GLOBATRONIX ( BOMBAY) P.LTD, MUMBAI V. DCIT CIR 8(1), MUMBAI

ITA 578/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7873 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 05-02-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V VIDYADHAR
• Assessee Lawyers: NIKUNJ GADA
• Keywords: Business income; Earning of tax free income
• Section: 10AA; 115JB; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI PAWAN SINGH , JM ITA NO. 578 / MUM/20 16 ( ASSESSMENT YEAR 2012 - 13 ) M/S. GLOBATRONIX (BOMBAY) P. LTD., UNIT NO.157, SDF - V, SEEPZ ANDHERI(E) MUMBAI 400 006 VS. DCIT CIR 8(1) AAYAKAR BHAVAN MUMBAI PAN/GIR NO. AAACG8030H APPELLANT ) .. RESPONDENT ) ITA NO. 615/ MUM/20 16 ( ASSESSMENT YEAR 2012 - 13 ) DCIT CIR 9(3)(2) 418,AAYAKAR BHAVAN M.K. MARG MUMBAI - 400 020 VS. M/S. GLOBATRONIX (BOMBAY) P. LTD. , UNIT NO.157, SDF - V, SEEPZ ANDHERI(E) MUMBAI 400 006 PAN/GIR NO. AAACG8030H APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI NIKUNJ GADA REVENUE BY SHRI V.VIDYADHAR DATE OF HEARING 26 / 12 /201 7 DATE OF PRONOUNCEME NT 27 / 12 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE CROSS APPEALS FILED BY ASSESSEE AND REVENUE AGAINST THE ORDER OF CIT(A) - 16, MUMBAI DATED 30/11/2015 FOR A.Y.2012 - 13 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. ITA NO. 578/MUM/2016 & 615/MUM/2016 M/S. GLOBATRONIX (BOMBAY) PVT. LTD., 2 3. IN THE APPEAL FILED BY REVENUE, REVENUE IS AGGRIEVED FOR ALLOWING DEDUCTION U/S.10AA. 4. AT THE OUTSET, LEARNED AR PLACED ON RECORD THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE DATED 15/02/2017, WHEREIN VERY SAME DEDU CTION WAS ALLOWED BY THE TRIBUNAL BY CONFIRMING THE ORDER OF CIT(A) FOR THE A.Y.2011 - 12. THE PRECISE OBSERVATION OF THE TRIBUNAL WAS AS UNDER: - 9. THE SECOND ISSUE RAISED BY THE REVENUE IS WITH RESPECT TO THE ALLOWABILITY OF DEDUCTION U/S 10AA AGAINST THE BOOK PROFIT U/S 115JB OF THE ACT, RELATING TO THE APPLICABILITY OF PROVISIONS OF SUB - SEOT.ION(6) OF SECTION 115JB OF THE ACT QUA THE AMENDMENTS TO CLAUSE (F) AND (IIJ OF EXPLANATION - 1 TO SECTION 115JB OF THE ACT. THE A.O. REJECTED THE CLAIM OF THE ASSESS EE AND ON APPEAL, THE ID. C1T(A) ALLOWED THE CLAIM OF THE ASSESSEE VIDE APPELLATE ORDER DATED 08 - 01 - 2015, BY HOLDING AS UNDER: - 'AFTER CAREFUL, PERUSAL OF THE ASSESSMENT ORDER AND WRITTEN SUBMISSIONS FILED BY THE A/R OF THE APPELLANT IT HAS BEEN OBSERVED THAT THE CASE OF THE APPELLANT IS COVERED BY THE ORDER OF MY PREDECESSOR IN APPEAL NO. CIT(A) - 16/IT - 136/2012 - 13 VIDE ORDER DATED 01.07.2013 FOR A.Y.2010 - 11 IN THE CASE OF THE APPELLANT COMPANY ITSELF. IT HAS BEEN HELD THAT SINCE THE PROVISIONS TO SECTION 115JB(6) OF THE ACT SHALL CEASE TO HAVE EFFECT ONLY W.E.F. 01 - 04 - 2012, THE PROVISO WOULD BE CONTINUED TO BE APPLICABLE FOR A.Y. 2010 - 11. ACCORDINGLY FOLLOWING THE DECISION OF THE ITAT, MUMBAI AFORESAID, THE AO IS NOT JUSTIFIED IN INCLUDING THE BOOK PROFIT IN RESPECT OF SEZ UNIT OF THE APPELLANT. RESPECTFULLY FOLLOWING THE ORDER OF THE ITAT MUMBAI AND MY PREDECESSOR THE GROUNDS OF APPEAL NO. 2 IS TREATED AS ALLOWED.' 