DCIT - 3(2), MUMBAI v. M/s. PAPER PRODUCTS LTD., MUMBAI

ITA 2518/MUM/2007 | 2003-2004
Pronouncement Date: 12-01-2010 | Result: Partly Allowed

Appeal Details

RSA Number 251819914 RSA 2007
Assessee PAN AAACT0086E
Bench Mumbai
Appeal Number ITA 2518/MUM/2007
Duration Of Justice 2 year(s) 9 month(s) 13 day(s)
Appellant DCIT - 3(2), MUMBAI
Respondent M/s. PAPER PRODUCTS LTD., MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 12-01-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 12-01-2010
Date Of Final Hearing 22-12-2009
Next Hearing Date 22-12-2009
Assessment Year 2003-2004
Appeal Filed On 30-03-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: MUMBAI BEFORE SHRI P M JAGTAP ACCOUNTANT MEMBER AND SHRI R S PADVEKAR JUDICIAL MEMBER ITA NO 798/MUM/2007 (ASSESSMENT YEAR: 2002-03) ITA NO 1705/MUM/2007 (ASSESSMENT YEAR: 2003-04) THE PAPER PRODUCTS LTD REGENT CHAMBERS 13TH FLOOR NARIMAN POINT MUMBAI -400 021 PAN: AAACT 0086 E VS ACIT 3(2) AAYAKAR BHAVAN M K ROAD NEW MARINE LINES MUMBAI -400 020 APPELLANT RESPONDENT ITA NO 1645/MUM/2007 (ASSESSMENT YEAR: 2002-03) ITA NO 2518/MUM/2007 (ASSESSMENT YEAR: 2003-04) DCIT 3(2) AAYAKAR BHAVAN M K ROAD NEW MARINE LINES MUMBAI -400 020 VS THE PAPER PRODUCTS LTD REGENT CHAMBERS 13TH FLOOR NARIMAN POINT MUMBAI -400 021 PAN: AAACT 0086 E APPELLANT RESPONDENT ASSESSEE BY: SHRI C N VAZE REVENUE BY: SHRI N K BALODIA/ SMT CHANDRA RAMA- KRISHNAN ORDER PER P M JAGTAP ACCOUNTANT MEMBER THESE FOUR APPEALS TWO BY THE REVENUE AND TWO BY T HE ASSESSEE ARE CROSS APPEALS FOR AY 2002-03 AND 2003-04 AND SINCE COMMON ISSUES ARE INVOLVED THEREIN THE SAME HAVE BEEN HEARD TOGETHER AND ARE BEING DIS POSED OFF BY THIS SINGLE CONSOLIDATED ORDER. THE PAPER PRODUCTS LTD ITA 798/M/2007 ITA 1645/M/2007 ITA 1705/M/2007 ITA 2518/M/2007 2 2. FIRST WE SHALL TAKE-UP THE CROSS APPEALS FILED F OR AY 2002-03 BEING ITA NO 798/MUM/2007 AND 1645/MUM/2007 WHICH ARE DIRECTED AGAINST THE ORDER OF LEARNED CIT (A) III MUMBAI DATED 12.12.2006. 3. AS REGARDS GROUND NOS. 1 2 & 3 OF ASSESSEES AP PEAL THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONCEDED BEFORE US THAT THE COMMON ISSUE INVOLVED THEREIN RELATING TO DISALLOWANCE OF ASSESSEES CLAIM FOR DEDUCTION O N ACCOUNT OF WRITE OFF OF NON- COMPETE FEES IS SQUARELY COVERED AGAINST THE ASSESS EE BY THIRD MEMBER DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEE S OWN CASE FOR ASSESSMENT YEAR 1998-99 TO ASSESSMENT YEAR 2001-02. HE HAS SUBMITT ED THAT THE ASSESSEE HOWEVER HAS TAKEN THIS MATTER TO THE HONBLE BOMBA Y HIGH COURT WHICH IS STILL PENDING. HE HAS SUBMITTED THAT THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDERATION BEING IDENTICAL WITH THE QUESTION OF LAW ARISING IN THE CASE OF THE ASSESSEE FOR EARLIER YEARS I.E. ASSESSMENT YEARS 1999-2000 TO ASSESSMENT YEAR 2001-02 WHICH IS PENDING BEFORE THE HONBLE BOMBAY HIGH COURT THE A SSESSEE HAS FILED A DECLARATION AS REQUIRED BY THE PROVISIONS OF SECTION 158A(1) WH ICH MAY BE TAKEN INTO CONSIDERATION. ACCORDINGLY WE DECIDE THIS ISSUE AG AINST THE ASSESSEE FOLLOWING THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEARS 1998-99 TO ASSESSMENT YEAR 2001-02 WITH THE RIGHT TO THE ASSES SEE TO SEEK AMENDMENT OF THIS ORDER IF NECESSARY SO AS TO BRING THE SAME IN CON FORMITY WITH THE DECISION OF THE HONBLE HIGH COURT ON THE IDENTICAL QUESTION OF LAW WHEN THE SAME BECOMES FINAL FOR ASSESSMENT YEARS 1998-99 TO ASSESSMENT YEAR 2001-02 . GROUND 1 2 AND 3 OF ASSESSEES APPEAL ARE ACCORDINGLY DISMISSED. 4. AS REGARDS GROUND NO.4 AND 5 THE LEARNED COUNSE L FOR THE ASSESSEE HAS CONCEDED THE COMMON ISSUE RAISED THEREIN RELATING T O THE DISALLOWANCE OF ASSESSEES CLAIM FOR DEDUCTION U/S 35D ON ACCOUNT OF SHARE ISS UE AND DEBENTURE EXPENSES IS SQUARELY COVERED AGAINST THE ASSESSEE. HE HAS SUBM ITTED THAT THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDERATION BEING IDENTICAL WITH T HE QUESTION OF LAW ARISING IN THE CASE OF THE ASSESSEE FOR EARLIER YEARS I.E. ASSESSM ENT YEARS 1999-2000 TO ASSESSMENT YEAR 2001-02 WHICH IS PENDING BEFORE THE HONBLE BOMBAY HIGH COURT THE ASSESSEE HAS FILED A DECLARATION AS REQUIRED BY THE PROVISIONS OF SECTION 158A(1) THE PAPER PRODUCTS LTD ITA 798/M/2007 ITA 1645/M/2007 ITA 1705/M/2007 ITA 2518/M/2007 3 WHICH MAY BE TAKEN INTO CONSIDERATION. ACCORDINGLY WE DECIDE THIS ISSUE AGAINST THE ASSESSEE FOLLOWING THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEARS 1998-99 TO ASSESSMENT YEAR 2001-02 WITH THE RIGHT TO THE ASSESSEE TO SEEK AMENDMENT OF THIS ORDER IF NECESS ARY SO AS TO BRING THE SAME IN CONFORMITY WITH THE DECISION OF THE HONBLE HIGH CO URT ON THE IDENTICAL QUESTION OF LAW WHEN THE SAME BECOMES FINAL FOR ASSESSMENT YEAR S 1998-99 TO ASSESSMENT YEAR 2001-02. GROUND 4 AND 5 OF ASSESSEES APPEAL ARE A CCORDINGLY DISMISSED. 5. GROUND NO. 6 AND 7 RELATING TO DISALLOWANCE ON A CCOUNT OF PROFESSIONAL FEES PAID FOR DIVESTMENT IN PPL FEEDBACK LTD MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT (A) ARE NOT PRESSED BY THE LEARN ED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE US. THE SAID GROUNDS AR E ACCORDINGLY DISMISSED AS NOT PRESSED. 6. AS REGARDS GROUND NO. 8 THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONCEDED THAT THE ISSUE RAISED THEREIN REGARDING TO ASSESSEE S CLAIM FOR INCLUSION OF INTEREST ON FDRS AND INTEREST ON STATUTORY DEPOSITS IN THE PROF ITS FOR DEDUCTION U/S 80HHC IS ALSO SQUARELY COVERED AGAINST THE ASSESSEE BY THE DECISI ON OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 1998-99 TO ASSESSMENT YEAR 2001-02. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE TRIBUNAL WE UPH OLD THE IMPUGNED ORDER OF LEARNED CIT (A) ON THIS ISSUE AND DISMISS GROUND NO.8 OF TH E ASSESSEES APPEAL. 7. AS REGARDS GROUND NO. 9 RELATING TO THE ASSESSEE S ALTERNATIVE CLAIM FOR INCLUSION OF ONLY NET INTEREST INCOME FROM THE PROF ITS ELIGIBLE FOR DEDUCTION U/S 80HHC THE LEARNED COUNSEL FOR THE ASSESSEE HAS REL IED ON THE DECISION OF SPECIAL BENCH OF ITAT DELHI IN THE CASE OF LALSONS ENTERPRI SES VS DCIT REPORTED IN 89 ITD 25. HE HAS CONTENDED THAT THIS ISSUE MAY THEREFORE BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINING THE CLAIM OF THE AS SESSEE FOR NETTING OFF INTEREST INCOME KEEPING IN VIEW THE SAID DECISION OF THE ITA T. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HAS RELIED ON TH E DECISION OF HONBLE P&H HIGH COURT IN THE CASE OF RANI PALIWAL VS CIT 268 ITR 22 0 OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS V CHINNAPANDI 282 ITR 389 AND TH AT OF HONBLE DELHI HIGH COURT IN THE PAPER PRODUCTS LTD ITA 798/M/2007 ITA 1645/M/2007 ITA 1705/M/2007 ITA 2518/M/2007 4 THE CASE OF CIT VS SHRI RAM HONDA POWER EQUIP 289 I TR 475 AND CONTENDED THAT FOR COMPUTING DEDUCTION U/S 80HHC GROSS INTEREST INCOM E IS LIABLE TO BE EXCLUDED FROM THE ELIGIBLE PROFITS AND NOT THE NET INTEREST AS SO UGHT TO BE CLAIMED BY THE LEARNED COUNSEL FOR THE ASSESSEE. 8. AFTER CAREFULLY PERUSING THE JUDICIAL PRONOUNCEM ENTS CITED BY BOTH THE SIDES IT IS NOTED THAT ALTHOUGH HONBLE P&H HIGH COURT IN TH E CASE OF RANI PALIWAL (SUPRA) AND HONBLE MADRAS HIGH COURT IN THE CASE OF V CHINNAPA NDI (SUPRA) HAVE HELD THAT THE GROSS INTEREST INCOME IS LIABLE TO BE REDUCED FROM THE PROFITS OF THE BUSINESS FOR COMPUTING DEDUCTION U/S 80HHC THE ALTERNATIVE CLAI M OF THE ASSESSEE FOR NETTING OFF INTEREST INCOME AGAINST INTEREST EXPENDITURE HAS BE EN SPECIFICALLY CONSIDERED ON MERIT BY THE HONBLE DELHI HIGH COURT IN THE CASE O F SHRI RAM HONDA POWER EQUIP (SUPRA). IN THE SAID DECISION IT WAS HELD BY HON BLE HIGH COURT AFTER TAKING INTO CONSIDERATION ALL THE RELEVANT ASPECTS OF THE MATTE R THAT THE WORD INTEREST IN CLAUSE (BAA) TO EXPLANATION TO SECTION 80HHC IS INDICATIVE OF NET INTEREST I.E. GROSS INTEREST LESS THE EXPENDITURE INCURRED BY THE ASSESSEE FOR E ARNING SUCH INTEREST. HONBLE DELHI HIGH COURT THUS DISSENTED FROM THE P&H HIGH C OURT DECISION IN THE CASE OF RANI PALIWAL VS CIT (SUPRA) AND ALSO MADRAS HIGH COURT D ECISION IN THE CASE OF V CHINNAPANDI AND AFFIRMED THE DECISION OF SPECIAL BE NCH OF DELHI IN THE CASE OF LALSONS ENTERPRISES (SUPRA). HONBLE DELHI HIGH CO URT ALSO LAID DOWN CERTAIN GUIDELINES FOR DECIDING THE ISSUE RELATING ASSESSEE S CLAIM FOR THE BENEFIT OF NETTING OFF INTEREST INCOME AS FOLLOWS: (I) IN COMPUTING WHAT THE PROFITS DERIVED FROM EXP ORTS FOR THE PURPOSES OF SECTION 80HHC(1) READ WITH SECTION 80HHC(3) ARE TH E NEXUS TEST HAS TO BE APPLIED TO EXCLUDE THAT WHICH DOES NOT PARTAKE OF P ROFITS THAT CAN BE SAID TO HAVE BEEN DERIVED FROM THE BUSINESS OF EXPORTS. (II) IN THE SPECIFIC CONTEXT OF CLAUSE (BAA) OF THE EXPLANATION TO SECTION 80HHC WHILE DETERMINING THE PROFITS OF THE BUSINE SS THE ASSESSING OFFICER HAS TO UNDERTAKE A TWO-STEP EXERCISE IN THE FOLLOWI NG SEQUENCE. HE HAS TO FIRST COMPUTE THE PROFITS OF THE BUSINESS UNDER THE HEA D PROFITS AND GAINS OF BUSINESS OR PROFESSION. IN OTHER WORDS HE WILL H AVE TO COMPUTE BUSINESS PROFITS IN TERMS OF THE ACT BY APPLYING THE PROVI SIONS OF SECTIONS 28 TO 44 THEREOF. THE PAPER PRODUCTS LTD ITA 798/M/2007 ITA 1645/M/2007 ITA 1705/M/2007 ITA 2518/M/2007 5 (III) IN ARRIVING AT PROFITS OF THE BUSINESS BY THE ABOVE METHOD THE ASSESSING OFFICER WILL EXCLUDE ALL SUCH INCOMES WHICH PARTAKE OF THE CHARACTER OF INCOME FROM OTHER SOURCES WHICH IN ANY EVENT ARE TREATED UNDER SECTIONS 56 AND 57 OF THE ACT AND ARE THEREFORE NOT TO BE RECKONED FOR THE PURPOSES OF SECTION 80HHC . THE ASSESSING OFFICER WILL APPLY THE LAW A S EXPLAINED IN THE JUDGMENTS OF THE KERALA HIGH C REFERRED TO ABOVE WH ICH HAVE BEEN AFFIRMED BY THE HONBLE SUPREME COURT. (IV) WHERE SURPLUS FUNDS ARE PARKED WITH THE BANK A ND INTEREST IS EARNED THEREON IT CAN ONLY BE CATEGORISED AS INCOME FROM O THER SOURCES. THIS RECEIPT MERITS SEPARATE TREATMENT UNDER SECTION 56 OF THE A CT WHICH IS OUTSIDE THE RING OF PROFITS AND GAINS FROM BUSINESS AND PROFESSION. IT GOES ENTIRELY OUT OF THE RECKONING FOR THE PURPOSES OF SECTION 80HHC. (V) INTEREST EARNED ON FIXED DEPOSITS FOR THE PURPO SES OF AVAILING OF CREDIT FACILITIES FORM THE BANK DOES NOT HAVE AN IMMEDIAT E NEXUS WITH THE EXPORT BUSINESS AND THEREFORE HAS TO NECESSARILY BE TREATE D AS INCOME FROM OTHER SOURCES AND NOT BUSINESS INCOME. (VI) ONCE BUSINESS INCOME HAS BEEN DETERMINED BY AP PLYING ACCOUNTING STANDARDS AS WELL AS THE PROVISIONS CONTAINED IN TH E ACT THE ASSESSEE WOULD BE PERMITTED TO IN TERMS OF SECTION 37 OF THE ACT CL AIM AS DEDUCTION EXPENDITURE LAID OUT FOR THE PURPOSES OF EARNING SUCH BUSINESS INCOME. (VII) IN THE SECOND STAGE THE ASSESSING OFFICER WI LL DEDUCT FROM THE PROFITS OF THE BUSINESS COMPUTED UNDER THE HAD PROFITS AND GA INS OF BUSINESS OR PROFESSION THE FOLLOWING SUMS IN ORDER TO ARRIVE A T THE PROFITS OF THE BUSINESS FOR THE PURPOSES OF SECTION 80HHC(3): (A) 90 PER CENT OF ANY SUM REFERRED TO IN CLAUSES (III A) (IIIB) AND (IIIC) OF SECTION 28 I.E. EXPORT INCENTIVE ; (B) 90 PER CENT OF ANY RECEIPTS BY WAY OF BROKERAGE CO MMISSION INTEREST RENT CHARGES OR ANY OTHER RECEIPT OF A S IMILAR NATURE INCLUDED IN SUCH PROFITS ; AND (C) PROFITS OF ANY BRANCH OFFICE WAREHOUSE OR ANY OTH ER ESTABLISHMENT OF THE ASSESSEE SITUATE OUTSIDE INDIA . (VIII) THE WORD INTEREST IN CLAUSE (BAA) OF THE E XPLANATION CONNOTES NET INTEREST AND NOT GROSS INTEREST. THEREFORE IN DEDUCTING SUCH INTEREST THE ASSESSING OFFICER WILL TAKE INTO ACCOUNT THE NET IN TEREST I.E. GROSS INTEREST AS REDUCED BY EXPENDITURE INCURRED FOR EARNING SUCH IN TEREST. THE DECISION OF THE SPECIAL BENCH OF THE INCOME-TAX APPELLATE TRIBUNAL IN LALSONS [2004] 8 ITR 25 (DELHI) TO THIS EFFECT IS AFFIRMED. IN HOLDING AS ABOVE WE DIFFER FROM THE JUDGMENTS OF THE PUNJAB AND HARYANA HIGH COURT IN R ANI PALIWAL [2004] 268 ITR 220 AND THE MADRAS HIGH COURT IN CHINNAPANDI [2 006] 282 ITR 389 AND AFFIRM THE RULING OF THE SPECIAL BENCH OF THE INCOM E-TAX APPELLATE TRIBUNAL IN LALSONS [2004] 89 ITD 25 (DELHI). THE PAPER PRODUCTS LTD ITA 798/M/2007 ITA 1645/M/2007 ITA 1705/M/2007 ITA 2518/M/2007 6 (IX) WHERE AS A RESULT OF THE COMPUTATION OF PROFI TS AND GAINS OF BUSINESS AND PROFESSION THE ASSESSING OFFICER TREATS THE IN TEREST RECEIPT AS BUSINESS INCOME THEN DEDUCTION SHOULD BE PERMISSIBLE IN TE RMS OF EXPLANATION (BAA) OF THE NET INTEREST I.E. THE GROSS INTEREST LESS THE EXPENDITURE INCURRED FOR THE PURPOSES OF EARNING SUCH INTEREST. THE NEXUS BETWE EN OBTAINING THE LOAN AND PAYING INTEREST THEREON (LAYING OUT THE EXPENDITURE BY WAY OF INTEREST) FOR THE PURPOSE OF EARNING THE INTEREST ON THE FIXED DEPOSI T TO DRAW AN ANALOGY FROM SECTION 37 WILL REQUIRE TO BE SHOWN BY THE ASSESSE E FOR APPLICATION OF THE NETTING PRINCIPLE. 9. IN OUR OPINION THE DECISION OF HONBLE DELHI HI GH COURT IN THE CASE OF SHRI RAM HONDA POWER EQUIP (SUPRA) IS DIRECTLY IN FAVOUR OF THE ASSESSEE ON THE ISSUE UNDER CONSIDERATION AND RESPECTFULLY FOLLOWING THE SAME WE SET ASIDE THE IMPUGNED ORDER OF LEARNED CIT (A) ON THIS ISSUE AND RESTORE THE MA TTER TO THE FILE OF THE ASSESSING OFFICER TO ALLOW THE ASSESSEES CLAIM FOR BENEFIT O F NETTING OF INTEREST INCOME KEEPING IN VIEW THE GUIDELINES LAID DOWN BY HONBLE DELHI H IGH COURT IN THE CASE OF SHRI RAM HONDA POWER EQUIP (SUPRA). GROUND NO.9 OF THE ASSE SSEES APPEAL IS ACCORDINGLY TREATED AS ALLOWED. 10. GROUND NO.10 AND 11 RELATE TO THE ASSESSEES CL AIM FOR INCLUSION OF SERVICES CHARGES AMOUNTING TO RS 3 76 200/- AND TECHNICAL FE ES AMOUNTING TO RS 8 82 580/- IN THE PROFITS ELIGIBLE FOR DEDUCTION U/S 80HHC. 11. AT THE TIME OF HEARING BEFORE US THE LEARNED C OUNSEL FOR THE ASSESSEE HAS RELIED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF BANGALORE CLOTHING CO 260 ITR 371 TO CONTEND THAT THE SERVICE CHARGES AND TECHNICAL FEES IN QUESTION RECEIVED BY THE ASSESSEE BEING PART OF ITS OPERATIONAL INCOME THE SAME WAS LIABLE TO BE INCLUDED IN THE PROFITS ELIGIBLE FOR D EDUCTION U/S 80HHC. IN THE SAID DECISION IT WAS HELD BY THE HONBLE BOMBAY HIGH CO URT THAT OTHER INCOME FORMING PART OF ASSESSEES OPERATIONAL INCOME CANNOT BE EXC LUDED FROM THE PROFITS OF THE BUSINESS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80HHC AS PER EXPLANATION (BAA) TO THAT SECTION. IT WAS ALSO HELD THAT NO STANDARD TEST FOR DECIDING WHAT WOULD CONSTITUTE THE OPERATIONAL INCOME OF THE ASSESSEE C AN BE LAID DOWN AND IN EVERY CASE THE ASSESSING OFFICER WILL HAVE TO ASCERTAIN WHETHER THE OTHER INCOME FORMS PART OF OPERATIONAL INCOME OF THE COMPANY AFTER TAK ING INTO CONSIDERATION THE NATURE THE PAPER PRODUCTS LTD ITA 798/M/2007 ITA 1645/M/2007 ITA 1705/M/2007 ITA 2518/M/2007 7 OF THE BUSINESS THE NATURE OF THE ACTIVITY AND SUC H OTHER TESTS. IT WAS ALSO OBSERVED BY HONBLE BOMBAY HIGH COURT IN THIS CONTEXT THAT T HE ASSESSING OFFICER WILL HAVE TO ASCERTAIN AS WHAT IS DOMINANT BUSINESS OF THE ASSES SEE-COMPANY AND WHETHER THE OTHER INCOME ACCRUES TO THE ASSESSEE AS A PART OF T HE MAIN BUSINESS ACTIVITY OR WHETHER THEY ACCRUE OUT OF INCIDENTAL BUSINESS. IT IS OBSERVED IN THIS CONTEXT THAT THE AMOUNT OF SERVICE CHARGES AND TECHNICAL FEES RECEIV ED BY THE ASSESSEE WAS HELD TO BE NOT INCLUDIBLE IN THE PROFITS OF THE BUSINESS FOR T HE PURPOSE OF COMPUTING DEDUCTION U/S 80HHC BY LEARNED CIT (A) FOR THE FOLLOWING REAS ONS GIVEN IN ANY PARAGRAPH NO.11.1 AND 13.2 OF HIS IMPUGNED ORDER : 11.1 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS M ADE BY THE APPELLANT. IN THE CASE OF CIT VS K K DOSHI & CO 245 ITR 849 (BOM) IT HAS BEEN HELD THAT THE SERVICE CHARGES EARNED BY THE ASSESSEE FROM THE JOB WORK HAVING NO DIRECT NEXUS WITH EXPORT ACTIVITIES SHALL NOT BE ENTITLED TO DEDUCTION U/S 80HHC. FURTHER IN THE CASE OF BANGALORE CLOTHING COMPANY (SUPRA) RELIED UPON BY THE APPELLANT THE ASSESSEE WAS A MANUFACTURER AND EXPO RTER OF GARMENTS. THE ASSESSEE WAS ALSO DOING LABOUR JOB FOR OTHERS. IT WAS OBSERVED BY THE HONBLE COURT THAT THERE WAS NO DIFFERENCE BETWEEN THE ACTI VITIES RELATING TO EXPORT BUSINESS CARRIED ON BY THE ASSESSEE AND THE PROCESS ES CARRIED ON FOR MANUFACTURING GARMENTS FOR OTHERS UNDER JOB WORK CO NTRACTS. THE ACTIVITY OF LABOUR JOB INVOLVED USE OF MACHINERY LABOUR MATER IAL WHICH WERE ALSO FORMING PART OF THE ACTIVITY OF MANUFACTURING GARMENTS BY T HE ASSESSEE FOR ITS OWN SALES. UNDER THESE CIRCUMSTANCES IT WAS HELD BY T HE COURT THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION U/S 80HHC IN RESPECT OF T HE PROFITS FROM JOB WORK. IN THE CASE OF THE APPELLANT THE FACTS ARE ENTIREL Y DIFFERENT. THE APPELLANT HAS PROVIDED ONLY MACHINERY TO THE PERSONS DOING JOB WO RK FOR THE APPELLANT. THE OTHER EXPENSES RELATING TO THE ACTIVITY OF MANUFACT URING ARE BORNE BY THE JOB WORKER. THE APPELLANT IS CHARGING FORM THE JOB WOR KER FOR THE USE OF MACHINERY WHICH CAN BE TERMED AS RENT FOR THE USE O F MACHINERY. THEREFORE THE SERVICE CHARGES RECOVERED BY THE APPELLANT FROM THE USE OF MACHINERY CANNOT BE SAID TO BE A PART OF THE OPERATIONAL INCO ME OF THE APPELLANT. ACCORDINGLY FOLLOWING THE DECISION OF JURISDICTION AL HIGH COURT IN THE CASE OF BANGALORE CLOTHING CO (SUPRA) AND M/S K K DOSHI & C O (SUPRA) THE ACTION OF THE AO IN NOT ALLOWING DEDUCTION U/S 80HHC ON SERVI CE CHARGES RECEIVED BY THE APPELLANT AT RS 3 76 200/- IS UPHELD. 