M/s. Cummins Generator Technologies India Ltd, Pune V. Assistant Commissioner of Income-tax, Pune

MA 102/PUN/2011

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 9177 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 1 month(s) 14 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 29-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 15-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPUATHAMA
• Section: 80HHC; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R S PADVEKAR, JUDICIAL MEMBER M.A NO 102/PN/2011 (IN ITA NO. 474/PN/09) (ASSTT. YEARS: 2003-04) M/S CUMMINS GENERATOR TECHNOLOGIES .. APPLICANT INDIA LTD., (FORMERLY KNOWN AS NEWAGE ELECTRICAL INDIA LTD), PUNE PAN AABCC1533E VS. ASSTT. COMMISSIONER OF INCOME-TAX, CIR. 1(1), PUNE .. RESPONDE NT APPLICANT BY : SHRI RAJENDRA AGIWAL RESPONDENT BY : MS ANN KAPUATHAMA DATE OF HEARING : 22.06.2012 DATE OF PRONOUNCEMENT : 29.08.2012 ORDER PER G.S. PANNU, AM IN THIS MISCELLANEOUS PETITION, THE APPLICANT-ASSES SEE HAS CANVASSED THAT CERTAIN MISTAKES WITHIN THE MEANING OF SECTION 254( 2) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) HAVE CREPT IN THE ORDER OF THE TR IBUNAL DATED 28.02.2011 PASSED BY THE TRIBUNAL IN ASSESSEES CASE IN ITA NO 474/PN/09 FOR THE ASSESSMENT YEAR 2003-04. 2. WE HAVE HEARD BOTH THE PARTIES. AFTER CAREFULLY CONSIDERING THE SUBMISSIONS MADE BY RIVAL SIDES, WE ARE SATISFIED THAT CERTAIN MISTAKES APPARENT FROM RECORD HAVE CREPT IN THE IMPUGNED ORDER OF THE TRIBUNAL, WHICH WE PROCEED TO RECTIFY HEREINBELOW. 2. THE FIRST MISTAKE POINTED OUT BY THE APPLICANT-A SSESSEE IS WITH REGARD TO THE ADDITION OF RS 4,09,386/- BEING 10% OF PAYMENT OF C OMMISSION AND AFTER- SALE SERVICES COMMISSION OF RS 40,93,862/- PAID TO CROMP TON GREAVES LTD.(CGL) BY APPLYING PROVISIONS OF SECTION 40A(2) OF THE ACT. I N THIS REGARD, IT IS POINTED OUT THAT THE 2 SAID AMOUNT OF RS. 40,93,862/- INCLUDED FOLLOWING COMPONENTS, AS IS EVIDENT FROM PARA 6 OF THE ASSESSMENT ORDER: BROKERAGE @ 15% FOR SALE OF PRODUCT AND @ 20% FOR S ALE OF SPARE PARTS 7,75,000 AFTER SALE SERVICES @ 2% 33,18,862 40,93,862 10% DISALLOWED BY AO 4,09,386 THE LEARNED COUNSEL FOR THE APPLICANT REITERATED TH AT THE ISSUE OF DISALLOWANCE OF THE COMMISSION AND AFTER SALE SERVICES HAD FIRST COME-U P FOR CONSIDERATION BEFORE OUR CO- ORDINATE BENCH IN ASSESSEES CASE FOR ASSESSMENT YE ARS 1997-98, 1998-99 & 1999-00 IN ITA NOS. 327/PN/03, 1045/PN/02 AND 328/PN/03 AN D WHILE ADJUDICATING THE ISSUE, THE TRIBUNAL HAD REMANDED THE MATTER IN RESPECT OF PAYMENT OF BROKERAGE @ 15 TO 20% TO THE FILE OF THE COMMISSIONER OF INCOME-TAX ( APPEALS) WITH A DIRECTION TO RE- EXAMINE THE ISSUE AND PASS A FRESH ORDER AFTER GIVI NG AN OPPORTUNITY TO THE ASSESSEE TO DISCHARGE ITS ONUS IN LIGHT OF THE PROVISIONS OF SECTION 40A(2) OF THE ACT. IN SO FAR AS THE PAYMENT OF AFTER SALE SERVICES @ 2% IS CONCERN ED, THE TRIBUNAL CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE HELD THAT THE P AYMENT OF COMMISSION @ 2% WAS JUSTIFIED AND THE ORDER OF THE COMMISSIONER OF INC OME-TAX (APPEALS) DELETING THE SAID ADDITION WAS UPHELD. IT WAS ACCORDINGLY SUBMITTED T HAT IN VIEW OF THE ABOVE FACTUAL ASPECTS, THE FINDINGS OF THE TRIBUNAL IN REGARD TO THE STATED ISSUE BE RECTIFIED. 