SULPHUR MILLS LIMITED , MUMBAI V. ADDITIONAL COMMISSIONER OF INCOME TAX RANGE 8(3), MUMBAI

MA 898/MUM/2017

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 6618 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 16-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 21-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIRENDER SINGH
• Assessee Lawyers: M K PATEL; K S CHOKSI
• Keywords: Business income
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI , JUDICIAL MEMBER MA NO. 898/MUM/2017 ( OUT OF ITA NO. 4631/MUM/2011 ) : A.Y : 2007 - 08 M/S. SULPHUR MILLS LTD., 604/605, 349 - BUSINESS POINT, WESTERN HIGHWAY EXPRESS, ANDHERI (E), MUMBAI 400 069 . PAN : AABCS8739K (APPLICANT) VS. ADDL. CIT, RANGE - 8(3), MUMBAI. (RESPONDENT) APPLICANT BY : SHRI K.S. CHOKSI & SMT. M.K. PATEL RESPONDENT BY : SHRI VIRENDER SINGH DATE OF HEARING : 04/05/2018 DATE OF PRONOUNCEMENT : 16 /05/2018 O R D E R PER G.S. PANNU , AM : THE CAPTIONED APPLICATION U/S 254(2) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT ) HAS BEEN PREFERRED BY THE ASSESSEE WITH RESPECT TO THE DECISION OF THE TRIBUNAL DATED 05.05.2017 QUA THE FOLLOWING GROUND NO. 2(B)(II) RAISED IN THE ORIGINAL MEMO OF APPEAL PERTAINING TO ASSESSMENT YEAR 2007 - 08 : - 2(B)(II) THE LEARNED ASSESSING OFFICER HAS CALCULATED EXEMPTION U/S 10B OF THE INCOME TAX ACT 1961 BY DIVIDING THE PROFITS OF THE BUSINESS BY TOTAL TURNOVER OF RS.364007221/ - AS AGAINST THE ADJUSTED TOTAL TURNOVER OF RS.330591812/ - . THE SAME BE RESTORED AS PER THE COMPUTATION OF INCOME 2 MA NO. 898/MUM/2017 M/S. SULPHUR MILLS LTD. AND ACCORDINGLY EXEMPTION U/S 10B OF THE INCOME TAX ACT 1961 BE ENHANCED. 2. THE AFORESAID GROUND HAS BEEN ADJUDICATED BY THE TRIBUNAL AND IN THE CONTEXT OF THE PRESENT APPLICATION, THE FOLLOWING DISCUSSION IN THE ORDER OF THE TRIB UNAL DATED 05.05.2017 (SUPRA) CONTAINED IN PARA 4.5 AND 4.6 HAS BEEN REFERRED TO, WHICH IS AS UNDER : - 4.5 THE LAST ASPECT WHICH HAS BEEN ARGUED WITH RESPECT TO THE COMPUTATION OF DEDUCTION UNDER SECTION 10B OF THE ACT IS IN RELATION TO THE DETERMINATION OF TOTAL TURNOVER FOR THE PURPOSES OF COMPUTING THE PROFITS ELIGIBLE FOR THE BENEFITS OF SECTION 10B OF THE ACT. THE LD. REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE TOTAL TURNOVER ADOPTED BY THE ASSESSING OFFICER IS INCLUSIVE OF EXCISE DUTY, WHI CH IS INAPPROPRIATE AND THAT THE TOTAL TURNOVER SHOULD BE ADOPTED AFTER EXCLUDING THE ELEMENT OF EXCISE DUTY. ON THIS ASPECT ALSO WE FIND ENOUGH MERIT IN THE PLEA OF THE ASSESSEE BECAUSE IN THE FIGURE OF EXPORT TOTAL TURNOVER (I.E. THE NUMERATOR) THE ELEM ENT OF EXCISE DUTY IS NOT PRESENT, THEREFORE, IN THE DENOMINATOR ALSO I.E IN THE FIGURE OF TOTAL TURNOVER, THE ELEMENT OF EXCISE DUTY SHOULD ALSO BE EXCLUDED FOR REASONS OF PARITY. 4.6 IN THE RESULT, IN SO FAR AS, THE ISSUE RELATING TO DEDUCTION UNDER SECTION 10B OF THE ACT IS CONCERNED, THE MATTER IS SENT BACK TO THE FILE OF ASSESSING OFFICER TO RECOMPUTE THE SAME, IN LINE WITH OUR ABOVE DISCUSSION. 3. IN THE MISCELLANEOUS APPLICATION IT IS SOUGHT TO BE POINTED OUT THAT THE ISSUE BEFORE THE TRIBUNAL WAS THE ADOPTION OF THE FIGURE OF TOTAL TURNOVER FOR THE PURPOSE OF CALCULATION OF DEDUCTION U/S 10B OF THE ACT; THAT THE ASSESSING OFFICER ADOPTED THE TOTAL TURNOVER OF BUSINESS AT RS. 3 6,40,07,221 / - AS AGAINST ASSESSEES STAND OF ADOPTING IT AT RS. 33, 05,91,812 / - . AT THE TIME OF HEARING, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE REFERRED TO PAGE 5 OF THE PAPER BOOK, WHICH IS A COPY OF 3 MA NO. 898/MUM/2017 M/S. SULPHUR MILLS LTD. COMPUTATION OF DEDUCTION U/S 10B OF THE ACT. ON THIS BASIS, IT IS SOUGHT TO BE EXPLAINED THAT THE DIFFERENCE BETWEEN THE FIGURE OF TOTAL TURNOVER OF BUSINESS ADOPTED BY THE ASSESSEE AND THE ASSESSING OFFICER WAS ON ACCOUNT OF THREE ELEMENTS, NAMELY, EXCISE DUTY RS.2,45,02,922/ - ; SHIPPING FREIGHT RS.88,65,703/ - AND INSURANCE RS.1,11,784/ - . THE ERROR WHICH IS SOUGH T TO BE POINTED OUT BY THE LEARNED REPRESENTATIVE IS THAT THE TRIBUNAL HAS ADJUDICATED THE ISSUE ONLY WITH REGARD TO THE ELEMENT OF EXCISE DUTY AND NOT THE OTHER TWO ELEMENTS OF DIFFERENCE, NAMELY, SHIPPING FREIGHT AND INSURANCE. 4. WE FIND THAT THE TRIBU NAL NOTICED THAT THE FIGURE OF TOTAL TURNOVER ADOPTED BY THE ASSESSING OFFICER WAS INCLUSIVE OF EXCISE DUTY, WHICH WAS FOUND INAPPROPRIATE PRIMARILY FOR THE REASON THAT SUCH LEVY WAS NOT INCLUDED IN THE FIGURE OF EXPORT TURNOVER THEREBY MEANING THAT TH ERE WAS NO PARITY BETWEEN THE FIGURE OF EXPORT TURNOVER TAKEN AS A NUMERATOR AND THE FIGURE OF TOTAL TURNOVER TAKEN AS THE DENOMINATOR. TO ENSURE PARITY, THE TRIBUNAL DIRECTED THAT IN THE FIGURE OF TOTAL TURNOVER , THE ELEMENT OF EXCISE DUTY SHOULD B E EXCLUDED FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 10B OF THE ACT. WHAT IS NOW SOUGHT TO BE POINTED OUT IS THAT SIMILAR IS THE SITUATION WITH REGARD TO THE ELEMENTS OF SHIPPING FREIGHT AND INSURANCE , WHICH HAVE OTHERWISE BEEN DEDUCTED FROM THE EXP ORT TURNOVER BUT CONTINUE TO REMAIN A PART OF THE TOTAL TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 10B OF THE ACT. IN OUR VIEW, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE AS WELL AS THE COMPUTATION OF DEDUCTION U/S 10B OF THE ACT, WHICH IS A PART OF RECORD AND HAVE BEEN REFERRED TO AT THE TIME OF ORIGINAL HEARING, JUSTIFIES THE ASSERTIONS OF THE ASSESSEE THAT ADJUDICATI O N OF THE ASPECT RELATING TO EXCLUSION OF ELEMENTS OF SHIPPING FREIGHT AND INSURANCE FROM THE FIGURE OF 4 MA NO. 898/MUM/2017 M/S. SULPHUR MILLS LTD. TOTAL TURNOVER HAS ESCAPED THE ATTENTION OF THE BENCH. THEREFORE, WE DEEM IT FIT AND PROPER TO MODIFY OUR ORDER DATED 05.05.2017 (SUPRA) AS DISCUSSED HEREINAFTER . 5. PERTINENTLY, IN PARA 4.5 OF THE ORDER, THE TRIBUNAL HELD THAT WHEN THE ELEMENT OF EXCISE DUTY HAS BEEN EXCLUDED FROM THE FIGURE OF EXPORT TURNOVER , THE SAME SHOULD ALSO BE EXCLUDED FROM THE FIGURE OF TOTAL TURNOVER FOR REASONS OF PARITY. THEREAFTER, IN PARA 4.6 OF THE ORDER, THE MATTER WAS SENT BACK TO THE FILE OF THE ASSESSING OFFICER TO RECOMPUTE TH E DEDUCTION U/S 10B OF THE ACT ACCORDINGLY. IN OUR CONSIDERED OPINION, IT WOULD MEET THE ENDS OF JUSTICE IF THE ISSUE RELATING TO EXCLUSION OF SHIPPING FREIGHT AND INSURANCE FROM THE FIGURE OF TOTAL TURNOVER IS ALSO SENT BACK TO THE FILE OF THE ASSE SSING OFFICER , WHO SHALL CONSIDER IT WHILE RECOMPUTING THE DEDUCTION U/S 10B OF THE ACT ON THE SAME REASONING AS HAS BEEN EXPLAINED BY US IN THE CONTEXT OF THE EXCLUSION OF ELEMENT OF EXCISE DUTY FROM THE FIGURE OF TOTAL TURNOVER . WITH THESE REMARKS, TH E ORDER OF THE TRIBUNAL DATED 05.05.2017 (SUPRA) STANDS MODIFIED TO THE ABOVE EXTENT. 6. IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS ALLOWED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 1 6 T H MAY, 2018. SD/ - SD/ - (RAM LAL NEGI) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER MUMBAI, DATE : 1 6 T H MAY, 2018 *SSL* 5 MA NO. 898/MUM/2017 M/S. SULPHUR MILLS LTD. COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, E BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI