Milton Laminates Limited V. Assistant Commissioner of Income Tax Circle-4

TAXAP/1833/2010

AI Insights

Milton Laminates Limited appealed against the ITAT's decision regarding the assessment for the assessment year 1997-98. The primary issues revolved around the exclusion of 90% of 'Other Income' such as interest and insurance claims from business profits while calculating deductions under Section 80HHC, and the non-allowance of netting off interest income against interest expenditure. The Gujarat High Court, referencing the Supreme Court's ruling in ACG Associated Capsules Pvt. Ltd, overturned the ITAT's decision, directing a recomputation of the deductions in favor of the assessee.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 807564 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 30-11-2013
• Assessment Year: misc
• Other Referred Cases: ACG Associated Capsules Pvt. Ltd vs. Commissioner of Income Tax (2012) 343 ITR 89(SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: MAUNA BHATT
• Assessee Lawyers: SWATI SOPARKAR
• Keywords: Assessment Order; Income Tax; Mistake apparent on record; Netting off interest income; Exclusion of Other Income
• Section: 154; 80HHC

Judgement Text

"O/TAXAP/1833/2010 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1833 of 2010 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH ­ sd/­ and HONOURABLE MR.JUSTICE R.P.DHOLARIA ­ sd/­ ============================================= Whether Reporters of Local Papers may be allowed to see the judgment ? NO To be referred to the Reporter or not ? NO Whether their Lordships wish to see the fair copy of the judgment ? NO Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? NO Whether it is to be circulated to the civil judge ? NO ============================================= MILTON LAMINATES LIMITED....Appellant(s) Versus ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE­4....Opponent(s) ============================================= Appearance: MRS SWATI SOPARKAR, ADVOCATE for the Appellant(s) No. 1 MRS MAUNA M BHATT, ADVOCATE for the Opponent(s) No. 1 ============================================= CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE R.P.DHOLARIA Date : 30/11/2013 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1.0. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Income Appellate Tribunal (hereinafter referred to as the ITAT) dated 24.10.2008 passed in ITA No.2053/AHD/2004 for the AY 1997­98, the assessee has preferred the Page 1 of 3 O/TAXAP/1833/2010 JUDGMENT present Tax Appeal. 2.0. While admitting the present Tax Appeal following substantial question of law are framed. (i) Whether, in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that mistake in the assessment order was apparent on record and was an obvious and patent mistake and that the view taken by the Assessing Officer in the order passed under Section 154 of the Income Tax Act, 1961 was not debatable at all? (ii) Whether, in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in excluding 90% of the ‘Other Income’ viz. Interest, Misc. Income and Insurance Claim from the profits of the Business while calculating the deduction u/s. 80HHC of the Act? (iii) Whether, in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in not allowing the “Netting Off” of interest income against interest expenditure? 3.0. Heard Shri S.N. Soparkar, learned Senior Advocate for the assessee and Shri M.R. Bhatt, learned Senior advocate for the revenue. 4.0. At the outset, it is required to be noted that so far as question nos. 2 and 3 are concerned, they are squarely covered by the decision of the Hon’ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd vs. Commissioner of Income Tax reported in (2012) 343 ITR 89(SC) in favour of assessee. Under the circumstances, the aforesaid issues / questions are now not res­integra. In the case of ACG Associated Capsules Pvt. Ltd (supra) it is held by the Hon’ble Supreme Court in the said decision that 90% of not the gross interest but only the net interest, which has been included in the profits of the business of the assessee as computed under the heads “Profits and gains of business or profession” is to be deducted under clause (1) of Explanation (baa) to Page 2 of 3 O/TAXAP/1833/2010 JUDGMENT Section 80HHC for determining the profits of business. 5.0. Applying the law laid down by the Hon’ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd (supra) the aforesaid question are held in favour of the assessee and order passed by the ITAT in ITA No.2053/AHD/2004 for AY 1997­98 is hereby quashed and set aside. Now, the AO to recompute the deduction under Section 80HHC of the Income Tax Act considering the law laid down by the Hon’ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd (supra) which is reproduced herein above. 6.0. In of the decision on merits with respect to question nos. 2 and 3, question no.1 become academic and therefore, the same is not dealt with. 7.0. With this, present appeal is allowed to the aforesaid extent. No costs. sd/­ (M.R.SHAH, J.) sd/­ (R.P.DHOLARIA,J.) Kaushik Page 3 of 3 "