PROCTER & GAMBLE HYGIENE AND HEALTHCARE LTD, MUMBAI V. CIT 8, MUMBAI

ITA 4866/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1668 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 08-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 03-09-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: HARESH G BUCH
• Keywords: Business income; Bonafide belief
• Section: 263

Judgement Text

1 I.T.A. NO. 5096 & 4866/MUM/2015 PROCTER & GAMBLE HYGIENE & HEALTHCARE LIMITED V. CI T/DY. CIT IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMB AI BEFORE SHRI SANJAY ARORA, AM AND SHRI PAWAN SINGH, J M ./I.T.A. NOS. 4866 & 5096/MUM/2015 ( / ASSESSMENT YEAR: 2008-09) PROCTER & GAMBLE HYGIENE & HEALTHCARE LIMITED, P & G PLAZA CARDINAL GRACIAS ROAD, CHAKKALA, ANDHERI (E), MUMBAI-400 009 / VS. CIT, RANGE-8, MUMBAI ./ ./PAN/GIR NO. AAACP 6332 M ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI HARESH G. BUCH & MS. MOKSHA MEHTA / RESPONDENT BY : SHRI RAHUL RAMAN / DATE OF HEARING : 14.09.2016 !'# / DATE OF PRONOUNCEMENT : 30.11.2016 / O R D E R PER SANJAY ARORA, A. M.: THIS IS A SET OF TWO APPEALS, ONE AGAINST THE ORDE R UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) BY THE COMMISSIONER OF INCOME TAX-8, MUMBAI (CIT FOR SHORT) DATED 31.03.2014 (IN ITA NO.4866/MUM/2015), AND THE OTHER AGITATING THE ASSESSMENT FRAMED PURSU ANT THERETO ON THE DISMISSAL OF THE APPEAL THERE-AGAINST BY THE COMMISSIONER OF INC OME TAX (APPEALS)-17, MUMBAI (CIT(A) FOR SHORT) VIDE ORDER DATED 28.08. 2015 (IN ITA NO.5096/MUM/2015), I.E., THE QUANTUM ASSESSMENT. 2 I.T.A. NO. 5096 & 4866/MUM/2015 PROCTER & GAMBLE HYGIENE & HEALTHCARE LIMITED V. CI T/DY. CIT 2. THE APPEAL AGAINST THE REVISION ORDER IS DELAYED BY A PERIOD OF 458 DAYS. WE SHALL THEREFORE TAKE UP THE APPEAL AGAINST THE M ERITS OF THE ASSESSMENT FIRST, AS IF THE ASSESSEE SUCCEEDS AGAINST THE SAME, THE CHAL LENGE TO THE SECTION 263 ORDER BECOMES UNFRUCTUOUS. 3. ASSESSMENT FOR THE INSTANT YEAR, MADE IN THE FIR ST INSTANCE ON 01.02.2012 (AND WHICH TRAVELLED UP TO THE FIRST APPELLANT STAG E), WAS HELD AS ERRONEOUS IN-SO-FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENU E IN-AS-MUCH AS THE ASSESSEE HAD BEEN ALLOWED ITS CLAIM FOR DEDUCTION U/S. 80-IC OF THE ACT AGAINST INTEREST INCOME, WHICH WAS HELD WHY THE REVISIONARY AUTHORITY AS LIA BLE TO BE ASSESSED AS INCOME FROM OTHER SOURCES, DIRECTING THE ASSESSING OFFICER (AO) TO FRAME THE ASSESSMENT AFRESH ACCORDINGLY. BEING ASSESSABLE U/S. 56, I.E., AS AGAINST BUSINESS INCOME, THE QUESTION OF ANY DEDUCTION UNDER SECTION 80-IC DID N OT ARISE; THE SAME BEING ONLY IN RESPECT OF PROFITS AND GAINS DERIVED BY ANY UNDERTA KING FROM ANY SPECIFIED BUSINESS, IMPLYING A FIRST DEGREE RELATIONSHIP THER EWITH. IN APPEAL AGAINST THE ASSESSMENT FRAMED PURSUANT THERETO, THE LD. CIT(A) DISMISSED THE ASSESSEES APPEAL, HOLDING IT AS NOT MAINTAINABLE AS THE AO HA D ONLY GIVEN EFFECT TO THE DIRECTIONS TO HIM BY THE LD. CIT, RELYING ON THE DEC ISION BY THE JURISDICTIONAL HIGH COURT IN HERDILLIA CHEMICALS LTD. V. CIT [1997] 90 TAXMAN 314 (BOM), REPRODUCING THE RELEVANT PART THEREOF (PER PARA 2.9 OF HIS ORDER). THE OPERATIVE/RELEVANT PART OF HIS READS AS UNDER: 2.10 THE AFORESAID DECISION OF THE HONBLE JURISDIC TIONAL HIGH COURT IS ON ALL FOURS WITH THE FACTS OF THE PRESENT APPEAL. TH E OPERATIVE PART OF THE ORDER UNDER SECTION 263 OF THE ACT PASSED BY THE ADMINIST RATIVE COMMISSIONER IN THIS CASE, IS EXPLICIT AND EX-FACIE FREE FROM ANY AMBIGUITY. IT STATES IS NO UNCERTAIN TERMS THAT THE ASSESSMENT MADE IS SET ASI DE WITH A CLEAR DIRECTION TO THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT AFRESH BY TAXING INTEREST INCOME OF RS. 1,92,21,567/- (13910069/- + 5311498/-) EARNED BY ITS UNITS ENTITLED FOR DEDUCTION U/S. 80IC, UNDER THE H EAD INCOME FROM OTHER SOURCES . THERE ISNT AN IOTA OF DOUBT THAT A DEFINITE FI NDING WAS RECORDED IN THE AFORESAID REVISION ORDER ON THE ISSUE AT HAND. THERE WAS ABSOLUTELY NO DISCRETION WITH THE ASSESSING OFFICER TO CONSIDER T HE IMPUGNED INTEREST INCOME IN ANY OTHER FASHION OTHER THAN WHAT WAS DIR ECTED BY THE COMMISSIONER. IT MAY BE GAINFULLY BE NOTED THAT WH ETHER THE APPELLANT HAS PERUSED THE STATUTORY REMEDIES AGAINST THE REVISION ORDER DATED 31.03.2014 3 I.T.A. NO. 5096 & 4866/MUM/2015 PROCTER & GAMBLE HYGIENE & HEALTHCARE LIMITED V. CI T/DY. CIT PASSED BY THE ADMINISTRATIVE COMMISSIONER ON NOT, D OES NOT IMPINGE ON THIS APPEAL. THE SAID REVISION ORDER STANDS INTACT AS ON DATE, WITHOUT BEING MODIFIED BY AN ORDER OF A SUPERIOR COMPETENT AUTHOR ITY. THUS, THE ISSUE OF TAXATION OF INTEREST INCOME AMOUNTING TO RS. 1,92,2 1,567/- HAS ALREADY BEEN DECIDED BY THE ADMINISTRATIVE COMMISSIONER, GIVEN E FFECT TO BY THE ASSESSING OFFICER AND, THEREFORE, IT IS NOT OPEN FO R THE ASSESSEE TO AGITATE THE SAME BEFORE THE APPELLATE COMMISSIONER. THE RELIANCE BY THE ASSESSEE ON SOME DECISIONS BEFOR E HIM WAS ALSO MET BY HIM WITH REFERENCE TO THE FACTS OF THOSE CASES. NO FINA LITY HAD BEEN ARRIVED AT BY VIRTUE OF THE REVISION ORDER WITH REGARD TO THE ITEMS CONS IDERED BY THE REVISIONARY AUTHORITY, SO THAT IT WAS THE ASSESSING AUTHORITY W HICH WAS DECIDING IT, TAKING INTO ACCOUNT THE EXPLANATIONS AND EVIDENCES FURNISHED BY THE ASSESSEE. IN THE PRESENT CASE, HOWEVER, THERE WAS NO SCOPE FOR ANY ADJUDICAT ION BY THE AO, WHO WAS LEFT WITH NO JUDICIAL DISCRETION IN THE MATTER. IN GUJARAT ROADS & INFRASTRUCTURE CO. LTD. V. ASST. CIT (IN ITA NOS. 1198-1201/AHD/2010), ANOTHER DECISION C ITED BY THE ASSESSEE BEFORE HIM, THE ORDER U/S. 263 WAS ITSELF QUASHED BY THE TRIBUNAL, SO THAT THERE WAS NO QUESTION OF ANY CONSEQUENTIAL ASSESSME NT, AS DIRECTED PER THE REVISION ORDER. THE ASSESSEES APPEAL BEING DISMISSED THUS, IT IS IN SECOND APPEAL. 