10. AGGRIEVED BY THE APPELLATE ORDER DATED 08 - 01 - 2015 OF THE LD, CIT(A) THE REVENUE IS IN AP PEAL BEFORE THE TRIBUNAL. 11. AT THE VERY OUTSET, THE ID. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SIMILAR ISSUE WAS DECIDED BY THE MUMBAI BENCHES OF THE TRIBUNAL IN ASSESSEE'S OWN CASE IN ITA NO. 41/MUM/2012 FOR ASSESSMENT YEAR 2008 - 0 9, ITA NO. 2816/ MUM/20 12 FOR ASSESSMENT YEAR 2009 - 10 AND ITA NO. 5995/MUM/2013 FOR ASSESSMENT YEAR 2010 - 11 VIDE COMMON ORDERS DATED 30 TH MARCH, 2016 , WHEREIN THE TRIBUNAL DECIDED THE AFORE - SAID ISSUE IN FAVOUR OF THE ASSESSEE. ITA NO. 578/MUM/2016 & 615/MUM/2016 M/S. GLOBATRONIX (BOMBAY) PVT. LTD., 3 ' 12. GR OUND NO.2 RELATES TO THE EFFECT OF SUB - SECTION (6) OF SECTION 115JB OF THE ACT QUA THE AMENDMENTS BROUGHT IN TO CLAUSE (F) TO EXPLANATION - 1 OF SECTION 115JB AND CLAUSE (II) TO THE SAID EXPLANATION, FINANCE ACT, 2007 OMITTED REFERENCE TO SECTION 10A AND 10B OF THE ACT IN THE SAID CLAUSE. IT IS THE ARGUMENT OF THE LD, COUNSEL FOR THE ASSESSEE THAT THE PROVISIONS OF SUB - SECTION(6), WHICH WAS AMENDED W.E.F. 10.2.2000 , WILL HAVE A OVERRIDING EFFECT ON THE SAID AMENDMENT BROUGHT IN BY THE FINANCE ACT, 2007. C ONSEQUENTLY, THE MAT PROVISIONS DO NOT APPLY TO THE ASSESSEE. FOR THIS PROPOSITION, LD, COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE DECISION OF THE TRIBUNAL IN THE CASE OF GENESYS INTERNATIONAL CORPN.. LTD. VS. ACIT(2013) 55 SOT 10 , DATED 1,12.2 012, WHICH IS RELEVANT FOR FOLLOWING PROPOSITION : - 'A UNIT IN A SEZ WILL BE COVERED BY SUB - SECTION (6) TO SECTION 115JB OF THE ACT IRRESPECTIVE OF THE FACT THAT THOSE UNITS WERE CLAIMING DEDUCTION U/S 10A OF THE ACT.' HE ALSO RELIED ON ANOTHER DECISION O F THE COORDINATE BENCH DECISION IN THE CASE OF G. JEWEL CRAFT LTD VS. ITO (2015) 56 TAXMANN.COM 192(MUMBAI - TRIB.), WHICH IS RELEVANT FOR THE FOLLOWING PROPOSITION: - ' INCOME OF UNITS LOCATED IN SPECIAL ECONOMIC ZONE WILL NOT BE INCLUDED WHILE COMPUTING B OOK PROFIT AS PER SECTION 115JB(6).' 13. CONSIDERING THE ABOVE SETTLED POSITION OF THE ISSUE, WE ARE OF THE OPINION THAT THE ORDER OF THE CIT(A) ON THIS ISSUE IS REQUIRED TO BE REVSERED. ACCORDINGLY, GROUND NO. 2 RAISED BY THE ASSESSEE IS ALLOWED.' 12. T HE ID. D.R. HAS FAIRLY' CONCEDED THAT THIS ISSUE IS COVERED BY THE AFORE - STATED ORDERS OF THE TRIBUNAL DATED 30 - 03 - 2016 (SUPRA) IN FAVOUR OF THE ASSESSEE. 13. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE MATERIAL AVAILABLE ON REC ORD INCLUDING THE AFORE - STATED TRIBUNAL ORDER DATED 30 - 03 - 2016. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORT OF MAGNETIC RELAY COILS AND HIGH RELIABILITY T05 COILS AND HEADER/MOTOR ASSEMBLES. WE HAVE OBSERVED THAT THE MUMB AI BENCHES OF THE TRIBUNAL HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE IN ASSESSEE'S OWN CASE IN ITA NO. 41/MUM/2012 FOR ASSESSMENT YEAR 2008 - 09 , ITA NO. 2816/MUM/2012 FOR ASSESSMENT YEAR 2009 - 10 AND ITA NO. 5995/MUM/2013 FOR ASSESSMENT YEAR 2011 VID E COMMON ORDERS ITA NO. 578/MUM/2016 & 615/MUM/2016 M/S. GLOBATRONIX (BOMBAY) PVT. LTD., 4 DATED 30 TH MARCH, 2016 , WHEREIN THE TRIBUNAL DECIDED THE AFORE - SAID ISSUE IN FAVOUR OF THE ASSESSEE. ' 12. GROUND NO.2 RELATES TO THE EFFECT OF SUB - SECTION (6) OF SECTION 115JB OF THE ACT QUA THE AMENDMENTS BROUGHT IN TO CLAUSE (F) TO EXPLANATION - 1 OF SECTION 115JB AND CLAUSE (II) TO THE SAID EXPLANATION, FINANCE ACT, 2007 OMITTED REFERENCE TO SECTION 10A AND 10B OF THE ACT IN THE SAID CLAUSE. IT IS THE ARGUMENT OF THE LD, COUNSEL FOR THE ASSESSEE THAT THE PROVISIONS OF SUB - SECTION(6) , WHICH WAS AMENDED W.E.F. 10.2.2000 , WILL HAVE A OVERRIDING EFFECT ON THE SAID AMENDMENT BROUGHT IN BY THE FINANCE ACT, 2007. CONSEQUENTLY, THE MAT PROVISIONS DO NOT APPLY TO THE ASSESSEE. FOR THIS PROPOSITION, LD, COUNSEL FOR THE ASSESSEE BROUGHT OUR AT TENTION TO THE DECISION OF THE TRIBUNAL IN THE CASE OF GENESYS INTERNATIONAL CORPN.. LTD. VS. ACIT(2013) 55 SOT 10 , DATED 1,12.2012, WHICH IS RELEVANT FOR FOLLOWING PROPOSITION : - 'A UNIT IN A SEZ WILL BE COVERED BY SUB - SECTION (6) TO SECTION 115JB OF THE ACT IRRESPECTIVE OF THE FACT THAT THOSE UNITS WERE CLAIMING DEDUCTION U/S 10A OF THE ACT.' HE ALSO RELIED ON ANOTHER DECISION OF THE COORDINATE BENCH DECISION IN THE CASE OFG. JEWELCRAFT LTD VS. ITO (2015) 56 TAXMANN.COM 192(MUMBAI - TRIB.), WHICH IS RELEV ANT FOR THE FOLLOWING PROPOSITION: - ' INCOME OF UNITS LOCATED IN SPECIAL ECONOMIC ZONE WILL NOT BE INCLUDED WHILE COMPUTING BOOK PROFIT AS PER SECTION 115JB(6).' 13. CONSIDERING THE ABOVE SETTLED POSITION OF THE ISSUE, WE ARE OF THE OPINION THAT THE ORD ER OF THE CIT(A) ON THIS ISSUE IS REQUIRED TO BE REVERSED. ACCORDINGLY, GROUND NO. 2 RAISED BY THE ASSESSEE IS ALLOWED.' ON BEING ASKED BY THE BENCH FROM THE LEARNED COUNSEL FOR THE ASSESSEE ABOUT THE APPLICABILITY OF THE AMENDMENT BROUGHT IN BY FINANCE ACT, 2011 BY INSERTION OF PROVISO TO SECTION 115JB(6) OF THE ACT AS TO THE APPLICABILITY OF THE MAT PROVISIONS TO UNITS LOCATED IN SEZ, THE ID. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAME ARE APPLICABLE W.E.F. 01 - 04 - 2012 I.E. ASSESSMENT YEAR 201 2 - 13 WHILE THE IMPUGNED ASSESSMENT YEAR UNDER INSTANT APPEAL IS 2011 - 12. SINCE THE FACTS ARE SIMILAR IN THE INSTANT CASE, RESPECTFULLY FOLLOWING THE AFORE - STATED ORDERS OF THE TRIBUNAL WE REJECT THE GROUND RAISED BY THE REVENUE. WE ORDER ACCORDINGLY. 