13.2 I HAVE CONSIDERED THE CONTENTION OF THE APPELL ANT. IT IS SEEN THAT THE APPELLANT IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF PACKAGING MATERIAL OF DIFFERENT TYPES AND SIZES. IT IS ALSO ENGAGED IN THE BUSINESS OF MANUFACTURING OF METALIZED FILMS POLY FILMS LABEL LING MATERIAL PACKING CARTONS ETC. IT IS NOT ENGAGED IN THE BUSINESS OF PROVIDING TECHNICAL SERVICES. THEREFORE THE INCOME OF RS 8 82 580/- RECEIVED BY THE APPELLANT AS TECHNICAL FEES CANNOT BE TREATED AS A PART OF THE OPERATIONAL INCOME OF THE APPELLANT. THE PAPER PRODUCTS LTD ITA 798/M/2007 ITA 1645/M/2007 ITA 1705/M/2007 ITA 2518/M/2007 8 ACCORDINGLY FOLLOWING THE DECISION IN THE CASE OF BANGALORE CLOTHING CO (SUPRA) THE APPELLANT IS NOT ENTITLED TO DEDUCTION U/S 80HHC ON TECHNICAL FESS OF RS 8 82 580/-. 12. AS IS CLEARLY EVIDENT FROM THE RELEVANT OBSERVA TIONS OF THE LEARNED CIT (A) REPRODUCED ABOVE THE NATURE OF ASSESSEES BUSINESS AS WELL AS THE NATURE OF RECEIPTS IN QUESTION WAS DULY EXAMINED BY HIM AND ON SUCH EX AMINATION HE HELD THAT THE SERVICE CHARGES AND TECHNICAL FEES RECEIVED BY THE ASSESSEE WERE NOT FORMING PART OF ITS OPERATIONAL INCOME. AT THE TIME OF HEARING BEF ORE US THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT BEEN ABLE TO RAISE ANY MATERIAL CO NTENTION TO REBUT OR CONTROVERT THESE OBSERVATIONS RECORDED BY LEARNED CIT (A) WHIL E DISALLOWING THE CLAIM OF THE ASSESSEE FOR INCLUSION OF SERVICE CHARGES AND TECHN ICAL FEES IN THE PROFITS OF BUSINESS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80HHC. THESE BEING SO AND KEEPING IN VIEW THE DECISIONS OF HONBLE BOMBAY HIGH COURT IN THE CASE OF K K DOSHI & CO (SUPRA) AND BOMBAY CLOTHING CO (SUPRA) RELIED UPON BY LEARNED CIT (A) WE FIND NO INFIRMITY IN THE ORDER OF LEARNED CIT (A) HOLDING T HAT THE SERVICE CHARGES AND TECHNICAL FEES NOT BEING PART OF OPERATIONAL INCOME OF THE ASSESSEE WAS LIABLE TO BE EXCLUDED FROM THE PROFITS OF THE BUSINESS FOR THE P URPOSE OF COMPUTING DEDUCTION U/S 80HHC. HIS IMPUGNED ORDER ON THIS ISSUE IS THEREF ORE UPHELD DISMISSING GROUND 10 11 AND 11 OF THE ASSESSEES APPEAL. 13. AS REGARDS GROUND NO.12 RELATING TO THE ASSESSE ES CLAIM FOR REDUCTION OF ONLY THE NET INCOME FROM SERVICE CHARGES AND TECHNICAL F EES FROM THE ELIGIBLE PROFITS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80HHC WE DI RECT THE ASSESSING OFFICER TO EXAMINE THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF EXPENSES IF ANY INCURRED FOR EARNING THE INCOME FROM SERVICE CHARGE S AND TECHNICAL FEES AND ACCORDINGLY TAKE ONLY THE NET INCOME FOR EXCLUSION FROM THE PROFITS OF THE BUSINESS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80HHC. GROU ND NO.12 OF THE ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOS ES. 14. AS REGARDS GROUND NO.13 14 AND 15 IT IS OBSER VED THAT THE ISSUES RAISED THEREIN RELATING TO THE ADDITION MADE ON ACCOUNT OF PROVISION FOR BAD AND DOUBTFUL THE PAPER PRODUCTS LTD ITA 798/M/2007 ITA 1645/M/2007 ITA 1705/M/2007 ITA 2518/M/2007 9 DEBTS WRITTEN BACK HAS BEEN REMANDED BY THE LEARNED CIT (A) TO THE ASSESSING OFFICER WITH A DIRECTION TO VERIFY THE ASSESSEES C LAIM THAT THERE BEING NO DEDUCTION ALLOWED FOR THE PROVISION MADE FOR BAD AND DOUBTFUL DEBTS IN THE EARLIER YEARS THE ADDITION MADE ON ACCOUNT OF WRITE BACK OF THE SAID PROVISION WAS NOT WARRANTED AND TO ALLOW APPROPRIATE RELIEF TO THE ASSESSEE AFTER S UCH VERIFICATION. THE GRIEVANCE OF THE ASSESSEE ON THIS ISSUE THUS HAS ALREADY BEEN TA KEN CARE OF BY THE DIRECTION GIVEN BY LEARNED CIT (A) BY HIS IMPUGNED ORDER AS AGREED EVEN BY THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE US. THE ASSESSEE THEREFORE CANNOT BE SAID TO HAVE ANY MATERIAL GRIEVANCE ON THIS ISSUE A ND THIS BEING SO WE DISMISS GROUND NO.13 14 AND 15 OF ASSESSEES APPEAL TREATI NG THE SAME AS INFRUCTUOUS. 15. THE GRIEVANCE OF THE ASSESSEE AS PROJECTED IN GROUND NO.16 17 AND 18 OF ITS APPEAL IS THAT THE LEARNED CIT (A) WAS NOT JUSTIFIE D IN NOT ENTERTAINING THE FOLLOWING ADDITIONAL GROUNDS SOUGHT TO BE RAISED BEFORE HIM ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEA RNED ASSTT COMMISSIONER OF INCOME TAX 3(2)- 1. ERRED IN DISALLOWING THE DEPRECIATION WHICH WAS ALLOWED TILL A.Y. 2001- 02 IN RESPECT OF OBSOLETE COMPUTERS CLAIMED AS WRIT TEN OFF IN A.Y. 1996-97 BUT DISALLOWED IN THAT YEAR; 2. ERRED IN DISALLOWING DEPRECIATION WHICH WAS ALLO WED TILL A.Y. 2001-02 IN RESPECT OF EXPENDITURE INCURRED ON FOREIGN TRAVEL A ND ON INTEREST ON BORROWINGS IN CONNECTION WITH PURCHASE OF PLANT AND MACHINERY . 16. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED RELEVANT MATERIAL ON THE RECORD. IT IS OBSERVED THAT THE AB OVE ADDITIONAL GROUNDS SOUGHT TO BE RAISED BY THE ASSESSEE BEFORE THE LEARNED CIT (A) W ERE NOT ENTERTAINED BY HIM ON THE GROUND THAT THE ISSUES RAISED THEREIN HAD NOT B EEN DISCUSSED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER NOR ANY SUCH CLAIM WAS MADE BY THE ASSESSEE ALSO IN ITS COMPUTATION OF TOTAL INCOME. HOWEVER AS HELD BY THE FULL BENCH OF HONBLE BOMBAY HIGH COURT IN THE CASE OF AHMEDABAD ELECTRIC ITY LTD VS CIT 199 ITR 351 THE BASIC PURPOSE OF AN APPEAL IN AN INCOME-TAX MATTER IS TO ASCERTAIN THE CORRECT TAX LIABILITY OF THE ASSESSEE IN ACCORDANCE WITH LAW. IT WAS ALSO HELD THAT THE APPELLATE AUTHORITY THEREFORE CAN CONSIDER THE PROCEEDINGS B EFORE IT AND THE MATERIAL ON RECORD THE PAPER PRODUCTS LTD ITA 798/M/2007 ITA 1645/M/2007 ITA 1705/M/2007 ITA 2518/M/2007 10 BEFORE IT FOR THE PURPOSE OF DETERMINING THE CORREC T TAX LIABILITY OF THE ASSESSEE AND THERE IS NOTHING EITHER IN SECTION 251 OR IN SECTIO N 254 WHICH WOULD INDICATE THAT APPELLATE AUTHORITIES ARE CONFINED TO CONSIDERING O NLY THE OBJECTIONS RAISED BEFORE THEM. THEY CAN CONSIDER THE ENTIRE PROCEEDINGS TO DETERMINE THE TAX LIABILITY OF THE ASSESSEE. KEEPING IN VIEW THIS JUDGMENT OF FULL BE NCH OF HONBLE JURISDICTIONAL HIGH COURT WE ARE OF THE VIEW THAT THE LEARNED CIT (A) SHOULD HAVE ADMITTED THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE BEFORE HI M AS THE ISSUES SOUGHT TO BE RAISED THEREIN WERE RELEVANT FOR THE PURPOSE OF DET ERMINING THE CORRECT TAX LIABILITY AND SHOULD HAVE REMANDED THE MATTER TO THE ASSESSIN G OFFICER TO EXAMINE THE ISSUES RAISED THEREIN ON MERITS. WE THEREFORE SET ASIDE THE IMPUGNED ORDER OF LEARNED CIT (A) ON THESE ISSUES AND RESTORE THE MATTER TO T HE FILE OF THE ASSESSING OFFICER FOR DECIDING THE ISSUES RAISED BY THE ASSESSEE IN THE A DDITIONAL GROUNDS ON MERITS. GROUNDS NO.16 17 AND 18 ARE ACCORDINGLY ALLOWED. 