M/S. GODREJ INDUSTRIES LTD, MUMBAI V. THE ITO RG 10(2)(2), MUMBAI

ITA 7174/MUM/2007

• Counselvise Citation: 717419914 RSA 2007
• Duration Of Justice: 3 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 27-01-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 03-12-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: F V IRANI; F H BILLIMORIA
• Keywords: Capital asset; Depreciation; Opportunity of being heard; Capital expenditure; Set aside
• Section: 80HHC; 14A; 115JB; 80HH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI BEFORE SHRI D.K. AGARWAL (J.M.) AND SHRI R.K. PANDA (A.M.) ITA NO. 7174/MUM /2007 ASSESSMENT YEAR 2004-05 GODREJ INDUSTRIES LTD., C/O KALYANIWALLA & MISTRY, KALPATARU HERITAGE, 127 M.G. ROAD, MUMBAI 400 001. PAN : AAACG 2953R VS. THE INCOME TAX OFFICER, RANGE 10(2)(2), 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI- 400 020. (APPELLANT) (RESPONDENT) ITA NO. 7144/MUM /2007 ASSESSMENT YEAR 2004-05 THE DY. COMMISSIONER OF INCOME TAX-10(2), ROOM NO. 432, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, NEW MARINE LINES, MUMBAI 400 020. VS. M/S GODREJ INDUSTRIES LTD., PIROJSHANAGAR, EASTERN EXPRESS HIGHWAY, VIKHROLI (E), MUMBAI- 79. PAN AAACG 2953R (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI F.V. IRANI & SHRI F.H. BILLIMORIA RESPONDENT BY : SHRI PAVAN VED O R D E R PER D.K. AGARWAL, J.M. THESE CROSS APPEALS BY THE ASSESSEE AND REVENUE AR E DIRECTED AGAINST THE ORDER DATED 6.9.2007 PASSED BY THE LD. CIT(A) FOR A.Y. 2004- 05. BOTH THESE APPEALS WERE HEARD TOGETHER AND DISP OSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND/OR TRA DING IN CONSUMER ITA 7174/M/07 & 7144/M/07 M/S GODREJ INDUSTRIES LTD. 2 PRODUCTS SUCH AS SOAPS, DETERGENTS, INDUSTRIAL CHEM ICALS, OILS, OILSEEDS, MEDICAL DIAGNOSTIC PRODUCTS ETC. AND ALSO ENGAGED I N LEAVE AND LICENCE OF PROPERTIES, FINANCIAL OPERATIONS AND OTHER OPERATIO NS. THE RETURN WAS FILED DECLARING TOTAL INCOME OF ` NIL AS PER THE NORMAL PROVISIONS OF THE ACT AND BOOK PROFIT U/S 115JB AT ` 440,424,450/-. HOWEVER, THE ASSESSMENT WAS COMPLETED AT AN INCOME OF ` 503,522,313/- U/S 115JB OF THE INCOME TAX ACT, 1961 (THE ACT). ON APPEAL, THE LD. CIT(A), PARTLY ALLOWED THE APPEAL. 3. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE AS SESSEE AND REVENUE BOTH ARE IN APPEAL BEFORE US. ITA NO. 7174/M/2007 (ASSESSEES APPEAL). 4. GROUND NO. 1 IS AGAINST THE SUSTENANCE OF DISALL OWANCE U/S 14A OF THE ACT. 5. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT HE DOES NOT WANT TO PRESS THE ABOVE GR OUND, WHICH WAS NOT OBJECTED TO BY THE LD. D.R. 6. THAT BEING SO AND IN THE ABSENCE OF ANY SUPPORTI NG MATERIAL PLACED ON RECORD BY THE LD. COUNSEL FOR THE ASSESSEE, THE GROUND TAKEN BY THE ASSESSEE IS THEREFORE REJECTED BEING NOT PRESSED. 7. GROUND NO. 2 IS AGAINST THE SUSTENANCE OF DISALL OWANCE OF AMORTIZATION OF PREMIUM PAID ON LEASEHOLD LAND OF ` 1,16,125/-. 