14. IN THE RESULT, APPEAL FILED BY THE REVENUE IN ITA NO. 2652/MUM/2015 FOR ASSESSMENT YEAR 201 1 - 12 IS DISMISSED. ITA NO. 578/MUM/2016 & 615/MUM/2016 M/S. GLOBATRONIX (BOMBAY) PVT. LTD., 5 5. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE TRIBUNAL AND FOUND THAT EXACTLY SIMILAR ISSUE WAS DECIDED BY THE TRIBUNA L IN ASSESSEES FAVOUR VIDE ORDER DATED 15/02/2017. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE PARIMETERIA, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR ALLOWING DEDUCTION U/S.10AA OF THE IT ACT. 6. IN THE APPEAL FILED BY ASSESSEE, ASSESSEE IS AGGRIEVED FOR DISALLOWANCE OF RS.1,54,267/ - U/S.14A. 7 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT WITH REGARD TO THE EXEMPT INCOME, ASSESSEE HAS ONLY DISALLOWED DIRECT EXPENDITURE OF RS.1,28,667/ - . AO WORKED OUT THE DISALLOWANCE AS PER RULE 8D WHICH AMOUNTS TO RS.1,54,267/ - . THE CIT(A) CONFIRMED THE ACTION OF THE AO. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR CONFIRMING THE DISALLOWANCE. 8 . ASSESSEE IS ALSO AGGRIEVED FOR TREATING THE INTEREST INCOME AS INCOME FROM OTHER SOURCES INSTEAD OF PROFIT AND GAINS OF BUSINESS AND PROFESSION. 9 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT THE ASSESSEE COMPANY HAD EARNED INTEREST INCOME OF RS.2,26,867/ - WHICH WAS CLAIMED UNDER THE HEAD 'INCOME FROM BUSINESS AND PROFESSION'. IT WAS POINTED OUT BY THE A.O, THAT INCOME OF RS.2 2 6,867/ - UNDER THE HEAD 'OTHER INCOME' WAS INCOME FROM O TH ER SOURCES AS PER PROVISIONS OF SECTION 56 OF THE ACT THEREFORE, AO TREATED AND TAXED INTEREST INCOME AS INCOME FROM OTHER SOURCES INSTEAD OF BUSINESS INCOME CLAIMED BY THE ASSESSEE. ITA NO. 578/MUM/2016 & 615/MUM/2016 M/S. GLOBATRONIX (BOMBAY) PVT. LTD., 6 10 . WE FOUND THAT BANK HAS ALLOWED INTEREST ON THE SWEEP ACCOUNT WHICH WAS OPERATED FOR THE BENEFIT OF THE ASSESSEE. THE OBJECTIVE OF ASSESSEE WAS TO JUST EARN THE IN TEREST OF SUCH SURPLUS FUNDS WHICH IS NOT REQUIRED FOR THE BUSINESS PURPOSE. FURTHERMORE, IT WAS NEITHER A REQUIREMENT FOR CARRYING OUT ITS MAIN BUSINESS ACTIVITY NOR IT WAS DUE TO CERTAIN CONDITIONS IMPOSED BY ANY AUTHORITY IMPLICATING VARIOUS PROVISIONS OF EXPORT PROCESSING ZONE OR SPECIAL ECONOMIC ZONE, FREE TRADE ZONE OR ELECTRONIC PROCESSING ZONE, ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR CONFIRMING AOS ACTION OF TREATING INTEREST AS INCOME FROM OTHER SOURCES. 1 1 . IN THE RES ULT, BOTH THE APPEALS OF ASSESSEE AND REVENUE ARE DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 27 / 12 /2017 S D/ - ( PAWAN SINGH ) S D/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMB ER MUMBAI ; DATED 27 / 12 / 201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//