MINE STONE, V. ACIT 16(2),

MA 186/MUM/2012

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 9465 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 21-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V KRISHNA MURTHY
• Keywords: Business income
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER MA NO. 185 & 186/MUM/2012 (ARISING OUT OF ITA NO. 3566 & 3567) (ASSESSMENT YEARS: 2001-02 & 2002-03) M/S. MINE STONE A C I T - 16(2) 514, 5TH FLOOR, PANCHRATNA MATRU MANDIR, TARDEO ROA D MAMA PARAMANAND MARG VS. MUMBAI 400007 OPERA HOUSE, MUMBAI 400004 PAN - AAAFM 0444 L APPELLANT RESPONDENT APPELLANT BY: NONE RESPONDENT BY: SHRI V. KRISHNAMURTHY DATE OF HEARING: 30.11.2012 DATE OF PRONOUNCEMENT: 30.11.2012 O R D E R PER D. MANMOHAN, V.P. THESE TWO APPLICATIONS ARISE OUT OF THE ORDER DATED 11 TH JANUARY, 2011 PASSED BY THE ITAT B BENCH, MUMBAI. 2. THE ISSUE BEFORE THE TRIBUNAL WAS WITH REGARD TO WO RKING OUT PROFITS OF BUSINESS UNDER SECTION 80HHC. IN THE PROCESS INTERE ST EARNED ON FIXED DEPOSIT SHOULD BE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF COMPUTING BUSINESS INCOME AND, IF SO, WHETHER NET INTEREST OR GROSS INTEREST, THAT HAS TO BE TAKEN INTO CONSIDERATION, IS SUBJECT MATTER O F DISPUTE BEFORE THE TRIBUNAL. 3. IN THE LIGHT OF THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF INDO SWISS JEWELS LTD. 284 ITR 389, THIS BE NCH HAD TAKEN A VIEW THAT INTEREST EARNED ON FIXED DEPOSIT SHOULD BE CON SIDERED AS PART OF BUSINESS INCOME. HOWEVER, IN THE LIGHT OF THE DECIS ION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ASIAN STAR CO. LTD . 326 ITR 56 THE TRIBUNAL HELD THAT ONLY GROSS INTEREST HAS TO BE TA KEN INTO CONSIDERATION. IN OTHER WORDS, SETTING OFF INTEREST PAID AGAINST INTE REST RECEIVED IS NOT MA NO. 185 & 186/MUM/2012 M/S. MINE STONE 2 PERMISSIBLE. THE DECISION OF THE HON'BLE BOMBAY HIG H COURT IN THE CASE OF ASIAN STAR CO. LTD. (SEE ITR 326 PAGE 56) WAS REVER SED BY THE HON'BLE SUPREME COURT IN THE CASE OF ACG ASSOCIATED CAPSULE S (P) LTD. VIDE ITS ORDER DATED 8 TH FEBRUARY, 2012 (343 ITR 89) WHEREIN THE HON'BLE SU PREME COURT OVERRULED THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ASIAN STAR CO. LTD. BY HOLDING THAT ONLY NET INT EREST HAS TO BE TAKEN INTO CONSIDERATION WHILE COMPUTING PROFITS AND GAINS OF BUSINESS OF THE ASSESSEE FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTIO N 80HHC OF THE ACT. IN THE LIGHT OF THE LATER DECISION OF THE HON'BLE SUPR EME COURT, THE CASE OF ASSESSEE IS THAT THE HON'BLE SUPREME COURT DOES NOT LAY DOWN ANY NEW LAW BUT IT MERELY MAINTAINS AND EXPOUNDS THE OLD ONE. IN OTHER WORDS, JUDGES DO NOT MAKE LAW, THEY DISCOVER OR FIND THE CORRECT LAW. IF A SUBSEQUENT DECISION ALTERS THE EARLIER ONE, IT ONLY DISCOVERS THE CORRECT PRINCIPLE OF LAW WHICH HAS TO BE APPLIED RETROSPECTIVELY. IN THE LIG HT OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SAURAS HTRA KUTCH STOCK EXCHANGE LTD. 305 ITR 227 IT WAS CONTENDED THAT THE DECISION OF THE TRIBUNAL DATED 11 TH JANUARY 2012, TO THE EXTENT THAT NETTING WAS NOT PERMITTED, SUFFERS FROM A MISTAKE APPARENT FROM REC ORD AND DESERVES TO BE RECTIFIED UNDER SECTION 254(2) OF THE ACT. 4. NONE APPEARED ON BEHALF OF THE ASSESSEE ON THE DATE FIXED FOR HEARING THOUGH NOTICE WAS SERVED UPON THE ASSESSEE (AD CARD ON RECORD). 5. WE HAVE HEARD THE LEARNED D.R. AND CAREFULLY PERUSE D THE RECORD. IT IS NOT DISPUTED BY THE LEARNED D.R. THAT IN THE LIGHT OF THE DECISION OF THE APEX COURT IN THE CASE OF ACG ASSOCIATED CAPSULES (P) LT D. ONLY NET INTEREST HAS TO BE TAKEN INTO CONSIDERATION IN THE CASE OF THE A SSESSEE ALSO. SINCE THE DECISION OF THE APEX COURT RULES THE FIELD ON THE I SSUE, WE HOLD THAT THE ORDER OF THE TRIBUNAL, TO THE EXTENT OF NOT PERMITT ING THE ASSESSEE TO CLAIM THE BENEFIT OF NETTING OF INTEREST, SUFFERS FROM A MISTAKE APPARENT FROM RECORD. BY RESPECTFULLY FOLLOWING THE AFORESAID DEC ISION, WE RECTIFY THE IMPUGNED ORDER BY HOLDING THAT THE ASSESSEE IS ENTI TLED TO CLAIM THE BENEFIT OF NETTING OF INTEREST. MA NO. 185 & 186/MUM/2012 M/S. MINE STONE 3 6. IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER, 2012. SD/- SD/- (RAJENDRA SINGH) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 30 TH NOVEMBER, 2012 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XVI, MUMBAI 4. THE CIT XVI, MUMBAI CITY 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.