17. IN GROUND NO.1 OF ITS APPEAL FOR ASSESSMENT YEA R 2002-03 BEING ITA NO. 1645/MUM/2007 THE REVENUE HAS CHALLENGED THE ACTIO N OF THE LEARNED CIT (A) IN DIRECTING THE ASSESSING OFFICER TO REDUCE THE AMOUN T OF RS 6 LAKHS WHICH IS THE FEES PAID IN CONNECTION WITH DIVESTMENT IN PPL FEEDBACK PACKAGING LTD TREATING IT AS A PART OF THE COST OF TRANSFER OF SHARES AND TO ALLOW THE SAME IN COMPUTING THE LONG TERM CAPITAL LOSS. 18. DURING THE YEAR UNDER CONSIDERATION THE ASSESS EE-COMPANY HAD INCURRED EXPENSES OF RS 6 LAKHS ON THE DIVESTMENT OF SHARES AND THE SAME WERE CLAIMED AS DEDUCTION WHILE COMPUTING THE BUSINESS INCOME. TRE ATING THE SAID EXPENSES TO BE OF CAPITAL EXPENDITURE THE DEDUCTION CLAIMED BY THE A SSESSEE FOR THE SAME WAS DISALLOWED BY THE ASSESSING OFFICER AND THE SAID DI SALLOWANCE WAS CONFIRMED BY LEARNED CIT (A). THE LEARNED CIT (A) HOWEVER ACC EPTED THE ALTERNATIVE CONTENTION OF THE ASSESSEE THAT THE SAID AMOUNT INCURRED IN CO NNECTION WITH DIVESTMENT OF SHARES IN PPL FEEDBACK PACKAGING LTD SHOULD BE TREA TED AS A PART OF THE COST OF TRANSFER OF SHARES FOR THE PURPOSE OF COMPUTING LON G TERM CAPITAL LOSS ON SALE OF INVESTMENTS IN PPL FEEDBACK PACKAGING LTD. ACCORDI NGLY HE DIRECTED THE ASSESSING OFFICER TO REDUCE THE AMOUNT OF RS 6 LAKHS FROM THE SALE CONSIDERATION RECEIVED BY THE PAPER PRODUCTS LTD ITA 798/M/2007 ITA 1645/M/2007 ITA 1705/M/2007 ITA 2518/M/2007 11 THE ASSESSEE FROM SALE OF SHARES OF PPL FEEDBACK PA CKAGING LTD WHILE COMPUTING THE LONG TERM CAPITAL LOSS. AT THE TIME OF HEARING BEF ORE US THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS NOT BEEN ABLE TO RAISE ANY MATER IAL CONTENTION TO POINT OUT ANY INFIRMITY IN THE IMPUGNED ORDER OF LEARNED CIT (A) ON THIS ISSUE. AS RIGHTLY HELD BY THE LEARNED CIT (A) THE AMOUNT OF RS 6 LAKHS HAVIN G BEEN PAID BY THE ASSESSEE IN CONNECTION WITH DIVESTMENT OF SHARES OF PPL FEEDBAC K PACKAGING LTD THE SAME CONSTITUTED EXPENDITURE INCURRED BY IT DIRECTLY IN CONNECTION WITH THE TRANSFER OF SHARES AND THE SAME WAS THEREFORE TO BE DEDUCTED FROM THE FULL VALUE OF CONSIDERATION AS PER SECTION 48 WHILE COMPUTING THE LONG TERM CAPITAL LOSS. THE LEARNED CIT (A) IN OUR OPINION THEREFORE WAS FULL Y JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE ON THIS ISSUE AND UPHOLDING HIS IMPUGN ED ORDER WE DISMISS GROUND NO.1 OF THE REVENUES APPEAL. 19. AS REGARDS GROUND NO. 2 OF REVENUES APPEAL IT IS OBSERVED THAT THE ISSUE RAISED THEREIN RELATING TO THE ASSESSEES CLAIM FOR EXCLUSION OF EXCISE DUTY AND SALES- TAX FROM THE TOTAL TURNOVER FOR THE PURPOSE OF COMP UTING THE DEDUCTION U/S 80HHC IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF HONBLE SUPREME COURT IN THE CASE OF LAKSHMI MACHINES REPORTED IN 290 ITR 667. RESPECTFULLY FOLLOWING THE SAID DECISION OF HONBLE APEX COURT WE UPHOLD THE IMPUGNED ORDER OF LEARNED CIT (A) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE AND DISMISS GROUND NO.2 OF THE REVENUES APPEAL 20. AS REGARDS GROUND NO. 3 OF THE REVENUES APPEAL IT IS OBSERVED THAT THE ISSUE INVOLVED THEREIN RELATING TO THE ASSESSEES CLAIM F OR NOT EXCLUDING THE DEDUCTION ALLOWABLE U/S 80IB FROM THE PROFIT FOR THE PURPOSE OF DEDUCTION U/S 80HHC IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE DECISION OF SPE CIAL BENCH OF ITAT AT DELHI IN THE CASE OF ACIT VS HINDUSTAN MINT & AGRO PRODUCTS (P) LTD 119 ITD 107. RESPECTFULLY FOLLOWING THE SAID DECISION OF BENCH OF ITAT WE SE T ASIDE THE IMPUGNED ORDER OF LEARNED CIT (A) GIVING RELIEF TO THE ASSESSEE ON TH IS ISSUE AND RESTORE THAT OF THE ASSESSING OFFICER. GROUND NO.3 OF THE REVENUES AP PEAL IS ACCORDINGLY ALLOWED. THE PAPER PRODUCTS LTD ITA 798/M/2007 ITA 1645/M/2007 ITA 1705/M/2007 ITA 2518/M/2007 12 21. NOW WE SHALL TAKE-UP THE CROSS APPEALS FOR ASS ESSMENT YEAR 2003-04 BEING ITA 1705/MUM/2007 AND 2518/MUM/2007 WHICH ARE DIREC TED AGAINST THE ORDER OF LEARNED CIT (A)-III MUMBAI DATED 15.1.2007. 22. AS REGARDS GROUND 1 2 & 3 OF ASSESSEES APPEAL THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONCEDED BEFORE US THAT THE COMMON ISS UE INVOLVED THEREIN RELATING TO DISALLOWANCE OF ASSESSEES CLAIM FOR DEDUCTION ON A CCOUNT OF WRITE OFF OF NON-COMPETE FEES IS SQUARELY COVERED AGAINST THE ASSESSEE BY TH IRD MEMBER DECISION OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN C ASE FOR ASSESSMENT YEAR 1998-99 TO ASSESSMENT YEAR 2001-02. HE HAS SUBMITTED THAT THE ASSESSEE HOWEVER HAS TAKEN THIS MATTER TO THE HONBLE BOMBAY HIGH COURT WHICH IS STILL PENDING. HE HAS SUBMITTED THAT THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDERATION BEING IDENTICAL WITH THE QUESTION OF LAW ARISING IN THE CASE OF THE ASSE SSEE FOR EARLIER YEARS I.E. ASSESSMENT YEARS 1999-2000 TO ASSESSMENT YEAR 2001- 02 WHICH IS PENDING BEFORE THE HONBLE BOMBAY HIGH COURT THE ASSESSEE HAS FIL ED A DECLARATION AS REQUIRED BY THE PROVISIONS OF SECTION 158A(1) WHICH MAY BE TAKE N INTO CONSIDERATION. ACCORDINGLY WE DECIDE THIS ISSUE AGAINST THE ASSESS EE FOLLOWING THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEARS 1998-99 TO ASSESSMENT YEAR 2001-02 WITH THE RIGHT TO THE ASSESSEE TO SEEK AMENDMENT OF THIS ORDER IF NECESSARY SO AS TO BRING THE SAME IN CONFORMITY WI TH THE DECISION OF THE HONBLE HIGH COURT ON THE IDENTICAL QUESTION OF LAW WHEN TH E SAME BECOMES FINAL FOR ASSESSMENT YEARS 1998-99 TO ASSESSMENT YEAR 2001-02 . GROUND 1 2 AND 3 OF ASSESSEES APPEAL ARE ACCORDINGLY DISMISSED. 