EXCEL INDUSTIES LTD, MUMBAI v. DCIT CEN CIR 38, MUMBAI

CO 25/MUM/2010 | 2005-2006
Pronouncement Date: 13-07-2011 | Result: Dismissed

Appeal Details

RSA Number 2519923 RSA 2010
Assessee PAN AAACE2488F
Bench Mumbai
Appeal Number CO 25/MUM/2010
Duration Of Justice 1 year(s) 5 month(s) 15 day(s)
Appellant EXCEL INDUSTIES LTD, MUMBAI
Respondent DCIT CEN CIR 38, MUMBAI
Appeal Type Cross Objection
Pronouncement Date 13-07-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted SMC
Tribunal Order Date 13-07-2011
Date Of Final Hearing 02-05-2011
Next Hearing Date 02-05-2011
Assessment Year 2005-2006
Appeal Filed On 29-01-2010
Judgment Text
1 ITA NO.4095 4134 &CO 25 EXCEL INDUSTRIES LTD IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI E BENCH MUMBAI BENCHES MUMBAI BEFORE SHRI PRAMOD KUMAR AM & SHRI VIJAY PAL RAO JM ITA NO. 4095/MUM/2009 (ASST YEAR 2005-06 ) THE DY COMMR OF INCOME TAX CEN.CIR 38 MUMBAI VS EXCEL INDUSTRIES LTD 184-187 S V ROAD JOGESWARI (W) MUMBAI 102 (APPELLANT) (RESPONDENT) ITA NO. 4134/MUM/2009 (ASST YEAR 2005-06 ) & CO NO.25/MUM/2010 IN ITA NO.4095/M/2009 EXCEL INDUSTRIES LTD 184-187 S V ROAD JOGESWARI (W) MUMBAI 102 VS THE DY COMMR OF INCOME TAX CEN.CIR 38 MUMBAI (APPELLANT/CROSS OBJECTOR) (RESPONDENT) PAN NO. AAACE2488F ASSESSEE BY SHRI KIRIT KAMDAR/MS SASISUDHA MULTANI REVENUE BY SHRI B JAYA KUMAR PER VIJAY PAL RAO JM THESE CROSS APPEALS AND CROSS OBJECTION BY THE ASSE SSEE ARE DIRECTED AGAINST THE ORDER DATED 29.4.2009 OF THE CIT(A) FOR THE AY 20506. ITA NO.4095/MUM/2009 (BY THE RVENUE) 2 THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN T HIS APPEAL: I)ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN DELETING THE ADDITION OF RS. 13 31 717/- M ADE BY THE ASSESSING OFFICER ON ACCOUNT OF ADVANCE LICENSE BENEFIT BY HOLDING THAT NO BENEFIT HAD ACCRUED TO THE ASSESSEE WHATEVER MAY BE THE ENTRIES THAT MIGHT HAVE BEEN PASSED BY THE ASSESSEE WITHOUT APPRECIATING THE REA SONS GIVEN BY THE 2 ITA NO.4095 4134 &CO 25 EXCEL INDUSTRIES LTD ASSESSING OFFICER IN THE ASSESSMENT ORDER FOR THE SA ID ADDITION. HE ALSO FAILED TO APPRECIATE THE VIEW TAKEN ON THE SAID ADDITION BY THE CIT(A) IN HIS ORDER NO.CIT(A)XXXII/280/IT/9596 DATED 12.3.198 FOR THE AS SESSMENT YEAR 193-94 IN ASSESSEES OWN CASE. II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.30 70 699/- ON ACCOUNT OF PASS BOOK BENEFIT BY HOLDING THAT THE SAD AMOUNT IS NOT ASSES SABLE IN THE YEAR OF EXPORT OF GOODS WHEN THE BENEFIT IS CREDITED TO THE PASS BO OK BUT IN THE YEAR THE BENEFIT RECEIVABLE IS ACTUALLY AVAILED OF BY THE ASS ESSEE IGNORING THE FACTS AND REASONS GIVEN BY THE AO IN THE ASSESSMENT ORDER RE LATING TO THE ISSUE III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE CIT(A) ERRED IN HOLDING THAT DFRC BENEFIT OF RS. 38 08 012 /- ACCRUED TO THE ASSESSEE IS NOT BE TAXED IN THIS YEAR IGNORING THE FACT AN D REASONS GIVEN BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. IV) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE CIT(A) ERRED IN HOLDING THAT THE REVERSAL OF ADVANCE LICEN SE APPLICATION AMOUNTING TO RS. 37 41 869/ WAS NOT CLAIMED AS DEDUCTION IN T HE EARLIER YEAR THE REVERSAL OF T THE SAME CANNOT BE TAXED AS INCOME. 