M/S. PRITHVI EXPORTS, MUMBAI V. THE ACIT 20(2), MUMBAI

ITA 735/MUM/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1600 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 01-02-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMOL KAMAL
• Assessee Lawyers: D P SAPRE
• Keywords: Business income; Set aside
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: MUMBAI BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NO 735/MUM/2008 (ASSESSMENT YEAR: 2003-04) M/S PRITHVI EXPORTS, 206, NEELKANTH COMMERCIAL CENTRE, 122/123 SAHAR ROAD, ANDHERI (EAST), PAN: AAFFP 8273 F VS ACIT 20(2), MUMBAI APPELLANT RESPONDENT ASSESSEE BY: SHRI D P SAPRE REVENUE BY: SHRI AMOL KAMAL ORDER PER T.R. SOOD, ACCOUNTANT MEMBER IN THIS APPEAL ASSESSEE HAS RAISED THE FOLLOWING GR OUNDS:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN CONFIRMING TAXING OF RS 9,64,000/- BEING INTEREST ON FIXED DEP OSITS KEPT FOR AVAILING BANK FACILITIES, UNDER THE HEAD INCOME FROM OTHER S OURCES INSTEAD OF BUSINESS INCOME. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN CONFIRMING THE DISALLOWANCE OF DEDUCTION U/S 80HHC IN RESPECT OF R S 25,65,489/- BEING THE AMOUNT OF DEPB LICENSES NOT TRANSFERRED DURING THE YEAR. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER OF EXCLUDING THE AM OUNT OF DEPB LICENSES NOT TRANSFERRED DURING THE YEAR FROM PROFITS OF THE BUS INESS FOR THE PURPOSES OF DEDUCTION U/S 80HHC. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN HOLDING THAT AMOUNT OF DEPB LICENSES NOT TRANSFERRED DURING THE YEAR TOOK THE CHARACTER OF ANY OTHER RECEIPT OF SIMILAR NATURE AND WERE C OVERED BY CLAUSE 1 OF EXPLANATION (BAA) BELOW SECTION 80HHC(4C). M/S PRITHVI EXPORTS 2 2. GROUND 1: AFTER HEARING BOTH THE PARTIES WE FIND THAT ASSESSEE HAD TREATED INTEREST RECEIVED AMOUNTING TO RS 9,64,928/- AS BUS INESS INCOME AND ACCORDINGLY CLAIMED DEDUCTION U/S 80HHC. AO ASSESSED THE INTEREST INCO ME AS INCOME FROM OTHER SOURCES AND DENIED THE DEDUCTION. 3. ON APPEAL, THE ACTION OF THE AO WAS CONFIRMED BY LEARNED CIT (A) IN VIEW OF THE DECISION OF CIT VS SHRI RAM HONDA POWER EQUIP (289 ITR 475). 4. BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE FAIR LY CONCEDED THAT NOW THIS ISSUE IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE DECISI ON OF THE SPECIAL BENCH IN CASE OF TOPMAN EXPORTS VS ITO (318 ITR 87). 5. ON THE OTHER HAND, LEARNED DEPARTMENTAL REPRESEN TATIVE RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THE SPECIAL BENCH DECISION IN THE CASE OF TOPMAN EXPORTS VS ITO WHILE DEALING WIT H THE ISSUE OF INTEREST HELD AS UNDER:- HELD ACCORDINGLY, ON THE FACTS, THAT THE INTEREST INCOME COULD NOT BE CONSIDERED FOR DEDUCTION UNDER SECTION 80HHC. NOTHING HAD BEE N SHOWN THAT THERE WAS SOME BUSINESS EXIGENCY NECESSITATING THE DEPLOYMENT OF FUNDS. IT WAS A CASE OF SIMPLE PARKING OF SURPLUS FUNDS WITH THIRD PARTIES AND THE BANK, HAVING NO RELATION WITH THE EXPORT BUSINESS. THE INTEREST INCOME HAD BEEN RIGHTLY TAXED UNDER THE LAST HEAD OF INCOME AND NO AMOUNT WAS DEDUCTIBLE AG AINST THIS INCOME. HENCE IT WAS ALSO INELIGIBLE FOR DEDUCTION UNDER SECTION 80H HC. 7. IN VIEW OF THE DECISION OF SPECIAL BENCH AND CO NCESSION MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE WE DECIDE THIS ISSUE AGAIN ST THE ASSESSEE. 8. GROUNDS 2 TO 4: BOTH THE PARTIES AGREED THAT AS FAR AS DEDUCTION ON ACCOUNT OF DEPB WAS CONCERNED, SAME HAS TO BE CONSIDERED IN VI EW OF THE DECISION OF THE SPECIAL M/S PRITHVI EXPORTS 3 BENCH DECISION IN CASE OF TOPMAN EXPORTS (SUPRA). FURTHER, WE SET ASIDE THE ORDER OF LEARNED CIT (A) AND REMIT THE MATTER BACK TO THE FI LE OF THE AO WITH A DIRECTION TO DECIDE THE ISSUE REGARDING DEDUCTION ON ACCOUNT OF DEPB LI CENCES IN ACCORDANCE WITH THE DECISION OF TOPMAN EXPORTS (SUPRA). 9. IN THE RESULT, APPEAL IS PARTLY ALLOWED FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED ON 12TH DAY OF NOVEMBER 2009. SD/- (R.K. GUPTA) JUDICIAL MEMBER SD/- (T. R. SOOD) ACCOUNTANT MEMBER MUMBAI, DATE: 12TH NOVEMBER 2009 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) XX, MUMBAI. 4) THE CIT-20, MUMBAI. 5) THE D.R. C BENCH, ITAT, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR CHAVAN* I.T.A.T., MUMBAI M/S PRITHVI EXPORTS 4 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 11.10.09 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 11.10.09 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND 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 OF DISPATCH OF ORDER