8. BRIEF FACTS OF THE ABOVE ISSUE ARE THAT THE ASSE SSEE COMPANY HAD OBTAINED LEASEHOLD LAND ON LEASE PERIOD OF 98 YEARS AT AN AMOUNT OF ` 1,13,80,243/-. ACCORDING TO THE ASSESSEE, THE SAID AMOUNT PAID, WAS IN ITA 7174/M/07 & 7144/M/07 M/S GODREJ INDUSTRIES LTD. 3 NATURE OF ADVANCE RENT AND AS SUCH IT CLAIMED 1/98 TH PART OF SUCH EXPENSES AMOUNTING TO ` 1,16,125/- AS DEDUCTION IN THE YEAR UNDER CONSIDERATION, WHEREAS ACCORDING TO THE A.O. THE AF ORESAID AMOUNT WAS PAID AS PART OF PREMIUM PAID TO OBTAIN THE LEASE AN D THAT THE SAME WAS CAPITAL EXPENDITURE, THEREFORE, NO PART OF SUCH EXP ENSES WAS ALLOWABLE AS EXPENSES. THUS, THE A.O. DISALLOWED THE ASSESSEES CLAIM OF ` 1.16,125/-. ON APPEAL, THE LD. CIT(A) FOLLOWING TH E APPELLATE ORDER FOR A.Y. 1998-99 IN ASSESSEES OWN CASE, CONFIRMED THE DISALLOWANCE MADE BY THE A.O. 9. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE VERY FAIRLY SUBMITS THAT THIS ISSUE IS COVERED AGAINST THE ASSE SSEE BY THE ORDERS OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.YRS. 2000 -01, 2001-02, 2002- 03 AND 2003-04. HE ALSO PLACED ON RECORD A COPY OF THE ORDERS OF TRIBUNAL APPEARING AT PAGE NO. 1 TO 20 OF THE ASSES SEES PAPER BOOK. 10. ON THE OTHER HAND, THE LD. D.R. WHILE RELYING O N THE ORDER OF THE A.O. AND LD. CIT(A) ALSO RELIED ON THE ORDERS OF TH E TRIBUNAL IN ASSESSEES OWN CASE (SUPRA) TO SHOW THAT THE SAME IS COVERED A GAINST THE ASSESSEE. 11. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE TRIBUNAL IN ASSESSEES OWN CASE IN GODREJ INDUSTRIES LTD. VS. A CIT IN ITA NO. 501/MUM/04 FOR A.Y. 2000-01 DATED 13.12.2006 VIDE P ARA NO. 2 OF ITS ORDER ON THE SIMILAR DISALLOWANCE HAS HELD THAT :- THIS GROUND OF THE APPEAL IS NOT PRESSED BY THE LD . COUNSEL FOR THE ASSESSEE AND ACCORDINGLY GROUND NO. 2 OF THE ASSESS EES APPEAL IS DISMISSED. THE ABOVE ORDER HAS BEEN CONSISTENTLY FOLLOWED BY T HE TRIBUNAL IN SUBSEQUENT ASSESSMENT YEARS BY HOLDING THAT THE GRO UND HAS NOT BEEN ITA 7174/M/07 & 7144/M/07 M/S GODREJ INDUSTRIES LTD. 4 PRESSED BY THE ASSESSEE. THIS BEING SO AND IN THE A BSENCE OF ANY SUPPORTING MATERIAL PLACED ON RECORD BY THE LD. COU NSEL FOR THE ASSESSEE, THE GROUND TAKEN BY THE ASSESSEE IS THEREFORE REJEC TED. 12. GROUND NO. 3 IS AGAINST THE DISALLOWANCE OF DEP RECIATION. 13. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THIS ISSUE IS ALSO COVERED AGAINST THE ASSESSE E BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN GODREJ INDUSTRIE S LTD. VS. ACIT IN ITA NO. 4196 AND 4197/M/06 FOR A.YRS. 2002-03 AND 2003- 04 WHEREIN THE TRIBUNAL HAS DECIDED THE ISSUE AGAINST THE ASSESSEE . 14. ON THE OTHER HAND, THE LD. D.R. WHILE RELYING O N THE ORDERS OF THE A.O. AND LD. CIT(A) ALSO RELIED ON THE ORDERS OF TH E TRIBUNAL (SUPRA). 