GATEWAY TERMINALS INDIA P.LTD, NAVI MUMBAI V. DCIT PANVEL CIRCLE, MUMBAI

MA 283/MUM/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5845 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-04-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 19-11-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR MENONLD
• Assessee Lawyers: PORUS F KAKA LD SR
• Keywords: Business income; Rectification of order; Question of law
• Section: 254(2)

Judgement Text

1 MA NO.83/MUM/2020 M/S GATEWAY TERMINALS PRIVATE LIMITED ASSESSMENT YEAR 2012-13 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI , , BEFORE HONBLE SHRI PAVAN KUMAR GADALE, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) MA NO.283/MUM/2020 (ARISING OUT OF ITA NO.300/MUM/2018) ( / ASSESSMENT YEAR: 2012-13) M/S. GATEWAY TERMINALS INDIA P VT . LTD. GTI HOUSE, JAWAHARLAL NEHRU PORT SHEVA, DISTRICT-URAN NAVI MUMBAI-400 707. / VS. DCIT - PANVEL CIRCLE ASHAR I.T. PARK, ROAD NO.16Z WAGLE ESTATE THANE (W)-400 604. ./ ./PAN/GIR NO. AACCG-1899-E ( ' /APPELLANT ) : ( #$' / RESPONDENT ) ASSESSEE BY : SHRI PORUS F. KAKA- LD. SR. COUNSEL REVENUE BY : SHRI VIJAY KUMAR MENON- LD. DR / DATE OF HEARING : 05/02/2021 / DATE OF PRONOUNCEMENT : 27/04/2021 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER):- 1. BY WAY OF THIS APPLICATION U/S 254(2), THE ASSES SEE SEEKS RECALL / RECTIFICATION OF TRIBUNAL ORDER DATED 28/05/2020 PA SSED IN CAPTIONED APPEAL FOR ASSESSMENT YEAR 2012-13. 2 MA NO.83/MUM/2020 M/S GATEWAY TERMINALS PRIVATE LIMITED ASSESSMENT YEAR 2012-13 2.1 DRAWING ATTENTION TO THE APPLICATION, LD. SR. C OUNSEL, SUBMITTED THAT THE ISSUE INVOLVED IN THE APPEAL WAS DENIAL OF DEDUCTION U/S 80-IA ON INTEREST ON INCOME TAX REFUND AND INTEREST EARNE D BY THE ASSESSEE ON FIXED DEPOSITS (FDS) HELD WITH THE BANK. DURING HEARING OF THE APPEAL, IT WAS SUBMITTED THAT THERE WERE TWO REASON S FOR PARKING OF FUNDS IN FIXED DEPOSITS VIZ. (I) UNDER LICENSE AGRE EMENT WITH JNPT, THE ASSESSEE WAS UNDER AN OBLIGATION TO REPLACE CRA NES AFTER CERTAIN PERIOD, WHICH CONSTITUTE SIGNIFICANT PORTION OF ITS MACHINERY AND EQUIPMENT; (II) THE TARIFF COLLECTED BY THE ASSESSE E FROM ITS CUSTOMERS WAS UNDER DISPUTE. THESE WERE THE CONDITIONS FOR OP ERATING AND MAINTAINING THE PORT ACTIVITIES, WHICH WERE ELIGIBL E FOR DEDUCTION U/S 80-IA. ACCORDINGLY, THE ASSESSEE WAS COMPELLED TO K EEP ASIDE CERTAIN AMOUNT AND PUT THE SAME IN FIXED DEPOSITS WITH THE BANK. THE LD. SR. COUNSEL SUBMITTED THAT CRITICAL FACTS WITH REGARD T O BUSINESS