4. WE HEARD THE PARTIES, PERUSED THE MATERIAL ON R ECORD. WE FIND NO SUBSTANCE IN THE ASSESSEES CASE IN THE CLEAR FACTS OF THE CASE. PARA 6 OF THE REVISION ORDER, REPRODUCED (ALONG WIT H PARA 5 THEREOF) IN THE IMPUGNED ORDER, READS AS UNDER: 6. IN VIEW OF THE ABOVE, THE ASSESSMENT MADE BY THE ASSESSING OFFICER IS SET-ASIDE WITH THE DIRECTIONS TO THE ASSESSING OFFI CER TO COMPLETE THE ASSESSMENT AFRESH BY TAXING INTEREST INCOME OF RS.1 ,92,21,567/- [1,39,10,069/- + 53,11,498/-] EARNED BY ITS UNITS E NTITLED FOR DEDUCTION U/S.80IC, UNDER THE HEAD INCOME FROM OTHER SOURCES . PER THE REVISION ORDER, THE LD. CIT HAS CLEARLY DIRE CTED THE AO TO ASSESS THE INTEREST INCOME ALLOCATED BY THE ASSESSEE TO THE TWO UNITS L OCATED AT BADDI ENTITLED TO DEDUCTION UNDER SECTION 80-IC AS INCOME FROM OTHER SOURCES. THE DIRECTIONS ARE PLAIN, CLEAR AND UNAMBIGUOUS, LEAVING NO SCOPE FOR ANY DISCRETION WITH THE A.O. IT IS NOT A CASE OF A TOTAL SET ASIDE OF ASSESSMENT, B UT TO A LIMITED EXTENT, SO THAT IT HAS 4 I.T.A. NO. 5096 & 4866/MUM/2015 PROCTER & GAMBLE HYGIENE & HEALTHCARE LIMITED V. CI T/DY. CIT TO BE MODIFIED TO THE STATED EXTENT ONLY. THE AO IN THE REVISED ASSESSMENT IS TO INTERFERE WITH THE ASSESSMENT ONLY TO THE STATED EX TENT AND, FURTHER, IN DOING SO IS ONLY GIVING EFFECT TO THE SAID DIRECTIONS BY THE LD . CIT. CLAUSE (C) OF EXPLANATION 1 TO SECTION 263(1) IS, AGAIN, SPECIFIC, EXCLUDING PA RALLEL EXERCISE OF JURISDICTION BY THE ADMINISTRATIVE AND THE APPELLANT COMMISSIONER. ONCE, THEREFORE, THE LD. CIT HAS, IN EXERCISE OF HIS POWER OF REVISION, HELD THE INTEREST INCOME AS ASSESSABLE UNDER SECTION 56, THE MATTER CANNOT BE RE-AGITATED BEFORE OR REVISITED BY THE APPELLANT COMMISSIONER, WHOSE VIEW IS THUS IN ACCOR DANCE WITH THE CLEAR MANDATE OF LAW. REFERENCE IN THIS CONTEXT, EXPLAINING THE C LEAR POSITION OF LAW, MAY BE MADE TO THE DECISION IN THE CASE OF CIT V . SHRI ARBUDA MILLS LTD. [1996] 231 ITR 50 (SC), BEING IN FACT CLARIFIED, IN A SIMILAR FACT SI TUATION, IN THE CASE OF HERDILLIA CHEMICALS LTD. (SUPRA), SO THAT THE MATTER CAN ONLY BE SAID TO BE NO LONGER RES INTEGRA , BEING SQUARELY COVERED BY BOTH, THE CLEAR POSITIO N OF LAW AS WELL AS SAID BINDING DECISIONS. THIS IS PRECISELY THE REASON FOR OUR STATING, AT THE OUTSET, OF THE ASSESSEE AS HAVING NO CASE. THE ASSESSEES APPEAL H AVING BEEN UPHELD BY US AS NOT MAINTAINABLE, THE QUESTION OF ADJUDICATING ITS GROU NDS ASSAILING THE ASSESSMENT ON MERITS DOES NOT ARISE. WE DECIDE ACCORDINGLY. 5. WE NEXT CONSIDER THE APPEAL AGAINST THE ORDER U/S.263 WHICH, FILED ONLY ON 03.09.2015, IS TIME BARRED BY 458 DAYS. THE REASON FOR THE DELAY, AS EXPLAINED PER AN AFFIDAVIT DATED 12.09.2016 ACCOMPANYING THE COND ONATION PETITION (WHICH IS DATED 06.09.2016), ALSO STATING LIKEWISE, IS THAT T HE APPELLANT DID NOT PREFER AN APPEAL AS THE LD. CIT HAD SET ASIDE THE ASSESSMENT, SO THAT THE SAME WOULD BE MADE AFRESH AND, AS SUCH, THE ISSUES INVOLVED WOULD BE A GITATED BEFORE THE