15. AFTER HEARING THE SUBMISSIONS OF THE RIVAL PART IES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND MERIT IN THE PLEA OF THE PARTIES THAT THE TRIBUNAL IN ASSESSEES OWN CASE (SUPRA) HAS DEC IDED THE ISSUE AGAINST THE ASSESSEE VIDE PARA 8 OF ITS ORDER DATED 30.9.20 08 AS UNDER:- 8. EVEN BEFORE THE OMISSION OF THE TERMS AS APPEA RING IN THE BOOKS OF ACCOUNT, THE EMPHASIS OF THE LEGISLATURE IN EXP LANATION 2B, IN OUR HUMBLE OPINION, IS THE WRITTEN DOWN VALUE OF THE TR ANSFERRED ASSET. THE OMISSION OF THESE WORDS AS APPEARING IN THE BOOKS OF ACCOUNT WITH EFFECT FROM 01.04.2004, IN OUR HUMBLE OPINION, IS C URATIVE AND THUS RETRO-ACTIVE. HENCE WE UPHOLD THE FINDINGS OF THE REVENUE AUTHORITIES THAT ONLY THE TAX WRITTEN DOWN VALUE OF THE TRANSFE RRED ASSETS OF THE DEMERGED COMPANY SHALL CONSTITUTE THE WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS OF THE RESULTING COMPANY. ITA 7174/M/07 & 7144/M/07 M/S GODREJ INDUSTRIES LTD. 5 RESPECTFULLY FOLLOWING THE SAME, WE ARE INCLINED TO UPHOLD THE FINDINGS OF THE LD. CIT(A) AND ACCORDINGLY THE GROUND TAKEN BY THE ASSESSEE IS REJECTED. 16. GROUND NO. 4 READS AS UNDER:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) E RRED IN IGNORING THE CONTENTION OF THE APPELLANT THAT THE PROVISIONS OF SECTION 80HHC (IB) WERE NOT APPLICABLE WHEN THE BOOK PROFITS WERE CONS IDERED FOR THE PURPOSES OF COMPUTING THE DEDUCTION UNDER CLAUSE (I V) OF THE EXPLANATION BELOW SECTION 115JB(2). THE APPELLANT SUBMITS THAT THE ASSESSING OFFICER BE DIRECTED TO ALLOW THE DEDUCTION U/S 80HH C AS CLAIMED BY THE APPELLANT. 17. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSE E BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.YRS. 2002-03 AND 2003-04, THEREFORE, THE ISSUE MAY BE DECIDED ACCORDINGLY. 18. ON THE OTHER HAND, THE LD. D.R. SUPPORTS THE OR DERS OF THE AUTHORITIES BELOW. 19. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND MERIT THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE O RDERS OF THE TRIBUNAL IN ASSESSEES OWN CASE IN GODREJ INDUSTRIES LTD. VS . ACIT IN ITA NO. 4197/M/2006 FOR A.YRS. 2002-03 & 2003-04 WHEREIN TH E TRIBUNAL VIDE PARA NO. 3.6 OF ITS ORDER DATED 30 TH SEPTEMBER, 2008 HAS OBSERVED AND HELD AS UNDER:- 3.6 GROUND 7 WITH REGARD TO COMPUTATION OF DEDUCTI ON U/S 80HHC STANDS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINS T THE REVENUE BY THE DECISION OF E BENCH OF THE TRIBUNAL IN THE CASE O F ACIT VS. AJANTA PHARMA LTD. VS. ACIT REPORTED IN (2008) 21 SOT 101 (MUM). THE BENCH HAD, ON PAGE 109 OF ITS REPORTED DECISION, CONSIDER ED THE DECISION OF THE SPECIAL BENCH OF THE MUMBAI TRIBUNAL IN THE CASE OF SYNCOME ITA 7174/M/07 & 7144/M/07 M/S GODREJ INDUSTRIES LTD. 6 FORMULATIONS (I) LTD. 106 ITD 193 (MUM) AND REFERRI NG TO THE FINDINGS AT PARAGRAPH 59 OF THAT DECISION, CAME TO THE CONCLUSI ON THAT IN CASE OF SECTION 115JB THE FINANCE ACT HAD MADE IT CLEAR THA T DEDUCTION U/S 80HHC WOULD BE AVAILABLE IN ITS ENTIRETY TO AN ASSE SSEE EVEN IF THE RELIEF UNDER SECTION 80HHC IS ELIMINATED IN A PHASED MANNE R. RESPECTFULLY FOLLOWING THE PRECEDENT WE ALLOW GROUND 7 OF THE AS SESSEE. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGH T ON RECORD BY THE REVENUE, WE RESPECTFULLY FOLLOWING THE CONSISTENT V IEW TAKEN BY THE TRIBUNAL, DIRECT THE A.O. TO ALLOW THE DEDUCTION U/ S 80HHC IN THE LIGHT OF THE DIRECTIONS GIVEN IN THE ABOVE ORDER OF THE TRIB UNAL AND ACCORDINGLY THE GROUND TAKEN BY THE ASSESSEE IS ALLOWED. 20. GROUND NOS. 5 TO 7 ARE AGAINST THE SUSTENANCE O F DISALLOWANCE OF INTEREST OF ` 82,91,531/- PAID BY THE ASSESSEE ON DELAYED PAYMEN T OF CUSTOM DUTY. 21. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT HE DOES NOT WANT TO PRESS THE ABOVE GROUNDS WH ICH WAS NOT OBJECTED TO BY THE LD. D.R. 22. THAT BEING SO AND IN THE ABSENCE OF ANY SUPPORT ING MATERIAL PLACED ON RECORD BY THE LD. COUNSEL FOR THE ASSESSEE, THE GROUNDS TAKEN BY THE ASSESSEE ARE THEREFORE REJECTED BEING NOT PRESSED. 23. GROUND NO. 8 READS AS UNDER:- WITHOUT PREJUDICE TO GROUND NOS. 5 & 6, EVEN ASSUM ING THOUGH NOT CONCEDING THAT THE INTEREST PAID ON ACCOUNT OF THE EPCG CLAIM WAS CAPITAL IN NATURE, THE LEARNED COMMISSIONER OF INCO ME TAX (APPEALS) ERRED IN NOT DIRECTING THE ASSESSING OFFICER TO GRA NT DEPRECIATION ON SUCH AMOUNT CAPITALISED TO PLANT & MACHINERY. HAVING RE GARD TO THE FACTS OF THE CASE, THE APPELLANT SUBMITS THAT THE ASSESSING OFFICER BE DIRECTED TO GRANT DEPRECIATION ON SUCH AMOUNT CAPITALISED TO TH E BLOCK OF ASSETS. ITA 7174/M/07 & 7144/M/07 M/S GODREJ INDUSTRIES LTD. 7 24. BRIEF FACTS OF THE ABOVE ISSUE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE VIDE LETTER DT D. DECEMBER 26, 2006, INTER ALIA, MADE A CLAIM THAT THE AMOUNT OF ` 82,91,531/- WHICH WAS PAID DURING THE YEAR UNDER CONSIDERATION TO TH E ASSISTANT COLLECTOR OF CUSTOMS ON ACCOUNT OF INTEREST LIABILITY TOWARDS UNFULFILLED EXPORT OBLIGATION WAS ALSO INADVERTENTLY NOT CLAIMED SINCE IT WAS ALSO DEBITED TO THE PROVISION ACCOUNT WHICH HAD IN ANY EVENT NOT BE EN ALLOWED IN THE EARLIER PREVIOUS YEAR ENDED MARCH 31, 2001, THEREFO RE, THE SAME BE ALLOWED TO THE ASSESSEE. IN SUPPORT, THE ASSESSEE HAS ALSO PLACED ON RECORD THE RELEVANT FACTS APPEARING AT PAGE NOS. 17 TO 19 OF THE ASSESSMENT ORDER. HOWEVER, THE A.O. WAS OF THE VIE W THAT SINCE THE CLAIM HAS BEEN MADE AT THE FAG END OF THE ASSESSMEN T PROCEEDINGS AND IT IS NOT SUPPORTED BY CLINCHING EVIDENCE TO SHOW THE CORRECTNESS AND GENUINENESS OF THE CLAIM, HENCE, HE DISALLOWED THE CLAIM OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A) CONFIRMED THE DISALLOWANC E OF INTEREST VIDE FINDINGS RECORDED IN PARA NO. 7.3 OF THE ORDER AS U NDER:- 7.3 WITH REGARD TO GROUND NO. 9, I AM UNABLE TO AC CEPT THE CLAIM OF THE ASSESSEE ON ACCOUNT OF THE FOLLOWING REASONS: (A) THE INTEREST IS PAYABLE BY THE ASSESSEE ON THE CUST OMS DUTY OBLIGATION FOR IMPORT OF CAPITAL GOODS. THE AMOUNT OF CUSTOM DUTY PAID HAS, THEREFORE, BEEN OBVIOUSLY CAPITALISED. H ENCE, INTEREST PAID ON THE CUSTOM DUTY IS ALSO CAPITAL IN NATURE. THIS IS NOT COVERED BY THE PROVISIONS OF SECTION 36(1)(III) AS IT IS NOT INTEREST PAID ON BORROWED CAPITAL. (B) THE PROVISION FOR INTEREST WAS CREATED BY THE ASSES SEE IN ITS BOOKS OF ACCOUNTS FOR F.Y. 2000-01. THE CUSTOMS AUTHORIT IES COMPUTED THE INTEREST @ 15% ON 13.01.2003, AND ISSUED A CHOW CAUSE TO THE ASSESSEE. DURING F.Y. 2003-04, ALL THAT HAPPENED W AS THAT THE ASSESSEES REQUEST FOR EXTENSION OF THE EPCG LICENS E WAS DENIED BY DGFT AND THE ASSESSEE PAID UP THE AMOUNT DEMANDE D BY THE CUSTOMS. AS THE ASSESSEE IS FOLLOWING THE MERCANTIL E SYSTEM OF ACCOUNTS, AND HAD HIMSELF CREATED A PROVISION IN F. Y. 2000-01, IT CANNOT BE SAID THAT THE CLAIM OF INTEREST ACCRUED I N F.Y. 2003-04. 