METROPOLITAN TRADING COMPANY, MUMBAI V. ADDL CIT 18(2), MUMBAI

ITA 4350/MUM/2009

• Counselvise Citation: 435019914 RSA 2009
• Duration Of Justice: 2 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 04-08-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 17-07-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P C MAURYA
• Assessee Lawyers: VASANTI B PATEL
• Keywords: Reopening of assessment; Depreciation; Rule of consistency; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, B, MUMBAI BEFORE S/SHRI D.K.AGARWAL (JM) AND RAJENDRA SINGH(A .M ) ITA NO.4350/MUM/2009 (ASSESSMENT YEAR:2003-04) METROPOLITAN TRADING COMPANY, 10/76 OFF.HAINES ROAD, WORLI, MUMBAI-400018 PAN:AAAFM1474C ADDL. COMMISSIONER OF INCOME TAX, 18(2), PIRAMAL CHAMBERS, LALBAUG, MUMBAI-400013 APPELLANT V/S RESPONDENT DATE OF HEARING : 4.8.2011 DATE OF PRONOUNCEMENT : 10.8.2011 APPELLANT BY : MS.VASANTI B.PATEL RESPONDENT BY : SHRI P.C.MAU RYA O R D E R PER D.K.AGARWAL (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 26.2.2009 PASSED BY THE LEA RNED COMMISSIONER OF INCOME TAX (A) FOR THE ASSESSMENT YEAR 2003-04. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE FIRM IS ENGAGED IN THE BUSINESS OF MANUFACTURING A ND EXPORTERS IN TIES AND OTHER WEARING APPARELS AND BU SINESS INCIDENTAL THERETO, FILED RETURN SHOWING THE TOTAL INCOME AT RS.1,89,16,002/-. HOWEVER, THE ASSESSMENT WAS COM PLETED AT AN INCOME OF RS.2,09,48,444/- VIDE ORDER DATED ITA NO.4350/MUM/2009 (ASSESSMENT YEAR:2003-04) 2 27.3.2006 PASSED UNDER SECTION 143(3) OF THE INCOM E TAX (A), 1961( IN SHORT THE ACT). ON APPEAL, THE LEARN ED COMMISSIONER OF INCOME TAX (A) PARTLY ALLOWED THE A PPEAL OF THE ASSESSEE. 3. BEING AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (A), THE ASSESSEE IS IN APPEAL BEFORE US. 4. GROUND NO.1,2 AND 3 ARE AGAINST THE INCLUSION OF LABOUR CHARGES OF KORMANGALA UNIT AMOUNTING TO RS.3,20,94, 126/- IN THE TOTAL TURNOVER FOR CALCULATION OF DEDUCTION U NDER SECTION 80HHC OF THE ACT. 5. BRIEF FACTS OF THE ABOVE ISSUE ARE, THE AO OBS ERVED THAT THE ASSESSEE HAS FILED SEPARATE PROFIT AND L OSS ACCOUNT FOR VARIOUS UNITS. HOWEVER, THE BUSINESS O F ALL THE UNITS ARE INTERLACED. THE KORAMANGALA UNIT OF TH E ASSESSEE HAS BEEN STATED TO BE DOING THE JOB WORK OF MANUFA CTURING OF SHIRTS FOR ITS OWN EXPORTS AS WELL FOR OTHER CONCER NS ASSOCIATED WITH THE ASSESSEE IN TERMS OF SECTION 40 A(2)(B). THE AO FURTHER OBSERVED THAT THE TURNOVER OF THE KORAMANGALA UNIT HAS NOT BEEN TAKEN IN TO ACCOUNT W HILE CALCULATING THE TOTAL TURNOVER FOR CALCULATION OF D EDUCTION UNDER SECTION 80HHC. ALSO, THE ASSESSEE HAS REMOV ED PROFITS OF THIS UNIT OF RS.32,445/- FROM THE CALCUL ATION OF ITA NO.4350/MUM/2009 (ASSESSMENT YEAR:2003-04) 3 PROFITS OF THE BUSINESS UNDER CLAUSE BAA(1) OF EXP LANATION AFTER SECTION 80HHC(4C). HE