UNITED LINER AGENCIES OF INDIA P LTD, MUMBAI V. DCIT CEN CIR 39, MUMBAI

ITA 5662/MUM/2011

• Counselvise Citation: 566219914 RSA 2011
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 08-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BABAN D PATIL SR
• Assessee Lawyers: Y P TRIVEDI

Judgement Text

M/S UNITED LINER AGENCIES OF INDIA P LTD I.T.A. NO. 5662/MUM/2011 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER & SHRI VIVEK VARMA, JUDICIAL MEMBER I.T.A. NO. 5662/MUM/2011 ASSESSMENT YEAR : 2008-09 M/S UNITED LINER AGENCIES OF INDIA P. LTD., 16, BANK STREET, FORT, MUMBAI. PAN: AAACU 5182 C VS. DY. COMMISSIONER OF I.T., CENTRAL CIRCLE 39, MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI Y.P.TRIVEDI. (SR. ADVOCATE) RESPONDENT BY : SHRI BABAN D. PATIL (SR. A.R) DATE OF HEARING: 28-06-2012. DATE OF PRONOUNCEMENT: 04-07-2012. O R D E R PER VIVEK VARMA, JM: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER OF CIT(A) 41, MUMBAI, DATED 12-05-2011, WHEREIN THE AS SESSEE HAS RAISED THE FOLLOWING GROUNDS : 1. WHILE COMPUTING THE DEDUCTION U/S 801A OF THE AC T, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE A.OS ACTION OF NOT CONS IDERING FOLLOWING INCOMES AS ELIGIBLE FOR DEDUCTION U/S 80-1(A): A) RENT INCOME RS. 12,57,651/- B) INTEREST INCOME RS. 14,11,165/- 2. THE LEARNED CIT (A) ERRED IN CONSIDERING THE A.O S ACTION OF ALLOCATING AN ADDITIONAL EXPENSES OF RS. 1,01,50,000/- ON ACCOUNT OF DIRECTORS REMUNERATION TO THE CFS BUSINESS WHILE COMPUTING DE DUCTION U/S 80-IA IN RESPECT OF CFS DIVISION. 3. THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THE DISALLOWANCE OF EXPENSES WITH REGARD TO STAFF WELFARE OF RS. 3,00,000/-, ENT ERTAINMENT OF RS. 2,00,000/- AND MISCELLANEOUS EXPENSES OF RS. 2,00,000/-. M/S UNITED LINER AGENCIE S OF INDIA P LTD I.T.A. NO. 5662/MUM/2011 PAGE 2 OF 5 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS I N THE BUSINESS OF HANDLING AGENCY WORK ON ALL TYPES OF VESSELS SUCH A S CONTAINER, COMBI, CAR CARRIERS, HEAVY LIFTS, RO-RO, BREAK BULK, BULK CARRIERS, TANKERS AND BARGES, CARGO CONSOLIDATION, WAREHOUSING (AT CERTAI N LOCATIONS) ETC. BESIDES ABOVE SERVICE THE APPELLANT OFFERS A SPECIA L SERVICE WHICH INCLUDES C&F, HANDLING OF HEAVY AND ODC CARGO AND T RANSPORT AND DELIVERY TO SITE/FINAL DESTINATION. THE APPELLANT I S AGENT FOR K LINE- TOKYO, WATERMAN STEAMSHIP CORPORATION USA, SHIPFRI END-DENMARK, TURKISH CARGO LINE, TURKEY AND CENTURY DISTRIBUTION SYSTEM-USA. THE ASSESSEE ALSO HAS A CONTAINER FREIGHT STATION AT DR ONAGIRI, NAVI MUMBAI. IN RESPECT OF THE PROFITS DERIVED FROM THE ABOVE CFS OPERATIONS, THE ASSESSEE HAS CLAIMED DEDUCTION U/S 801A OF THE INCOME TAX ACT, 1961. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAD EARNED RENTAL INCOME AT RS. 1 2,57,651/- FOR PROVIDING ITS SPACE AND HAD ALSO EARNED INTEREST IN COME OF RS. 14,11,165/- ON FDR KEPT WITH THE BANK. THE AO CALLE D FOR THE EXPLANATION AS TO WHY THESE SHOULD INCLUDED IN THE INCOME OF THE ASSESSEE FOR COMPUTING DEDUCTION U/S 80IA, AS THESE INCOME ARE NOT DERIVED FROM THE BUSINESS OF THE ASSESSEE, CITING THE CASE OF HON'BLE SUPREME COURT IN THE CASE OF CIT V/S STERLING FOODS , REPORTED IN 237 ITR 579 AND ALSO SINCE THE DISALLOWANCE HAS BEEN CO NFIRMED BY THE CO- ORDINATE BENCH, VIDE ORDER DATED 17-03-2010 IN THE ASSESSEES OWN CASE. AGGRIEVED, THE ASSESSEE APPROACHED THE CIT(A) , WHO SUSTAINED M/S UNITED LINER AGENCIE S OF INDIA P LTD I.T.A. NO. 5662/MUM/2011 PAGE 3 OF 5 THE DISALLOWANCE FOLLOWING THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2005-06, BY THE ITAT, WHEREIN THE CO-ORDINATE BENCH HELD, AFTER HEARING BOTH THE SIDES, WE FIND THE ASSESSING OFFIC ER DID NOT CONSIDER RENTAL INCOME OF RS. 4,83,500/- AND INTEREST INCOME OF RS. 10,34,649/- WHILE COMPUTING DEDUCTION U/S 801A ON THE GROUND TH AT SUCH INCOME IS NOT DERIVED FROM THE INDUSTRIAL UNDERTAKING. IN APP EAL, THE LEARNED CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER B Y FOLLOWING VARIOUS JUDICIAL DECISIONS. IT IS BY NOW THE SETTLED POSITI ON OF LAW THAT FOR CLAIMING DEDUCTION U/S 801A THE INCOME HAS TO BE DE RIVED FROM THE INDUSTRIAL UNDERTAKING. THE LEARNED COUNSEL FOR THE ASSESSEE COULD NOT SUBSTANTIATE AS TO HOW THE RENTAL INCOME OF RS. 4,8 3,500/- AND THE INTEREST INCOME OF RS. 10,34,649/- HAS BEEN DERIVED FROM THE INDUSTRIAL UNDERTAKING. IN ABSENCE OF SUCH EXPLANATION THE ORD ER OF THE CIT(A) UPHOLDING THE ACTION OF THE ASSESSING OFFICER IS JU STIFIED. ACCORDINGLY THE SAME IS UPHELD AND THE GROUND RAISED BY THE ASS ESSEE IS DISMISSED. 4. THE ASSESSEE IS NOW BEFORE THE ITAT. 5. BEFORE US, THE SR. A.R APPEARING ON BEHALF OF TH E ASSESSEE CONCEDED THAT THIS ISSUE IS COVERED BY THE ASSESSEE S OWN CASE AS WELL AS BY THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT V/S STERLING FOODS (SUPRA). SINCE THE ASSESSEE HAS HIMS ELF CONCEDED THE ISSUE AGAINST IT, WE DISMISS THE GROUND OF APPEAL. 6. THE ASSESSEE HAS NOT PRESSED THE 2 ND GROUND OF APPEAL, HENCE IT IS DISMISSED AS NOT PRESSED. M/S UNITED LINER AGENCIE S OF INDIA P LTD I.T.A. NO. 5662/MUM/2011 PAGE 4 OF 5 7. APROPOS THE THIRD GROUND OF APPEAL, THE SR. A.R POINTED OUT THAT THE ISSUE HAS NOT BEEN DEALT WITH BY THE CIT(A) AND , THEREFORE, IT HAS TO BE RESTORED TO THE FILE OF THE CIT(A) FOR ADJUDI CATION. 8. ON GOING THROUGH THE RECORDS PLACED BEFORE US, W E FIND THAT IN THE FORMAL GROUNDS OF APPEAL APPENDED ALONG WITH FO RM NO. 35, THERE IS NO SPECIFIC GROUND AGITATED BY THE ASSESSEE ON T HESE ISSUES, HOWEVER, IN THE STATEMENT OF FACTS FILED THE ISSUE HAS BEEN STATED. 9. ON THE BASIS OF PRAYER MADE BY THE SENIOR AR, WE RESTORE THE GROUND TO THE FILE OF THE CIT(A) WITH THE DIRECTION THAT IF AT ALL THE ISSUE IN GROUND NO. 3 BEFORE US, HAS BEEN AGITATED BEFORE THE CIT(A) EITHER BY WAY OF REVISED GROUND OF APPEAL, OR BY WAY OF F ORMAL ADDITIONAL GROUND OF APPEAL, ONLY IN THAT CASE THE GROUND MAY BE ADJUDICATED AND DECIDED UPON. 10. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 04/07/2012. SD/- SD/- (B.RAMAKOTAIAH) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICI AL MEMBER MUMBAI: 04/07/2012. P/-* M/S UNITED LINER AGENCIE S OF INDIA P LTD I.T.A. NO. 5662/MUM/2011 PAGE 5 OF 5