2 GROUND NOS 1 3 & 4 REGARDING TAXABILITY OF ADVAN CE LICENSE BENEFIT RECEIVABLE ADVANCE LICENSES OBLIGATION REVE4SWED A ND DUTY FREE REPLENISHMENT CERTIFICATE. 3 WE HAVE HEARD THE LD DR AND THE LD AR OF THE ASSE SSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE CIT(A) DECIDED THI S ISSUE BY FOLLOWING THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR AYS 1995-9 6 TO 2004-05. AT THE OUTSET WE NOTE THAT THIS TRIBUNAL IN ASSESEES OWN CASE FOR A Y 2001-02 IN ITA NO.6969/MUM/2008 VIDE ORDER DATED 29.4.2011 ADJUDICATED THIS ISSUE I N PARAS 5 TO 7 AS UNDER: 5. IN ANSWER TO THE WRITTEN SUBMISSIONS AND THE DECI SION OF THE SPECIAL BENCH (SUPRA) THE LEARNED COUNSEL FOR THE ASSESSEE DREW OUR A TTENTION TO THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS. KALPATARU COLOURS AND CHEMICALS (2010) 328 ITR 451 (BOM). IN THIS JUDGMENT THE HONBLE HIGH COURT WAS ASKED TO ANSWER THE FOLLOWIN G TWO QUESTIONS OF LAW: - 3 ITA NO.4095 4134 &CO 25 EXCEL INDUSTRIES LTD (A) WHETHER THE TRIBUNAL IS JUSTIFIED IN HOLDING TH AT THE ENTIRE AMOUNT RECEIVED ON THE SALE OF THE DUTY ENTITLEMENT PASSBOO K DOES NOT REPRESENT PROFITS CHARGEABLE UNDER SECTION 28(IIID) OF THE INCOME TAX ACT 1961 AND THAT THE FACE VALUE OF TH E DUTY ENTITLEMENT PASSBOOK SHALL BE DEDUCTED FROM THE SALE PROCEEDS? (B) WHETHER THE TRIBUNAL IS JUSTIFIED IN HOLDING THA T THE FACE VALUE OF THE DUTY ENTITLEMENT PASSBOOK IS CHARGEABLE TO TAX U NDER SECTION 28(IIIB) AT THE TIME OF ACCRUAL OF INCOME I.E. WHEN THE APPLICATION FOR DUTY ENTITLEMENT PASSBOOK IS FILED W ITH THE COMPETENT AUTHORITY PURSUANT TO THE EXPORTS MADE AN D THAT THE PROFITS ON THE SALE OF DUTY ENTITLEMENT PASSBOOK REPRESENTING THE EXCESS OF THE SALE PROCEEDS OVER THE FACE VALUE IS LIABLE TO BE CONSIDERED UNDER SECTION 28(II ID) AT THE TIME OF SALE? ULTIMATELY THE HONBLE HIGH COURT HELD THAT THE VIE W OF THE TRIBUNAL ON THE TWO QUESTIONS OF LAW FORMULATED BY THE REVENUE IS U NSUSTAINABLE AND THAT THE FIRST QUESTION IS TO BE ANSWERED IN THE NEGATIVE. I N SO FAR AS THE SECOND QUESTION WAS CONCERNED THE HIGH COURT OPINED THAT T HEY WERE NOT IN AGREEMENT WITH THE VIEW OF THE TRIBUNAL THAT THE FAC E VALUE OF THE DEPB IS CHARGEABLE TO TAX UNDER SECTION 28(IIIB) AT THE TIME OF ACCRUAL OF INCOME I.E. WHEN THE APPLICATION FOR DEPB IS FILED WITH THE COM PETENT AUTHORITY PURSUANT TO THE EXPORTS MADE. THE DECISION OF THE SPECIAL B ENCH WAS THUS REVERSED. IN THE LIGHT OF THE JUDGMENT OF THE HONBLE BOMBAY HIG H COURT WE ARE UNABLE TO ACCEPT THE WRITTEN SUBMISSIONS FILED BY THE LEARN ED CIT DR BASED ON THE ORDER OF THE SPECIAL BENCH. 6 FOR THE AFORESAID REASONS WE UPHOLD THE DECISION OF THE CIT(A) IN RESPECT OF THE TAXABILITY OF THE ADVANCE LICENCE BEN EFITS RECEIVABLE BY THE ASSESSEE. 