23. AS REGARDS GROUND NO. 4 AND 5 THE LEARNED COUN SEL FOR THE ASSESSEE HAS CONCEDED THE COMMON ISSUE RAISED THEREIN RELATING T O THE DISALLOWANCE OF ASSESSEES CLAIM FOR DEDUCTION U/S 35D ON ACCOUNT OF SHARE ISS UE AND DEBENTURE EXPENSES IS SQUARELY COVERED AGAINST THE ASSESSEE. HE HAS SUBM ITTED THAT THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDERATION BEING IDENTICAL WITH T HE QUESTION OF LAW ARISING IN THE CASE OF THE ASSESSEE FOR EARLIER YEARS I.E. ASSESSM ENT YEARS 1999-2000 TO ASSESSMENT YEAR 2001-02 WHICH IS PENDING BEFORE THE HONBLE BOMBAY HIGH COURT THE ASSESSEE HAS FILED A DECLARATION AS REQUIRED BY THE PROVISIONS OF SECTION 158A(1) THE PAPER PRODUCTS LTD ITA 798/M/2007 ITA 1645/M/2007 ITA 1705/M/2007 ITA 2518/M/2007 13 WHICH MAY BE TAKEN INTO CONSIDERATION. ACCORDINGLY WE DECIDE THIS ISSUE AGAINST THE ASSESSEE FOLLOWING THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEARS 1998-99 TO ASSESSMENT YEAR 2001-02 WITH THE RIGHT TO THE ASSESSEE TO SEEK AMENDMENT OF THIS ORDER IF NECESS ARY SO AS TO BRING THE SAME IN CONFORMITY WITH THE DECISION OF THE HONBLE HIGH CO URT ON THE IDENTICAL QUESTION OF LAW WHEN THE SAME BECOMES FINAL FOR ASSESSMENT YEAR S 1998-99 TO ASSESSMENT YEAR 2001-02. GROUND 4 AND 5 OF ASSESSEES APPEAL ARE A CCORDINGLY DISMISSED. 24. AS REGARDS GROUND NO.6 THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONCEDED THAT THE ISSUE RAISED THEREIN REGARDING TO ASSESSEE S CLAIM FOR INCLUSION OF INTEREST ON FDRS AND INTEREST ON STATUTORY DEPOSITS IN THE PROF ITS FOR DEDUCTION U/S 80HHC IS ALSO SQUARELY COVERED AGAINST THE ASSESSEE BY THE DECISI ON OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 1998-99 TO ASSESSMENT YEAR 2001-02. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE TRIBUNAL WE UPH OLD THE IMPUGNED ORDER OF LEARNED CIT (A) ON THIS ISSUE AND DISMISS GROUND NO.6 OF TH E ASSESSEES APPEAL. 25. AS REGARDS GROUND NO. 7 RELATING TO THE ASSESSE ES ALTERNATIVE CLAIM FOR INCLUSION OF ONLY NET INTEREST INCOME FROM THE PROF ITS ELIGIBLE FOR DEDUCTION U/S 80HHC THE LEARNED COUNSEL FOR THE ASSESSEE HAS REL IED ON THE DECISION OF SPECIAL BENCH OF ITAT DELHI IN THE CASE OF LALSONS ENTERPRI SES VS DCIT REPORTED IN 89 ITD 25. HE HAS CONTENDED THAT THIS ISSUE MAY THEREFORE BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINING THE CLAIM OF THE AS SESSEE FOR NETTING OFF INTEREST INCOME KEEPING IN VIEW THE SAID DECISION OF THE ITA T. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HAS RELIED ON TH E DECISION OF HONBLE P&H HIGH COURT IN THE CASE OF RANI PALIWAL VS CIT 268 ITR 22 0 OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS V CHINNAPANDI 282 ITR 389 AND TH AT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS SHRI RAM HONDA POWER EQUIP 289 I TR 475 AND CONTENDED THAT FOR COMPUTING DEDUCTION U/S 80HHC GROSS INTEREST INCOM E IS LIABLE TO BE EXCLUDED FROM THE ELIGIBLE PROFITS AND NOT THE NET INTEREST AS SO UGHT TO BE CLAIMED BY THE LEARNED COUNSEL FOR THE ASSESSEE. THE PAPER PRODUCTS LTD ITA 798/M/2007 ITA 1645/M/2007 ITA 1705/M/2007 ITA 2518/M/2007 14 26. AFTER CAREFULLY PERUSING THE JUDICIAL PRONOUNCE MENTS CITED BY BOTH THE SIDES IT IS NOTED THAT ALTHOUGH HONBLE P&H HIGH COURT IN TH E CASE OF RANI PALIWAL (SUPRA) AND HONBLE MADRAS HIGH COURT IN THE CASE OF V CHINNAPA NDI (SUPRA) HAVE HELD THAT THE GROSS INTEREST INCOME IS LIABLE TO BE REDUCED FROM THE PROFITS OF THE BUSINESS FOR COMPUTING DEDUCTION U/S 80HHC THE ALTERNATIVE CLAI M OF THE ASSESSEE FOR NETTING OFF INTEREST INCOME AGAINST INTEREST EXPENDITURE HAS BE EN SPECIFICALLY CONSIDERED ON MERIT BY THE HONBLE DELHI HIGH COURT IN THE CASE O F SHRI RAM HONDA POWER EQUIP (SUPRA). IN THE SAID DECISION IT WAS HELD BY HON BLE HIGH COURT AFTER TAKING INTO CONSIDERATION ALL THE RELEVANT ASPECTS OF THE MATTE R THAT THE WORD INTEREST IN CLAUSE (BAA) TO EXPLANATION TO SECTION 80HHC IS INDICATIVE OF NET INTEREST I.E. GROSS INTEREST LESS THE EXPENDITURE INCURRED BY THE ASSESSEE FOR E ARNING SUCH INTEREST. HONBLE DELHI HIGH COURT THUS DISSENTED FROM THE P&H HIGH C OURT DECISION IN THE CASE OF RANI PALIWAL VS CIT (SUPRA) AND ALSO MADRAS HIGH COURT D ECISION IN THE CASE OF V CHINNAPANDI AND AFFIRMED THE DECISION OF SPECIAL BE NCH OF DELHI IN THE CASE OF LALSONS ENTERPRISES (SUPRA). HONBLE DELHI HIGH CO URT ALSO LAID DOWN CERTAIN GUIDELINES FOR DECIDING THE ISSUE RELATING ASSESSEE S CLAIM FOR THE BENEFIT OF NETTING OFF INTEREST INCOME AS FOLLOWS: (I) IN COMPUTING WHAT THE PROFITS DERIVED FROM EXP ORTS FOR THE PURPOSES OF SECTION 80HHC(1) READ WITH SECTION 80HHC(3) ARE TH E NEXUS TEST HAS TO BE APPLIED TO EXCLUDE THAT WHICH DOES NOT PARTAKE OF P ROFITS THAT CAN BE SAID TO HAVE BEEN DERIVED FROM THE BUSINESS OF EXPORTS. (II) IN THE SPECIFIC CONTEXT OF CLAUSE (BAA) OF THE EXPLANATION TO SECTION 80HHC WHILE DETERMINING THE PROFITS OF THE BUSINE SS THE ASSESSING OFFICER HAS TO UNDERTAKE A TWO-STEP EXERCISE IN THE FOLLOWI NG SEQUENCE. HE HAS TO FIRST COMPUTE THE PROFITS OF THE BUSINESS UNDER THE HEA D PROFITS AND GAINS OF BUSINESS OR PROFESSION. IN OTHER WORDS HE WILL H AVE TO COMPUTE BUSINESS PROFITS IN TERMS OF THE ACT BY APPLYING THE PROVI SIONS OF SECTIONS 28 TO 44 THEREOF. (III) IN ARRIVING AT PROFITS OF THE BUSINESS BY THE ABOVE METHOD THE ASSESSING OFFICER WILL EXCLUDE ALL SUCH INCOMES WHICH PARTAKE OF THE CHARACTER OF INCOME FROM OTHER SOURCES WHICH IN ANY EVENT ARE TREATED UNDER SECTIONS 56 AND 57 OF THE ACT AND ARE THEREFORE NOT TO BE RECKONED FOR THE PURPOSES OF SECTION 80HHC . THE ASSESSING OFFICER WILL APPLY THE LAW A S EXPLAINED IN THE JUDGMENTS OF THE KERALA HIGH C REFERRED TO ABOVE WH ICH HAVE BEEN AFFIRMED BY THE HONBLE SUPREME COURT. THE PAPER PRODUCTS LTD ITA 798/M/2007 ITA 1645/M/2007 ITA 1705/M/2007 ITA 2518/M/2007 15 (IV) WHERE SURPLUS FUNDS ARE PARKED WITH THE BANK A ND INTEREST IS EARNED THEREON IT CAN ONLY BE CATEGORISED AS INCOME FROM O THER SOURCES. THIS RECEIPT MERITS SEPARATE TREATMENT UNDER SECTION 56 OF THE A CT WHICH IS OUTSIDE THE RING OF PROFITS AND GAINS FROM BUSINESS AND PROFESSION. IT GOES ENTIRELY OUT OF THE RECKONING FOR THE PURPOSES OF SECTION 80HHC. (V) INTEREST EARNED ON FIXED DEPOSITS FOR THE PURPO SES OF AVAILING OF CREDIT FACILITIES FORM THE BANK DOES NOT HAVE AN IMMEDIAT E NEXUS WITH THE EXPORT BUSINESS AND THEREFORE HAS TO NECESSARILY BE TREATE D AS INCOME FROM OTHER SOURCES AND NOT BUSINESS INCOME. (VI) ONCE BUSINESS INCOME HAS BEEN DETERMINED BY AP PLYING ACCOUNTING STANDARDS AS WELL AS THE PROVISIONS CONTAINED IN TH E ACT THE ASSESSEE WOULD BE PERMITTED TO IN TERMS OF SECTION 37 OF THE ACT CL AIM AS DEDUCTION EXPENDITURE LAID OUT FOR THE PURPOSES OF EARNING SUCH BUSINESS INCOME. (VII) IN THE SECOND STAGE THE ASSESSING OFFICER WI LL DEDUCT FROM THE PROFITS OF THE BUSINESS COMPUTED UNDER THE HAD PROFITS AND GA INS OF BUSINESS OR PROFESSION THE FOLLOWING SUMS IN ORDER TO ARRIVE A T THE PROFITS OF THE BUSINESS FOR THE PURPOSES OF SECTION 80HHC(3): (A) 90 PER CENT OF ANY SUM REFERRED TO IN CLAUSES (III A) (IIIB) AND (IIIC) OF SECTION 28 I.E. EXPORT INCENTIVE ; (B) 90 PER CENT OF ANY RECEIPTS BY WAY OF BROKERAGE CO MMISSION INTEREST RENT CHARGES OR ANY OTHER RECEIPT OF A S IMILAR NATURE INCLUDED IN SUCH PROFITS ; AND (C) PROFITS OF ANY BRANCH OFFICE WAREHOUSE OR ANY OTH ER ESTABLISHMENT OF THE ASSESSEE SITUATE OUTSIDE INDIA . (VIII) THE WORD INTEREST IN CLAUSE (BAA) OF THE E XPLANATION CONNOTES NET INTEREST AND NOT GROSS INTEREST. THEREFORE IN DEDUCTING SUCH INTEREST THE ASSESSING OFFICER WILL TAKE INTO ACCOUNT THE NET IN TEREST I.E. GROSS INTEREST AS REDUCED BY EXPENDITURE INCURRED FOR EARNING SUCH IN TEREST. THE DECISION OF THE SPECIAL BENCH OF THE INCOME-TAX APPELLATE TRIBUNAL IN LALSONS [2004] 8 ITR 25 (DELHI) TO THIS EFFECT IS AFFIRMED. IN HOLDING AS ABOVE WE DIFFER FROM THE JUDGMENTS OF THE PUNJAB AND HARYANA HIGH COURT IN R ANI PALIWAL [2004] 268 ITR 220 AND THE MADRAS HIGH COURT IN CHINNAPANDI [2 006] 282 ITR 389 AND AFFIRM THE RULING OF THE SPECIAL BENCH OF THE INCOM E-TAX APPELLATE TRIBUNAL IN LALSONS [2004] 89 ITD 25 (DELHI). (IX) WHERE AS A RESULT OF THE COMPUTATION OF PROFI TS AND GAINS OF BUSINESS AND PROFESSION THE ASSESSING OFFICER TREATS THE IN TEREST RECEIPT AS BUSINESS INCOME THEN DEDUCTION SHOULD BE PERMISSIBLE IN TE RMS OF EXPLANATION (BAA) OF THE NET INTEREST I.E. THE GROSS INTEREST LESS THE EXPENDITURE INCURRED FOR THE PURPOSES OF EARNING SUCH INTEREST. THE NEXUS BETWE EN OBTAINING THE LOAN AND PAYING INTEREST THEREON (LAYING OUT THE EXPENDITURE BY WAY OF INTEREST) FOR THE PURPOSE OF EARNING THE INTEREST ON THE FIXED DEPOSI T TO DRAW AN ANALOGY FROM THE PAPER PRODUCTS LTD ITA 798/M/2007 ITA 1645/M/2007 ITA 1705/M/2007 ITA 2518/M/2007 16 SECTION 37 WILL REQUIRE TO BE SHOWN BY THE ASSESSE E FOR APPLICATION OF THE NETTING PRINCIPLE. 27. IN OUR OPINION THE DECISION OF HONBLE DELHI H IGH COURT IN THE CASE OF SHRI RAM HONDA POWER EQUIP (SUPRA) IS DIRECTLY IN FAVOUR OF THE ASSESSEE ON THE ISSUE UNDER CONSIDERATION AND RESPECTFULLY FOLLOWING THE SAME WE SET ASIDE THE IMPUGNED ORDER OF LEARNED CIT (A) ON THIS ISSUE AND RESTORE THE MA TTER TO THE FILE OF THE ASSESSING OFFICER TO ALLOW THE ASSESSEES CLAIM FOR BENEFIT O F NETTING OF INTEREST INCOME KEEPING IN VIEW THE GUIDELINES LAID DOWN BY HONBLE DELHI H IGH COURT IN THE CASE OF SHRI RAM HONDA POWER EQUIP (SUPRA). GROUND NO.7 OF THE ASSE SSEES APPEAL IS ACCORDINGLY TREATED AS ALLOWED. 28. GROUND NO. 8 RELATES TO THE ASSESSEES CLAIM FO R INCLUSION OF SERVICES CHARGES AMOUNTING TO RS 3 61 009/- AND PROFIT ON SALE OF AS SETS AMOUNTING TO RS 1 33 445/- IN THE PROFITS ELIGIBLE FOR DEDUCTION U/S 80HHC. 29. AT THE TIME OF HEARING BEFORE US THE LEARNED C OUNSEL FOR THE ASSESSEE HAS RELIED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF BANGALORE CLOTHING CO 260 ITR 371 TO CONTEND THAT THE AMOUNTS IN QUESTION RECEIVED BY THE ASSESSEE BEING PART OF ITS OPERATIONAL INCOME THE SAME WERE LIABLE TO BE INCLUDED IN THE PROFITS ELIGIBLE FOR DEDUCTION U/S 80HHC. IN T HE SAID DECISION IT WAS HELD BY THE HONBLE BOMBAY HIGH COURT THAT OTHER INCOME FORMING PART OF ASSESSEES OPERATIONAL INCOME CANNOT BE EXCLUDED FROM THE PROFITS OF THE B USINESS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80HHC AS PER EXPLANATION (B AA) TO THAT SECTION. IT WAS ALSO HELD THAT NO STANDARD TEST FOR DECIDING WHAT WOULD CONSTITUTE THE OPERATIONAL INCOME OF THE ASSESSEE CAN BE LAID DOWN AND IN EVERY CASE THE ASSESSING OFFICER WILL HAVE TO ASCERTAIN WHETHER THE OTHER INCOME FORMS PART OF OP ERATIONAL INCOME OF THE COMPANY AFTER TAKING INTO CONSIDERATION THE NATURE OF THE B USINESS THE NATURE OF THE ACTIVITY AND SUCH OTHER TESTS. IT WAS ALSO OBSERVED BY HON BLE BOMBAY HIGH COURT IN THIS CONTEXT THAT THE ASSESSING OFFICER WILL HAVE TO ASC ERTAIN AS WHAT IS DOMINANT BUSINESS OF THE ASSESSEE-COMPANY AND WHETHER THE OTHER INCOM E ACCRUES TO THE ASSESSEE AS A PART OF THE MAIN BUSINESS ACTIVITY OR WHETHER THEY ACCRUE OUT OF INCIDENTAL BUSINESS. THE PAPER PRODUCTS LTD ITA 798/M/2007 ITA 1645/M/2007 ITA 1705/M/2007 ITA 2518/M/2007 17 IT IS OBSERVED IN THIS CONTEXT THAT THE AMOUNTS IN QUESTION WERE HELD TO BE NOT INCLUDIBLE IN THE PROFITS OF THE BUSINESS FOR THE P URPOSE OF COMPUTING DEDUCTION U/S 80HHC BY LEARNED CIT (A) AFTER TAKING INTO CONSIDER ATION THE NATURE OF ASSESSEES BUSINESS AS WELL AS THE NATURE OF RECEIPTS IN QUEST ION AND ON SUCH CONSIDERATION HE HELD THAT THE SERVICE CHARGES ETC. RECEIVED BY THE ASSESSEE WERE NOT FORMING PART OF ITS OPERATIONAL INCOME. AT THE TIME OF HEARING BEF ORE US THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT BEEN ABLE TO RAISE ANY MATERIAL CO NTENTION TO REBUT OR CONTROVERT THESE OBSERVATIONS RECORDED BY LEARNED CIT (A) WHIL E DISALLOWING THE CLAIM OF THE ASSESSEE FOR INCLUSION OF SERVICE CHARGES ETC. IN T HE PROFITS OF BUSINESS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80HHC. THESE BE ING SO AND KEEPING IN VIEW THE DECISIONS OF HONBLE BOMBAY HIGH COURT IN THE CASE OF K K DOSHI & CO (SUPRA) AND BOMBAY CLOTHING CO (SUPRA) RELIED UPON BY LEARNED C IT (A) WE FIND NO INFIRMITY IN THE ORDER OF LEARNED CIT (A) HOLDING THAT THE SERVI CE CHARGES ETC. NOT BEING PART OF OPERATIONAL INCOME OF THE ASSESSEE WERE LIABLE TO B E EXCLUDED FROM THE PROFITS OF THE BUSINESS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80HHC. HIS IMPUGNED ORDER ON THIS ISSUE IS THEREFORE UPHELD DISMISSING GROUND 8 OF THE ASSESSEES APPEAL. 30. AS REGARDS GROUND NO. 9 RELATING TO THE ASSESSE ES CLAIM FOR REDUCTION OF ONLY THE NET INCOME FROM SERVICE CHARGES ETC FROM THE EL IGIBLE PROFITS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80HHC WE DIRECT THE ASSESS ING OFFICER TO EXAMINE THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF E XPENSES IF ANY INCURRED FOR EARNING THE INCOME FROM SERVICE CHARGES ETC. AND AC CORDINGLY TAKE ONLY THE NET INCOME FOR EXCLUSION FROM THE PROFITS OF THE BUSINE SS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80HHC. GROUND NO.9 OF THE ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 31. AS REGARDS GROUND NO.10 TO 13 OF THE ASSESSEES APPEAL IT IS OBSERVED THAT THE ISSUE INVOLVED THEREIN RELATING TO THE ASSESSEES C LAIM FOR NOT EXCLUDING THE DEDUCTION ALLOWABLE U/S 80IB FROM THE PROFIT FOR THE PURPOSE OF DEDUCTION U/S 80HHC IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE DECISION OF SPE CIAL BENCH OF ITAT AT DELHI IN THE CASE OF ACIT VS HINDUSTAN MINT & AGRO PRODUCTS (P) LTD 119 ITD 107. RESPECTFULLY FOLLOWING THE SAID DECISION OF BENCH OF ITAT WE UP HOLD THE IMPUGNED ORDER OF THE PAPER PRODUCTS LTD ITA 798/M/2007 ITA 1645/M/2007 ITA 1705/M/2007 ITA 2518/M/2007 18 LEARNED CIT (A) ON THIS ISSUE AND DISMISS GROUND NO . 10 TO 13 OF THE ASSESSEES APPEAL. 32. GROUND NOS. 14 TO 16 RAISED IN THE ASSESSEES A PPEAL HAVE NOT BEEN PRESSED BY THE LEARNED COUNSEL FOR THE ASSESSEE KEEPING IN VIEW THAT THE LEARNED CIT(A) HAS ALREADY ALLOWED RELIEF TO THE ASSESSEE ON THE ISSUE S RAISED THEREIN. THE SAME ARE ACCORDINGLY DISMISSED AS NOT PRESSED. 33. AS REGARDS GROUND NO. 17 18 & 19 OF THE ASSES SEES APPEAL IT IS OBSERVED THAT THE RELIEF SOUGHT THEREIN ON THE ISSUES RELATI NG TO DEPRECIATION ON OBSOLETE COMPUTERS AS WELL AS DEPRECIATION ON EXPENSES INCUR RED ON FOREIGN TRAVEL AND INTEREST ON BORROWINGS IN RELATION TO PURCHASE OF PLANT AND MACHINERY HAS ALREADY BEEN GIVEN BY THE LEARNED CIT(A) IN HIS IMPUGNED ORDER BY DIRE CTING THE A.O. TO CONSIDER THE SAID CLAIMS OF THE ASSESSEE PASSING ORDER U/S. 154. THESE GROUNDS THEREFORE DO NOT SURVIVE AND THE SAME ARE ACCORDINGLY DISMISSED. 34. AS REGARDS GROUND NO. 20 IT IS OBSERVED THAT T HE ISSUE RAISED THEREIN RELATING TO LEVY OF INTEREST U/S. 234D IS SQUARELY COVERED I N FAVOUR OF THE ASSESSEE BY THE DECISION OF THE SPECIAL BENCH OF ITAT AT DELHI IN T HE CASE OF EKTA PROMOTERS REPORTED IN 113 ITD 719 WHEREIN IT WAS HELD THAT THE PROVISI ONS OF SECTION 234D HAVING BEEN BROUGHT ON STATUTE ON 1.6.2003 WILL BE APPLICABLE O NLY WITH EFFECT FROM A.Y. 04-05 AND SUCH INTEREST THEREFORE COULD NOT BE CHARGED FO R EARLIER YEARS. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE ITAT WE DIRECT THE AO TO CANCEL THE INTEREST LEVIED U/S. 234D AND ALLOW GROUND NO. 20 OF THE ASSESSEES APPEAL. 35. NOW WE SHALL TAKE UP THE APPEAL OF THE REVENU E FOR A.Y. 03-04 BEING ITA NO. 2518/M/07. AT THE TIME OF HEARING BEFORE US THE L D. REPRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THE ISSUE RAISED IN GROUND N O. 1 OF THE SAID APPEAL RELATING TO ASSESSEES CLAIM FOR DEDUCTION U/S. 80IB IN RESPECT OF SERVICE CHARGES AND RENT RECEIVED FROM EMPLOYEES IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE DECISION OF HONBLE SC IN THE CASE OF LIBERTY INDIA LTD. REPORT ED AS 317 ITR 218. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE HONBLE SUPREME COURT WE SET ASIDE IMPUGNED THE PAPER PRODUCTS LTD ITA 798/M/2007 ITA 1645/M/2007 ITA 1705/M/2007 ITA 2518/M/2007 19 ORDER OF THE LD. CIT (A) GIVING RELIEF TO THE ASSES SEE ON THIS ISSUE AND DIRECT THE A.O. TO RECOMPUTE THE DEDUCTION U/S. 80IB. GROUND NO. 1 OF THE REVENUES APPEAL IS ACCORDINGLY ALLOWED. 36. AS REGARDS GR. 2 OF THE REVENUES APPEAL IT IS OBSERVED THAT ISSUE RAISED THEREIN RELATING TO ASSESSEES CLAIM FOR EXCLUSION OF EXCISE DUTY AND SALES TAX FROM THE TOTAL TURNOVER FOR THE PURPOSE OF COMPUTING DED UCTION U/S. 80HHC IS ALSO SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF HONBLE SUPREME COURT IN THE CASE OF LAXMI MACHINE TOOLS REPORTED AS 290 ITR 667. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE HONBLE APEX COURT WE UPH OLD THE IMPUGNED ORDER OF THE LD. CIT(A) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE AND DISMISS GROUND NO. 2 OF THE REVENUES APPEAL. 37. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE AS WELL AS THE APPEAL OF THE REVENUE FOR A.Y. 03-04 ARE PARTLY ALLOWED WHEREAS T HE APPEAL OF THE REVENUE FOR A.Y. 2002-03 IS DISMISSED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 12 TH DAY OF JANUARY 2010. SD/- SD/- (R S PADVEKAR) JUDICIAL MEMBER (P M JAGTAP) ACCOUNTANT MEMBER MUMBAI DATE: 12 TH JANUARY 2010 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) - XVII MUMBAI. 4) THE CIT-C MUMBAI. 5) THE D.R. C BENCH ITAT MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR CHAVAN* I.T.A.T. MUMBAI THE PAPER PRODUCTS LTD ITA 798/M/2007 ITA 1645/M/2007 ITA 1705/M/2007 ITA 2518/M/2007 20 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 22.12.09 8.1.2010 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 05.01.10 07.01.10 11.1.2010 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS 7 FILE SENT TO THE BENCH CLERK SR.PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER