M/S. PIDILITE INDUSTRIES LTD., MUMBAI V. ACIT C.C.-46, MUMBAI

ITA 7401/MUM/2007

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9244 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 17-12-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 12-12-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 80HHC

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI . . !'# , $ %& BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI N.K. B ILLAIYA, AM I.T.A. NO. 7401/MUM/2007 ( ( ( ( ( / ASSESSMENT YEAR: 2004-05 M/S. PIDILITE INDUSTRIES LTD., REGENT CHAMBERS, 7 TH FLOOR,JAMNALAL BAJAJ MARG, NARIMAN POINT, MUMBAI-400 021 / VS. THE ACIT, CENTRAL CIRCLE-46. AAYAKAR BHAVAN, MUMBAI-400 020 I.T.A. NO. 7106/MUM/2006 ( ( ( ( ( / ASSESSMENT YEAR-2003-04 THE ACIT, CENTRAL CIRCLE-46. AAYAKAR BHAVAN, MUMBAI-400 020 / VS. M/S. PIDILITE INDUSTRIES LTD., REGENT CHAMBERS, JAMNALAL BAJAJ MARG, MUMBAI-400 021 &) $ ./ *+ ./PAN/GIR NO. : AAACP 4156B ( ), /APPELLANT ) .. ( -.), / RESPONDENT ) ), / / ASSESSEE BY: SHRI YOGESH THAR -.), 0 / / DEPARTMENT BY : SHRI RAJARSHI DWIVEDY 0 12$ / DATE OF HEARING : 17.12.2012 34( 0 12$ /DATE OF PRONOUNCEMENT :17.12.2012 %5 / O R D E R PER N.K. BILLAIYA, AM: THESE TWO APPEALS ONE FILED BY THE ASSESSEE AND THE OTHER FILED BY THE REVENUE ARE POSTED FOR HEARING TO HONOUR THE DI RECTIONS ISSUED BY THE ITA NO. 7401/M/07 & 7106/M/06 2 HONBLE BOMBAY HIGH COURT IN ITA NOS. 2624 & 2625 O F 2010. IT WOULD BE PERTINENT TO MENTION THE OBSERVATIONS/DIRE CTIONS OF THE HONBLE JURISDICTIONAL HIGH COURT WHICH ARE AS UNDER: THESE APPEALS WERE ADMITTED ON 23 RD AUGUST 2010 ON THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW: A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE DED UCTION OF PROFIT AND GAINS ALLOWED U/S. 80 IA/80 IB HAD TO BE DEDUCTED FROM THE PROFITS AND GAINS OF THE APPELLANTS BUSIN ESS ON WHICH DEDUCTION U/S. 80HHC OF THE ACT HAD TO BE COMPUTED? B) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE TRIBUNAL WAS RIGHT IN FOLLOWING THE DECISI ON OF THE FIVE MEMBER SPECIAL BENCH OF THE APPELLATE TRIBUNAL IN T HE CASE OF ACIT VS HINDUSTAN MINT? LEARNED COUNSEL ON BOTH THE SIDES STATE THAT THE AF ORESAID QUESTIONS OF LAW HAVE ALREADY BEEN ANSWERED BY THIS COURT IN THE CASE OF ASSOCIATED CAPSULES PVT. LTD. VS DY. CO MMISSIONER OF INCOME TAX (INCOME TAX APPEAL NO. 3036 OF 2010) DECIDED ON 10 TH JANUARY, 2011 IN FAVOUR OF THE ASSESSEE AND AGAINS T THE REVENUE. THE APPEALS ARE DISPOSED OFF ACCORDINGLY WITH A DIR ECTION TO THE TRIBUNAL TO RE-COMPUTE THE DEDUCTION IN THE LIGHT O F AFORESAID DECISION OF THIS COURT. NO. ORDER AS TO COSTS. 2. AS THE HONBLE JURISDICTIONAL HIGH COURT HAS DIR ECTED TO RECOMPUTE THE DEDUCTION IN THE LIGHT OF THE DECISION OF ASSOC IATED CAPSULES PVT. LTD. VS DCIT, WE HAVE CAREFULLY PERUSED THE ORDER OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ASSOCIATED CAPSULES PVT. LTD. 332 ITR 42 WHEREIN THE QUESTION BEFORE THE HONBLE HIGH COURT WAS AS UNDER: WHETHER THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT SECTION 80-IA(9) OF THE INCOME-TAX ACT, 1961 MANDATES THAT THE AMOUNT OF ITA NO. 7401/M/07 & 7106/M/06 3 PROFITS ALLOWED AS DEDUCTION UNDER SECTION 80-IA(1) OF THE ACT HAS TO BE REDUCED FROM THE PROFITS OF THE BUSINESS OF T HE UNDERTAKING WHILE COMPUTING DEDUCTION UNDER ANY OTHER PROVISION S UNDER HEADING C IN CHAPTER VI-A OF THE INCOME-TAX ACT, 19 61 ? 3. THE HONBLE HIGH COURT GAVE ITS FINDING AS UNDER : IN THE RESULT, WE HOLD THAT SECTION 80-IA(9) DOES N OT AFFECT THE COMPUTABILITY OF DEDUCTION UNDER VARIOUS PROVIS IONS UNDER HEADING C OF CHAPTER VI-A, BUT IT AFFECTS THE ALLOW ABILITY OF DEDUCTIONS COMPUTED UNDER VARIOUS PROVISIONS UNDER HEADING C OF CHAPTER VI-A, SO THAT THE AGGREGATE DEDUCTION UNDER SECTION 80-IA AND OTHER PROVISIONS UNDER HEADING C OF CHAPTER VI- A DO NOT EXCEED 100 PER CENT. OF THE PROFITS OF THE BUSINESS OF THE ASSESSEE. OUR ABOVE VIEW IS ALSO SUPPORTED BY THE CENTRAL BOA RD OF DIRECT TAXES CIRCULAR NO. 772 DATED DECEMBER 23, 1998 WHER EIN IT IS STATED THAT SECTION 80-IA(9) HAS BEEN INTRODUCED WI TH A VIEW TO PREVENT THE TAXPAYERS FROM CLAIMING REPEATED DEDUCT IONS IN RESPECT OF THE SAME AMOUNT OF ELIGIBLE INCOME AND THAT TOO IN EXCESS OF THE ELIGIBLE PROFITS. THUS, THE OBJECT OF SECTION 80-IA (9) BEING NOT TO CURTAIL THE DEDUCTIONS COMPUTABLE UNDER VARIOUS PRO VISIONS UNDER HEADING C OF CHAPTER VI-A, IT IS REASONABLE TO HOLD THAT SECTION 80- IA(9) AFFECTS ALLOWABILITY OF DEDUCTION AND NOT COM PUTATION OF DEDUCTION. TO ILLUSTRATE, IF RS.100 IS THE PROFITS OF THE BUSINESS OF THE UNDERTAKING, RS. 30 IS THE PROFITS ALLOWED AS D EDUCTION UNDER SECTION 80-IA(1) AND THE DEDUCTION COMPUTED AS PER SECTION 80HHC IS RS. 80, THEN, IN VIEW OF SECTION 80-IA(9), THE DEDUCTION UNDER SECTION 80HHC WOULD BE RESTRICTED TO RS. 70, SO THAT THE AGGREGATE DEDUCTION DOES NOT EXCEED THE PROFITS OF THE BUSINESS. 4. AS THE ISSUE IS NOW WELL SETTLED IN FAVOUR OF TH E ASSESSEE, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT (SUPRA), WE RESTORE THIS ISSUE BACK TO THE FI LE OF AO TO RECOMPUTE THE DEDUCTION IN THE LIGHT OF THE AFORESAID DECISIO N OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF ASSOCIATED CAPSULES (P) LTD (SUPRA), AS NECESSARY FACTS AND FIGURES ARE NOT AVAILABLE BEFOR E US TO RECOMPUTE THE DEDUCTION IN THE LIGHT OF THE DIRECTIONS OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF THE ASSESSEE. ITA NO. 7401/M/07 & 7106/M/06 4 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE AS WELL AS THE APPEAL FILED BY THE REVENUE ARE ALLOWED FOR STATISTICAL PU RPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17.12.2012 %5 0 4( $ 6 7%8 17.12.2012 4 0 9 SD/- SD/- (H.L. KARWA) (N.K. BILLAIYA) /PRESIDENT $ %& / ACCOUNTANT MEMBER MUMBAI; 7% DATED 17.12.2012 . . ./ RJ , SR. PS %5 0 -1 : (1 / COPY OF THE ORDER FORWARDED TO : 1. ), / THE APPELLANT 2. -.), / THE RESPONDENT. 3. ; ( ) / THE CIT(A)- 4. ; / CIT 5. <9 -1 , , / DR, ITAT, MUMBAI 6. 9= > / GUARD FILE. %5 / BY ORDER, . 1 -1 //TRUE COPY// ? / @ * DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI