GRINDWELL NORTON LTD, V. DCIT RG 1(1),

MA 488/MUM/2012

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 9731 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: L
• Assessment Year: 2003-2004
• Appeal Filed On: 25-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M M GOLAVALA
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH L, MUMBAI BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA JUDICIAL MEMBER. M.A. NO. 488//MUM/2012. (ARISING OUT OF C.O . NO.230/MUM/2012) ASSESSME NT YEAR : 2003-04. M/S GRINDWELL NORTON LTD., DY. COMMISSIONER OF LEELA BUSINESS PARK, VS. INCOME-TAX, 5 TH LEVEL, ANDHERI KURLA ROAD, RANGE-1(1), MAROL, ANDHERI (E), MUMBAI. MUMBAI 400 059. PAN AAACG 8725BG APPLICANT. RESPON DENT. APPLICANT BY : SHRI M.M. GOLAVALA. RESPONDENT BY : SHRI MOHIT JAIN. DATE OF HEA RING : 21-122012. DATE OF PRONOUNCEM ENT : 21-11 -2012. O R D E R PER P.M. JAGTAP, A.M. : BY THIS MISCELLANEOUS APPLICATION, THE ASSESSEE IS SEEKING RECTIFICATION OF THE ORDER OF THE TRIBUNAL DATED 20 TH JANUARY, 2012 PASSED IN C.O. NO. 230/MUM/2009 ON THE GROUND THAT THE VIEW TAKEN THER EIN WHILE DISALLOWING THE ALTERNATIVE CLAIM OF THE ASSESSEE FOR REDUCING ONLY THE NET AMOUNT OF SERVICE CHARGES RECEIVED FROM THE PROFITS & GAINS OF BUSIN ESS OR PROFESSION UNDER EXPLANATION (BAA) TO SECTION 80HHC IS NOT IN CONFOR MITY WITH THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ACG ASSOCIATED CAPSULES PVT. LTD. VS. CIT 343 ITR 89 RENDERED SUBSEQUENTLY. 2 M.A. NO.488/MUM/2012 2. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE ISSUE R AISED BY THE ASSESSEE IN THE SOLITARY GROUND TAKEN IN ITS CROSS OBJECTION RELATING TO ITS ALTERNATIVE CLAIM THAT IF THE SERVICE CHARGES OF RS.2,22,82,726/- RECEIVED DURING THE YEAR UNDER CONSIDERATION ARE TO BE REDUCED FROM THE PROFITS & GAINS OF BUSI NESS OR PROFESSION AS PER EXPLANATION (BAA) TO SECTION 80HHC AS CLAIMED BY TH E REVENUE IN ITS APPEAL, ONLY THE NET AMOUNT AFTER ALLOWING THE EXPENDITURE INCUR RED FOR EARNING THE SERVICE CHARGES SHOULD BE REDUCED, WAS DECIDED BY THE TRIBU NAL AGAINST THE ASSESSEE VIDE ITS ORDER DATED 20 TH JANUARY, 2012 (SUPRA) FOLLOWING THE DECISION OF HO NBLE BOMBAY HIGH COURT IN THE CASE OF ASIAN STAR LTD. 32 6 ITR 56 WHEREIN IT WAS HELD THAT SUCH NETTING IS NOT ALLOWABLE. AS POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE HONBLE SUPREME COURT IN THE JUDGMENT DELIVERED SUBSEQUENTLY IN THE CASE OF ACG ASSOCIATED CAPSULES PVT. LTD. (SUPRA) H AS IMPLIEDLY OVERRULED THE DECISION OF HONBLE BIMBAY HIGH COURT IN THE CASE OF ASIAN STAR LTD. (SUPRA) ON THIS ISSUE BY HOLDING THAT 90% OF NOT THE GROSS AMO UNT OF RENT OR INTEREST BUT ONLY THE NET AMOUNT OF SUCH INTEREST OR RENT, WHICH HAD BEEN INCLUDED IN THE PROFITS OF BUSINESS OF THE ASSESSEE, SHOULD BE REDUCED UNDER C LAUSE (I) OF EXPLANATION (BAA) TO SECTION 80HHC FOR DETERMINING THE PROFITS OF THE BU SINESS. THE DECISION RENDERED BY THE TRIBUNAL VIDE ITS ORDER DATED 20 TH JANUARY, 2012 (SUPRA) ON THIS ISSUE THUS IS CONTRARY TO THE VIEW EXPRESSED BY THE HONBLE SUPRE ME COURT IN THE CASE OF ACG ASSOCIATED CAPSULES PVT. LTD. (SUPRA) RENDERED SUBS EQUENTLY AND THIS POSITION HAS NOT BEEN DISPUTED EVEN BY THE LEARNED DR AT THE TI ME OF HEARING BEFORE US. IN THE CASE OF ACIT VS. SAURASHTRA KUCCHA STOCK EXCHANGE L TD. 305 ITR 227, THE HONBLE SUPREME COURT HELD THAT EVEN THE JUDGMENT O F THE JURISDICTIONAL HIGH COURT ALTHOUGH RENDERED SUBSEQUENTLY WOULD GIVE RIS E TO A MISTAKE APPARENT FROM RECORD IN THE ORDER OF THE TRIBUNAL WHICH IS NOT IN CONFORMITY WITH THE SAID DECISION. KEEPING IN VIEW THE SAID DECISION OF THE HONBLE APEX COURT WHICH IS 3 M.A. NO.488/MUM/2012 SQUARELY APPLICABLE IN THE PRESENT CONTEXT, WE RECT IFY THE ORDER OF THE TRIBUNAL DATED 20 TH JANUARY, 2012 (SUPRA) ON THIS ISSUE AND DIRECT THE AO TO REDUCE 90% OF ONLY THE NET SERVICE CHARGES AFTER ALLOWING EXPENDI TURE INCURRED TO EARN THE SAID INCOME FROM THE PROFITS AND GAINS OF BUSINESS OR PR OFESSION AS PER EXPLANATION (BAA) TO SECTION 80HHC. THE CROSS OBJECTION FILED B Y THE ASSESSEE BEING C.O. NO. 230/MUM/2009 IS ACCORDINGLY ALLOWED. 3. IN THE RESULT, THE MISCELLANEOUS APPLICATION FIL ED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 21 ST DAY OF DEC., 2012. SD/- SD/- (AMIT SHUKLA) (P.M. JAGTAP) JUDICIAL MEMBER. ACCOUNTANT MEMBER. MUMBAI, DATED : 21 ST DEC., 2012. WAKODE COPY TO : 1. APPLICANT. 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. D.R., L-BENCH. (TRUE COPY) BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.