ACIT, Ludhiana V. M/s Malwa Cotton Spinning Mills Ltd., Ludhiana

MA 117/CHANDI/2007

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 8943 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 year(s) 5 month(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 03-08-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2000-2001
• Appeal Filed On: 27-02-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Assessee Lawyers: M L JOSHI
• Keywords: Business income
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI H.L. KARWA, VP AND SHRI T.R. SOOD, AM MISC. APPLICATION NO. 117/CHD/2007 ARISING OUT OF ITA NO. 1261/CHD/2004 ASSESSMENT YEAR: 2000-01 A.C.I.T, C-VII V M/S MALWA COTTON SPINNING MILLS LUDHIANA LTD. INDUSTRIAL AREA A LUDHIANA PAN: AABCM 1201 D (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. JAISHREE SHARMA RESPONDENT BY: SHRI M.L. JOSHI DATE OF HEARING: 03.08.2012 DATE OF PRONOUNCEMENT: 03.08.2012 ORDER PER T.R. SOOD, A.M THROUGH THIS MISC. APPLICATION THE REVENUE HAS SOUG HT RECTIFICATION OF THE ORDER OF THE TRIBUNAL IN ITA NO. 1261/CHG/2004 WHEREIN IT WAS HELD FOLLOWING THE EARLIER ORDER THAT THE ASSESSEE WAS E NTITLED TO DEDUCTION U/S 80HHC OF THE ACT FROM THE INTEREST RECEIVED FROM TH E CUSTOMERS. 2. THE LD. DR FOR THE REVENUE REFERRED TO THE CONTE NTS OF THE MISC. APPLICATION AND POINTED OUT THAT THE TRIBUNAL HAD R ELIED ON ITS ORDER FOR ASSESSMENT YEAR 1994-95 AND HELD THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION U/S 80HHC OF THE ACT IN RESPECT OF INTEREST ON DELA YED PAYMENT FROM THE CUSTOMERS. HOWEVER, THIS ORDER OF THE TRIBUNAL HAS BEEN REVERSED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CASE OF THE ASSESSEE WHICH IS REPORTED AT CIT V. MALWA COTTON SPINNING MILLS LTD. 302 ITR 53 (PH). SHE FURTHER POINTED OUT THAT THIS ORDER HAS BEEN FOLLOW ED EVEN LATER ON BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CASE OF CIT V. MAHAVIR SPINNING MILLS LTD, 308 ITR 445 (PH). 3. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESS EE SUBMITTED THAT HON'BLE PUNJAB & HARYANA HIGH COURT HAS TAKEN A CON TRARY VIEW IN CASE OF CIT 2 V. AVERY CYCLE INDS LTD. 157 TAXMAN 382 (PH). HE F URTHER SUBMITTED THAT EVEN HON'BLE BOMBAY HIGH COURT IN CASE OF ALFA LAVAL (IN DIA) LTD. V DCIT, 266 ITR 418 HAS HELD THAT ONCE THE INTEREST ON DELAYED PAYM ENT FROM THE CUSTOMERS WAS TREATED AS BUSINESS INCOME THEN THE SAME COULD NOT BE EXCLUDED FROM BUSINESS PROFITS FOR THE PURPOSE OF DEDUCTION U/S 8 0HHC OF THE ACT. THIS DECISION WAS LATER ON CONFIRMED BY THE HON'BLE SUPR EME COURT IN CASE OF CIT V. ALFA LAVAL (INDIA) LTD. 170 TAXMAN 615. THEREFO RE, NOW THE ISSUE HAS BEEN COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE SUPREME COURT. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY AN D ARE UNABLE TO AGREE WITH THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSE SSEE. AS FAR AS THE DECISIONS OF HON'BLE PUNJAB & HARYANA HIGH COURT ARE CONCERNE D, WE HAVE NO AUTHORITY TO COMMENT ON THE SAME. HOWEVER, IT IS CLEAR THAT IN ASSESSEES OWN CASE HON'BLE HIGH COURT HAS HELD AS UNDER:- INTEREST RECEIVED FROM CUSTOMERS ON ACCOUNT OF DEL AY IN PAYMENT, EVEN IF ASSESSED AS BUSINESS INCOME WILL HAVE TO BE REDUCED THEREFROM FROM THE PURPOSE OF CALCULATION OF PROFITS OF BUSINESS TO CA LCULATE THE RELIEF ADMISSIBLE U/S 80HHC OF THE INCOME-TAX ACT, 1961. IT IS CLEAR THAT HON'BLE JURISDICTIONAL HIGH COURT HAS OPINED THAT EVEN AFTER THE INTEREST IS TREATED AS BUSINESS INCOME THE SAME HAS TO BE REDUCED FROM THE BUSINESS PROFITS FOR THE PURPOSE OF COMPUTING DEDUC TION U/S 80HHC. THIS DECISION WAS RENDERED ON 22.12.2006. NO DOUBT THE DECISION OF THE HON'BLE SUPREME COURT HAS BEEN RENDERED ON NOV 1, 2007, HOW EVER, HON'BLE PUNJAB & HARYANA HIGH COURT HAS FOLLOWED THE DECISION IN CAS E OF CIT V. MALWA COTTON SPINNING MILLS LTD. EVEN MUCH LATER ON NOV 5, 2008 I.E. MUCH AFTER THE DISMISSAL OF REVENUES APPEAL IN CASE OF CIT V. ALFA LAVAL (I NDIA) LTD. BY HON'BLE SUPREME COURT. SINCE THE HON'BLE JURISDICTIONAL HI GH COURT HAS TAKEN A PARTICULAR VIEW AND DID NOT REFER TO THE DECISION O F HON'BLE SUPREME COURT IN CASE OF CIT V. ALFA LAVAL (INDIA) LTD. (SUPRA) THER EFORE, FOLLOWING THE DISCIPLINE OF JUDICIAL HIERARCHY, WE ARE BOUND TO FOLLOW THE D ECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT REFERRED ABOVE BECAUSE TH E HON'BLE JURISDICTIONAL 3 HIGH COURT HAS FOLLOWED ITS DECISION IN CASE OF ASS ESSEE I.E. MALWA COTTON SPINNING MILLS LTD. (SUPRA) MUCH AFTER THE DECISION OF HON'BLE SUPREME COURT ON NOV 5, 2008 IN CASE OF CIT V. MAHAVIR COTTON SPI NNING MILLS LTD. THEREFORE, IN VIEW OF THE DECISION OF HON'BLE HIGH COURT IN ASSESSEES OWN CASE WHICH HAS BEEN RELIED ON BY THE TRIBUNAL FOR ALLOW ING THE DEDUCTION U/S 80HHC ON INTEREST RECEIVED FROM THE CUSTOMERS AN ERROR HA S CREPT IN THE ORDER OF THE TRIBUNAL. ACCORDINGLY WE RECTIFY THE ORDER BY HOLD ING THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S 80HHC ON INTEREST RECEIVE D FROM THE CUSTOMERS. ACCORDINGLY THIRD GROUND RAISED BY THE REVENUE IN I TA NO. 1261/CND/2004 IS ALLOWED. 5. IN THE RESULT, MISC. APPLICATION OF THE REVENUE IS ALLOWED. ORDER PRONOUNCED ON 03.08.2012 SD/- SD/- (H.L. KARWA) (T.R. SOOD) VICE PRESIDENT ACCOUNTANT MEM BER DATED: 03 ,08.2012 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/ THE DR 4