TMI Blog2011 (12) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... receipts, details of which are not available at present - Assessee could not relate the receipt of the above income to the industrial unit for claim of deduction under section 80I - Decided against the assessee - ITA Nos. 6262 and 6263/Mum/2010, ITA Nos. 6279 to 6284/Mum/2010, - - - Dated:- 21-12-2011 - D. Manmohan, B. Ramakotaiah, JJ. For the Appellant: Srinivasa Rao For the Respondent: Vijay Shah and Basant Karat ORDER Per: Bench: 1. In these eight appeals, there are cross appeals for assessment year 1990-91 and 1991-92 by the assessee and Revenue, whereas there are only assessee appeals in other assessment years. Since common issues are involved, these were heard together and decided as under. Assessee appeals: ITA 6279 to 6284/M/2010 In all assessee's appeals, various grounds raised are on four issues. The assessee has furnished a chart indicating the issues and grounds of appeal relevant to each assessment year. Accordingly, on the basis of the chart and submissions from the learned Counsel and learned Departmental Representative, the issues are decided as under. Issue No.1. Exclusion of rental income, interest income a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business', these receipts have no direct relationship with the assessee's claim under section 80HHC on export of goods. These are services separately rendered by the assessee company to a foreign company. Therefore, even though it is a business income, these incomes will fall under non operational income like brokerage, commission, interest or any other receipt of similar nature to be excluded at 90% under the provisions of section 80HHC Explanation (baa). Even in the proceedings before the AO when restored by ITAT, assessee did not submit any details to substantiate the claim. Considering that assessee originally excluded the same and only contested before the ITAT as additional ground, the Assessing Officer's and the CIT (A)'s orders on this issue are upheld and assessee's ground is rejected. 1.4 In the result, all respective grounds on this issue stands rejected. Issue-2. Exclusion of miscellaneous receipts from profits and gains in computing deduction under section 80I : This issue arises as Ground No.3 in assessment year 1996-97 only. 2.1 The facts of the issue are that the assessee included miscellaneous receipts as profit and gains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n than to confirm the action of the Assessing Officer in treating the miscellaneous expenses as not related to the industrial undertaking. Even though the assessee relied on the decision of the Hon'ble Madras High Court in the case of CIT vs. Sundaram Industries Ltd (2002) 253 ITR 396 (Mad), the issue was related to sale of scrap which the CIT (A) has allowed. Similar reliance on CIT vs. Eltek SGS (P) Ltd (2006) 10 SOT 178 (Del) is also misplaced where the issue is with reference to amount of duty drawback, the principle of which was subsequently reversed by the Hon'ble Supreme Court in Liberty India 317 ITR218 (SC). Assessee could not relate the receipt of the above income to the industrial unit for claim of deduction under section 80I. In view of this, the assessee's claim cannot be allowed. Accordingly the ground on this issue is dismissed. Issue-3. Error on computation of interest under section 244A: This issue arises as Ground No.1 in AY 1990-91 and AY 1991-92, as Ground No.2 in AY 1992-93 and AY 1994-95 and as Ground No.4 in 1996-97. 3.1 The assessee was aggrieved by the method of calculation of interest on the refund under section 244A. The main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due to the assessee but the amount which represents the tax already refunded has to be reduced from the total refund due to the assessee for computation of interest under section 244A. We note that the CIT (A) has decided the issue in Para 2.2 of the impugned order as under: 2.2 I have considered the appellant's request and examined the facts. In view of the facts above, I find that the issue relates to calculation method adopted by the department and assessee. It is seen that method adopted by the Assessing Officer is being consistently followed in respect of all assessee's. Therefore, I am of the view that method adopted by the Assessing Officer as per provisions of the act cannot be faulted. I therefore included to agree with the computation method adopted by the Assessing Officer. Accordingly, the ground under appeal is dismissed . 