OBLIGATION TO REPLACE THE CRANES WAS NEITHER NOTED NOR CONSIDE RED BY THE BENCH WHILE PASSING THE ORDER. THE ATTENTION WAS ALSO DRA WN TO THE FACT THAT THE ASSESSING OFFICER, IN ALL THE YEARS STARTING FR OM AY 2006-07 ONWARDS, HAS ACCEPTED THE INTEREST INCOME FROM FDS AS BUSINESS INCOME. THE ASSESSEE WAS ENGAGED ONLY IN ONE BUSINE SS OF DEVELOPING, OPERATING AND MAINTAINING PORT TERMINAL S. THE INTENT TO PARK THE FUNDS IN THE FDS WAS TO SECURE THE FUNDS S O THAT THE ASSESSEE COULD FULFILL ITS FUTURE OBLIGATIONS UNDER THE AGREEMENT. THE INCOME EARNED THERE-FROM WAS DIRECTLY LINKED AND / OR INCIDENTAL TO THE CORE BUSINESS OF THE ASSESSEE. THEREFORE, IT WAS CL AIMED THAT THE 3 MA NO.83/MUM/2020 M/S GATEWAY TERMINALS PRIVATE LIMITED ASSESSMENT YEAR 2012-13 INTEREST INCOME WAS ELIGIBLE FOR DEDUCTION U/S 80-I A. SINCE, THIS CRITICAL FACT WAS NOT CONSIDERED, THE ORDER DESERVE TO BE RE CALLED. 2.2 THE LD. SR. COUNSEL FURTHER SUBMITTED THAT RELI ANCE ON THE DECISION OF HONBLE SUPREME COURT IN PARA-4.6 OF TH E ORDER IN THE CASE OF CIT V/S ELTEK SGS (P) LTD. (CA NO.2817 OF 2010 26/0 3/2010) WAS NEITHER CITED BY THE ASSESSEE NOR BY THE REVENUE DU RING THE COURSE OF THE HEARING. NO OPPORTUNITY TO REBUT AND DISTINGUIS H THIS DECISION HAS BEEN GRANTED BY THE TRIBUNAL. PROCEEDING FURTHER, L D. SR. COUNSEL SUBMITTED THAT FACTS IN ASSESSEES CASE VIS--VIS F ACTS IN THE DECISION OF HONBLE APEX COURT IN LIBERTY INDIA LTD. (317 ITR 218) WERE DIFFERENT SINCE IN ASSESSEES CASE, THE INTEREST IN COME HAD DIRECT AND PROXIMATE CONNECTION WITH ASSESSEES BUSINESS UNLIK E LIBERTYS CASE WHICH DEALT WITH DEDUCTION OF DUTY DRAWBACK. AS AGA INST THIS, THE ASSESSEE PLACED RELIANCE ON TWO DECISIONS OF HONBL E BOMBAY HIGH COURT IN CIT V/S JAGDISHPRASAD M. JOSHI (318 ITR 420 25/11/2 008) AND TEMA EXCHANGERS MANUFACTURERS PVT. LTD. V/S ACIT (I TA NO. 415 OF 2004 DATED 18/07/2018) AND ANOTHER DECISION OF MUMBAI TRIBUNAL IN ITO V/S HIRANANDANI BUILDERS (83 TAXMANN.COM 65 28/10/2015) WHICH DEALT WITH DEDUCTION OF INTEREST INCOME. THE DECISION IN TEMA EXCHANGERS MANUFACTURERS PVT. LTD. V/S ACIT (SUPRA) AS WELL AS DECISION OF TRIBUNAL IN ITO V/S HIRANANDANI BUILDERS (SUPRA) WAS RENDERED SUBSEQUENT TO DECISION IN LIBERTY INDIA AND THE DECISION OF MUMBAI TRIBUNAL HAS DISTI NGUISHED THE CASE LAW OF LIBERTY INDIA. OUR ATTENTION HAS ALSO BEEN D RAWN TO POST-LIBERTY INDIA DECISION OF HONBLE RAJASTHAN HIGH COURT IN CHAMBAL 4 MA NO.83/MUM/2020 M/S GATEWAY TERMINALS PRIVATE LIMITED ASSESSMENT YEAR 2012-13 FERTILIZERS & CHEMICALS LTD. (95 TAXMANN.COM 313) WHICH HAS DEALT WITH DEDUCTION U/S 80-IA ON INTEREST INCOME. THE SPECIAL LEAVE PETITION AGAINST THE SAME IS STATED TO HAVE BEEN DI SMISSED BY HONBLE SUPREME COURT. IT HAS BEEN SUBMITTED THAT SIMILAR I S THE DECISION OF HONBLE MADRAS HIGH COURT IN ARUL MARIAMMAL TEXTILES LTD. (97 TAXMANN.COM 298). 