ASST CIT 18(2), V. METROPOLITAN TRADING CO.,

MA 555/MUM/2011

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 8818 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 29-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 28-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C G K NAIR
• Assessee Lawyers: VASANTI B PATEL
• Keywords: Rule of consistency; Question of law
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , ! ' ' ' ' #$ % & , ' ! ( BEFORE SHRI DINESH KUMAR AGARWAL (J.M.) AND SHRI RAJENDRA SINGH (A.M.) )) / M.A. NO. 555/MUM/2011 ARISING OUT OF ITA NO. 4350/MUM/2009 + + + + ,+ ,+ ,+ ,+ / ASSESSMENT YEAR : 2003-04 ASSTT. COMMISSIONER OF INCOME- TAX 18(2), ROOM NO. 115, IST FLOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI. 400 012. VS. M/S METROPOLITAN TRADING CO., 10/76 OFF HAINES ROAD, WORLI, MUMBAI 400 018. PAN : AAAFM 1474C ( -. / APPLICANT) ( /0-. / RESPONDENT) -. 1 2 / APPLICANT BY : SHRI C.G.K. NAIR /0-. 1 2 / RESPONDENT BY : MS. VASANTI B. PATEL 1 3' / DATE OF HEARING 22-6-2012 45, 1 3' / DATE OF PRONOUNCEMENT / O R D E R PER DINESH KUMAR AGARWAL, J.M. THIS MISC. PETITION DATED NIL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DTD. 10-8-2011 PASSED BY THE TRIB UNAL IN ITA NO. 4350/MUM/2009 FOR THE A.Y. 2003-04. MA NO. 555/MUM/2011 2 2. IN THE MISC. PETITION IT WAS INTER ALIA STATED T HAT THE ITAT WHILE DECIDING THE APPEAL IN FAVOUR OF THE ASSESSEE, RELY ING UPON JUDICIAL DECISION IN THE CASE OF ALFA LAVAL INDIA LTD. VS CI T (266 ITR 418) HAS NOT CONSIDERED THE JUDICIAL PRONOUNCEMENTS IN THE CASES OF CIT VS. DRESSER RAND INDIA (P) LTD. AND LIBERTY INDIA VS. COMMISSIO NER OF INCOME-TAX (SUPRA) BOTH OF WHICH HAVE BEEN DELIVERED SUBSEQUEN T TO THE JUDGMENT RELIED UPON BY THE ITAT AND THE RATIO OF THOSE JUDG MENTS ARE CLEARLY APPLICABLE TO THE CASE OF THE ASSESSEE INVOLVED IN THE PRESENT APPEAL. IT IS PERTINENT TO MENTION HERE THAT THE HON. SUPREME COU RT WHILE DISMISSING THE APPEAL OF THE REVENUE IN THE CASE OF M/S. ALFA LAVAL INDIA LTD. HAS LEFT OPEN THE QUESTION FOR TREATING SALES TAX SET-O FF/REFUND, INTEREST AND OTHER REFUNDS RECEIVED BY THE ASSESSEE, FOR TREATIN G IT AS PART OF BUSINESS PROFIT OR NOT. IT WAS, THEREFORE, SUBMITTED THAT T HERE IS MISTAKE APPARENT FROM RECORD IN THE ORDER OF THE TRIBUNAL DTD. 10-8- 2011 (SUPRA) AND THE SAME MAY BE RECTIFIED/AMENDED U/S 254 (2) OF THE IN COME TAX ACT, 1961 (THE ACT). 3. AT THE TIME OF HEARING THE LD. D.R. SUBMITS THAT FOR THE REASONS AS MENTIONED IN THE MISC. PETITION FILED BY THE REVENU E AND IN VIEW OF THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CI T VS. DRESSER RAND INDIA PVT. LTD. (2010) 323 ITR 429 (BOM), THE ORDER PASSED BY THE TRIBUNAL BE RECALLED. HE ALSO PLACED ON RECORD A CO PY OF THE SAID JUDGMENT. MA NO. 555/MUM/2011 3 4. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESS EE, AT THE OUTSET, SUBMITS THAT THE LD. D.R. AT THE TIME OF HEARING O F THE APPEAL DID NOT REFER/RELY ON THE JUDGMENT IN THE CASE OF DRESSER R AND INDIA (P) LTD. (SUPRA) WHICH IS DTD. 8-4-2010 I.E. MUCH PRIOR TO T HE DATE OF HEARING OF THE PRESENT APPEAL WHICH WAS HEARD ON 4-8-2011. SHE FURTHER SUBMITS THAT THE HONBLE JURISDICTIONAL HIGH COURT IN THE C ASE OF CIT VS. PFIZER LTD. (2011) 330 ITR 62 (BOM) WHILE OBSERVING THAT T HE CASE OF DRESSER RAND INDIA PVT. LTD. PROCEEDED ON A CONCESSION BY C OUNSEL APPEARING ON BEHALF OF THE ASSESSEE, THEREFORE, NOT CONCLUDED TH E ISSUE, HAS HELD THAT THE CLAIM ON ACCOUNT OF INSURANCE FOR STOCK-IN-TRAD E DID NOT CONSTITUTE A RECEIPT OF A SIMILAR NATURE WITHIN THE MEANING OF E XPLANATION (BAA) AND WAS, THEREFORE, NOT LIABLE TO BE REDUCED TO THE EXT ENT OF NINETY PER CENT. THEREFORE THE RELIANCE PLACED BY THE REVENUE IN THE CASE OF DRESSER RAND INDIA (P) LTD. (SUPRA) IS NOT MAINTAINABLE. SHE, T HEREFORE, SUBMITS THAT THE ORDER PASSED BY THE TRIBUNAL FOLLOWING THE ORDE R OF THE TRIBUNAL IN ASSESSEES OWN CASE DOES NOT CALL FOR ANY INTERFERE NCE. 5. WE HAVE CAREFULLY HEARD THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THE TRIBUNAL HAS DEALT WITH THE ISSUE OF SALES TAX REFUND NOT TO BE EXCLUDED WHILE CALCULATING DEDUCTION U/S 80HHC VIDE PARA 13 OF THE ORDER DTD. 10-08-2011 AS UNDER:- 13. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND M ERITS IN THE PLEA OF THE MA NO. 555/MUM/2011 4 LEARNED COUNSEL FOR THE ASSESSEE THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBU NAL IN THE ASSESSEES OWN CASE (SUPRA) WHEREIN THE TRIBUNAL HAS OBSERVED AND HELD VIDE PARAGRAPHS 6,6.1 AND 6.2 AS UNDER : 6. AS REGARDS SALES TAX REFUND, WE FIND THAT THIS ISSUE IS COVERED BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ALFA LAVAL INDIA LTD. VS. CIT, 266 ITR 418 WHEREIN THE HONBLE COURT HELD AS UNDER:- ..THE INTEREST FROM CUSTOMER S AND SALES TAX SET OFF RECEIVED BY THE ASSESSEE BEING ASSESSED AS PART OF THE BUSINESS PROFITS UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION, THE SAME COULD NOT BE EXCL UDED WHILE CALCULATING DEDUCTION UNDER SECTION 80 HHC OF THE ACT. 6.1 THE SAID DECISION OF THE BOMBAY HIGH COURT HAS BEEN AFFIRMED BY THE SUPREME COURT WHICH IS REPORTED IN 295 ITR 451(SC). 6.2 WE RESPECTFULLY FOLLOW THE SAID JUDGMENT OF THE BOMBAY HIGH COURT AND IN THE LIGHT OF THAT WE DIRECT THE ASSESS ING OFFICER NOT TO EXCLUDE THE SALES TAX REFUND WHILE CALCULATING THE DEDUCTION U/S 80 HHC. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGH T ON RECORD BY THE REVENUE, WE RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL AND THE JUDGMENTS OF THE HONBLE SUPREME COURT AND THE HON BLE JURISDICTIONAL HIGH COURT (SUPRA) DIRECT THE AO NOT TO EXCLUDE T HE SALES TAX REFUND WHILE CALCULATING THE DEDUCTION UNDER SECTION 80HH C OF THE ACT. HOWEVER, IN THE ABSENCE OF ANY ARGUMENTS OR SUPPORT ING MATERIAL IN RESPECT OF MISCELLANEOUS INCOME OF RS.2167/-, THE SAME IS THEREFORE, REJECTED AND ACCORDINGLY THE GROUNDS TAKEN BY THE ASSESSEE ARE PARTLY ALLOWED. THUS THE TRIBUNAL HAS DECIDED THE ISSUE FOLLOWING T HE TRIBUNALS ORDER IN ASSESSEES OWN CASE FOR A.Y. 2002-03 DTD. 21-1-2009 . WE FIND MERIT IN THE PLEA OF THE LD. COUNSEL FOR THE ASSESSEE THAT T HE DECISION IN THE CASE OF DRESSER RAND INDIA PVT. LTD. (SUPRA) RELIED ON B Y THE LD. D.R., AT THIS STAGE, WAS RENDERED BY THE HONBLE JURISDICTIONAL H IGH COURT ON A CONCESSION BY COUNSEL APPEARING ON BEHALF OF THE AS SESSEE, THEREFORE, DID MA NO. 555/MUM/2011 5 NOT CONCLUDE THE ISSUE AS OBSERVED BY THE HONBLE J URISDICTIONAL HIGH COURT IN PFIZER LTD. (SUPRA) APPEARING AT PLACITUM 5-6 OF PAGE 66 OF 330 ITR AS