8. From the above it is clear that the CIT (A) has not gone into the question of correctness of method adopted by the Assessing Officer but decided the issue on the ground that the method adopted by the Assessing Officer is being consistently followed in respect of all assessees. Therefore, the impugned order of the CIT (A) qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arising out of such claims otherwise eligible under section 234A(1). However it was also the submission that the Assessing Officer has not followed the provisions of section 244A(2) and declined interest under section 244A(2) without referring the matter to CCIT or CIT and therefore, the Assessing Officer's action cannot be justified following the principles laid down by the ITAT in the cases of DCIT vs. Videocon International Ltd 6 SOT 227 (Mum) and Artist Tree Pvt. Ltd vs. Income Tax Officer (2005) 93 ITD 603 (Mum). It was also submitted that giving effect to the orders of the ITAT are proceedings equivalent to Sec.154 as has been considered by the Hon'ble Bombay High Court in the case of Empire Industries Ltd vs. CIT (1992) 93 ITR 295 (Bom). Further issue is such that two views are possible, the Assessing Officer's action in denying the interest under section 244A in consequential proceedings is not correct. 4.3. The learned Departmental Representative however, submitted that the decision of the assessee's in making the claim belatedly has resulted in refunds in consequential proceeding only and had the assessee made the claims at the time of filing the retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed or reduced accordingly and the Assessing Officer has no option to vary the period on interpretation of provisions of section 244A(2). Provisions of section 244A(2) does not apply in these facts of the case, as the assessee was already been granted interest under section 244A(1) and the period for such refund has already been determined. If consequent to the orders under section 254 the resultant order gives rise to further refund, the Assessing Officer has to increase the interest on the enhanced refund without varying the period for which interest was granted earlier. 4.5 The case of revenue is supported by judgment of Hon'ble Gauhati High Court in the case of CIT vs Assam Roofing Ltd, 330 ITR 87(Gau) but in that case interest u/s 244A (1) was granted for the first time after the order of CIT(A) in which claim was made. Moreover the Hon'ble Kerala High Court in the case of South Indian Bank (supra) held against revenue and in favor of assessee. No jurisdictional High Court judgment was brought to our notice. Therefore, the view favourable to assessee is to be followed. However, we are of the view that provisions of Sec 244A(3) are applicable on the facts of this ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in favour of the assessee and accordingly this issue is covered against the Revenue. We have perused the orders placed on record in all the years from the assessment year 1991-92 to 1998-99 in the respective ITA Nos as given below: A.Y 91-92 ITA No.1105/M/97 (Para 9.0) A.Y 92-93 ITA No.3961/M/97 (Para 9.0) A.Y 93-94 ITA No.6901/M/97 (Para 9.0) A.Y 94-95 ITA No.3055/M/98 (Para 9.0) A.Y. 96-97 ITA No.3783/M/00 (Para 4.0) A.Y. 97-98 ITA No.3298/M/01 (Para 3-5) A.Y 98-99 ITA No.6289/M/03 (Para 4-6) The CIT (A) also not only followed the above orders, but also analyzed the issue in the light of the Supreme Court judgment and the jurisdictional High Court in the case of DCIT vs. Reliance Industries Ltd (2004) and the orders of the CIT (A) is as under: 5.8 I have carefully considered the submission made on behalf of the appellant. I have also gone through the Transport Subsidy Scheme, 1971. From the perusal of the scheme and various facts placed before me, I found that, the Gagal Unit of the appellant company is situated in the state of Himachal Pradesh which is among one of the selected areas eligible for transport subsidy. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the case of CIT vs. Veekaylal Investment C.(P) Ltd 249 ITR 597 (Bom) wherein the Hon'ble High Court decided the income from capital gain should be included for the purpose of computing book profit under section 115J. Therefore, the issue is to be decided in favour of the Revenue and against the assessee. The order of the CIT (A) is modified to that extent and the order of the Assessing Officer is restored. The ground is considered as allowed. 8. Ground No.3 pertains to the addition of provision of interest on income tax to book profit under section 115J. The assessee claimed exclusion of interest under the income tax in computing book profit by way of additional ground the issue of which was restored to the file of the Assessing Officer. The Assessing Officer while giving effect to the orders did not allow claim contending that the provisions of interest on income tax is unascertained liability and hence falls under the ambit of clause (c) to Explanation to Section 115J of the Act. The CIT (A) gave relief to the assessee by stating as under: 8.3 I have considered the submission made by the AR of the appellant and also perused the decision relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an additional ground. The Hon'ble ITAT vide order dated 18.01.2007 has restored the said issue to the Assessing Officer to decide it afresh. 