Calcutta High Court
Vesuvius India Limited vs Asst. Commissioner Of Income Tax on 24 November, 2021
1
OD-12
IN THE HIGH COURT AT CALCUTTA
Special Jurisdiction (Income tax)
ORIGINAL SIDE
IA No.GA/1/2018 [OLD NO:GA/2158/2018]
In
ITAT 188 of 2017
VESUVIUS INDIA LIMITED
Vs
ASST. COMMISSIONER OF INCOME TAX
BEFORE:
The Hon'ble JUSTICE T. S. SIVAGNANAM
AND
The Hon'ble JUSTICE HIRANMAY BHATTACHARYYA
Date : 24th November, 2021.
Appearance:
Mr. J. P. Khaitan, Sr. Adv.,
Mr. Sounak Basu, Adv.
...for the appellant.
Mr. P. K. Bhowmick, Adv.
...for the respondent.
The Court : This appeal by the assessee filed under Section 260A of the
Income Tax Act, 1961 [the Act, in brevity] is directed against the order dated
28th December, 2016 passed by the Income Tax Appellate Tribunal, "C"
Bench, Kolkata [The Tribunal] in ITA No.613/Kol/2011 for the assessment
year 2003-04". The assessee has raised the following substantial questions of
law for our consideration.
a. Whether on the facts and in the circumstances of the case and in
law, the Tribunal erred in denying the claim of the appellant that
profits and gains of business of the undertaking eligible for
deduction under Section 80-IB shall be re-computed by considering
only the income and expenditure having direct and immediate nexus
to the said undertaking ?
b. Whether on the facts and in the circumstances of the case and in
law and without prejudice to 7[a], the Tribunal erred in denying the
claim of the appellant that profit and gains of business of the
undertaking eligible for deduction under Section 80-IB shall be re-
computed by excluding net of other income instead of gross of other
income ?
We have elaborately heard Mr. Khaitan, learned senior counsel
appearing for the appellant and Mr. Bhowmick, learned senior standing
counsel appearing for the respondent/revenue. The Tribunal by impugned
order dated 28th December, 2016 granted partial relief to the assessee but in
so far as certain grounds, which were canvassed by the appellant/assessee
the Tribunal did not take a decision in the matter but held those grounds to
have become infructuous and they do not require any adjudication. The
correctness of such order is being tested. To be noted that the Tribunal on
the major issue, which was canvassed before it, on law held in favour of the
assessee and for the purpose of computation the matter has been remanded
back to the Assessing Officer. The submission of the learned counsel for the
appellant assessee is that the other two grounds, which have been canvassed
by the assessee would also form integral part of the main ground, which was
canvassed before the Tribunal and the assessee never gave up those grounds
of challenge. For consideration of the said submission of the learned counsel,
we take note that the grounds, which were canvassed by the assessee before
the Tribunal, which are quoted herein below:
" 2[a]. That on the facts and in the circumstances of the case, the
Ld. CIT[Appeals] was not justified rather grossly erred in excluding other
income comprising of commission of Rs.5,09,000/- interest from bank of
Rs.8,72,000/-, interest from others of Rs.46,73,000/- and miscellaneous
income of Rs.6,34,000/- in computing profits and gains of business of
the undertaking eligible for deduction u/s. 80IB.
2[b]. That on the facts and in the circumstances of the case, the Ld.
CIT[Appeals] erred in facts and law in denying the claim of the appellant
to exclude net of the aforesaid other income and not gross of the
aforesaid income from the profits and gains of business of the eligible
undertaking.
2[c]. That on the facts and in the circumstances of the case and
without prejudice to Ground No.2[a] and 2[b] taken here-in above, the Ld.
CIT[Appeals] erred in not re-computing profits and gains of business of
the undertaking eligible for deduction u/s 80IB by considering only the
income and expenditure attributable to the said undertaking."
As mentioned above, the ground no.2[a] [supra] has been decided in
favour of the assessee in respect of the two items, namely, interest from
others to the tune of Rs.46,73,000/- and sale of scrap, namely Rs.6,34,000/.
After having held that there is merit in the submission of the assessee as the
proposition canvassed by them are supported with the judgments of the
Hon'ble High Courts and the Hon'ble Supreme Court, the Tribunal remanded
the matter to the Assessing Officer with a direction to examine the interest
from others and miscellaneous income and the Assessing Officer was directed
to give relief to the assessee in the light of the judicial pronouncements
referred to in paragraph 6.4 of the order passed by the Tribunal. If such
relief is granted by the Tribunal to the assessee, we find no justifiable reason
for having rejected the grounds 2(b) and 2(c) as having become infructuous.
The Tribunal has not assigned any reason as to why and in what manner
those two grounds have become infructuous. In any event, whether the claim
made by the assessee to exclude net of the aforesaid other income and not
gross of the aforesaid income from profits and gains of business of the eligible
undertaking is also required to be considered by the Assessing Officer and
this will form integral part of the computation directed to be done by the
Tribunal by remanding the matter to the Assessing Officer. Furthermore, the
assessee's specific case was that the Commissioner of Income Tax [Appeals]
had committed an error in not re-computing the profits and gains of business
of the undertaking eligible for deduction under section 80IB by considering
only the income and expenditure attributable to the said undertaking. This
ground also will form integral part of the ground no.2[a] of the grounds and
the same is required to be considered by the Assessing Officer as to whether
those grounds raised by the Assessing Officer are justifiable and legally
tenable. Therefore, we are of the view that on remand while the Assessing
Officer would comply with the direction issued by the Tribunal he shall also
examine the grounds raised by the assessee, being ground no.2[b] and 2[c]
[supra]. The assessee is at liberty to place all materials in support of their
contention and thereafter the Assessing Officer shall redo the assessment in
accordance with law.
With the above observation, the appeal stands partly allowed.
Consequential substantial questions of law are left open.
Stay application, GA/2158/2018 stands disposed of accordingly.
(T. S. SIVAGNANAM, J.)
(HIRANMAY BHATTACHARYYA, J.)
s.pal/pkd