ALSO OBSERVED THAT TH E PROFITS FROM THIS UNIT HAS BEEN SHOWN AT A VERY NOMINAL FIG URE AS THE ASSESSEE IS CHARGING AT A VERY NOMINAL RATE FROM IT S SISTER CONCERNS AND ALSO FOR ITS EXPORT. THE TRANSFER PRICE OF SHIRTS TO THE EXPORT UNIT HAS BEEN SET AT A VERY LO W FIGURE. IN FACT, THE ASSESSEE HAS GOT THE WORK DONE FROM ITS S ISTER CONCERN METROPOLITAN TRADING CORPORATION INDIA LTD . (MTC INDIA LTD.). ON BEING ASKED AS TO WHY THE TURNO VER OF THIS UNIT SHOULD NOT BE INCLUDED IN THE TOTAL TURNOVER, IT WAS INTERALIA STATED BY THE ASSESSEE THAT THE FORMULA FOR SECTION 80 HHC PRESCRIBES FOR EXCLUSION OF OTHER RECEIPTS. SINCE THE PROFITS FROM LABOUR CHARGES IS IN THE NATURE OF OT HER RECEIPTS, THE SAME HAS BEEN EXCLUDED BY THE ASSESSEE. THUS T HE ASSESSEE HAS EXCLUDED THE PROFITS OF THE KORAMANGAL A UNIT FROM THE PROFITS OF THE BUSINESS, THE TURNOVER OF T HE UNIT HAS BEEN EXCLUDED FROM THE TOTAL TURNOVER. IT WAS FURT HER STATED THAT THE FORMULA PRESCRIBES FOR CALCULATION OF OTH ER PROFITS SEPARATELY. HOWEVER, THE AO WAS OF THE VIEW THAT KORAMANGALA UNIT CANNOT BE SAID TO BE ENGAGED IN TH E OTHER ACTIVITIES NOT CONNECTED WITH THE MAIN BUSINESS OF THE ASSESSEE OF EXPORT OF SHIRTS. ACCORDINGLY, THE AO ADDED THE TURNOVER OF KORAMANGALA UNIT OF RS.3,20,94,126 IN THE TOTAL TURNOVER OF THE ASSESSEE WHICH WORKED TO RS.21,12, 56,772/- (32094126 + 179162646) FOR CALCULATION OF DEDUCTIO N UNDER ITA NO.4350/MUM/2009 (ASSESSMENT YEAR:2003-04) 4 SECTION 80HHC OF THE ACT. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX (A) WHILE AGREEING WITH THE VIEW OF THE AO RELIED ON THE DECISIONS IN THE CASE OF CI T V/S BANGALORE CLOTHING CO. (260 ITR 371) (BOM) AND K.K.DOSHI AND CO. V/S CIT (297 ITR 38)(SC) AND ACCORDINGLY UPHELD THE ORDER PASSED BY THE AO. 6. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT THIS ISSUE HAS BEEN RAISED BY THE AO IN THE ASSESSMENT YEAR 2001-02 IN THE ASSESSEES O WN CASE AND CAME BEFORE THE TRIBUNAL, WHEREIN THE TRIBUNAL DISCUSSED THE ISSUE IN PARAGRAPHS 7 TO 13 OF THE O RDER AND SENT IT BACK TO THE FILE OF THE AO VIDE PARAGRAPHS 13 OF THE ORDER PASSED IN ITA NO.4349/MUM/2009 DATED 13.4.20 11, THEREFORE, THE ISSUE MAY BE SET ASIDE TO THE FILE O F THE AO. 7. ON THE OTHER HAND, THE LEARNED D.R. SUBMITS THAT SINCE IN THE YEAR UNDER CONSIDERATION THERE IS A PROFIT IN BOTH THE UNITS, THEREFORE, THE AO WAS JUSTIFIED IN ADDING TH E LABOUR CHARGES OF KORAMANGALA UNIT AMOUNTING TO RS.3,20, 94,126/- IN THE TURNOVER OF THE ASSESSEE FOR THE PURPOSE OF CALCULATION OF DEDUCTION UNDER SECTION 80HHC OF THE ACT. HE HAS ALSO PLACED RELIANCE ON THE DECISIONS IN THE CA SES OF K.K.DOSHI AND CO. AND BANGALORE CLOTHING CO.(SU PRA). ITA NO.4350/MUM/2009 (ASSESSMENT YEAR:2003-04) 5 8. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON REC ORD WE FIND THAT ON THE SIMILAR ISSUE THE TRIBUNAL IN THE ASS ESSEES OWN CASE IN METROPOLITAN TRADING COMPANY V/S ITO IN ITA NO.4349/MUM/2009 (AY-2001-02) ORDER DATED 13.4.2011 , VIDE PARAGRAPHS 13 OF ITS ORDER HELD AS UNDER : 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE FIRST PART OF THE REASON RECORDED DEALS WITH THE QUESTION REGARDING THE TURNOVER OF THE KORAMANGALA UNIT OF R S. 2,79,81,165/- NOT HAVING BEEN TAKEN INTO ACCOUNT WH ILE CALCULATING THE TOTAL TURNOVER FOR THE CALCULATION OF DEDUCTION U/S. 80 HHC. ALSO THE ASSESSEE HAS REMOVE D LOSS OF THIS UNIT OF RS. 12,69,654/- FROM THE CALCU LATION OF THE PROFITS OF THE BUSINESS UNDER CLAUSE (BAA) OF EXPLANATION AFTER 80 HHC (4C). AS ALREADY MENTIONED THE REASONS WERE RECORDED BY THE AO ON 28.3.2006. EVEN AS EARLY 21/2/2005 THE AO PASSED ORDER OF ASSESSMENT U/S.143(3) READ WITH SEC.147 OF THE ACT, PURSUANT T O THE 1 ST REASSESSMENT NOTICE, WHEREIN THE AO TREATED 90% OF THE LABOUR CHARGES RECEIVED OF RS. 2,79,81,165 BY T HE KORAMANGALA UNIT AS FALLING WITHIN CLAUSE(A) OF EXPLANATION -(BAA) TO SECTION 80HHC OF THE ACT IN T HE REASSESSMENT PROCEEDINGS AS AGAINST HIS ACTION IN T HE ORIGINAL ORDER PASSED U/S.143(3) OF THE ACT, IN ADD ING 90% OF THE LOSS OF RS.12,96,655 TO THE PROFITS OF T HE BUSINESS IN VIEW OF CLAUSE(A) OF EXPLANATION (BAA) TO SECTION 80HHC OF THE ACT. THE FACT THAT THE SERVICE CHARGES OF RS.2,79,81,165 RECEIVED BY THE KORAMANGA LA UNIT WAS NOT INCLUDED IN THE TOTAL TURNOVER IS A MA TTER WHICH THE AO OUGHT TO HAVE CONSIDERED WHEN MAKING T HE 1ST REASSESSMENT. SUCCESSIVE REASSESSMENTS CANNOT BE DONE TO CONSIDER DIFFERENT FACETS OF THE VERY SAME DEDUCTION U/S.80-HHC OF THE ACT. IN OTHER WORDS, TH E AO IS DEEMED TO HAVE CONSIDERED THIS ASPECT WHEN HE PASSED THE ORIGINAL ASSESSMENT ORDER AS WELL AS THE 1ST REASSESSMENT ORDER. THE REOPENING OF ASSESSMENT FOR THE 2ND TIME ON THIS ASPECT, IF PERMITTED WOULD AMO UNT TO ALLOWING THE AO TO REVIEW HIS OWN ORDERS ON A MERE CHANGE OF OPINION. IN THE 1ST REASSESSMENT THE AO W AS NOT PRECLUDED FROM GOING INTO THE QUESTION OF WHAT SHOULD BE THE TOTAL TURNOVER FOR ALLOWING DEDUCTION U/S.80-HHC OF THE ACT. THEREFORE 2ND REASSESSMENT O N ITA NO.4350/MUM/2009 (ASSESSMENT YEAR:2003-04) 6 THIS ASPECT SHOULD BE HELD TO BE A INITIATION OF REASSESSMENT ON A MERE CHANGE OF OPINION, WHICH IS NOT PERMISSIBLE. IT CAN ALSO BE SAID THAT THE REASONS RECORDED ON 28.3.2006 FOR THE 2ND REASSESSMENT NOTI CE DID NOT SURVIVE AFTER THE ORDER DATED 21.2.2005 PAS SED BY THE AO U/S.143(3) READ WITH SEC.147 OF THE ACT PURSUANT TO THE 1 ST REASSESSMENT NOTICE. THEREFORE IT CANNOT BE SAID THAT THE AO ENTERTAINED BELIEF REGAR DING ESCAPEMENT OF INCOME CHARGEABLE TO TAX. THE EXISTEN CE OF REASON TO BELIEVE BEING A CONDITION PRECEDENT FO R INITIATION OF REASSESSMENT PROCEEDINGS, THE INITIAT ION OF REASSESSMENT PROCEEDINGS ON THIS GROUND WAS CERTAIN LY NOT VALID. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUG HT ON RECORD BY THE LEARNED D.R. EXCEPT THAT IN THE ASSE SSMENT YEAR 2001-02 THERE WAS A LOSS WHEREAS IN THE YEAR UNDER CONSIDERATION THERE IS A PROFIT IN THE SAID UNIT, W E ARE OF THE VIEW THAT TO DETERMINE AS TO WHETHER THE TURNOVER OF THE KORAMANGALA UNIT HAS TO BE TAKEN INTO ACCOUNT WHIL E CALCULATING THE TOTAL TURNOVER FOR THE CALCULATIO N OF DEDUCTION UNDER SECTION 80HHC AND KEEPING IN VIEW T HE RULE OF CONSISTENCY, THE MATTER SHOULD GO BACK TO THE FI LE OF THE AO AND ACCORDINGLY, WE SET ASIDE THE ORDER PASSED B Y THE REVENUE AUTHORITIES ON THIS ACCOUNT AND SEND BACK T HE MATTER TO THE FILE OF THE AO TO DECIDE THE SAME AF RESH IN THE LIGHT OF THE DIRECTIONS GIVEN BY THE TRIBUNAL (SUP RA) AND ACCORDING TO LAW AFTER PROVIDING REASONABLE OPPOR TUNITY OF BEING HEARD TO THE ASSESSEE. THE GROUNDS TAKEN BY THE ASSESSEE ARE, THEREFORE, PARTLY ALLOWED FOR STATIS TICAL PURPOSES. ITA NO.4350/MUM/2009 (ASSESSMENT YEAR:2003-04) 7 9. GROUNDS NO.4, 4.1 AND 4.2 ARE AGAINST THE CONFI RMING THE ACTION OF THE AO IN HOLDING THAT THE SALES TAX REFUND OF RS.6,14,188/- AND MISC. INCOME OF RS.2167 ARE IN TH E NATURE OF OTHER INCOME NOT CONNECTED WITH THE MAIN BUSINES S OF THE ASSESSEE. 10. BRIEF FACTS ON THE ABOVE ISSUE ARE THAT THE AO NOTED THAT THE ASSESSEE HAS NOT EXCLUDED THE SALES TAX RE FUND OF RS.6,14,188 AND MISCELLANEOUS INCOME OF RS.2,167/- AND OTHER RECEIPTS FOR THE PURPOSE OF DEDUCTION UNDER SECTION 80HHC. ACCORDING TO THE AO, THESE INCOMES ARE CLEA RLY IN THE NATURE OF OTHER INCOME AS THEY ARE NOT CONNECTE D WITH THE MAIN BUSINESS OF THE ASSESSEE. THE AO FOLLOWING THE DECISION OF THE HON. SUPREME COURT IN CIT V/S STEA RLING FOODS LTD. ( 237 ITR 579) (SC), HELD THAT THE INCO MES WHICH ARE ONLY ATTRIBUTABLE TO THE MAIN BUSINESS OF THE A SSESSEE AND ARE NOT DERIVED FROM THE SAME HAVE TO BE TRE ATED AS OTHER INCOME AND ACCORDINGLY DENIED THE DEDUCTION U NDER SECTION 80HHC OF THE ACT ON THE SAID RECEIPTS. ON A PPEAL, THE LEARNED COMMISSIONER OF THE INCOME (A) WHILE RELYING ON THE VARIOUS DECISIONS CITED AT PAGES 3 AND 4 OF THE ORDER WHILE AGREEING WITH THE VIEWS OF THE AO, CONFIR MED THE DISALLOWANCE OF DEDUCTION UNDER SECTION 80HHC MADE BY THE AO. ITA NO.4350/MUM/2009 (ASSESSMENT YEAR:2003-04) 8 11. AT THE TIME OF HEARING, THE LEARNED COUNSEL FO R THE ASSESSEE SUBMITS THAT THIS ISSUE IS COVERED IN FA VOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN THE ASSE SSEES OWN CASE IN METROPOLITAN TRADING COMPANY V/S ADDL. COMMISSIONER OF INCOME TAX IN ITA NO. 3189/MUM/20 06 (AY 2002-03) DATED21.1.2009, WHEREIN THE TRIBUNAL FOLLOWING THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN T HE CASE OF ALFA LAVAL INDIA LTD. V/S CIT (266 ITR 418) (BOM ) AFFIRMED BY THE HONBLE SUPREME COURT IN (295 ITR 451) (SC) DIRECTED THE AO NOT TO EXCLUDE THE SALES TAX REFUND WHILE CALCULATING THE DEDUCTION UNDER SECTION 80HHC. 12. ON THE OTHER HAND, THE LEARNED D.R. SUPPORTS T HE ORDER OF THE AO AND THE LEARNED COMMISSIONER OF INCOME T AX (A). 13. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON REC ORD WE FIND MERITS IN THE PLEA OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN THE ASSESSEES O WN CASE (SUPRA) WHEREIN THE TRIBUNAL HAS OBSERVED AND HEL D VIDE PARAGRAPHS 6,6.1 AND 6.2 AS UNDER : 6. AS REGARDS SALES TAX REFUND, WE FIND THAT THIS ISSUE IS COVERED BY THE DECISION OF THE HONBLE BOM BAY HIGH COURT IN THE CASE OF ALFA LAVAL INDIA LTD. VS. CIT, 266 ITR 418 WHEREIN THE HONBLE COURT HELD AS UNDER :- ITA NO.4350/MUM/2009 (ASSESSMENT YEAR:2003-04) 9 ..THE INTEREST FROM CUSTOMERS AND SALES TAX SET OFF RECEIVED BY THE ASSESSEE BEING ASSESSED AS PART OF THE BUSINESS PROFITS UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION, THE SAME COULD NO T BE EXCLUDED WHILE CALCULATING DEDUCTION UNDER SECTION 80 HHC OF THE ACT. 6.1 THE SAID DECISION OF THE BOMBAY HIGH COURT HAS BEEN AFFIRMED BY THE SUPREME COURT WHICH IS REPORTE D IN 295 ITR 451(SC). 6.2 WE RESPECTFULLY FOLLOW THE SAID JUDGMENT OF THE BOMBAY HIGH COURT AND IN THE LIGHT OF THAT WE DIREC T THE ASSESSING OFFICER NOT TO EXCLUDE THE SALES TAX REFU ND WHILE CALCULATING THE DEDUCTION U/S 80 HHC. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUG HT ON RECORD BY THE REVENUE, WE RESPECTFULLY FOLLOWING T HE ORDER OF THE TRIBUNAL AND THE JUDGMENTS OF THE HONBLE SUPR EME COURT AND THE HONBLE JURISDICTIONAL HIGH COURT (SU PRA) DIRECT THE AO NOT TO EXCLUDE THE SALES TAX REFUND WHILE CALCULATING THE DEDUCTION UNDER SECTION 80HHC OF THE ACT. HOWE VER, IN THE ABSENCE OF ANY ARGUMENTS OR SUPPORTING MATERIA L IN RESPECT OF MISCELLANEOUS INCOME OF RS.2167/-, THE SAME IS THEREFORE, REJECTED AND ACCORDINGLY THE GROUNDS TA KEN BY THE ASSESSEE ARE PARTLY ALLOWED. 14. GROUND NO.5 IS AGAINST THE DISALLOWANCE OF CAR EXPENSES AND DEPRECIATION. ITA NO.4350/MUM/2009 (ASSESSMENT YEAR:2003-04) 10 15. BRIEF FACTS ON THE ABOVE ISSUE ARE THAT THE AO HAS DISALLOWED 20% CAR EXPENSES AND DEPRECIATION ON THE GROUND THAT THE ASSESSEE DOES NOT MAINTAIN ANY LOGB OOK TO SHOW THAT THE CAR IS USED EXCLUSIVELY FOR THE BUSIN ESS PURPOSE. ACCORDINGLY, THE AO DISALLOWED RS.64,294/ - TOWARDS CAR EXPENSES AND RS.15,312/- ON ACCOUNT OF CAR DEPRECIATION. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX (A) CONFIRMED THE DISALLOWANCE MADE BY T HE AO. 16. AT THE TIME OF HEARING, THE LEARNED COUNSEL FO R THE ASSESSEE SUBMITS THAT THIS ISSUE IS ALSO PARTLY CO VERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRI BUNAL IN ASSESSEES OWN CASE IN METROPOLITAN TRADING COMPAN Y V/S THE JCIT IN ITA NO.6213/MUM/2003 (AY-1998-998) ORDE R DATED 10.10.2006, WHEREIN THE TRIBUNAL HAS CONFIRME D THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (A) IN REDUCING THE DISALLOWANCE AT 1/6 TH . 