9.2 The Assessing Officer while giving effect to the order of Income Tax Appellate Tribunal dated 18-01-2007 did not grant the said relief contenting that the assessee has not filed audit report in Form No.10CCAC duly verified by the CA/Auditor along with return of income for the assessment year under consideration. The CIT (A) allowed the deduction under section 80HHC from book profit on the contention that requirement of filing Form 10CCAC is mandatory if the assessee is claiming deduction under section 80HHC in the normal computation of total income. No such requirement has been specified in the provisions of section 115J. 9.3 It has been submitted that identical issue has been decided in favour of the assessee by the ITAT in the assessment year 1998-99 following the decision of the Hon'ble Supreme Court in the case of Ajanta Pharma 327 ITR 305 (SC). The ITAT held as under: 18. The short issue involved in this appeal is as to what is the amount of deduction under section 80HHC - export profits computed under the he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igibility whereas section 80HHC(3) refers to computation of tax incentive. Coming to section 80HHC(1B) it is clear that after Finance Act, 2000 with effect from assessment year 2001-02 exporters would not get 100 per cent deduction in respect of profits derived from exports but that they would get deduction of 80 per cent in assessment year 2001-02, 70 per cent in the assessment year 2002-03 and so on. Thus, section 80HHC(1B) deals not with eligibility but with the extent of deduction . As earlier stated section 115JB is a self contained code. It taxes deemed income. It begins with a non abstante clause. Section 115JB refers to computation of book profits which have to be computed by making upward and Downward Adjustments. In the Downward Adjustment, vide clause (iv) it seeks to exclude eligible profits derived from exports. On the other hand, under section 80HHC(1B) it is the extent of deduction which matters. The word thereof in each of the items under section 80HHC(1B) is important. Thus, if an assessee earns ₹ 100 crores then for the assessment year 201-02, the extent of deduction is 80 per cent thereof and so on which means that the principle of proportionality ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 115JB, as in section 115JA, it has been clearly stated that the relief will be computed under section 80HHC(3)/(3A) subject to the conditions under subsections (4) and (4A) of that section. The conditions are only that the relief should be certified by the Chartered Accountant. Such condition is not a qualifying condition but it is a compliance condition. Therefore, one cannot rely upon the last sentence in clause (iv) of Explanation to section 115JB (subject to the conditions specified in sub-section (4) and (4A) of that section) to obliterate the difference between eligibility and deductibility of profits as contended on behalf of the Department. 20. The same principles apply on the situation before us. Therefore, what is to be excluded must start with book profits of export business as base. One cannot have computation of book profit with tax profits as the base. In this view of the matter, and in view of the broad principles clearly discernable from Hon'ble Supreme Court's judgment in Ajanta Pharma case (surpa), we uphold the grievance of the assessee and direct the Assessing Officer to give resultant relief, if any 9.4. In view of this, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the CIT (A) to direct the Assessing Officer to include the amount without examining the nature of the amount. Therefore, we are not in agreement with the order of the CIT (A). Since the assessee could not establish the nature of the receipts as pertaining to the income derived from the undertaking, we uphold the order of the Assessing Officer and reverse the directions of the CIT (A). Accordingly ground No.1 is allowed. 11. Ground No.2 pertains to claim of exclusion of sale of machinery in computing 'total turnover' for the purpose of deduction under section 80HHC. The assessee claimed exclusion on account of sale of machinery from total turnover in computing deductions under section 80HHC before the Hon'ble I.T.A.T. by way of additional ground. The Hon'ble ITAT has restored the matter to the file of the Assessing Officer. The Assessing Officer while giving effect to the order of the Hon'ble ITAT did not grant relief in this respect on the contention that the items to be excluded to work out the total turnover are clearly specified in explanation (baa) below section 80HHC(4C) of the Act. The CIT (A) has held that the total turnover should not include ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