AO OR THE APPELLATE AUTHORITIES, I.E., AGAINST THE ORDER OF T HE A.O. NOTHING COULD BE FARTHER FROM TRUTH, I.E., IN FACE OF THE CLEAR DIRECTIONS B Y THE LD. CIT, WHICH THE AO WAS BOUND TO FOLLOW. HOW, THEN, WE WONDER, COULD IT BE SAID THAT THE ISSUES WOULD BE AGITATED IN THE ASSESSMENT PROCEEDINGS BEFORE THE A O AND, THEREAFTER, BEFORE THE APPELLATE AUTHORITIES. THAT IS, WE FIND NO BASIS FOR THE SAID BONA FIDE BELIEF, WHICH IS STATED AS THE REASON FOR THE ASSESSEE HAVING NOT PREFERRED AN APPEAL AGAINST THE 5 I.T.A. NO. 5096 & 4866/MUM/2015 PROCTER & GAMBLE HYGIENE & HEALTHCARE LIMITED V. CI T/DY. CIT REVISION ORDER. THAT THE ASSESSEE BECAME, OR WAS MAD E, AWARE OF SUCH AN INTERPRETATION (OF THE ORDER BY THE LD. CIT) IN THE COURSE OF THE APPELLATE PROCEEDINGS (BEFORE THE LD. CIT(A)), IS ONLY A FALS E PLEA. THE DIRECTIONS BY THE LD. CIT ARE, AS AFORE-STATED, CLEAR AND EXPLICIT. AND, I N SO STATING, WE ARE NOT, WE MAY CLARIFY, CONSIDERING THE ASPECT OF INTERPRETATION F ROM THE STAND-POINT OF A LEGAL PERSON, BUT OF THAT OF A BUSINESS OR A LAYMAN. THE ASSESSEE, IN FACT, BEING A MULTINATIONAL COMPANY, GUIDED AND ASSISTED BY, RATH ER, TOP END COUNSELS, WELL CONVERSANT WITH THE LEGAL LANGUAGE, AS WELL AS LAW IN THE MATTER, COULD HARDLY ASSUME SUCH A POSTURE. WHY, THE GROUNDS, INCLUDING THE ADDITIONAL GROUNDS OF APPEAL, TAKEN WITHOUT PREJUDICE, AS RAISED BEFORE U S, ASSAIL THE IMPUGNED ORDER ON SEVERAL GROUNDS, WHICH ITSELF DEMONSTRATES THE SAME . THEN, AGAIN, IF THE ASSESSEE HAD SO MANY GRIEVANCES AGAINST THE IMPUGNED ORDER, OR THE SAME IS, AS CLAIMED, JUDICIALLY UNSOUND ON SEVERAL COUNTS, THAT IS ALL T HE MORE REASON FOR THE ASSESSEE TO HAVE PREFERRED AN APPEAL, WHICH IT DOES ONLY AFTER THE PASSING OF THE ORDER BY THE FIRST APPELLATE AUTHORITY ON 28.08.2015. THE VERY FA CT THAT THE ASSESSEE STATES OF ENTERTAINING A BONA FIDE BELIEF OF BEING ABLE TO RE-AGITATE MATTERS IN ASSE SSMENT AND, WHERE UNSUCCESSFUL, IN APPEAL, ITSELF IMPLIES OF TH AT BEING ITS ONLY GRIEVANCE. FOR WHY ELSE WOULD THE ASSESSEE, REPRESENTED BY ONE OF THE MOST REPUTED FIRM OF CAS IN INDIA, NOT FILE AN APPEAL? ASSUMING THESE GROUND S ITSELF BETRAYS THE ASSESSEES CASE. THIS, WE MAY THOUGH CLARIFY, IS INDEPENDENT AN D APART FROM OUR HAVING FOUND NO REASON FOR ANY DIFFERENT INTERPRETATION AND, THU S, NO BASIS FOR A BONAFIDE BELIEF . IN OUR CLEAR VIEW, EVEN AS EXPRESSED DURING HEARING , THE ASSESSEE HAD CLEARLY, AND PRESUMABLY, ONLY ON THE BASIS OF A LEGAL OPINIO N, TAKEN A CONSCIOUS DECISION NOT APPEAL AGAINST THE REVISION ORDER, PASSED WITH REFERENCE TO AND RELYING ON SEVERAL DECISIONS, INCLUDING BY THE APEX COURT. NO REASONABLE, MUCH LESS SUFFICIENT, CAUSE HAS BEEN ADVANCED FOR CONDONATION OF DELAY. RELIANCE FOR THE PURPOSE, EVEN AS OUR DECISION IS BASED ON CLEAR FIN DINGS OF FACT, IS PLACED ON THE DECISION IN THE CASE OF STATE OF A.P VS. VENKATARAMANA CHUDUVA & OTHRS ., REPORTED