UNDER:- AT THE OUTSET IT WOULD BE NECESSARY FOR THE COURT TO ADVERT TO THE JUDGMENT OF THIS DIVISION BENCH DATED APRIL 8, 2010 , IN CIT V. DRESSER RAND INDIA PVT. LTD. [2010] 323 ITR 429 (BOM) (INC OME-TAX APPEAL 2186 OF 2009). THE QUESTION OF LAW WHICH WAS FORMULATED IN THE APPEAL BY THE REVENUE WAS AS FOLLOWS (PAGE 432) : 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT 9 0 PER CENT OF RECOVERY OF FREIGHT, INSURANCE AND PACKING RECEIPT S AMOUNTING TO RS. 49,14,076, SALES TAX SET OFF/REFUND AMOUNTING TO RS. 38,33,148 AND SERVICE INCOME OF RS. 2,89,17,545 AR E NOT TO BE EXCLUDED FROM PROFITS OF BUSINESS WITHIN THE MEANI NG OF CLAUSE (BAA) OF EXPLANATION TO SECTION 80HHC OF THE ACT F OR THE PURPOSE OF COMPUTATION OF DEDUCTION UNDER SECTION 80HHC OF THE INCOME- TAX ACT, 1961 ?' THIS COURT BY ITS DECISION HELD THAT IN TERMS OF TH E JUDGMENT OF THE SUPREME COURT IN CIT V. K. RAVINDRANATHAN NAIR [20 07] 295 ITR 228 THE ISSUE OF PROCESSING CHARGES WOULD STAND COVERED BY THE DECISION. THIS COURT NOTED THAT THE SUPREME COURT HAD HELD THAT TH E PROCESSING CHARGES, THOUGH THEY FORM A PART OF THE GROSS TOTA L INCOME, CONSTITUTE INDEPENDENT INCOME LIKE RENT, COMMISSION AND BROKE RAGE AND THAT HENCE 90 PER CENT. OF THE SAME HAD TO BE REDUCED F ROM THE GROSS TOTAL INCOME TO ARRIVE AT BUSINESS PROFITS. THE CONCLUDI NG PARAGRAPH OF THE JUDGMENT OF THIS COURT RECORDS THE CONCESSION OF CO UNSEL APPEARING ON BEHALF OF THE ASSESSEE THAT THE DISCUSSION IN RESPE CT OF THE ISSUE IN REGARD TO PROCESSING CHARGES AS AN INDEPENDENT INCO ME UNRELATED TO EXPORT, WOULD SIMILARLY APPLY TO THE OTHER ISSUES R AISED IN THE QUESTION OF LAW FRAMED BY THE REVENUE, VIZ., IN REGARD TO RECOV ERY OF FREIGHT, INSURANCE AND PACKING RECEIPTS, SALES TAX REFUND AN D SERVICE INCOME. THE QUESTION OF LAW WAS THEREFORE ANSWERED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. FROM THIS IT IS APPARENT THAT IN SO FAR AS THE INSURANCE CLAIM WAS CONCERNED, DRESSER RAND PROCEED ED ON A CONCESSION BY COUNSEL APPEARING ON BEHALF OF THE AS SESSEE. THAT APART, THE FACTS DO NOT CONTAIN AN ELABORATION OF THE NATU RE OF THE INSURANCE CLAIM IN THAT CASE. THE JUDGMENT OF THE DIVISION B ENCH IN DRESSER RAND WOULD THEREFORE NOT CONCLUDE THE ISSUE WHICH HAS FA LLEN FOR DETERMINATION IN THIS APPEAL. MA NO. 555/MUM/2011 6 RESPECTFULLY FOLLOWING THE ABOVE AND KEEPING IN VIE W THE RULE OF CONSISTENCY, WE ARE OF THE VIEW THAT THERE IS NO MI STAKE IN THE ORDER OF THE TRIBUNAL IN TERMS OF SECTION 254(2) OF THE ACT AND ACCORDINGLY THE MISC. PETITION FILED BY THE REVENUE IS REJECTED. 6. IN THE RESULT, THE MISC. APPLICATION FILED BY TH E REVENUE STANDS DISMISSED. 6 37 #! 1 )) '6# 1 #3 &8 ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JUNE, 2012. 1 5, ' 7 29-6-2012 5 1 9 SD/- (RAJENDRA SINGH) ( ' ! / ACCOUNTANT MEMBER SD/- (DINESH KUMAR AGARWAL) ! / JUDICIAL MEMBER / // / MUMBAI, / DATED 29 TH JUNE, 2012. . . ./ RK MA NO. 555/MUM/2011 7 1 11 1 /3%) /3%) /3%) /3%) ),3 ),3 ),3 ),3 / COPY OF THE ORDER FORWARDED TO : 1. -. / THE APPELLANT 2. /0-. / THE RESPONDENT. 3. ; ( ) / THE CIT(A)- 4. ; / CIT 5. )<9 /3 , , / DR, ITAT, MUMBAI 6. 9=+ > / GUARD FILE. / BY ORDER, 0)3 /3 //TRUE COPY// ? ?? ? / & & & & # # # # (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI