INCOME TAX OFFICER-9(3)(3), MUMBAI V. GEBBS HEALTHCARE SOLUTIONS PRIVATE LIMITED, MUMBAI

ITA 5756/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0216 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 11-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B B RAJENDRA PRASAD
• Assessee Lawyers: MAHESH O RAJORA
• Keywords: Set aside
• Section: 10AA; 10B

Judgement Text

1 IN THE INCOME-TAX APPELLATE TRIBUNAL G BENCH MUMB AI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO. 5756/MUM/2017 (ASSESSMENT YEAR 2014-15 ) ITO- 9(3)(3) ROOM NO. 471, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. VS. M/S GEBBS HEALTHCARE SOLUTIONS PVT. LTD., MINDSPACE BUILDING NO.3, 1 ST OFFICE LEVEL, THANE-BELAPUR ROAD, AIROLI, NAVI MUMBAI-400708 . PAN: AALCS4978H APPELLANT RESPONDE NT APPELLANT BY : SHRI B.B. RAJENDRA PRASAD (CIT-DR) RESPONDENT BY : SHRI MAHESH O. RAJORA (C.A) DATE OF HEARING : 20.03.2019 DATE OF PRONOUNCEMEN T : 27.03.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-16, (HEREINAFTER REFERRED A S LD. CIT(A), MUMBAI DATED 14.06.2017 FOR ASSESSMENT YEAR 2014-15. THE R EVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: I) 'WHETHER ON THE FACTS, AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT-(A) ERRED IN ALLOWING THE ASSESSEE'S CLAIM OF DEDUCTION U/S 10AA ON INTEREST ON FOR OF RS. 79,69,006/- AND SUNDRY BALAN CE WRITTEN BACK OF RS. 11,15,904/- WITHOUT APPRECIATING THE FACT THAT THE PROVISION OF SECTION 10AA WHICH STATES THAT --- A DEDUCTION OF HUNDRED PER C ENT OF PROFITS AND GAINS AS ARE DERIVED FROM THE EXPORT OF ARTICLES OR THINGS-- ----' (EMPHASIS SUPPLIED). A PLAIN READING OF THIS PROVISION MAKES CLEAR THAT TH E GAIN OR LOSS HAS TO BE EXCLUSIVELY RELATED OR DERIVED FROM BUSINESS ACTIVI TY OF EXPORT?' ITA NO. 5756 MUM 2017-M/S GEBBS HEALTHCA RE SOLUTIONS PVT. LTD. 2 II) 'WHETHER ON THE FACTS, AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT-(A) ERRED IN ALLOWING THE ASSESSEE'S CLAIM OF EMPLOYEES CONTRIBUTION TO PF AND ESIC AMOUNTING TO RS. 19,657/- AND RS. 2, 35,697/- RESPECTIVELY WHICH WERE PAID BEYOND DUE DATES SPECIFIED IN THE R ESPECTIVE ACT RELYING DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT VS HINDUSTAN ORGANICS CHEMICALS LTD. AND CIT VS GHATGE PATIL TRA NSPORTS LTD. WHICH WAS NOT ACCEPTED BY THE DEPARTMENT FILED SLP BEFORE THE HON'BLE SUPREME COURT?' THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ITO 9(3)(3) BE RESTORED. 2. AT THE OUTSET OF HEARING, THE LD. AUTHORIZED REPRES ENTATIVE (AR) OF THE ASSESSEE SUBMITS THAT BOTH THE GROUNDS OF APPEAL RA ISED BY REVENUE ARE COVERED IN FAVOUR OF ASSESSEE AND AGAINST THE REVEN UE IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2010-11 (ITA NO. 101/MUM/ 2016), 2011-12 (ITA NO. 181/MUM/2017) & 2013-14 (IN ITA NO.5755/ MUM/2016). THE LD. AR OF THE ASSESSEE FURNISHED THE COPY OF DE CISIONS OF TRIBUNAL FOR ASSESSMENT YEARS 2010-11, 2011-12 & 2013-14. 3. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE (DR) FOR THE REVENUE AFTER GOING THROUGH THE GROUNDS OF APPEAL A ND THE DECISION OF TRIBUNAL IN ASSESSEES OWN FAIRLY AGREED THAT THE G ROUNDS OF APPEAL RAISED BY REVENUE ARE COVERED IN FAVOUR OF ASSESSEE AND AG AINST THE REVENUE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. GROUND NO. 1 RELATES TO CLAIM OF DEDUCTION UNDER SECTION 10AA. WE HAVE NOTED THAT SI MILAR GROUND OF APPEAL WAS RAISED BY REVENUE IN APPEAL FOR ASSESSME NT YEAR 2010-11 ITA NO. 5756 MUM 2017-M/S GEBBS HEALTHCA RE SOLUTIONS PVT. LTD. 3 AND THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ITA NO . 