M/S. JEWELLERY SOLUTIONS INTERNATIONL PVT. LTD, MUMBAI V. THE ITO WD 5(2)(2), MUMBAI

ITA 6351/MUM/2007

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48526 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 07-04-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 15-10-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RK GUPTA
• Assessee Lawyers: SANJIV M SHAH
• Keywords: Business income
• Section: 10B

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI D.K. AGARWAL (JM) AND SHRI RAJENDRA SI NGH(AM) ITA NO.6351/M/2007 ASSESSMENT YEAR 2004-05 M/S.JEWELLERY SOLUTIONS INTERNATIONAL P.LTD. THE I TO WARD 5(2)(2), MUMBAI PLOT NO.118, ROAD NO.18 MIDC ANDHERI (EAST) MUMBAI 400 096. PAN : AAACJ 8708 R APPELLANT RESPONDENT ASSESSEE BY : SHRI SANJIV M. SHAH REVENUE BY : SHRI R.K. GUPTA O R D E R PER RAJENDRA SINGH (AM) THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 3.9.2007 OF CIT(A) FOR THE ASSESSMENT YEAR 2004-05. THE DISP UTES RAISED IN THIS APPEAL RELATE TO EXCLUSION OF CERTAIN RECEIPTS FROM EXPORT TURNOVER AND ALLOWABILITY OF DEDUCTION UNDER SECTION 10B IN RELATION TO INTEREST INCOME. 2. THE FIRST DISPUTE IS REGARDING EXCLUSION OF SUM OF RS.4,78,783/- BEING THE REPAIRING/ RECONDITIONING CHARGES, RS.4450/- BEING THE SCRAP SALE AND RS.6,34,222/- BEING THE JOB CHARGES RECEIVED FROM O THER EXPORTING UNITS, FROM THE EXPORT TURNOVER WHILE COMPUTING DEDUCTION UNDER SECTION 10B. THE AO OBSERVED THAT THE DEDUCTION UNDER SECTION 10B ARE A LLOWED IN RESPECT OF PROFIT DERIVED FROM THE EXPORT OF ARTICLES OR THINGS THE A O THEREFORE EXCLUDED SUCH 2 ITEMS FROM THE EXPORT TURNOVER WHILE COMPUTING THE DEDUCTION. AGGRIEVED BY THE SAID DECISION THE ASSESSEE FILED APPEAL BEFORE CIT(A) BUT NO SPECIFIC GROUND ON THIS ISSUE HAS RAISED. THE ASSESSEE HAD RAISED A GENERAL GROUND BEING THE GROUND NO.1 IN WHICH THE DECISION OF AO IN REDUCING THE DEDUCTION UNDER SECTION 10B OF RS.99,76,035 TO RS.74,38,819/- WAS C HALLENGED. THERE BEING NO SPECIFIC GROUND RAISED ON THE ABOVE ISSUES, CIT(A) DID NOT DEAL WITH THESE ASPECTS. THE ASSESSEE HAS RAISED SPECIFIC GROUNDS B EFORE THE TRIBUNAL AS MENTIONED ABOVE. 2.1 WE HAVE HEARD BOTH THE PARTIES, PERUSED THE REC ORDS AND CONSIDERED THE MATTER CAREFULLY. WE FIND THAT THIS ISSUE HAS NOT B EEN ADJUDICATED BY THE CIT(A). WE THEREFORE RESTORE THIS ISSUE TO THE FILE OF CIT(A) FOR ADJUDICATING THE SAME AFTER ALLOWING OPPORTUNITY OF HEARING TO THE A SSESSEE. 3. THE SECOND DISPUTE IS REGARDING ALLOWABILITY OF DEDUCTION UNDER SECTION 10B IN RESPECT OF INTEREST INCOME. THE ASSESSEE HAD RECEIVED THE INTEREST INCOME OF RS.25,38,383/- FROM FIXED DEPOSITS WITH B ANKS AND AFTER SETTING OFF THE SAME AGAINST THE INTEREST PAYMENT OF RS.59,03,3 91/-, THE ASSESSEE HAD DEBITED NET INTEREST OF RS.33,65,008/- TO THE P & L ACCOUNT. THE ASSESSEE SUBMITTED THAT INTEREST INCOME HAD BEEN RECEIVED FR OM THE FDRS KEPT AS COLLATERAL SECURITY FOR THE PURPOSE OF BUSINESS AND THEREFORE THE NATURE OF INTEREST INCOME WAS BUSINESS INCOME WHICH WAS ELIGI BLE FOR DEDUCTION UNDER SECTION 10B. AO HOWEVER OBSERVED THAT THE INTEREST INCOME WAS ONLY INCIDENTAL INCOME AND IT WAS NOT DERIVED FROM THE EXPORT OF AR TICLES OR THINGS OR COMPUTER SOFTWARE. HE THEREFORE DID NOT ALLOW DEDUCTION UNDE R SECTION 10B BY TREATING THE INTEREST INCOME AS INCOME FROM OTHER SOURCES. I N APPEAL CIT(A) HAS 3 CONFIRMED THE ORDER OF AO AGGRIEVED BY WHICH THE AS SESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3.1 BEFORE US THE LEARNED AR FOR THE ASSESSEE SUBMI TTED THAT THE SAME ISSUE HAD ARISEN IN ASSESSEES OWN CASE IN A.Y.2006-06 AN D THE TRIBUNAL VIDE ORDER DATED 30.11.2010 IN ITA NO.5766/M/2009 HAS ALLOWED THE CLAIM OF DEDUCTION IN RELATION TO INTEREST INCOME. THE LEARNED DR ON THE OTHER HAND SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 3.2 WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING ALLOWABILITY OF DEDUCTION UNDE R SECTION 10B IN RESPECT OF INTEREST INCOME RECEIVED FROM FDRS KEPT AS MARGIN M ONEY WITH BANK FOR THE PURPOSE OF BUSINESS. THE ASSESSEE HAS TREATED THE I NTEREST INCOME AS BUSINESS INCOME AND CLAIMED DEDUCTION UNDER SECTION 10B. AUT HORITIES BELOW HAVE TREATED THE INTEREST INCOME AS INCOME FROM OTHER SO URCES AND DENIED THE CLAIM OF DEDUCTION. WE FIND THAT THE IDENTICAL ISSUE HAS ALREADY BEEN CONSIDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN A.Y.2005-06 (SUPRA) IN WHICH THE TRIBUNAL HAS ACCEPTED THE IDENTICAL CLAIM OF INTEREST INCOME AS BUSINESS INCOME AND ALLOWED THE CLAIM OF DEDUCTION. WE HAVE TO FOLLOW T HE DECISION OF THE COORDINATE BENCH ON THE SAME ISSUE WHICH IS IN ASSESSEES OWN CASE. RESPECTFULLY FOLLOWING THE SAME, WE SET ASIDE THE ORDER OF CIT(A) AND ALLO W THE CLAIM OF THE ASSESSEE. 4. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED. 5. ORDER WAS PRONOUNCED IN THE OPEN COURT 20.04.201 1. SD/- SD/- ( D. K. AGARWAL ) (RAJEND RA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 20.04.2011 AT :MUMBAI 4 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CITY CONCERNED 5. THE DR J BENCH, ITAT, MUMBAI // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ALK