7 AS REGARDS THE SECOND GROUND THE SAME IS DIRECTL Y COVERED BY THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT CITED ABO VE. EVEN IN THE EARLIER ORDERS OF THE TRIBUNAL IN THE ASSESSEES OWN CASE F OR THE ASSESSMENT YEAR 1996- 97 IT HAS BEEN HELD THAT THE DEPB IS NOT ASSESSABL E IN THE YEAR OF EXPORT OF GOODS WHEN THE BENEFIT IS CREDITED TO THE PASSBOOK BUT IT IS ASSESSABLE IN THE YEAR WHEN THE BENEFIT RECEIVABLE IS ACTUALLY AVAILED OF BY THE ASSESSEE. THIS IS IN THE ORDER DATED 12 TH JANUARY 2009 WHICH IS A COMBINED ORDER FOR THE ASSESSMENT YEARS 1996-97 AND 1997-98. THUS THE ISS UE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BOTH BY THE HONBLE BOMBAY HI GH COURT (SUPRA) AND 4 ITA NO.4095 4134 &CO 25 EXCEL INDUSTRIES LTD BY THE TRIBUNAL IN THE ASSESSEES OWN CASE. WE THERE FORE AFFIRM THE DECISION OF THE CIT(A) IN RESPECT OF THIS GROUND ALSO. 4 SINCE THE CIT(A) HAS FOLLOWED THE ORDER OF THIS T RIBUNAL; THEREFORE WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) IN VIEW OF THE FACTS THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE O RDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER YEARS. THE GROUND TAKEN BY TH E REVENUE IS ACCORDINGLY DISMISSED. 5 GROUND NO.2 REGARDING TAXABILITY OF PASS BOOK BEN EFIT RECEIVABLE. 6 WE HAVE HEARD THE LD DR AND THE LD AR OF THE ASSE SSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. WE FIND THIS ISSUE IS ALSO COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESEES OWN CASE FOR AY 2001-02 AS W ELL AS FOR THE AYS 1996-97 AND 1997-98. IN PARA 7 OF THE ORDER REPRODUCED ABOVE THE TRIBUNAL HAS CONSIDERED AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. AC CORDINGLY THIS ISSUE IS ALSO DECIDED IN FAVOUR OF THE ASSESSEE. CROSS OBJECTION NO. 25/MUM/2010 (BY THE ASSESSEE) 7 IN THE CROSS OBJECTION THE ASSESSEE HAS RAISED T HE FOLLOWING GROUNDS: I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE RESPONDENT SUBMITS THAT IN CASE THE DEPARTMENT SUCCE EDS IN GROUND NO.1 OF ITS APPEAL BEARING ITANO.4095/MUM/2009 THEN ONLY TH AT PORTION OF ADVANCE LICENCE BENEFIT RECEIVABLE THAT HAS ACCRUED DURING THE YEAR OUGHT TO B INCLUDED IN THE TOTAL INCOME AND NOT THE ENTIRE AMOU NT ACCRUED TILL DATE. II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE RESPONDENT SUBMITS THAT IN CASE THE DEPARTMENT SUCCE EDS IN GROUND NO.2 OF ITS APPEAL BEARING ITANO.4095/MUM/2009 THEN ONLY THA T PORTION OF PASS BOOK BENEFIT RECEIVABLE THAT HAS ACCRUED DURING THE YEAR OUG HT TO B INCLUDED IN THE TOTAL INCOME AND NOT THE ENTIRE AMOUNT ACCRUED T ILL DATE. III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE RESPONDENT SUBMITS THAT IN CASE THE DEPARTMENT SUCCE EDS IN GROUND NO.3 OF 5 ITA NO.4095 4134 &CO 25 EXCEL INDUSTRIES LTD ITS APPEAL BEARING ITANO.4095/MUM/2009 THEN ONLY TH AT PORTION OF DFRC BENEFIT THAT HAS ACCRUED DURING THE YEAR OUGHT TO B INCLUDED IN THE TOTAL INCOME AND NOT THE ENTIRE AMOUNT ACCRUED TILL DATE. 8 SINCE THE APPEAL OF THE REVENUE HAS BEEN DISMISSE D; THEREFORE THE CROSS OBJECTION FILED BY THE ASSESSEE HAS BECOME INFRUCTU OUS AND THEREFORE THE