AT [1986] 159 ITR 59 (A.P). THE RELIANCE BY THE ASSES SEE ON THE DECISION IN THE CASE OF KEWALKUMAR JAIN VS. ASST. CIT [2013] 37 TAXMANN.COM 248 (PUNE) IS 6 I.T.A. NO. 5096 & 4866/MUM/2015 PROCTER & GAMBLE HYGIENE & HEALTHCARE LIMITED V. CI T/DY. CIT MISPLACED. IN THE FACTS OF THAT CASE, THE REVISION ARY AUTHORITY HAD SET ASIDE THE ASSESSMENT FOR THE AO TO ARRIVE AT THE CORRECT AMOU NT OF THE PROFIT AVAILABLE FOR THE PURPOSE OF CONSIDERING THE AMOUNT OF DEEMED DIVIDEN D ASSESSABLE. THE MATTER WAS ACCORDINGLY CONSTRUED BY THE ASSESSEE, AS A TRIBUNA L FOUND, AS OF A REMISSION FOR FRESH DETERMINATION. THAT IS, THE ASSESSEES PLEA O F HAVING ENTERTAINED A BONA FIDE BELIEF WAS FOUND AS SO BY THE TRIBUNAL. IN FACT, I T CLEARLY STATES AT PARA 6 OF ITS ORDER OF THE LD. DEPARTMENTAL REPRESENTATIVE AS HAVING NO T DOUBTED THE BONA FIDES OF THE REASONS FOR THE DELAY. WE, ON THE CONTRARY, HAVE FO UND NO BASIS FOR TAKING SUCH A PLEA IN THE PRESENT CASE, EVEN CONSIDERING THE MATT ER FROM THE STAND-POINT OF A COMMON MAN OR A MAN OF COMMERCE, EVEN AS THE ASSESS EE HAS ACCESS TO THE BEST LEGAL ADVICE, AND THAT, THEREFORE, IT HAD TAKEN A C ONSCIOUS DECISION, ACCEPTING THE REVISION ORDER, BASED AS IT IS, ON WELL-SETTLED LAW . THAT, THE PLEA OF BONA FIDE IS MISPLACED, NAY, FALSE, WITH THE ASSESSEE RATHER CON TRADICTING ITSELF BY ASSUMING SEVERAL INDEPENDENT GROUNDS IMPUGNING THE REVISION ORDER. THE ASSESSEES STAND OF ENTERTAINING A BONA FIDE BELIEF IS ALSO WITHOUT BASIS IN LAW IN VIEW OF THE CLEAR POSITION OF LAW AS ENUMERATED IN SHRI ARBUDA MILLS LTD. (SUPRA); HERDILLIA CHEMICALS LTD. (SUPRA); AND RANKA JEWELLERS V. ADDL. CIT [2010] 328 ITR 148 (BOM). WE ARE CONSCIOUS OF THE DECISION IN THE CASE OF THE COLLECTOR OF LAND ACQUISITION VS. MST. KATIJI [1987] 167 ITR 471 (SC), ALSO RELIED UPON BY THE TRIBUNAL IN THE CASE OF KEWALKUMAR JAIN (SUPRA). WE HAVE ALREADY EXPRESSED THAT THE IMPUGNED ORDER STANDS PASSED RELYING ON SEVERAL DECISIONS, INCLUDING BY THE APEX COURT. THE ASSESSEE COULD NOT MAKE OUT A PRIMA FACIE CASE, I.E., ON THE MERITS OF THE IMPUGNED DIRECTIONS ISSUED BY THE LD. CIT, B EFORE US, WITH WE ON THE CONTRARY OBSERVING THE ASSESSEE TO HAVE TAKEN A CON SCIOUS DECISION ACCEPTING THE SAME. THE SAID DECISION WOULD THUS ALSO HAVE NO APPL ICATION IN THE PRESENT CASE. THE INSTANT APPEAL IS NOT MAINTAINABLE, AND IS ACCOR DINGLY DISMISSED. WE DECIDE ACCORDINGLY. 7 I.T.A. NO. 5096 & 4866/MUM/2015 PROCTER & GAMBLE HYGIENE & HEALTHCARE LIMITED V. CI T/DY. CIT 7. IN THE RESULT, BOTH THE APPEALS BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON NOVEMBER 30, 2016 . SD/- SD/ - (PAWAN SINGH) (SANJAY ARORA) &' / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; * DATED : 30.11.2016 . ' . ./EDN, SR. PS !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. ,-. ''/0 , /0# , / DR, ITAT, MUMBAI 6. .12 3 / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI