M/s VIC Industries., Sattari, Goa V. Income Tax Officer, Ward-2 (5), Panaji

ITA 447/PAN/2018

AI Insights

The case involves two appeals by VIC Industries and Esteem Industries P. Ltd. against the orders of the Commissioner of Income Tax (Appeals), which pertained to the assessment year 2009-10. The primary issue in both appeals was the disallowance of bank interest under section 80IB of the Income Tax Act, 1961. Initially, the Assessing Officer disallowed various deductions including bank interest, which was later contested and partially allowed by the CIT(A). However, the Tribunal found that the CIT(A) did not adequately consider its previous directions regarding the allowability of the bank interest deduction and thus remanded the matter back to the CIT(A) for a comprehensive re-evaluation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136862 (ITAT-PANAJI)
• Duration Of Justice: 4 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: WT(D)
• Next Hearing Date: 15-08-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 25-11-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH :: PANAJI BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER & SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER (Through virtual hearing) ITA No.447/PAN/2018 (A.Y. 2009-10) VIC Industries, Plot no.78, Pissurlem Industrial Estate, Sattari, Goa. PAN: AACFV 8626 M vs ITO, Ward-2(5), Panaji - Goa Appellant Respondent ITA No.448/PAN/2018 (A.Y. 2009-10) M/s. Esteem Industries P. Ltd., Plot No.76-77, Pissurlem Industrial Estate, Sattari, Goa. PAN: AAACE 9474 F Vs ITO, Ward-2, Margao - Goa Appellant Respondent Assessee by : Shri Mahendra Sanghvi, CA Revenue by : Shri N. Shrikanth, DR Date of hearing : 16/08/2023 Date of pronouncement : 21/08/2023 O R D E R Per PARTHA SARATHI CHAUDHURY, JM: These appeals preferred by the different assessees emanate from the separate orders of Commissioner of Income Tax (Appeals)-1, Panaji (for short, ‘CIT(A)’), dated 25/09/2018 & 24/09/2018 respectively for A.Y.2009-10 as per the grounds of appeal on record. ITA Nos.447 & 448/PAN/2018 VIC Industries & Ano. 2 2. At the time of hearing, it was submitted by the parties that the facts and circumstances and the issues involved in both the appeals are absolutely same and identical, and considering the submissions made, these matters were heard together and are disposed of vide this consolidated order. Ld. counsel for the assessee submitted that ITA No.448/PAN/2018 may be taken as lead case for illustration of facts regarding the issue for adjudication. 3. The only issue and dispute in both the appeals is the disallowance of bank interest u/sec. 80IB of the Income Tax Act, 1961 (for short, ‘the Act’) 4. Brief facts of the case are that assessee is a company engaged in the business of manufacture of chemicals, filed its return of income on 26/09/2009 declaring income of Rs.2,47,38,870/- and had claimed deduction u/sec. 80IB of Rs.1,06,02,371/-. The Assessing Officer (AO) disallowed deduction claimed u/sec. 80IB on Sales Tax Incentives of Rs.27,54,214/-, Bank Interest of Rs.11,02,117/-, Excise Refund received of Rs.1,47,99,719/-; and Entry Tax refund of Rs.11,08,224/-. Against the order of AO, assessee had preferred appeal before the ld.CIT(A), who allowed the claim made by the assessee. Aggrieved by the order of ld. CIT(A), Revenue filed appeal before this Tribunal. This Tribunal vide order dated 24/08/2015 in ITA No. 211/PAN/2014 allowed the claim of deduction u/sec. 80IB of Sales Tax Incentives, ITA Nos.447 & 448/PAN/2018 VIC Industries & Ano. 3 and restored the matter back to the file of AO for allowability of claim of deduction on Excise Duty, Entry Tax refund and Bank Interest. The AO by passing order u/sec. 143(3) r.w.s. 254 of the Act dated 06/12/2016 allowed the deduction on Excise Duty refund, and refund of Entry Tax received, but had not allowed Bank Interest. Aggrieved by the order of AO, assessee preferred appeal before the ld.CIT(A). 5. When the matter went up before ld.CIT(A), after considering the assessment order and the submissions of the assessee, held as follows:- “14. Thus, I find that various Courts have held that since the interest has not been derived from the direct operation of the industrial undertaking, such interest is not eligible for deduction u/sec. 80I/80IA/80IB of the I.T. Act. 15. The assessee can claim deduction on the income derived by the infrastructure facility. However, as far as interest is concerned in the present case, it is clear that the same has not been manufactured/produced. I find that the interest income can be said to be attributable to the business but is certainly not derived from the business. The income „derived from‟ infrastructure undertaking has to be interpreted in a restricted /narrower sense as compared to „attributable to‟, and hence only income earned directly from the business carried on by the infrastructure undertaking can be taken into consideration for calculating total income and deduction available under these sections. 16. The action of the AO is correct and these grounds of appeal are therefore, dismissed.” 6. At the time of hearing, ld.counsel for the assessee demonstrated that Panaji Bench of this Tribunal in earlier round of litigation, vide its order dated 24/08/2015 had restored the matter to the file of the AO ITA Nos.447 & 448/PAN/2018 VIC Industries & Ano. 4 with certain directions regarding allowabillity of claim of deduction u/sec. 80IB on Excise Duty refund, Entry Tax refund and Bank Interest. We observe that ld.CIT(A) while deciding this issue, has not considered the decision of the Tribunal (supra). Therefore, we are of the considered opinion, in the interest of justice, ld. CIT(A) is to re-adjudicate the matter considering the directions of the Tribunal given in its earlier order (supra) and then come out with a speaking order. In view thereof, we set aside the order of the ld. CIT(A) and remand the matter back to his file for re-adjudication as per law while complying with the principles of natural justice. Grounds of appeal of the assessee are allowed for statistical purposes. 7. In the result, appeal of the assessee in ITA No.448/PAN/2018 is allowed for statistical purposes. 8. At the outset, the parties have conceded that the facts and circumstances in both these appeals are absolutely similar and identical, and therefore, our decision already taken in ITA No.448/PAN/2018 for A.Y. 2009-10 shall apply mutatis mutandis to the appeal of the assessee in ITA No.447/PAN/2018 for A.Y. 2009-10. Grounds of appeal of the assessee are allowed for statistical purposes. 9. In the result, appeal of the assessee in ITA No.447/PAN/2018 is ITA Nos.447 & 448/PAN/2018 VIC Industries & Ano. 5 allowed for statistical purposes. 10. In the combined result, both the appeals of the assessees are allowed for statistical purposes. Order pronounced in open Court on 21 st August, 2023. Sd/- Sd/- (INTURI RAMA RAO) (PARTHA SARATHI CHAUDHURY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 21 st August, 2023 vr/- Copy to : 1. The Appellant. 2. The Respondent. 3. The Pr. CIT concerned. 5. The DR, ITAT, Panaji Bench, Panaji. 6. Guard File. By Order // TRUE COPY // Senior Private Secretary ITAT, Pune.