17. ON THE OTHER HAND, THE LEARNED D.R. SUPPORTS T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (A). 18. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON REC ORD AND IN ABSENCE OF ANY MATERIAL TO SHOW THAT THE CAR WAS U SED EXCLUSIVELY FOR THE PURPOSE OF BUSINESS, WE ARE OF THE VIEW THAT THE PERSONAL USE OF THE CAR CANNOT BE RULED OU T. ITA NO.4350/MUM/2009 (ASSESSMENT YEAR:2003-04) 11 HOWEVER, KEEPING IN VIEW THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE (SUPRA) WHEREIN THE TRIBUNAL HAS UPHELD THE DISALLOWANCE AT 1/6 TH, WE RESPECTFULLY FOLLOWING THE SAME DIRECT THE AO TO REDUCE THE DISALLOWANCE T O 1/6 TH AS AGAINST 20% MADE BY HIM AND CONFIRMED BY THE LEA RNED COMMISSIONER OF INCOME TAX (A). GROUND TAKEN BY THE ASSESSEE IS, THEREFORE, PARTLY ALLOWED. 19. GROUND NO.6 IS AGAINST THE LEVY OF INTEREST UND ER SECTION 234D OF THE ACT. 20. THE AO HAS CHARGED THE INTEREST UNDER SECTION 2 34D OF THE ACT. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX DIRECTED THE AO THAT THE SAME IS CONSEQUENTI AL IN NATURE THEREFORE THE SAME MAY BE CHARGED AS PER LAW . 21. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT THIS ISSUE IS COVERED IN FAVO UR OF THE ASSESSEE BY THE DECISION OF THE SPECIAL BENCH OF T HE TRIBUNAL IN THE CASE OF ITO V/S EKTA PROMOTORS (P) LTD. (2008) 113 ITD 719 (DELHI) (SB), THEREFORE, FOLLOWI NG THE SAME, THE LEVY OF INTEREST BE DELETED. 22. ON THE OTHER HAND, THE LEARNED D.R. SUPPORTS TH E ORDER OF THE AO AND THE LEARNED COMMISSIONER OF INCOME TA X (A). ITA NO.4350/MUM/2009 (ASSESSMENT YEAR:2003-04) 12 23. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON REC ORD WE FIND MERIT IN THE PLEA OF THE LEARNED COUNSEL FOR T HE ASSESSEE THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSE E BY THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN EKTA PROMOTORS (P) LTD (SUPRA), WHEREIN IT HAS BEEN HELD THAT SECTION 234D WHICH HAS BEEN BROUGHT ON THE STATUTE W.E.F. 1.6.2003 CANNOT BE APPLIED TO THE ASSESSMENT YEAR 2 003-04 OR EARLIER YEARS, BUT IT WILL HAVE APPLICATION ONLY WITH EFFECT FROM ASSESSMENT YEAR 2004-05. RESPECTFULLY FOLLOW ING THE SAME, WE HOLD THAT THE AO WAS NOT JUSTIFIED IN LEV YING THE INTEREST UNDER SECTION 234D OF THE ACT AND ACCORDI NGLY THE SAME IS DELETED. THE GROUND TAKEN BY THE ASSESSEE IS THEREFORE ALLOWED. 24. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10TH AUGUS T,2011. SD SD (RAJENDRA SINGH) (D.K.A GARWAL) ACCOUNTANT MEMBER JUD ICIAL MEMBER MUMBAI, DATED 10TH AUGUST, 2011 SRL: ITA NO.4350/MUM/2009 (ASSESSMENT YEAR:2003-04) 13 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILE. BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI