Vimal Oil & Food Ltd., Ahmedabad V. The DCIT, Cent. Circle 1(2), Ahmedabad

MA 108/AHD/2013

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 1217 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 20-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-12-2013
• Assessment Year: 1999-2000
• Appeal Filed On: 31-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P M MEHTA
• Assessee Lawyers: K C MATHEWS
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) M A. NO. 108/AHD/2013 (IN ITA NO. 2500/AHD/2007) M.A. NO. 109 /AHD/2013 (C.O. 185/AHD/2009) (ASSESSMENT YE AR:1999-2000) VIMAL OIL & FOODS LTD., 4 TH FLOOR, HERITAGE BUILDING. NR. GRAND BHAGWATI, SARKHEJ GANDINAGAR ROAD, AHMEDABAD V/S DCIT, CENT. CIRCLE. 1(2), CENT. CIRCLE. 1 (2), AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.C. MATHEWS SR. D.R. RESPONDENT BY : SHRI P.M. MEHTA A.R. ( )/ ORDER DATE OF HEARING : 06-12-201 3 DATE OF PRONOUNCEMENT : 20 -12-2013 PER SHRI ANIL CHATURVEDI,A.M. 1. THE PRESENT M.A. OF THE ASSESSEE ARE ARISING OUT OF THE ORDER OF TRIBUNAL IN ITA NO. 2500/AHD/2007 & CO. NO. 185/AHD/2009 FOR A.Y. 1999- 2000 ORDER DATED 22 ND MARCH 2013. 2. THROUGH M.A. NO. 108/AHD/2013 THE ASSESSEE HAS STAT ED THAT ISSUE IN GROUND NO. 3 OF DEPARTMENTS APPEAL IN ITA NO. 2500 /AHD/2007 FOR A.Y. 1999-2000 WAS AS TO WHETHER THE INTEREST RECEI PT ON LATE PAYMENT OF SALES CONSIDERATION WAS IN THE NATURE OF BUSINESS I NCOME WHICH WAS NOT MA NO 108/A/2013 ( IN ITA NO. 2500/A/13 ) . A.Y. 1999- 2000 2 COVERED UNDER CLAUSE (BAA) OF THE EXPLANATION UNDER SECTION 80HHC OF THE ACT? 3. THROUGH THIS M.A. IT HAS BEEN STATED THAT THE ISSUE WAS SQUARELY COVERED AGAINST THE DEPARTMENT AND IN ASSESSEES FAVOUR BY THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF NIRMA IND USTRIES LTD. VS. DCIT 283 ITR 402. IT WAS FURTHER STATED THAT IN TH E ORDER, THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF ASIAN STAR P. LTD. 326 ITR 56 WAS REFERRED AND RELYING ON THE AFORESAID DECISION OF H ON. BOMBAY HIGH COURT THE ISSUE WAS DECIDED IN FAVOUR OF REVENUE. 4. BEFORE US, IT WAS SUBMITTED THAT THE DECISION OF BO MBAY HIGH COURT IN THE CASE OF ASIAN STAR PVT. LTD. (SUPRA) WAS OUT OF CONTEXT AS IT PERTAINED TO SECTION 80IA AND FURTHER THE DECISION WAS SUBSEQ UENTLY OVERRULED BY HON. SUPREME COURT IN THE CASE OF ACG ASSOCIATED CA PSULES P. LTD. VS. CIT 343 ITR 89. IN VIEW OF THE AFORESAID GROUND NO . 3 RAISED BY THE DEPARTMENT WAS REQUIRED TO BE DISMISSED. IT WAS THE REFORE SUBMITTED THAT IN VIEW OF THE FACTUAL AND LEGAL POSITION THERE WAS MISTAKE APPARENT FROM THE RECORD AND THEREFORE THE ORDER OF THE HON. TRIB UNAL NEEDS TO BE RECTIFIED UNDER SECTION 254(2) OF THE ACT. THE LD. D.R. ON THE OTHER HAND OBJECTED TO THE SUBMISSIONS MADE BY THE A.R. AND SU BMITTED THAT THERE WAS NO MISTAKE APPARENT ON RECORD WHICH REQUIRES RE CTIFICATION. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT THE ISSUE RAISED BY R EVENUE BEFORE THE TRIBUNAL WAS NET INTEREST RECEIVED FROM CUSTOMERS W AS TO BE CONSIDERED FOR THE PURPOSE OF DEDUCTION U/S. 80HHC. IN THE CAS E OF ACG ASSOCIATED MA NO 108/A/2013 ( IN ITA NO. 2500/A/13 ) . A.Y. 1999- 2000 3 CAPSULES PVT. LTD. VS. CIT (2012) 247 CTR (SC) 372 THE HONBLE APEX COURT HAS HELD THAT 90% OF NOT THE GROSS RENT OR GR OSS INTEREST BUT ONLY THE NET INTEREST OR NET RENT WHICH HAS BEEN INCLUDE D IN THE PROFITS OF THE BUSINESS OF THE ASSESSEE AS COMPUTED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OF PROFESSION IS TO BE DEDUCTED UNDER CLAUSE (1) OF EXPLANATION (BAA) TO SECTION 80HHC FOR DETERMINING THE PROFITS OF THE BUSINESS. 6. IN THE CASE OF NIRMA IND. LTD. VS. DCIT. IT HAS BEE N HELD THAT INTEREST RECEIVED FROM TRADE DEBTORS FOR LATE PAYMENT OF SAL ES CONSIDERATION IS INCOME DERIVED FROM THE BUSINESS OF THE INDUSTRIAL UNDERTAKING AND IT CANNOT BE EXCLUDED FROM THE PROFITS OF THE INDUSTRI AL UNDERTAKING WHILE COMPUTING DEDUCTION U/S. 80IB. 7. SINCE THE ISSUE OF GROSS INTEREST OR NET INTEREST H AS BEEN SETTLED BY THE DECISION OF HON. APEX COURT. WE ARE OF THE VIEW THA T IN VIEW OF THE AFORESAID DECISION OF APEX COURT, THERE SEEMS TO BE APPARENT MISTAKE IN THE ORDER. WE THEREFORE RECALL OUR ORDER ONLY WITH RESPECT TO DECIDE GROUND NO. 3 OF ITA NO. 2500/AHD/2007 IN LIGHT OF T HE FOREGOING. REGISTRY IS DIRECTED TO FIX THE CASE FOR THE LIMITE D PURPOSE OF DECIDING GROUND NO. 3 IN NORMAL COURSE. 8. IN THE RESULT, THE M.A. OF THE ASSESSEE IS ALLOWED. M.A. NO. 109/AHD/2013 (ARISING OUT OF CO. 185/A HD/2009) MA NO 108/A/2013 ( IN ITA NO. 2500/A/13 ) . A.Y. 1999- 2000 4 9. THROUGH THIS M.A. HAS STATED THAT ISSUE IN GROUND N O. 2 OF ASSESSEES C.O. NO. 185/AHD2009 FOR A.Y. 1999-2000 WAS AGAINST THE DECISION OF CIT(A) WHERE HE HAD HELD THAT FOR THE PURPOSE OF CL AUSE (BAA) OF THE EXPLANATION TO SECTION 80HHC OF THE ACT, NETTING OF INTEREST WAS NOT TO BE DONE. IT IS FURTHER SUBMITTED THAT FOLLOWING THE DECISION IN REVENUES APPEAL A SIMILAR VIEW WAS TAKEN AND THE ISSUE WAS R ESTORED TO THE FILE OF A.O. FOR FRESH DISPOSAL WITH SIMILAR DIRECTIONS AS GIVEN IN REVENUES APPEAL. 10. BEFORE US, THE LD. A.R. SUBMITTED THAT THE ISSUE RA ISED IN THE PRESENT M.A. WAS IDENTICAL TO THAT OF M.A. NO. 108/AHD/2013 AND THEREFORE THE M.A. HAS TO BE CONSIDERED AND DECIDED ALONG WITH M.A. NO . 108/AHD/2013 FILED BY THE ASSESSEE IN CONNECTION WITH THE AFORES AID DEPARTMENT APPEAL. THE LD. A.R. FURTHER SUBMITTED THAT THE ISS UE RAISED IN THE C.O. WAS FULLY COVERED BY THE DECISION OF APEX COURT IN THE CASE OF ACG ASSOCIATED CAPSULES P. LTD. VS. CIT (SUPRA) AND THE REFORE THE GROUND RAISED BY THE ASSESSEE SHOULD HAVE BEEN ALLOWED WIT H THE DIRECTION TO THE A.O. TO ADOPT ONLY THE NET INTEREST INCOME. IT WAS FURTHER SUBMITTED THAT IN THE PRESENT CASE, THE NET INTEREST INCOME WAS NI L AND THEREFORE NO REDUCTION WAS CALLED FOR UNDER THE AFORESAID CLAUSE (BAA). HE THEREFORE SUBMITTED THAT THE GROUND NO. 2 RAISED BY THE ASSES SEE WAS REQUIRED TO BE ALLOWED. THE LD. D.R. ON THE OTHER HAND RELIED ON T HE ORDER OF TRIBUNAL. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND OF CO OF ASSESSEE I S WITH RESPECT TO NET INCOME/ GROSS INCOME WHICH IS REQUIRED TO BE DEDUCT ED FOR COMPUTING DEDUCTION U/S. 80HHC. THE HON. APEX COURT IN THE CA SE OF ACG MA NO 108/A/2013 ( IN ITA NO. 2500/A/13 ) . A.Y. 1999- 2000 5 ASSOCIATED CAPSULES (SUPRA) HAS HELD THAT 90% OF NO T THE GROSS RENT OR GROSS INTEREST BUT ONLY THE NET INTEREST OR NET REN T WHICH HAS BEEN INCLUDED IN THE PROFITS OF THE BUSINESS OF THE ASSESSEE AS C OMPUTED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OF PROFESSION IS TO BE DEDUCTED UNDER CLAUSE (1) OF EXPLANATION (BAA) TO SECTION 80HHC FO R DETERMINING THE PROFITS OF THE BUSINESS. 12. BEFORE US, THE LD. A.R. HAS SUBMITTED THAT THE NET INTEREST INCOME WAS NIL. WE ARE THEREFORE OF THE VIEW THAT IN THE LIGHT OF T HE DECISION OF HON. APEX COURT IN THE CASE OF ACG ASSOCIATED CAPSULES P VT. LTD (SUPRA) THERE SEEMS TO BE AN APPARENT MISTAKE. WE THEREFOR E RECALL THE C.O. FOR THE LIMITED PURPOSE OF DECIDING THE AFORESAID GROUN D OF ASSESSEE. REGISTRY IS DIRECTED TO FIX THE CASE FOR THE LIMITE D PURPOSE OF DECIDING GROUND NO. 3 IN NORMAL COURSE. 13. IN THE RESULT, BOTH THE MAS OF THE ASSESSEE ARE AL LOWED AS ABOVE. ORDER PRONOUNCED IN OPEN COURT ON 20 - 12 - 2013. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AH MEDABAD