2.3 IN THE ABOVE BACKGROUND, LD. SR. COUNSEL SUBMIT TED THAT TRIBUNAL OUGHT TO HAVE GRANTED AN OPPORTUNITY TO TH E ASSESSEE TO REBUT THE DECISION WHICH WAS NOT CITED BY EITHER OF THE P ARTIES AND WHOSE PRINCIPLES HAVE SUBSEQUENTLY BEEN DISTINGUISHED. TH E ASSESSEE COULD HAVE DISTINGUISHED THE UNREPORTED DECISION OF ELTEK SGS P. LTD. (SUPRA) IF AN OPPORTUNITY WAS PROVIDED TO THE ASSESSEE. TH E FAILURE TO DO SO RUN CONTRARY TO ESTABLISHED PRINCIPLES OF NAT URAL JUSTICE AND FAIR TRIAL / HEARING. 2.4 THE LD. DR, ON THE OTHER HAND, SUBMITTED THAT T HE ORDER COULD NOT BE REVIEWED U/S 254(2). 3. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS AS WE LL AS CONTENTS OF THE APPLICATION. UPON PERUSAL OF TRIBUNAL ORDER, WE FIND THAT THAT THE CIRCUMSTANCES UNDER WHICH DEPOSITS WERE KEPT WITH T HE BANK WERE DULY NOTED IN PARA 5.4 AS WELL AS IN PARA 7 OF THE ORDER. THE ARGUMENT THAT FDR WOULD HAVE DIRECT NEXUS WITH ASSESSEES BU SINESS ACTIVITIES AND THEREFORE, THE SAME SHOULD BE TREATED AS PART A ND PARCEL OF THE BUSINESS ACTIVITIES WAS DULY TAKEN NOTE OF IN PARA 7 OF THE ORDER. HOWEVER, THE POINT OF DISPUTE WAS NOT THE CIRCUMSTA NCES UNDER WHICH THE DEPOSITS WERE HELD BY THE ASSESSEE AND WHETHER THE SAME WERE 5 MA NO.83/MUM/2020 M/S GATEWAY TERMINALS PRIVATE LIMITED ASSESSMENT YEAR 2012-13 PART & PARCEL OF BUSINESS ACTIVITIES. THE SAME IS E VIDENT FROM THE FACT THAT LD. AO, IN ALL THE YEARS, HAD ACCEPTED INTERES T ON FDR AS BUSINESS INCOME ONLY. RATHER THE POINT OF DISPUTE W AS WHETHER THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION ON INTEREST ON FDR WITHIN FOUR CORNERS OF SEC. 80-IA OR NOT. IN FACT, THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80-IA EVEN ON INTEREST ON INCOME TAX REFUND WHICH IS ULTIMATELY ASSESSED AS INCOME FROM OTHER SOURCES. THEREFORE, THE FACT THAT FDRS WERE KEPT OUT OF COMMERCIAL EXPEDIEN CY AND THE SAME WAS PART AND PARCEL OF BUSINESS ACTIVITIES WAS NOT UNDER DISPUTE. THE ASSESSEE CLAIMED DEDUCTION U/S 80-IA ON INTEREST ON FDRS WHICH WAS ASSESSED AS BUSINESS INCOME AND ALSO CLAIMED SIMI LAR DEDUCTION ON INTEREST ON INCOME TAX REFUND WHICH WAS ASSESSED AS INCOME FROM OTHER SOURCES. THEREFORE, THE FIRST AGREEMENT WOUL D NOT CONVINCE US TO ALTER THE ORDER, IN ANY MANNER. 4. SO FAR AS THE CASE LAWS ARE CONCERNED, THE DECIS ION OF HONBLE APEX COURT IN LIBERTY INDIA LTD. (317 ITR 218) WAS RENDERED ON 31/08/2009 AND IT WAS CONCERNED WITH DEDUCTION OF D EPB CREDIT / DUTY DRAWBACK IN THE CONTEXT OF SEC.80-IB READ WITH SECT IONS 80-I AND 80- IA. A PRINCIPLE WAS LAID DOWN THEREIN THAT THE WORD S DERIVED FROM IS NARROWER CONNOTATION AS COMPARED TO THE WORDS ATTR IBUTABLE TO AND BY USING THE WORDS DERIVED FROM, THE PARLIAMENT I NTENDED TO COVER SOURCES NOT BEYOND THE FIRST DEGREE. DURING THE COURSE OF HEARING OF THE APPEAL, LD. SR. COUNSEL PRIMARILY RELIED UPON THE DECISION OF HONBLE DELHI HIGH COUR T IN CIT V/S ELTEK SGS (P) LTD. (169 TAXMAN 283) WHICH WAS RENDERED ON 19/02/2008. 6 MA NO.83/MUM/2020 M/S GATEWAY TERMINALS PRIVATE LIMITED ASSESSMENT YEAR 2012-13 THIS CASE LAW WAS ALSO RENDERED IN THE CONTEXT OF D EDUCTION OF DUTY DRAWBACK U/S 80-IB AND WAS PRIOR TO LIBERTY INDIA. IT WAS VEHEMENTLY PLEADED BEFORE US THAT THIS DECISION OF ELTEK SGS W AS FOLLOWED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V/S JAGDISHPRASAD M. JOSHI (318 ITR 420) RENDERED ON 25/11/2008 WHICH WAS RENDERED IN THE CONTEXT OF DEDUCTION OF INTEREST INCOME FROM FI XED DEPOSITS AND OTHER INTEREST INCOME U/S 80-IA. THE HONBLE COURT, RELYING UPON AFORESAID DECISION OF HONBLE DELHI HIGH COURT IN CIT V/S ELTEK SGS (P) LTD. (SUPRA; DATED 19/02/2008), REFUSED TO ADMIT THE SUBSTANTIAL QUESTION OF LAW RAISED BY THE REVENUE. THIS DECISIO N OF CIT V/S JAGDISHPRASAD M. JOSHI (SUPRA) HAS SUBSEQUENTLY BEEN FOLLOWED BY HONBLE BOMBAY HIGH COURT IN TEMA EXCHANGERS MANUFACTURERS PVT. LTD. V/S ACIT (ITA NO. 415 OF 2004) RENDERED ON 18/07/2018. THIS CASE LAW SIMILARLY DEALS WITH ASSESSEES ELIGI BILITY TO CLAIM DEDUCTION OF INTEREST INCOME U/S 80-IA. IN THIS D ECISION, HONBLE COURT HAS ALSO REFERRED TO THE DECISION OF DELHI HIGH COU RT IN CIT V/S ELTEK SGS (P) LTD. (SUPRA; DATED 19/02/2008). HOWEVER, FOLLOWING LIBERTY INDIA, THE DECISION OF H ONBLE DELHI HIGH COURT IN ELTEK SGS STOOD REVERSED BY HONBLE APEX C OURT ON 26/03/2010. THEREFORE, THE RATIO OF THIS DECISION R ENDERED BY HONBLE DELHI HIGH COURT AND OTHER DECISIONS, WHICH FOLLOWE D THIS DECISION, WAS NO LONGER APPLICABLE. 