FAZE THREE LTD, MUMBAI V. ASST CIT 6(2), MUMBAI

ITA 5449/MUM/2011

• Counselvise Citation: 544919914 RSA 2011
• Duration Of Justice: 2 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 12-08-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 22-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Question of law; Capital receipt; Revised return

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI .. , ! ' # $$, % ', & BEFORE SHRI R.S.SYAL, AM AND SHRI SANJAY GARG, JM ITA NO.5449/MUM/2011 : ASST.YEAR 2007-2008 M/S.FAZE THREE LIMITED 1-2, SHIV SMRITI CHAMBERS 49A, DR.ANNIE BESANT ROAD WORLI, MUMBAI 400 018. PAN : AAACF2212N. THE ASSTT.COMMISSIONER OF INCOME-TAX RANGE 6(2) MUMBAI. ( '( / // / APPELLANT) * * * * / VS. ( +,'(/ RESPONDENT) '( - -- - . . . . / APPELLANT BY : S/SHRI RAJAN VORA & NIKHIL TIWARI +,'( - . - . - . - . / RESPONDENT BY : SHRI SANJEEV JAIN * - /! / / / / DATE OF HEARING : 12.08.2013 012 - /! / DATE OF PRONOUNCEMENT : 16.08.2013 ' 3 ' 3 ' 3 ' 3 / / / / O R D E R PER R.S.SYAL (AM) : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 14.03.2011 IN RELATION TO THE ASSESSMENT YEAR 2007-2008. 2. THE FIRST GROUND IS AGAINST THE DENIAL OF DEDUCT ION OF ` 2.24 CRORE ON ACCOUNT OF EXPENSES INCURRED ON ISSUE OF F OREIGN CURRENCY CONVERTIBLE BONDS (FCCBS). BRIEFLY STATED THE FACTS OF THIS GROUND ARE THAT THE ASSESSEE FILED A LETTER ON 07.12.2009 CLAIMING DEDUCTION OF ` 2.24 CRORE TOWARDS EXPENSES INCURRED ON ISSUE OF FC CBS. IT WAS CLAIMED THAT THE ASSESSEE MISSED TO LODGE CLAIM FOR DEDUCTION IN THE COMPUTATION OF TOTAL INCOME. THE ASSESSING OFFICER REFUSED THE CLAIM ITA NO.5449/MUM/2011. M/S.FAZE THREE LIMITED. 2 BY RELYING ON THE DECISION OF THE HONBLE SUPREME C OURT IN GOETZ INDIA V. CIT [284 ITR 323] BY ASSIGNING THE REASON THAT SINCE REVISED RETURN WAS NOT FILED, THIS CLAIM WAS NOT ENTERTAINA BLE. THE LEARNED CIT(A) UPHELD THE ASSESSMENT ORDER ON THIS ISSUE. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THERE IS NO BAR ON THE APPELLATE AUTHORITIES IN CONSIDERING A CLAIM MADE B Y THE ASSESSEE OTHERWISE THAN BY FILING A REVISED RETURN. THIS POS ITION IS ABUNDANTLY CLEAR FROM THE AFORE-NOTED JUDGMENT ITSELF WHEREIN IT HAS BEEN CATEGORICALLY MENTIONED THAT THE RESTRICTION ON ACC EPTING A CLAIM WITHOUT A REVISED RETURN IS APPLICABLE ONLY ON THE ASSESSING OFFICER. WE, THEREFORE, TAKE UP THIS GROUND FOR DISPOSAL ON MERITS. THERE IS NO DISPUTE ON THE FACTUAL MATRIX ON THE GROUND THAT TH E ASSESSEE ISSUED CERTAIN FCCBS AND CLAIMED DEDUCTION OF ` 2.24 CRORE TOWARDS EXPENSES INCURRED ON THE ISSUANCE OF SUCH FCCBS. TH E QUESTION ARISES AS TO WHETHER THE EXPENSES ON ISSUE OF FCCB S CAN BE ALLOWED AS DEDUCTION OR NOT. THE HONBLE RAJASTHAN HIGH COU RT IN CIT V. SECURE METERS LTD. [(2010) 321 ITR 611 (RAJ.)] HAS HELD THAT THE DEBENTURES WHEN ISSUED ARE ONLY A LOAN. ANY EXPENSE S INCURRED ON ISSUING DEBENTURE, WHETHER CONVERTIBLE OR NON-CONVE RTIBLE IS ALLOWABLE DEDUCTION. SIMILARLY, THE HONBLE PUNJAB & HARYANA HIGH COURT IN CIT V. SUKHJIT STARCH & CHEMICALS LTD. [(2010) 326 ITR 29 (P&H)] HAS HELD THAT THE EXPENDITURE ON THE ISSUE OF CONV ERTIBLE DEBENTURES IS ADMISSIBLE. WE FIND THAT THERE IS NO QUALITATIVE DIFFERENCE BETWEEN THE ISSUANCE OF DEBENTURES OR BO NDS. BOTH FALL IN ITA NO.5449/MUM/2011. M/S.FAZE THREE LIMITED. 3 THE REALM OF LOAN. IN THE LIGHT OF THESE PRECEDENTS , WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE DESERVES DEDUC TION FOR THIS AMOUNT. THIS GROUND IS ALLOWED. 4. GROUND NO.2 IS AGAINST DENIAL OF DEDUCTION OF ` 72,18,172 (WRONGLY MENTIONED AS ` 1,61,51,229 IN THE GROUND OF APPEAL) U/S 80-IB ON DUTY DRAWBACK / DEPB. THE ASSESSING OFFICE R REFUSED DEDUCTION U/S 80-IB ON DUTY DRAWBACK / DEPB, WHICH ACTION WAS ECHOED IN THE FIRST APPEAL. IT IS NOTICED THAT THE TRIBUNAL IN ASSESSEES OWN CASE HAS DENIED SIMILAR DEDUCTION ON DEPB IN TH E PAST. THIS POSITION WAS FAIRLY ADMITTED BY THE LEARNED AR AS W ELL. HOWEVER IT WAS ARGUED THAT THE RECEIPT OF DUTY DRAWBACK TO THE EXTENT OF ACTUAL EXPENSES SHOULD BE ALLOWED. IN SUPPORT OF THIS CONT ENTION THE LEARNED AR RELIED ON SOME ORDER PASSED BY THE AHMEDABAD BEN CH OF THE TRIBUNAL. WE ARE UNABLE TO ACCEPT THIS CONTENTION I N VIEW OF THE DIRECT JUDGMENT OF THE HONBLE SUPREME COURT IN LIBERTY INDIA V. CIT [(2009) 317 ITR 218 (SC)] IN WHICH IT HAS BEEN HELD THAT DUTY DRAWBACK / DEPB ARE NOT DERIVED FROM INDUSTRIAL UND ERTAKING AND HENCE NO DEDUCTION IS AVAILABLE U/SS 80-I, 80-IA AN D 80-IB. MOREOVER SIMILAR VIEW HAS BEEN EXPRESSED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN EARLIER YEARS. RESPECTFULLY FOLLOWING THE J UDGMENT OF THE HONBLE SUPREME COURT, WE UPHOLD THE IMPUGNED ORDER ON THIS ISSUE. THIS GROUND IS NOT ALLOWED. 5. ADDITIONAL GROUND NO.11 TAKEN WITHOUT PREJUDICE TO GROUND NO.2 FOR TREATING THE AMOUNT OF DUTY DRAWBACK / DEPB AS CAPITAL RECEIPT ITA NO.5449/MUM/2011. M/S.FAZE THREE LIMITED. 4 AND HENCE NOT LIABLE TO BE TAX, WAS NOT PRESSED BY THE LEARNED AR. THE SAME IS, THEREFORE, DISMISSED. 6. GROUND NOS.4 AND 5 AND ADDITIONAL GROUND NOS. 9 AND 10 ARE AGAINST THE DENIAL OF DEDUCTION U/S 80-IB ON INTERE ST INCOME ON SUBSIDY RECEIVED UNDER THE TEXTILE UPGRADATION FUND . THE AUTHORITIES BELOW DID NOT ALLOW DEDUCTION U/S 80-IB ON SUBSIDY RECEIVED UNDER TUF. WE ARE CONVINCED WITH THE VIEW POINT OF THE AU THORITIES BELOW THAT SUCH SUBSIDY RECEIVED ON ACCOUNT OF INTEREST O N LOAN BORROWED FOR ACQUISITION OF PLANT AND MACHINERY CANNOT BE CO NSIDERED AS AN INCOME DERIVED FROM INDUSTRIAL UNDERTAKING. GROUND NOS.4 & 5 TAKEN BY THE ASSESSEE ARE DISMISSED. AS REGARDS GROUND NO S.9 AND 10 IN WHICH IT HAS BEEN CLAIMED THAT SUCH INTEREST UNDER TUF SCHEME SHOULD BE CONSIDERED AS CAPITAL IN NATURE. WE FIND THAT THERE BEING A PURE QUESTION OF LAW AS TO WHETHER SUCH SUBSIDY IS A REVENUE OR A CAPITAL RECEIPT, CAN BE TAKEN UP FOR CONSIDERATION BEFORE THE TRIBUNAL FOR THE FIRST TIME. SINCE THERE IS NO ADJUDICATION BY THE AUTHORITIES BELOW ON THIS POINT, WE ARE OF THE CONSIDERED OPINI ON THAT THE ENDS OF JUSTICE WOULD MEET ADEQUATELY IF THE MATTER IS REST ORED TO THE FILE OF ASSESSING OFFICER FOR EXAMINATION AND EVALUATION OF THIS CONTENTION. ACCORDINGLY, ADDITIONAL GROUND NOS.9 AND 10 ARE ALL OWED FOR STATISTICAL PURPOSES. 7. GROUND NOS.3, 6, 7 AND 8 WERE NOT PRESSED BY THE LEARNED AR. THESE GROUNDS, THEREFORE, STAND DISMISSED. ITA NO.5449/MUM/2011. M/S.FAZE THREE LIMITED. 5 8 . 4 /5 6 73 / 8 - #/ 9: IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 16 TH DAY OF AUGUST, 2013. ' 3 - 012 ;'*5 1 - $ SD/- SD/- (SANJAY GARG) (R.S.SYAL) % ' % ' % ' % ' / JUDICIAL MEMBER ! ' ! ' ! ' ! ' / ACCOUNTANT MEMBER MUMBAI ; ;'* DATED : 16 TH AUGUST, 2013. DEVDAS* ' 3 - +%/7< = <2/ ' 3 - +%/7< = <2/ ' 3 - +%/7< = <2/ ' 3 - +%/7< = <2// COPY OF THE ORDER FORWARDED TO : 1. '( / THE APPELLANT 2. +,'( / THE RESPONDENT. 3. > () / THE CIT, MUMBAI. 4. > / CIT(A) 12, MUMBAI. 5.