SAME IS DISMISSED. ITA NO. 4134/MUM/2009 (BY THE ASSESSEE) I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN DIRECTING THE DCIT TO RECOMPUTED THE DISALLOWANCE U/S 14A IN RESPECT OF EXPENDITURE INCURRED FOR EARNING TAX FREE INCOME AS PER RULE 8D INSERTED BY THE IT (5 TH AMENDMENT)RULES 2008. II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE DCIT IN DISALLOWING A SUM OF RS. 20 3 000/- OUT OF INTEREST PAID ATTRIBUTABLE TO LOAN TO A SUBSIDIARY. III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE DCIT IN DISALLOWING A SUM OF RS. 2 24 000/- OUT OF INTEREST PAID ATTRIBUTABLE TO OTHE R LOANS. IV) WITHOUT PREJUDICE TO THE GROUNDS OF APPEAL NO.S 2 & 3 THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE DCIT IN CO NSIDERING THE RATE OF INTEREST ON BORROWINGS @ 14% FOR MAKING THE AFORESAID DISALLOW ANCE OUT OF INTEREST PAID. V) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE DCIT IN REJECTING THE CLAIM FOR DEDUCTION OF AN AMOUNT OF RS. 7681/- BEING EXPENDIT URE ON FINES AND PENALTIES. VI) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE CIT(A) ERRED IN REJECTING THE CLAIM FOR DEDUCTION IN RESPECT OF WEALTH TAX PAID AMOUNTING TO RS. 1 23 651/-. VII) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE DCIT IN INCLUDING IN THE TOTAL INCOME DEFERRED SALES TAX LIABILITY WRITTEN BACK AMO UNTING TO RS. 2 70 37 113/- VIII) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN N UPHOLDING THE ACTION OF THE DCIT IN GRANTING INTEREST U/S 244A ONLY UPTO THE DATE OF INTIMATION AND NOT UPTO THE D ATE OF GRANTING REFUND/DATE OF REFUND ORDER. 6 ITA NO.4095 4134 &CO 25 EXCEL INDUSTRIES LTD 9 GROUND NO.1 REGARDING DISALLOWANCE OF EXPENDITURE U/S 14A. 9.1 THE ASSESSING OFFICER DISALLOWED THE INTEREST E XPENDITURE OF RS. 7 84 000/- U/S 14A BY CONSIDERING THE SAME AS EXPENDITURE INCURRED IN CONNECTION WITH EARNING OF EXEMPT INCOME (DIVIDEND INCOME). 9.2 ON APPEAL THE CIT(A) HAS DIRECTED THE ASSESSIN G OFFICER TO APPLY RULE 8D AND RE-WORKOUT THE DISALLOWANCE U/S 14A. 10 BEFORE US THE LD AR HAS SUBMITTED THAT IN THE Y EAR 1996-97 THE ISSUE OF DISALLOWANCE U/S 80M HAS BEEN RESTRICTED TO .5% OF THE DIVIDEND INCOME BY THE TRIBUNAL. THEREFORE HE HAS URGED THAT THE DISALLOW ANCE ON ACCOUNT OF INTEREST EXPENDITURE TOWARDS EARNING OF EXEMPT INCOME (DIVID END INCOME) MAY BE RESTRICTED TO .5% OF THE DIVIDEND INCOME FOR THIS Y EAR ALSO. 10.1 THE LD DR ON THE OTHER HAND SUPPORTED THE OR DERS OF THE AUTHORITIES BELOW. 11 WE HAVE HEARD THE LD DR AND THE LD AR OF THE AS SESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE OR DER OF THE TRIBUNAL FOR AY 1996-97 PERTAINS TO THE DISALLOWANCE FOR GRANTING DEDUCTION U/S 80M AND NOT U/S 14A. MOREOVER THE DISALLOWANCE U/S 14A FOR THE ASSESSME NT YEAR UNDER CONSIDERATION IS WITH RESPECT TO THE INTEREST EXPENDITURE WHICH REQ UIRES PROPER EXAMINATION AND VERIFICATION OF THE FACT REGARDING THE USE OF INTER EST BEARING FUNDS FOR EARNING THE DIVIDEND INCOME/EXEMPT INCOME. AS REGARD THE APPLI CABILITY OF RULE 8D IS CONCERNED IN VIEW OF THE DECISION OF THE JURISDIC TIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG P LTD VS ACIT GODREJ BOYCE MFG LTD REPORTED IN 328 ITR 81 THE SAME IS NOT APPLICABLE FOR THE AY UNDER CONSIDERATI ON. THEREFORE IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COURT CITED SUP RA THIS ISSUE IS REMANDED TO THE 7 ITA NO.4095 4134 &CO 25 EXCEL INDUSTRIES LTD RECORDS OF THE ASSESSING OFFICER TO DECIDE THE SAME AFRESH IN TERMS OF THE SAID DECISION. 12 GROUND NO.2 REGARDING DISALLOWANCE OUT OF INTERE ST PAID ATTRIBUTED TO LOAN TO SUBSIDIARY. 12.1 THE ASSESSING OFFICER DISALLOWED A SUM OF RS. 20 30 000/- OUT OF INTEREST PAID ATTRIBUTABLE TO LOAN TO THE SISTER CONCERNS OF THE ASSESSEE. ON APPEAL THE CIT(A) HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 13 BEFORE US THE LD AR OF THE ASSESSEE HAS SUBMITT ED THAT NO SPECIFIC BORROWINGS WERE MADE FOR ADVANCING THE SAID LOANS. THE SAID LO ANS WERE MADE FROM ASSESSEES OWN FUNDS OR AT THE MIXED FUNDS. THE LD AR OF THE ASSESSEE HAS ACCORDINGLY PLEADED THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION TOWARDS INTEREST PAID U/S 36(1)(III) OF THE I T ACT. THE LOANS GRANTED TO THE SUBSIDIARY ARE OUT OF COMMERCIAL EXPEDIENCY. HE HAS RELIED UPON THE DECISION OF THE HONBLE SUPREME COU RT IN THE CASE OF SA BUILDERS VS CIT REPORTED IN 288 ITR 1(SC). HE HAS ALSO POINTED OUT THAT IDENTICAL ISSUE WAS CONSIDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE F OR ASSESSMENT YEAR 1996-97 AND 1997-98. 13.1 THE LD DR ON THE OTHER HAND SUPPORTED THE OR DERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT WHEN THE IDENTICAL ISSUE HAS BEE N CONSIDERED AND REMANDED TO THE RECORDS OF THE ASSESSING OFFICER BY THE TRIBUNA L THEN THE SAME MAY BE SET ASIDE TO THE RECORDS OF THE ASSESSING OFFICER. 8 ITA NO.4095 4134 &CO 25 EXCEL INDUSTRIES LTD 14 WE HAVE CONSIDERED THE RIVAL CONTENTION AND THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET WE FIND THAT THIS TRIBUNAL F OR THE ASSESSMENT YEAR 1996-97 AND 97-98 IN THE CASE OF THE ASSESSEE HAS CONSIDERED TH E ISSUE AS UNDER: 12 THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE OUT OF THE CLAIM OF DEDUCTION ON ACCOUNT OF INTEREST IN RESPECT OF THE LO ANS GRANTED FREE OF INTEREST TO SUBSIDIARIES. THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED BEFORE US THAT THE ISSUE REQUIRES RECONSIDERATION IN THE LIGHT OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF S A BUILDERS LTD. VS. CIT (2007) 288 ITR 1 (SC). RELIANCE HAS ALSO BEEN PLACED ON VARIOU S OTHER HIGH COURT DECISIONS TO SUPPORT THE CONTENTION THAT THE ASSESS EE IS ENTITLED TO DEDUCTION IN RESPECT OF THE INTEREST PAID ON THE BORROWINGS UTI LISED FOR PURPOSES OF BUSINESS AND NO DISALLOWANCE IS WARRANTED IN RESPECT OF INTEREST PAID TO SUBSIDIARIES. 13 THE LEARNED DR ON THE OTHER HAND CONTENDED THAT THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MUNJAL SALES CO RPORATION VS. CIT (2008) 298 ITR 298 (SC) SHOULD ALSO BE TAKEN INTO CONSIDER ATION FOR THE PURPOSE OF DETERMINATION OF CLAIM OF THE ASSESSEE. 14 SINCE IN THE LIGHT OF THE DECISIONS OF THE SUPREM E COURT THE ISSUE REQUIRES RECONSIDERATION WE SET ASIDE THE ORDERS OF T HE CIT(A) AS WELL AS THAT OF THE ASSESSING OFFICER RELATING TO THIS ISSUE AND RE STORE THE SAME TO THE FILE OF THE ASSESSING OFFICER FOR THE PURPOSE OF FRESH DECIS ION IN ACCORDANCE WITH LAW IN PARTICULAR CONSIDERING THE DECISIONS OF THE HONBLE SUPREME COURT REFERRED TO ABOVE. THE GROUND OF APPEAL RAISED BY THE ASSESSE E IS ALLOWED FOR STATISTICAL PURPOSES FOR BOTH THE YEARS UNDER CONSID ERATION. 15 RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL AND MAINTAIN THE RULE OF CONSISTENCY WE SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER ON SIMILAR TERMS AND DIRECTION GIVEN BY THE TRIBUNAL FOR THE ASSESSM ENT YEAR 1996-97 & 97-98. 16 GROUND NO.3 REGARDING DISALLOWANCE OUT OF IN TEREST PAID ATTRIBUTABLE TO OTHER LOANS. 9 ITA NO.4095 4134 &CO 25 EXCEL INDUSTRIES LTD 16.1 THE ASSESSING OFFICER DISALLOWED THE INTEREST OF RS. 2 24 000/- ATTRIBUTABLE TO THE LOAN GIVEN BY THE ASSESSEE TO M/S CYMBIO PHARMA PVT LTD OF RS. 13 000/- AND EXCEL CONSUMER COOPERATIVE SOCIETY LTD OF RS.3 00 000/-. ON APPEAL THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 17 BEFORE US THE LD AR OF THE ASSESSEE HAS ADVANC ED THE IDENTICAL ARGUMENTS AS ADVANCED IN RESPECT OF GROUND NO.2 ABOVE. ON T HE OTHER HAND THE LD DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND P OINTED OUT THAT THIS ISSUE IS ALSO PART OF GROUND NO.2 AND THE SAME HAS BEEN REMANDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 1996-97 & 97-98. 18 WE HAVE CONSIDERED THE RIVAL CONTENTION AND PERU SED THE RELEVANT MATERIAL ON RECORD. IN VIEW OF THE ORDER OF THE TRIBUNAL A S REPRODUCED IN THE FOREGOING PARAGRAPH THIS ISSUE IS ALSO SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN TERMS AND DIRECTION GIVEN BY THE TR IBUNAL. 19 GROUND NO.4 REGARDING APPLICATION OF RATE OF IN TEREST FOR DISALLOWANCE MADE BY THE LOWER AUTHORITIES. 20 THIS GROUND IS ALSO AN ALTERNATIVE GROUND TO THE GROUND NO.2 AND 3 OF THE ASSESSEE. THE GROUND NOS 2 & 3 HAVE ALREADY BEEN R EMANDED BACK TO THE FILE OF THE ASSESSING OFFICER FOR AFRESH ADJUDICATION. THEREFOR E THIS GROUND IS CONSEQUENTIAL AND ACCORDINGLY THE SAME IS SET ASIDE TO THE FILE OF T HE ASSESSING OFFICER. 21 GROUND NO.5 REGARDING DISALLOWANCE OF EXPENDITUR E ON FINES AND PENALTIES. 10 ITA NO.4095 4134 &CO 25 EXCEL INDUSTRIES LTD 22 THE LD AR OF THE ASSESSEE HAS STATED THAT THIS G ROUND IS NOT PRESSED AND THE SAME MAY BE DISMISSED AS NOT PRESSED. THE LD DR HAS NO OBJECTION IF THE GROUND IS DISMISSED BEING NOT PRESSED. ACCORDINGLY WE DISM ISS THIS GROUND AS NOT PRESSED. 23 GROUND NO.6 REGARDING DEDUCTION IN RESPECT OF WE ALTH TAX PAID. 23.1 WE HAVE HEARD THE LD AR OF THE ASSESSEE AND TH E LD DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET WE FIN D THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE. THE CIT(A ADJUDICATED THIS ISSUE AS UNDER: 11. THE EIGHTH GROUND OF APPEAL RELATES TO NON-GRAN TING OF DEDUCTION IN RESPECT OF WEALTH TAX PAID. 11.1 IT WAS FAIRLY ADMITTED BY THE AR THAT THE SAID ISSUE WAS COVERED AGAINST THE APPELLANT BY THE APPELLATE ORDERS FOR AYS 1999- 00 2000-01 2001-02 2002- 03 & 2004-05. 11.2 FOR THE SAKE OF CONSISTENCY FOLLOWING THE APPE LLATE ORDERS FOR ASSESSMENT YEARS 1999-00 2000-01 2001-02 2002-03 & 2004-05. THE ABOVE GROUND OF APPEAL IS DISMISSED. 24 THE LD AR OF THE ASSESSEE HAS FAIRLY CONCEDED TH AT THIS GROUND IS COVERED AGAINST THE ASSESSEE IN VIEW OF THE ORDER OF THE TR IBUNAL FOR ASSESSMENT YEARS 1999-00 TO 2002-03 AND 2004-05. ACCORDING WE DO NOT SEE AN Y REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) QUA THIS ISSUE. 24.1 MOREOVER THIS ISSUE IS ALSO AGAINST THE ASSES SEE BY THE ORDER OF THE TRIBUNAL IN THE CASE OF BACHHRAJ FACTORIES LTD VS ACIT REPORTED IN 56 ITD 225 (BOM). ACCORDINGLY THIS GROUND OF THE ASSESSEE IS DISMISSED. 25 GROUND NO.7 REGARDING THE CLAIM OF DEDUCTION IN RESPECT OF DEFERRED SALES TAX LIABILITY WRITTEN BACK. 11 ITA NO.4095 4134 &CO 25 EXCEL INDUSTRIES LTD 25.1 THE ASSESSEE HAS WRITTEN BACK THE DEFERRED SAL ES TAX LIABILITY AMOUNTING TO RS.2 70 07 113/- . IN THE RETURN OF INCOME THE AS SESSEE ADMITTED THE SAID AMOUNT OF RS. 2 70 37 113/- IN RESPECT OF DEFERRED SALES TAX LIABILITY WRITTEN BACK AND OFFERED TO TAX. BEFORE THE CIT(A) THE ASSESSEE HAS RAISED TH IS GROUND THAT THE DEFERRED SALES TAX LIABILITY WRITTEN BACK IS IN THE NATURE OF CAP ITAL RECEIPT AND NOT ELIGIBLE TO TAX. THE CIT(A) REJECTED THE GROUND RAISED BY THE ASSES SEE BY FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF SCHENECTADY SPECIALITIES AS IA PVT LTD VS ACIT IN ITA NOS.7098 AND 7099/MUM/2005 VIDE ORDER DATED 6.1.2009. 26 BEFORE US THE LD AR OF THE ASSESSEE HAS SUBMITT ED THAT THIS IS A PAYMENT OF NET PRESENT VALUE OF THE LIABILITY IN FUTURE AND TH EREFORE DID NOT RESULT IN ANY BENEFIT OR CESSATION OF LIABILITY TO THE ASSESSEE. THE LD AR HAS CONTENDED THAT THE WRITTEN BACK OF DEFERRED SALES TAX LIABILITY OUGHT TO BE EXCLUDE D WHILE COMPUTING THE TOTAL INCOME. HE HAS RELIED UPON THE DECISION OF THE SPE CIAL BENCH OF THE TRIBUNAL IN THE CASE OF SULZER INDIA LTD VS JCIT REPORTED IN 6 ITR 604(TRIB)(SB)(MUM). 26.1 ON THE OTHER HAND THE LD DR HAS SUBMITTED THA T WHEN THE ASSESSEE HAS NOT CLAIMED THE NON TAXABILITY OF THIS BENEFIT TOWARDS WRITTEN BACK OF THE DEFERRED SALES TAX LIABILITY IN THE RETURN OF INCOME THEN THE AS SESSEE ADMITTED THE BENEFIT OF CESSATION OF LIABILITY. HE HAS RELIED UPON THE ORDE RS OF THE AUTHORITIES BELOW. 27 WE HAVE CONSIDERED THE RIVAL CONTENTION AND PERU SED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THIS ISSUE WAS NOT BEFORE THE ASSESSING OFFICER BECAUSE THE ASSESSEE DID NOT CLAIM THIS AMOUNT OF RS. 2 70 37 1 13/- WRITTEN BACK TO THE P&L ACCOUNT ON ACCOUNT OF OUTSTANDING DEFERRED SALES TA X LIABILITY. THE ASSESSEE HAS RAISED THIS ISSUE FOR THE FIRST TIME BEFORE THE CIT (A). THE CIT(A) HAS DECIDED THIS ISSUE AGAINST THE ASSESSEE BY FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF 12 ITA NO.4095 4134 &CO 25 EXCEL INDUSTRIES LTD SCHENECTADY SPECIALITIES ASIA PVT LTD IN ITA NOS.70 98 AND 7099/MUM/2005 VIDE ORDER DATED 6.1.2009. THUS THE CIT(A) WITHOUT DIS CUSSING THE FACTS OF THE ISSUE AND THE NATURE OF THE BE BENEFIT OR CESSATION OF LIAB ILITY TO THE ASSESSEE DECIDED THE ISSUE PURELY ON LEGAL BASIS. THE ASSESSEE HAS NOT PRODUCED ANY RECORD BEFORE US TO SHOW THAT THE WRITTEN BACK AMOUNT OF RS. 2 70 37 11 3/- REPRESENTS ONLY THE DIFFERENCE BETWEEN THE TOTAL OUTSTANDING DEFERRED SALES TAX LI ABILITY AND ITS NET PRESENT VALUE. IN THE ABSENCE OF RELEVANT MATERIAL IT IS NOT POSS IBLE FOR TO ADJUDICATE THIS ISSUE CONCLUSIVELY. THEREFORE IN THE FACTS AND CIRCUMS TANCES OF THE CASE AS NARRATED ABOVE WE SET ASIDE THIS ISSUE TO THE FILE OF THE A SSESSING OFFICER TO ADJUDICATE THE SAME AFTER CONSIDERING THE CONTENTION OF THE ASSESS EE AS PER LAW. 28 GROUND NO.8 REGARDING GRANT OF INTEREST U/S 244A UPTO THE DATE OF GRANT OF REFUND. 29 THE INTIMATION U/S 143(1) WAS PASSED ON 28.3.200 7 WHEREBY REFUND OF RS. 34 08 359/- WAS DETERMINED INCLUDING INTEREST O F RS.4 09 008/-. THE ASSESSEE CLAIMED BEFORE THE CIT(T) THAT THE INTEREST U/S 24 4A SHOULD HAVE BEEN CALCULATED UPTO THE DATE OF REFUND ORDER I.E. 15.6.2007. THE CIT(A) TURNED DOWN THE CLAIM OF THE ASSESSEE AND HELD THAT THE DATE OF ORDER U/S 143(1 ) IS 28.3.2007 IS THE DATE OF GRANT OF REFUND AND THERE IS NO INORDINATE DELAY IN THE ISSUE OF ACTUAL REFUND. 30 BEFORE US THE LD AR OF THE ASSESSEE HAS SUBMITT ED THAT THE ASSESSEE IS ENTITLED FOR THE INTEREST UPTO THE DATE OF REFUND ORDER I.E. 15.6.2007 WHEREAS THE ASSESSEE HAS BEEN GRANTED INTEREST UP TO THE DATE OF INTIMATION I.E. 28.3.2007. HE HAS RELIED UPON THE ORDER OF THE TRIBUNAL IN THE CASE OF JAY BROS I NVESTMENT AND TRADING CO P LTD VS DCIT REPORTED IN 74 TTJ 748 (MUM). 13 ITA NO.4095 4134 &CO 25 EXCEL INDUSTRIES LTD 30.1 THE LD DR ON THE OTHER HAND SUPPORTED THE OR DERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT WHEN THERE IS NO INORDINATE DELA Y IN GRANTING OF REFUND THEN INTEREST GRANTED TO THE ASSESSEE UPTO THE DATE OF I NTIMATION IS JUST AND PROPER. 31 WE HAVE CONSIDERED THE RIVAL CONTENTION AND PERU SED THE RELEVANT MATERIAL ON RECORD. IN THIS CASE THE ASSESSING OFFICER HAS COMPUTED THE INTEREST U/S 244A UPTO THE DATE OF INTIMATION I.E. 28.3.2007 WHEREAS THE REFUND ORDER WAS PASSED ON 15.6.2007. THEREFORE IN VIEW OF THE DECISION OF TH E CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF JAY BROS INVESTMENT AND TRADING CO P LTD (SUPRA) WE ALLOW THE CLAIM OF THE ASSESSEE FOR INTEREST UPTO THE DATE OF GRANT ING OF REFUND I.E. 15.6.2007. 32 IN THE RESULT THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED WHEREAS THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THE 13 TH DAY OF JULY 2011. SD/- SD/- (PRAMOD KUMAR ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 13 TH JULY 2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR ITAT MUMBAI