7.4 IN VIEW OF THE ABOVE REASONS, THE ASSESSEES CL AIM MADE IN GROUND NO. 9 IS DENIED. ITA 7174/M/07 & 7144/M/07 M/S GODREJ INDUSTRIES LTD. 8 25. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT SINCE THE ABOVE AMOUNT OF INTEREST HAS BEEN CA PITALISED BY THE REVENUE AUTHORITIES, THEREFORE, DIRECTION MAY BE GI VEN FOR ALLOWING DEPRECIATION THEREON. 26. ON THE OTHER HAND, THE LD. D.R. WHILE RELYING O N THE ORDER OF THE A.O. AND LD. CIT(A) SUBMITS THAT THE DELAYED PAYMEN T OF INTEREST OF CUSTOM DUTY IS NOT A CAPITAL ASSET, THEREFORE, ON S UCH PAYMENT INTEREST IS NOT ALLOWABLE AND HENCE THE LD. CIT(A) WAS FULLY JUSTIFIED IN NOT ALLOWING THE SAME. HE, THEREFORE, SUBMITS THAT THE ORDER PASSED BY THE LD. CIT(A) BE UPHELD. 27. WE HAVE CAREFULLY HEARD THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THERE IS NO DISPUTE THAT THE ASSESSEE HAS PAID THE INTEREST ON DELAYED PAYMENT OF CUSTOM DUTY FOR IMPORT OF MACHINERY FOR NOT FULFILLING EXP ORT OBLIGATIONS. IT WAS DISALLOWED BY THE A.O. ON THE GROUND THAT THE ASSES SEE HAS MADE THE ABOVE CLAIM AT THE FAG END OF THE ASSESSMENT PROCEE DING NOT SUPPORTED BY CLINCHING EVIDENCE TO SHOW THE CORRECTNESS AND G ENUINENESS OF THE CLAIM. ON APPEAL, THE LD. CIT(A) WHILE OBSERVING T HAT INTEREST PAID ON CUSTOM DUTY IS ALSO CAPITAL IN NATURE, DISALLOWED T HE CLAIM OF INTEREST ON THE GROUND THAT THE ASSESSEE IS FOLLOWING MERCANTIL E SYSTEM OF ACCOUNTING AND HAS HIMSELF CREATED A PROVISION FOR THE FINANCIAL YEAR 2000-01, THEREFORE, IT CANNOT BE SAID THAT THE CLAI M OF INTEREST ACCRUED FOR FINANCIAL YEAR 2003-04. FROM THE READING OF TH E FINDINGS RECORDED BY THE A.O. AND THE LD. CIT(A), WE OBSERVE THAT BOTH A UTHORITIES HAVE DISALLOWED THE CLAIM OF INTEREST ON DIFFERENT GROUN D. IN THE ABSENCE OF ANY MATERIAL TO SHOW THAT ANY PART OF THE SAME WAS ALLOWED IN THE EARLIER YEARS AS THE ASSESSEE IS FOLLOWING MERCANTILE SYSTE M OF ACCOUNTING AND THE RELEVANT ACCOUNTING ENTRIES AND KEEPING IN VIEW THAT THE A.O. HAS NOT ITA 7174/M/07 & 7144/M/07 M/S GODREJ INDUSTRIES LTD. 9 EXAMINED THE ISSUE ON THE GROUND OF LIMITATION, WE ARE OF THE VIEW THAT IN THE INTERESTS OF JUSTICE, THE MATTER SHOULD GO BACK TO THE FILE OF THE A.O. AND ACCORDINGLY WE SET ASIDE THE ORDERS PASSED BY T HE REVENUE AUTHORITIES ON THIS ACCOUNT AND SEND BACK THE MATTE R TO THE FILE OF THE A.O. WHO SHALL DECIDE THE SAME AFRESH IN THE LIGHT OF OUR OBSERVATIONS HEREIN ABOVE AND ACCORDING TO LAW AFTER PROVIDING R EASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GROUND TAKEN B Y THE ASSESSEE IS, THEREFORE, PARTLY ALLOWED FOR STATISTICAL PURPOSE. ITA NO. 7144/MUM/2007 (REVENUES APPEAL) 28. THE GROUNDS TAKEN BY THE REVENUE READ AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT W HILE COMPUTING THE BOOK PROFIT U/S 115 JB OF THE I.T. ACT, DEDUCTION O F ` 5,71,10,095/- WILL BE ALLOWED ALTHOUGH THERE WAS NO PROFIT ELIGIBLE FO R DEDUCTION U/S 80HHC IN THE REGULAR COMPUTATION OF INCOME. 2. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE R ESTORED. 29. THE A.O. HAS DISALLOWED DEDUCTION U/S 80HHC ON THE GROUND THAT THERE WAS NO PROFIT ELIGIBLE IN THE REGULAR COMPUTA TION OF INCOME. HOWEVER, THE LD. CIT(A) FOLLOWING THE DECISION OF T HE SPECIAL BENCH OF THE TRIBUNAL IN DCIT VS. SYNCOME FORMULATIONS (I) LTD. 13 SOT 414 (MUM) [SB] HELD THAT DEDUCTION U/S 80HHC R.W.S. 115JB IS TO BE ALLOWED ON THE BASIS OF BOOK PROFIT AND MOREOVER IN EARLIER YEARS ALSO THE ASSESSEE IS BEING REGULARLY ALLOWED RELIEF ON THIS GROUND. 30. AT THE TIME OF HEARING, THE LD. D.R. SUPPORTS T HE ORDER OF THE A.O. ITA 7174/M/07 & 7144/M/07 M/S GODREJ INDUSTRIES LTD. 10 31. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSE SSEE SUBMITS THAT THIS ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF SPECIAL BENCH OF ITAT IN THE CASE OF DCIT VS. SYNCO ME FORMULATIONS (I) LTD. 13 SOT 414 (MUM) [SB] AND ALSO BY THE ORDERS O F THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.YS. 2001-02, 2002-03 & 20 03-04. 32. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND MERIT IN THE PLEA OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE SPECIAL BENCH OF I TAT IN SYNCOME FORMULATIONS (I) LTD. (SUPRA) WHEREIN IT HAS BEEN H ELD THAT DEDUCTION U/S 80HHC IN A CASE OF MAT ASSESSMENT IS TO BE WORKED O UT ON THE BASIS OF THE ADJUSTED BOOK PROFIT AND NOT ON THE BASIS OF TH E PROFIT COMPUTED UNDER THE REGULAR PROVISIONS OF LAW APPLICABLE TO T HE COMPUTATION OF PROFIT AND GAINS OF BUSINESS OR PROFESSION. THE ABO VE VIEW HAS BEEN CONSISTENTLY FOLLOWED BY THE TRIBUNAL IN ASSESSES OWN CASES (SUPRA). IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGHT O N RECORD BY THE REVENUE, WE RESPECTFULLY FOLLOWING THE CONSISTENT V IEW TAKEN BY THE TRIBUNAL, UPHELD THE ORDER PASSED BY THE LD. CIT(A) ON THIS ACCOUNT AND ACCORDINGLY, THE GROUNDS TAKEN BY THE REVENUE ARE R EJECTED. 33. IN THE RESULT, ASSESSEES APPEAL STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSE AND REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.04.2011 SD/- (R.K. PANDA) ACCOUNTANT MEMBER SD/- (D.K. AGARWAL) JUDICIAL MEMBER MUMBAI, DATED 8 TH APRIL, 2011 RK ITA 7174/M/07 & 7144/M/07 M/S GODREJ INDUSTRIES LTD. 11 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- X, MUMBAI 4. COMMISSIONER OF INCOME TAX, MC X, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH G, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI ITA 7174/M/07 & 7144/M/07 M/S GODREJ INDUSTRIES LTD. 12 1 DRAFT DICTATED ON 31 .3.11 SR PS 2 DRAFT PLACED BEFORE AUTHOR ON 1.4.11 SR PS 3 DRAFT PROPOSED & PLACE BEFORE THE 2 ND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY 2 ND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR PS 7 FILE SENT TO THE BENCH CLERK SR PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DESPATCH SR PS