5. UPON PERUSAL OF CASE LAWS AS CITED BY LD SR. COU NSEL DURING HEARING OF THE APPEAL, IT WAS NOTED BY THE BENCH TH AT THE ARGUMENTS DRAW STRENGTH FROM THE DECISION OF HONBLE DELHI HI GH COURT IN CIT V/S 7 MA NO.83/MUM/2020 M/S GATEWAY TERMINALS PRIVATE LIMITED ASSESSMENT YEAR 2012-13 ELTEK SGS (P) LTD. (SUPRA; DATED 19/02/2008). IT WAS NOTED THAT THIS CASE LAW STOOD REVERSED BY HONBLE SUPREME COURT IN CIVIL APPEAL NO. 2817 OF 2010 DECISION DATED 26/03/2010 AND THER EFORE, THE RATIO OF THIS DECISION WAS NO LONGER APPLICABLE. CONSEQUENTL Y, THE RELIANCE ON THE STATED DECISIONS OF HONBLE BOMBAY HIGH COURT W AS NOT CORRECT AND HENCE THE ADJUDICATION BY THE BENCH. THE LD. SR . COUNSEL, DURING HEARING OF APPLICATION, ARGUED THAT THE CASE LAW OF ELTEK SGS (P) LTD. WAS DISTINGUISHABLE WHICH COULD NOT BE ACCEPTED IN VIEW OF THE FACT THAT THE RATIO OF THIS VERY DECISION HAS BEEN APPLI ED BY HONBLE BOMBAY HIGH COURT IN THE STATED CASE LAWS WHILE ADJ UDICATING ASSESSEES ELIGIBILITY TO CLAIM DEDUCTION OF INTERE ST U/S 80-IA WHICH IS SIMILAR TO THE FACTS OF THE ASSESSEES CASE. FURTHE R, THIS CASE LAW WAS RELIED UPON BY THE ASSESSEE HIMSELF DURING HEARING OF THE APPEAL. THE DECISION OF TRIBUNAL IN ITO V/S HIRANANDANI BUILDERS (SUPRA) HAS ALREADY BEEN TAKEN NOTE OF BY THE BENCH AND APP ROPRIATELY DEALT WITH IN THE ORDER. NO FURTHER ELABORATION WOULD BE REQUIRED ON THIS DECISION. LASTLY, THE TWO DECISIONS OF HONBLE RAJASTHAN HIGH COURT AND HONBLE MADRAS HIGH COURT HAVE BEEN CITED FOR THE FIRST TIM E DURING THE HEARING OF THIS APPLICATION. THESE DECISIONS ARE FR OM NON JURISDICTIONAL HIGH COURT AND THE SAME WERE NOT CITED DURING THE H EARING OF THE APPEAL. THEREFORE, NON CONSIDERATION OF THESE DECIS IONS WOULD NOT MAKE THE ORDER ERRONEOUS WHICH WOULD CALL FOR ANY I NTERFERENCE IN TERMS OF MANDATE OF SECTION 254(2). 8 MA NO.83/MUM/2020 M/S GATEWAY TERMINALS PRIVATE LIMITED ASSESSMENT YEAR 2012-13 6. WE FIND THAT THE PROVISIONS OF SECTION 254(2) HA VE NARROW APPLICATION AND ENVISAGE RECTIFICATION OF MISTAKES WHICH ARE APPARENT FROM RECORD. THERE IS POWER TO RECTIFY BUT NOT TO R EVIEW THE ORDER. THE ARGUMENTS OF LD. SR. COUNSEL, IF ACCEPTED, WOULD AM OUNT TO REVIEW OF THE ORDER WHICH IS IMPERMISSIBLE. 7. IN VIEW OF THE FOREGOING, FINDING NO REASON TO I NTERFERE IN THE ORDER PASSED BY THE TRIBUNAL. WE DISMISS THIS APPLI CATION. ORDER PRONOUNCED ON 27 TH APRIL, 2021. SD/- SD/- (PAVAN KUMAR GADALE) (MA NOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 27/04/2021 SR.PS:-JAISY VARGHESE ! / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$' / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. , #&- , - , / DR, ITAT, MUMBAI 6. ./0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.