PREMIER NUTRACEUTICAL PRIVATE LIMITED, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX 13(1)(2), MUMBAI

ITA 6225/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0590 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 11-10-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER ITA NO.6225/M/2017 ASSESSMENT YEAR: 2012-13 M/S. PREMIER NUTRACEUTICAL PVT. LTD., 702, A-WING, BONANZA, SAHAR PLAZA, ANDHERI KURLA ROAD, ANDHERI WEST, MUMBAI-400 020 PAN: AACCP9121E VS. DCIT-13(1)(2), ROOM NO.218, 2 ND FLOOR, AAYAKAR BHAVAN, MAHARSHI KARVE ROAD, MUMBAI 400 020 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI DHARMESH SHAH, A.R. REVENUE BY : SMT N. HEMALATHA, D.R. DATE OF HEARING : 21.12.2017 DATE OF PRONOUNCEMENT : 07.02.2018 O R D E R PER D.T. GARASIA, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 05.06.2017 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2012-13. 2. THIS APPEAL IS BARRED BY 31 DAYS. DURING THE CO URSE OF HEARING, THE LD. A.R. FOR THE ASSESSEE HAS SUBMITTED THAT AS SESSEE HAS PAID STAMP DUTY ON 15.12.17 AND IT IS INTERNAL PART OF L ETTER OF AUTHORITY SIGNED ON 15.12.17. THEREFORE, APPEAL IS FILED IN TIME AND THE ENDORSEMENT MADE BY REGISTRY IS SATISFIED BY THE AR . ITA NO.6225/M/2017 M/S. PREMIER NUTRACEUTICAL PVT. LTD. 2 3. THE SHORT FACTS OF THE CASE ARE THAT ASSESSEE HA S FILED THE RETURN OF INCOME SHOWING TOTAL INCOME AT NIL. ASSESSEE CO MPANY IS ENGAGED IN BUSINESS OF TRADING AND MANUFACTURING IN PHARMACEUTICAL PRODUCTS. ASSESSEE HAS SHOWN RS.3,65,475/- AS INCO ME FROM BUSINESS AND ASSESSING OFFICER (HEREINAFTER REFERRE D TO AS THE AO) HELD THAT IT IS AN INCOME FROM OTHER SOURCES. ASSE SSEE HAS CLAIMED DEDUCTION UNDER 80IC ON THIS AMOUNT BUT AO WAS OF A VIEW THAT THIS AMOUNT DOES NOT QUALIFY FOR DEDUCTION UNDER 80IC. RS.2,27,290/- IS THE INCOME OF INTEREST AND RS.1,38,185/- IS INCOME FROM SALE OF A SCRAP. 4. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS PARTLY ALLOWED THE APPEAL. 5. THE LD. A.R. SUBMITTED BEFORE ME THAT ASSESSEE I S ENGAGED IN BUSINESS OF PHARMACEUTICAL PRODUCT FOR HIS OWN AND FOR M/S. LUPIN LIMITED. THE ASSESSEES FACTORY IS SITUATED AT DEH RADUN. THE ASSESSEE IMPORTED THE RAW MATERIAL FROM JAPAN AND L ETTER OF CREDIT WAS ISSUED BY THE BANK. AGAINST THE LETTER OF CRED IT ASSESSEE WAS REQUIRED TO OPEN A FIXED DEPOSIT AS MARGIN MONEY ON WHICH THE INTEREST INCOME OF RS.2,27,290/- WAS EARNED. THERE FORE, IT IS A BUSINESS INCOME. HE RELIED UPON THE DECISION OF HO NBLE GUJARAT HIGH COURT IN THE CASE OF EMPIRE PUMPS (P.) LTD. VS . ACIT (2015) 54 TAXMANN.COM 317 (GUJARAT) AND HE ALSO RELIED UPO N THE DECISION OF HONBLE KARNATAKA HIGH COURT (FULL BENCH) IN THE CASE OF CIT VS. HEWLETT PACKARD GLOBAL SOFT LTD. (87 TAXMANN.COM 18 2). HE ALSO ITA NO.6225/M/2017 M/S. PREMIER NUTRACEUTICAL PVT. LTD. 3 RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COU RT IN THE CASE OF CIT VS. JAGDISHPRASAD M. JOSHI (318 ITR 420), 6. THE LD. D.R. RELIED UPON THE REVENUE AUTHORITIES . 7. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES. ASSESSEE IS ENGAGED IN BUSINESS OF TRADING AND MANUFACTURING IN PHARMACEUTICAL PRODUCTS. ASSESSEE IMPORTED THE RAW MATERIAL FROM JAPAN AND LETTER OF CREDIT WAS ISSUED BY THE BANK. AGAINST THE LETTER OF CREDIT ASSESSEE WAS REQUIRED TO OPEN A FIXED DEP OSIT AS MARGIN MONEY ON WHICH THE INTEREST INCOME OF RS.2,27,290/- WAS EARNED. I FIND THAT SIMILAR ISSUE HAD COME UP BEFORE THE HON BLE GUJARAT HIGH COURT AND THE HONBLE GUJARAT HIGH COURT CONSIDERIN G THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF LIBERTY IND IA VS. CIT (2009) 317 ITR 218/183 TAXMAN 349 (SC) HAS HELD AS UNDER: II-SECTION 80-I OF THE INCOME-TAX ACT, 1961 - DEDU CTIONS - PROFITS AND GAINS FROM INDUSTRIAL UNDERTAKINGS ETC. AFTER CERTA IN DATES (COMPUTATION OF) - ASSESSMENT YEARS 1989-90 TO 199293 - WHETHER WHERE INTEREST EARNED BY ASSESSEE FROM 'B' HAD DIRECT NEXUS WITH B USINESS, IT WAS REQUIRED TO BE CONSIDERED AS 'DERIVED FROM' BUSINES S FOR PURPOSE OF COMPUTING AMOUNT OF DEDUCTION UNDER SECTION 80-I - HELD, YES - WHETHER WHERE ASSESSEE WAS COMPELLED TO PARK A PART OF ITS FUNDS IN FIXED DEPOSITS UNDER INSISTENCE OF FINANCIAL INSTITUTIONS, INTERES T INCOME RECEIVED ON SAID DEPOSITS WAS TO BE REGARDED AS BUSINESS INCOME FOR PURPOSE OF COMPUTING AMOUNT OF DEDUCTION UNDER SECTION 80-I - HELD, YES [PARAS 7,8 AND 10][IN FAVOUR OF ASSESSEE] 8. I FIND THAT SIMILAR ISSUE WAS CONSIDERED IN RESP ECT OF DEDUCTION UNDER SECTION 10A IN THE CASE OF CIT VS. HEWLETT PA CKARD GLOBAL SOFT LTD. (87 TAXMANN.COM 182) BY THE DECISION OF H ONBLE KARNATAKA HIGH COURT (FULL BENCH). THE ISSUE BEFOR E THE HIGH COURT WAS WITH RESPECT TO DISALLOWANCE OF DEDUCTION UNDER SECTION 10A ON ITA NO.6225/M/2017 M/S. PREMIER NUTRACEUTICAL PVT. LTD. 4 THE INTEREST OF FIXED DEPOSIT KEPT IN ORDINARY COUR SE OF BUSINESS. AFTER CONSIDERING THE DECISION OF HONBLE SUPREME C OURT LIBERTY INDIA VS. CIT (SUPRA) THE HONBLE GUJARAT HIGH COUR T IN THE CASE OF EMPIRE PUMPS (P.) LTD. VS. ACIT (SUPRA) HAS HELD TH AT ASSESSEE IS ALLOWED DEDUCTION UNDER SECTION 10A ON THE SAID INT EREST INCOME EARNED BY THE ASSESSEE ON THE BANK DEPOSIT KEPT IN THE ORDINARY COURSE OF BUSINESS. SIMILARLY, HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF CIT VS. JAGDISHPRASAD M. JOSHI 318 ITR 420 HAS HELD THAT THE INTEREST INCOME ON FIXED DEPOSIT WITH BANK WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA. SIMILARLY, TRIBUNAL OF DELHI BENCH IN THE CASE OF PIONEER INDUSTRIES VS. ITO IN ITA NO.25 0/DEL/2015 DATED 02.05.2016 WHEREIN INTEREST ON FIXED DEPOSITS KEPT AS MARGIN MONEY AGAINST OPENING OF LETTER OF CREDIT WAS HELD AS ELI GIBLE UNDER SECTION 80IC. THEREFORE, I AM OF THE VIEW THAT ASSESSEE IS ENTITLED FOR THE SAME. HENCE, WE ALLOW THIS APPEAL IN FAVOUR OF THE ASSESSEE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07.02.2018. SD/- (D.T. GARASIA) JUDICIAL MEMB ER MUMBAI, DATED: 07.02.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// ITA NO.6225/M/2017 M/S. PREMIER NUTRACEUTICAL PVT. LTD. 5 [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.