101/MUM/2016 DATED 05.01.2018 PASSED THE FOLLOWING ORDER: 3.2. BEFORE US, THE DR SUPPORTED THE ORDER OF AO AND THE AR RELIED UPON THE ORDER OF THE FAA.WE HAVE HEARD THE RIVAL SUBMISSION S AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THAT THE FAA HAS G IVEN A FINDING OF FACT THAT SUNDRY CREDIT BALANCE WRITTEN BACK REPRESENTED THE SUNDRY CREDITORS RELATED TO THE EXPORT BUSINESS OF THE ASSESSEE AND THAT THE SA ID EXPENSES WERE CONSIDERED AS PART OF EXPORT BUSINESS. THERE IS NOTHING ON REC ORD TO PROVE THAT THE ORDER OF THE FAA IS FACTUALLY INCORRECT. SIMILARLY, IT IS FO UND THAT THE DISPUTED INTEREST INCOME WAS EARNED ON FIXED DEPOSITS PLEDGED WITH BA NK OR THE AUTHORISED BROKERS, THAT IT WAS A PRE-REQUISITE TO CARRY THE H EDGING TRANSACTION, THAT THE REVENUE GENERATED BY IT FROM OVERSEAS, THAT HEDGING TRANSACTION WERE ENTERED INTO BY THE ASSESSEE AS A SAFEGUARD AGAINST EXCHANG E RATE FLUCTUATION, THAT HEDGING IS DIRECTLY RELATED TO EXPORT BUSINESS OF T HE ASSESSEE. CONSIDERING THESE FACTS WE ARE OF THE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL INFIRMITY, SO, CONFIRMING THE SAME, WE DECIDE THE SECOND EFFECTIVE GROUND OF APPEAL AGAINST THE AO. 5. FURTHER, IN APPEAL FOR ASSESSMENT YEAR 2011-12, THE TRIBUNAL BY FOLLOWING THE DECISION OF ASSESSMENT YEAR 2010-11, PASSED THE FOLLOWING ORDER: 8 NEXT ISSUE RELATES TO THE ELIGIBILITY OF THE ASS ESSEE TO CLAIM DEDUCTION UNDER SECTION 10AA OF THE ACT IN RESPECT OF INTEREST INCO ME FROM FDI AND SUNDRY BALANCES WRITTEN BACK. FOR THE REASONS STATED IN TH E IMMEDIATELY PRECEDING PARAGRAPHS, WE HOLD THAT THE ASSESSEE IS ENTITLED F OR DEDUCTION UNDER SECTION 10B OF THE ACT IN RESPECT OF BOTH THE AMOUNTS AND A CCORDINGLY WE UPHOLD THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE. 6. AGAIN IN APPEAL FOR ASSESSMENT YEAR 2013-14 IN ITA NO. 5755/MUM/2017 DATED 19.12.2018 THE TRIBUNAL ON IDEN TICAL GROUNDS OF ITA NO. 5756 MUM 2017-M/S GEBBS HEALTHCA RE SOLUTIONS PVT. LTD. 4 APPEAL BY FOLLOWING THE DECISION OF EARLIER YEARS P ASSED THE FOLLOWING ORDER: 8. I FOUND THAT ISSUE WITH REGARD TO CLAIM OF DEDU CTION UNDER SECTION 10AA WITH REGARD TO THE INTEREST INCOME HAS ALREADY BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES FAVOUR IN THE A.Y. 2010-11 VIDE ORDER DA TED 05/01/2018. 7. CONSIDERING THE CONSISTENT VIEW TAKEN BY THE CO-ORD INATE BENCH OF TRIBUNAL, WE FIND THAT THE GROUND OF APPEAL RAISED BY THE REVENUE IS COVERED IN FAVOUR OF THE ASSESSEE. EVEN OTHERWISE, THE LD. CIT(A) FOLLOWED THE DECISION OF ASSESSMENT YEAR 2011-12. H ENCE, GROUND NO.1 OF THE APPEAL IS DISMISSED. 8. GROUND NO.2 RELATES TO DELETING THE DISALLOWANCE UN DER SECTION 40A(IA) ON ACCOUNT OF ESIC & PF CONTRIBUTION PAID BEYOND DU E DATE. WE HAVE NOTED THAT THIS GROUND OF APPEAL IS ALSO COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE, WH EREIN SIMILAR GROUND OF APPEAL WAS ALLOWED IN FAVOUR OF ASSESSEE BY THE TRIBUNAL IN THE FOLLOWING MANNER: 5. LAST EFFECTIVE GROUND OF APPEAL IS ABOUT ALLOWING T HE CLAIM OF THE ASSESSEE OF EMPLOYEES CONTRIBUTION TO PF AND ESCI, AMOUNTIN G TO RS.2.34 LAKHS AND RS.4.15 LAKHS RESPECTIVELY THAT WERE PAID BEYOND TH E DUE DATES SPECIFIED IN RESPECTIVE ACT. THE AO HAD DISALLOWED THE DISPUTED AMOUNTS AS THEY WERE PAID BEYOND THE DUE DATES. HOWEVER, THE FAA RELYING UPON THE CASES OF HINDUSTAN ORGANICS CHEMICALS LTD.(ITA. 399 OF 2012 AND GHATGE PATIL TRANSPORTERS LTD. ITA 1002 OF 2012 AND 1034 OF 2012 ) HELD THAT EMPLOYEES CONTRIBUTION TO PF HAD TO ALLOWED AS DEDUCTION, IF IT WAS PAID BY THE EMPLOYER BEFORE THE DUE DATE OF FILING OF INCOME. ITA NO. 5756 MUM 2017-M/S GEBBS HEALTHCA RE SOLUTIONS PVT. LTD. 5 9. CONSIDERING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN GHATGE PATIL TRANSPORTERS LTD. IN ITA NO. 1002 OF 2012 AND 1034 OF 2012, WHICH WAS FOLLOWED BY CO-ORDINATE BENCH OF TRIBUNAL , WE DO NOT FIND ANY MERIT IN THE GROUND OF APPEAL RAISED BY REVENUE . 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/03/2019. SD/- SD /- N.K. PRADHAN, PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 27.03.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR G BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI