DCIT CIR 5(3), MUMBAI V. SANGHAVI JEWELS P.LTD, MUMBAI

ITA 6912/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92364 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 28-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N V NADKARNI
• Section: 143(3); 10AA; 10

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ./ I.T.A. NO.6912 /MUM/2013 ( / ASSESSMENT YEAR : 2010-2011 DY. COMMISSIONER OF INCOME TAX 5(3), ROOM NO. 573, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI -20. / VS. M/S SANGHAVI JEWELS PVT. LTD., GJ-01, SEEPZ++, ANDHERI (E), MUMBAI 400 096. ./ PAN : AAICS7624R ( / APPELLANT ) .. ( / RESPONDENT ) A PPELLANT BY SHRI N.V. NADKARNI R E SPONDENT BY : S MT. AARTI VISSANJI / DATE OF HEARING : 27-04-2015 / DATE OF PRONOUNCEMENT : 27-04-2015 [ !' / O R D E R PER G.S. PANNU, A.M . : THIS IS AN APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A) -13, MUMBAI DATED 17-9-201 3 FOR THE A.Y. 2010-11 IN THE MATTER OF ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 DATED 5-3-2013. 2. IN THIS APPEAL THE BY THE REVENUE, THE ONLY GRIE VANCE IS WITH RESPECT TO THE TO THE DECISION OF THE LD. CIT(A) IN HOLDING TH AT ONLY NET INTEREST AND NOT GROSS INTEREST IS LIABLE TO BE EXCLUDED FOR THE PUR POSE OF DETERMINING THE PROFITS ELIGIBLE FOR COMPUTATION OF DEDUCTION U/S 1 0AA OF THE INCOME TAX ACT, 1961. ITA 6912/M/13 2 3. THE ASSESSEE BEFORE US IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND IS, INTER ALIA, ENGA GED IN THE BUSINESS OF MANUFACTURE AND EXPORT OF DIAMOND STUDDED GOLD AND PLATINUM JEWELLERY. THE ASSESSEE HAS CLAIMED DEDUCTION U/S 10AA OF THE ACT OF RS. 1,31,78,450/- WITH RESPECT TO THE BUSINESS OF EXPORTS. THE A.O., HOWEVER, RE-WORKED THE DEDUCTION ELIGIBLE TO THE ASSESSEE AT RS. 69,92,181 /- THEREBY RESULTING IN DIFFERENCE OF RS. 61,88,269/-. 4. BEFORE US, THE DISPUTE PERTAINS TO THE ACTION OF THE A.O. IN EXCLUDING A SUM OF RS. 68,37,560/- REPRESENTING INTEREST EARNED ON FIXED DEPOSITS WITH BANKS FOR THE PURPOSE OF QUANTIFYING THE PERMISSIBL E DEDUCTION U/S 10 AA OF THE ACT. THOUGH THE LD. CIT(A) UPHELD THE ACTION O F THE A.O. IN PRINCIPLE BUT DIRECTED THE A.O. TO EXCLUDE ONLY THE NET INTEREST INCOME AND NOT GROSS INTEREST INCOME FOR THE PURPOSE OF QUANTIFYING THE PERMISSIBLE DEDUCTION. IN COMING TO THAT DECISION, HE HAS FOLLOWED THE ORDER OF HIS PREDECESSOR CIT(A) IN ASSESSEES OWN CASE FOR A.Y. 2008-09. 5. IN THE ABOVE BACKGROUND, DURING THE COURSE OF HE ARING, IT WAS A COMMON POINT BETWEEN THE PARTIES THAT SIMILAR ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2007-08 WH EREBY VIDE ORDER DATED 26-9-2012 IN ITA NO. 6979/MUM/2011, THE PLEA OF THE ASSESSEE FOR EXCLUDING ONLY NET INTEREST INCOME FOR CALCULATING THE PROFIT S ELIGIBLE FOR DEDUCTION/S 10AA OF THE ACT WAS UPHELD, KEEPING IN MIND THE JUD GMENT OF HONBLE SUPREME COURT IN THE CASE OF ACG ASSOCIATED CAPSULE S (P) LTD. VS. CIT 67 DTR 205. SUBSEQUENTLY IN ASSESSMENT YEARS 2008-09 A ND 2009-10 ALSO THE TRIBUNAL FOLLOWED ITS EARLIER DECISION FOR A.Y. 200 7-08 (SUPRA). THE TRIBUNAL IN ITS ORDER IN ITA NO. 7188/MUM/2012 DTD. 14-01-2015 AND ITA NO. 6911/MUM/2013 DATED 28-07-2014 FOR ASSESSMENT YEAR 2008-09 AND 2009-10 RESPECTIVELY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE REVENUE ITA 6912/M/13 3 HAS NOT CONTESTED THAT AFORESAID DECISIONS IN ASSES SEES OWN CASE CONTINUE TO HOLD THE FIELD. AS A CONSEQUENCE, WE HEREBY UPHOLD THE ORDER OF THE LD. CIT(A) DIRECTING THE A.O. TO EXCLUDE ONLY NET INTEREST INC OME FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 10AA OF THE ACT. THUS ON T HIS ASPECT REVENUE FAILS. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D AS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF BOTH THE PARTIES AT T HE CONCLUSION OF THE HEARING ON 27-04-2015. SD/- SD/- (AMIT SHUKLA) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER . / MUMBAI ; 0! DATED 27-4-2015 .8../ RK RKRK RK , SR. PS ! '#$% &%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. 9 () / THE CIT(A), 9, MUMBAI 4. 9 / CIT, -5,MUMBAI 5. <=> 88?@ , ?@ , . / / DR, ITAT, MUMBAI E BENCH 6. >BC D / GUARD FILE. ' / BY ORDER, < 8 //TRUE COPY// (/') * ( DY./ASSTT. REGISTRAR) , . / / ITAT, MUMBAI