING THE CASE, CAN GIVE DIRECTIONS AND LAY DOWN LIMITS FOR THE ENQUIRY TO BE MADE BY THE LOWER COURT. WHEN SUCH A DIRECTION IS MADE AND LIMITS ARE LAID DOWN, THE POWER AND JURISDICTION OF THE LOWER COURT TO DEAL WITH THE CASE, AFTER REMAND, DEPEND ON THE SPECIFICATIONS OF THE REMAND ORDER. THE LOWER COURT HAS NO JURISDICTION TO ENTER INTO ANY QUESTION WHICH FALLS OUTSIDE THIS LIMIT (SEE V. R. SUBRAMANYAM V. B. THAYAPPA, AIR 1966 SC 1034 AND BUDHILAL DEVIPRASAD V. JAGANNATHDAS BAJRANGDAR, AIR 1963 MP 344). IN THE INSTANT CASE, THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS IN ITS REMAND ORDER DATED JANUARY 30, 1982, MADE A CLEAR DIRECTION TO THE ASSESSING ITA NO.4238/AHD/2007 DCIT CIR-4, AHMEDABAD VS JINDAL WORLDWIDE LTD. 11 OFFICER TO RECONSIDER THE CASE ONLY ON THE MATTER RELATING TO THE DISALLOWANCE OUT OF MACHINERY REPAIRS. THE ASSESSING OFFICER HAD, THEREFORE, CLEARLY TRAVELED BEYOND THE SPECIFICATIONS OF THE REMAND ORDER IN MAKING THE AFORESAID ADDITIONS AND THE APPELLATE AUTHORITIES WERE, THEREFORE, RIGHT IN DELETING THE SAID ADDITIONS. THE ORDER OF THE TRIBUNAL IS BASED ON PROPER APPRECIATION OF THE SETTLED LEGAL POSITION AND DOES NOT, THEREFORE, GIVE RISE TO ANY REFERABLE QUESTION OF LAW. 8. SINCE, THE MATTER IN ISSUE WAS RESTORED TO THE F ILE OF THE AO TO RE-DECIDE THE DEDUCTION U/S 80 HHC OF THE IT ACT AS PER DECISION IN THE CASE OF LALSONS ENTERPRISES (SUPRA) , THE AUTHORITIES BELOW HAVE UNDISPUTEDLY DECIDED THE ISS UE IN ACCORDANCE WITH THE DECISION IN THE CASE OF LALSONS ENTERPRISES (SUPRA). THEREFORE, NO INFIRMITY CAN BE FOUND IN THE ORDER OF THE ORDER OF THE LEARNED CIT(A) IN FOL LOWING THE DIRECTION OF THE TRIBUNAL. HOWEVER, WE MAY NOTE THA T LATER ON THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS M/S. ASIAN STAR CO. LTD. CONSIDERED THE IDENTICAL QUESTI ON WHETHER THE NET INTEREST SHOULD BE CONSIDERED FOR THE PURPO SE OF WORKING OUT DEDUCTION U/S 80 HHC OF THE IT ACT AND NOT THE GROSS INTEREST? HONBLE BOMBAY HIGH COURT CONSIDERE D SEVERAL DECISIONS IN SUPPORT OF ITS FINDING AS WELL AS CONS IDERED THE DECISION IN THE CASE OF SHRI RAM HONDA POWER EQUIPM ENTS AND LALSON ENTERPRISES (SUPRA) AND OBSERVED THAT WE AR E AFFIRMATIVELY OF THE VIEW THAT IN ITS DISCUSSION ON THE ISSUE OF ITA NO.4238/AHD/2007 DCIT CIR-4, AHMEDABAD VS JINDAL WORLDWIDE LTD. 12 NETTING, THE TRIBUNAL IN ITS SPECIAL BENCH DECISION IN LALSONS ENTERPRISES HAS TRANSGRESSED THE LIMITATION ON THE EXERCISE OF JUDICIAL POWER. THE TRIBUNAL HAS IN FACT LEGISLATED BY PROVIDING DEDUCTION ON THE GROUND OF EXPENSES OTHER THAN IN T ERMS WHICH HAVE BEEN ALLOWED BY THE PARLIAMENT. THAT IS IMPERMISSIBLE. THE HONBLE BOMBAY HIGH COURT ULTIM ATELY ALLOWED THE APPEAL OF THE REVENUE BY HOLDING THAT T HE TRIBUNAL WAS NOT JUSTIFIED IN COMING TO THE CONCLUSION THAT NET INTEREST ON FIXED DEPOSITS IN THE BANK RECEIVED BY THE ASSES SEE SHOULD BE CONSIDERED FOR THE PURPOSE OF WORKING OUT THE DE DUCTION U/S 80 HHC OF THE IT ACT AND NOT THE GROSS INTEREST . THE QUESTION OF LAW WOULD ACCORDINGLY STAND ANSWERED IN THE AFORESAID TERMS IN FAVOUR OF THE REVENUE AND AGAINS T THE ASSESSEE. 9. HOWEVER, AS NOTED ABOVE, IN THE PRESENT CASE, TH E PROCEEDINGS BEFORE THE AUTHORITIES BELOW WERE PENDI NG BEING SET ASIDE PROCEEDINGS AS DIRECTED BY THE TRIBUNAL V IDE ORDER DATED 29-07-2005 BY WHICH THE AO WAS DIRECTED TO RE -DECIDE THE ISSUE IN ACCORDANCE WITH THE DECISION OF THE SP ECIAL BENCH OF ITAT DELHI IN THE CASE OF LALSONS ENTERPRISES (S UPRA). THEREFORE, THE AUTHORITIES BELOW WERE BOUND TO FOLL OW THE ORDER OF THE TRIBUNAL DATED 29-07-2005. IN VIEW OF THESE CIRCUMSTANCES, THE DECISION OF THE HONBLE BOMBAY H IGH COURT ITA NO.4238/AHD/2007 DCIT CIR-4, AHMEDABAD VS JINDAL WORLDWIDE LTD. 13 IN THE CASE OF CIT VS M/S. ASIAN STAR CO. LTD. CANN OT BE APPLIED AT THIS STAGE AND MORE PARTICULARLY IN THE SET ASIDE PROCEEDINGS. WE ACCORDINGLY, DO NOT HAVE ANY OPTION EXCEPT TO CONFIRM THE ORDER OF THE LEARNED CIT(A). NO OTHER P OINT IS ARGUED OR PRESSED. WE CLARIFY HERE THAT THE FINDING S IN THIS CASE ARE BASED UPON THE FACTS AND CIRCUMSTANCES OF THIS CASE AS NOTED ABOVE. ACCORDINGLY, THE APPEAL OF THE REVE NUE IS DISMISSED. 10. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 17-09-2010 SD/- SD/- (N. S. SAINI) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 17-09-2010 LAKSHMIKANT/ LAKSHMIKANT/ LAKSHMIKANT/ LAKSHMIKANT/ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD ITA NO.4238/AHD/2007 DCIT CIR-4, AHMEDABAD VS JINDAL WORLDWIDE LTD. 14 1. DATE OF DICTATION: 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S. 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DISPATCH OF THE ORDER: