Vesuvius India Limited vs Assistant Commissioner Of Income ...
2021 Latest Caselaw 1485 Cal/2

OD-38
                          ITAT/186/2017
             IA NO: GA/1/2018 (Old No: GA/2157/2018)
                 IN THE HIGH COURT AT CALCUTTA
                SPECIAL JURISDICTION(INCOME TAX)
                          ORIGINAL SIDE


                     VESUVIUS INDIA LIMITED
                           VERSUS
             ASSISTANT COMMISSIONER OF INCOME TAX


BEFORE :
THE HON'BLE JUSTICE T.S. SIVAGNANAM
             And
THE HON'BLE JUSTICE HIRANMAY BHATTACHARYYA
Date : 25th November, 2021

                                   Appearance:-

                           Mr. J.P. Khaitan, Sr. Adv.
                           Mr. Somak Basu, Adv.
                                                 ...For Appellant

                           Mr. P. K. Bhowmik, Adv.
                                               ... For Respondent

The Court : This appeal filed by the revenue filed under Section

260A of the Income Tax Act, 1961 (the `Act' for 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.

614/Kol/2011 for the assessment year 2004-05.

The assessee has raised the following substantial questions of

law for 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 ?

c) Whether on the facts and in the circumstances of the case and

in law the Tribunal erred in law in remanding back the matter

to the Assessing officer for re-examination in allowing the claim

of petitioner on account of interest from the other of

Rs.38,27,000/- relates to interest on late payment received from

trade debtors and miscellaneous income of Rs.10,86,000/- has

been generated from sale of scrap in computing profits and

gains of business of eligible undertaking under Section 80IB,

when Appellate and Assessing authority both have been fully

satisfied about the nature of the said incomes ?

We have heard Mr. J.P. Khaitan, learned Senior Counsel

assisted by Mr. Somak Basu, learned Counsel appearing for the

respondent/assessee and Mr. P.K. Bhowmik, learned Counsel

appearing for the appellant.

Learned Counsel appearing for the appellant assessee

submitted that a substantial question of law being ground (c) is not

pressed. Thus it leaves us with substantial questions of law (a) and (b)

to be decided. The order impugned before us passed by the Tribunal is

for assessment years 2003-04 and 2004-05 and the Tribunal disposed

of both the appeals by a common order dated 28th December, 2016. As

against the order passed for the assessment year 2003-04, the

appellant/assessee had filed appeal before this Court being appeal

ITAT 188 of 2017 and by judgment dated 24th November, 2021 we

have allowed the appeal filed by the assessee in part and remanded

the matter to the assessing officer for fresh consideration. In the

impugned order, in paragraph 5 the Tribunal has noted the grounds

raised by the assessee before it. However, there appears to be a small

error in not noting the grounds raised by the assessee for the

assessment year 2004-05. Though the grounds were identical, the

figures mentioned therein differ. For easy reference, we note the said

grounds as under :-

"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.25,000/-, interest from bank of Rs.5,36,000/-, interest from

others of Rs.38,27,000/0 and scrap sales of Rs.10,86,000/- in

computing profits and gains of business of the undertaking

eligible for deduction u/s80IB.

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."

Except for the above distinction namely, the figures which have

been mentioned above for the assessment year 2004-05, in all other

aspects the matter is identical to that of the decision for the

assessment year 2003-04.

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 and sale of scrap. 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 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 reminding 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/2157/2018 stands disposed of

accordingly.

(T.S. SIVAGNANAM, J.)

(HIRANMAY BHATTACHARYYA, J.)

SN./D.Ghosh AR(CR)