3. WE HAVE GONE THROUGH THE IMPUGNED ORDER OF THE T RIBUNAL AND FIND THAT A MISTAKE APPARENT FROM RECORD HAS CREPT IN THE SAID ORDER OF THE TRIBUNAL DATED 28.2.2011. WE ACCORDINGLY RECTIFY THE SAID MISTAKE AND DIRECT THAT IN SO FAR AS THE ISSUE RELATING TO PAYMENT OF BROKERAGE @ 15 TO 20% IS CONCERNED, FOLLOWING THE PRECEDENT, WE RESTORE THE SAME TO THE FILE OF THE C OMMISSIONER OF INCOME-TAX (APPEALS) WITH A DIRECTION TO RE-EXAMINE THE ISSUE AND PASS A FRESH ORDER AFTER GIVING AN OPPORTUNITY TO THE ASSESSEE TO DISCHARGE ITS ONU S IN LIGHT OF THE PROVISIONS OF SECTION 40A(2) OF THE ACT. IN SO FAR AS OTHER ASPECT OF PAY MENT OF COMMISSION @ 2% IS CONCERNED, WE HOLD THAT THE COMMISSIONER OF INCOME- TAX (APPEALS) WAS JUSTIFIED IN DELETING THE SAID ADDITION FOLLOWING THE PRECEDENTS IN ASSESSEES OWN CASE. WE ACCORDINGLY AFFIRM HIS ORDER ON THIS ASPECT. 3 4. THE OTHER APPARENT MISTAKE POINTED OUT BY THE AS SESSEE IS WITH REGARD TO DEDUCTION UNDER SECTION 80HHC VIS-A-VIS 80IB OF THE ACT. THE RELEVANT GROUND RAISED BY THE ASSESSEE IN ITS GROUNDS OF APPEAL READS AS F OLLOWS: 10. ERRED IN CONFIRMING THE ACTION OF THE AO IN A LLOWING THE DEDUCTION UNDER SECTION 80HHC ON THE PROFITS AND GAINS AFTER REDUCING THE AMOUNT OF DEDUCTION GRANTED / ALLOWABLE UNDER SECTION 80IB WITHOUT APPRECIATING THAT SECTION 80HH C DOES NOT CONTAIN ANY RESTRICTION ON CLAIMING DEDUCTION UNDER SECTION 80HHC FROM THE PRO FITS, BY REDUCING THE DEDUCTION GRANTED UNDER SECTION 80IB. 11. SHOULD HAVE APPRECIATED THAT THE INTENT AND PUR POSE OF SECTION 80IA(9) WAS TO RESTRICT THE CLAIMING IF DEDUCTION UNDER ALL SECTION OF CHAPTER VIA MORE THAN 100% OF THE PROFITS AND GAINS FROM BUSINESS AND WAS NOT TO RESTRICT THE DEDUCTION S COMPUTED UNDER EACH OF THE PROVISIONS OF THE ACT[SUBJECT HOWEVER, TO THE OVERALL RESTRICTION S UNDER SECTION 80A(2)] THE TRIBUNAL, RELYING UPON THE DECISION OF THE LARG ER BENCH OF THE TRIBUNAL IN THE CASE OF HINDUSTAN MINT & AGRO PRODUCTS P LTD VIDE ITA N O 1537 TO 1539/DEL/07, DECIDED THE ISSUE AGAINST THE ASSESSEE. NOW, BY WAY OF THE PRESENT APPLICATION, THE ASSESSEE- APPLICANT HAS BROUGHT TO OUR NOTICE THAT THE HONBL E JURISDICTIONAL HIGH COURT IN THE CASE OF ASSOCIATED CAPSULES (P) LTD. MUMBAI V. DCIT 50 DTR 65 (BOM) HAS OVERRULED THE DECISION OF LARGER BENCH IN CASE OF HINDUSTAN M INT & AGRO PRODUCTS P. LTD. (SUPRA) AND HAS HELD THAT SECTION 80-IA(9) CANNOT B E INTERPRETED TO MEAN THAT SECTION 80-IA DEDUCTION HAS TO BE REDUCED FOR COMPUTING DED UCTION SECTION 80HHC. HE ACCORDINGLY SUBMITTED THAT SUITABLE AMENDMENT BE MA DE TO THE ORDER OF THE TRIBUNAL IN THIS REGARD. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF RIVAL SIDES AND HAVE ALSO PERUSED THE SUBSEQUENT DECISION OF THE HONBLE BOMB AY HIGH COURT IN THE CASE OR ASSOCIATED CAPSULES P LTD. (SUPRA). WE ARE IN AGREE MENT WITH THE SUBMISSION OF THE ASSESSEE THAT THE ISSUE HAS TO BE DECIDED IN FAVOUR OF THE ASSESSEE IN VIEW OF THIS JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT. FOR THE SAKE OF BREVITY, WE REPRODUCE HEREINBELOW THE RELEVANT OBSERVATIONS OF THE HONBLE HIGH COURT IN THIS REGARD: 35. .IN OUR OPINION, THE REASONABLE CONSTRUCTI ON OF S. 80-IA(9) WOULD BE THAT WHERE DEDUCTION IS ALLOWED UNDER S.80-IA(1), THEN THE DED UCTION COMPUTED UNDER OTHER PROVISIONS UNDER HEADING C OF CHAPTER VI-A HAS TO BE RESTRIC TED TO THE PROFITS OF THE BUSINESS THAT REMAINS AFTER EXCLUDING THE PROFITS ALLOWED AS DEDU CTIONS UNDER S.80-IA, SO THAT THE TOTAL DEDUCTION ALLOWED UNDER THE HEADING C OF CHAPTER VI-A DOES NOT EXCEED THE PROFITS OF THE BUSINESS. 39. IN THE RESULT, WE HOLD THAT SECTION 80-IA(9) D OES NOT AFFECT COMPUTABILITY OF DEDUCTION UNDER VARIOUS PROVISIONS UNDER HEADING C OF CHAPT ER VIA, BUT IT AFFECTS THE ALLOWABILITY OF DEDUCTIONS COMPUTED UNDER VARIOUS PROVISIONS UNDER HEADING C OF CHAPTER VIA, SO THAT THE AGGREGATE DEDUCTION UNDER SECTION 80-IA AND OTHER P ROVISIONS UNDER HEADING C OF CHAPTER 4 VIA DO NOT EXCEED 100% OF THE PROFITS OF THE BUSINE SS OF THE ASSESSEE. OUR ABOVE VIEW IS ALSO SUPPORTED BY THE C.B.D.T. CIRCULAR NO.772 DATED 23. 12.1998, WHEREIN IT IS STATED THAT SECTION 80IA(9) HAS BEEN INTRODUCED WITH A VIEW TO PREVENT THE TAXPAYERS FROM CLAIMING REPEATED DEDUCTIONS IN RESPECT OF THE SAME AMOUNT OF ELIGIBL E 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 PROVISIONS UNDER HEADING C OF CHAPTER, IT IS REASONABLE TO HOLD THAT SECTION 80IA(9) AFFECTS ALLOWABILITY OF DEDUCT ION AND NOT COMPUTATION OF DEDUCTION. TO ILLUSTRATE, IF RS.100/- IS THE PROFITS OF THE BUSIN ESS OF THE UNDERTAKING, RS.30/- IS THE PROFITS ALLOWED AS DEDUCTION UNDER SECTION 80IA(1) AND THE DEDUCTION COMPUTED AS PER SECTION 80HHC IS RS.80/-, THEN, IN VIEW OF SECTION 80IA(9), THE DEDUCTION UNDER SECTION 80HHC WOULD BE RESTRICTED TO RS.70/-, SO THAT THE AGGREGATE DED UCTION DOES NOT EXCEED THE PROFITS OF THE BUSINESS FOLLOWING THE RATIO OF THE AFORESAID DECISION OF TH E HONBLE HIGH COURT, WE MODIFY OUR ORDER DATED 28.2.2011 AND DECIDE THE ISSUE IN FAVOU R OF THE ASSESSEE. AS A RESULT, WE SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME-T AX (APPEALS) ON THIS ISSUE AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80HHC VIS-A-VIS 80-IB OF THE ACT. 6. IN THE RESULT, THE MISCELLANEOUS APPLICATION OF THE ASSESSEE IS ALLOWED, AS ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF AUGUST, 2012. SD/- SD/- (R S PADVEKAR) (G.S . PANNU) JUDICIAL MEMBER ACC OUNTANT MEMBER PUNE DATED: 29 TH AUGUST, 2012 B COPY TO:- 1) M/S CUMMINS GENERATOR TECHNOLOGIES INDIA LTD. PU NE 2) ACIT CIR.1(1) PUNE 3) THE CIT (A) I PUNE. 4) THE CIT I PUNE. 5) THE DEPARTMENTAL REPRESENTATIVE, B BENCH, ITAT, PUNE. BY ORDER PS, I.T.A.T., PUNE.