EXCEL INDUSTRIES LTD, MUMBAI v. DCIT CIR -38, MUMBAI

ITA 3457/MUM/2010 | 2006-2007
Pronouncement Date: 18-11-2011 | Result: Partly Allowed

Appeal Details

RSA Number 345719914 RSA 2010
Assessee PAN AAACE2488F
Bench Mumbai
Appeal Number ITA 3457/MUM/2010
Duration Of Justice 1 year(s) 6 month(s) 15 day(s)
Appellant EXCEL INDUSTRIES LTD, MUMBAI
Respondent DCIT CIR -38, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 18-11-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted J
Tribunal Order Date 18-11-2011
Date Of Final Hearing 08-11-2011
Next Hearing Date 08-11-2011
Assessment Year 2006-2007
Appeal Filed On 03-05-2010
Judgment Text
1 IT A 3457 & 3552/ M/2010 EXCEL INDUSTRIES LTD. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J BEFORE SHRI R.K. PANDA A.M. AND SHRI VIJAY PAL RAO J.M. ITA NO. 3457/MUM/2010 ASSESSMENT YEAR 2006-07 EXCEL INDUSTRIES LIMITED 184-187 S.V. ROAD JOGESHWARI (WEST) MUMBAI 400 102. VS. DY. CIT CENT. CIR. 38 AAYAKAR BHAWAN ROOM NO. 112 IST FLOOR M.K. ROAD MUMBAI 400 050. PAN AAACE 2488F APPELLANT RESPONDENT ITA NO. 3552/MUM/2010 ASSESSMENT YEAR 2006-07 DY. CIT CENT. CIR. 38 AAYAKAR BHAWAN ROOM NO. 112 IST FLOOR M.K. ROAD MUMBAI 400 050. PAN AAACE 2488F VS. EXCEL INDUSTRIES LIMITED 184-187 S.V. ROAD JOGESHWARI (WEST) MUMBAI 400 102. APPELLANT RESPONDENT ASSESSEE BY MS. SAI SUDHA MULTANI REVENUE BY SHRI D.S. SUNDER SINGH DATE OF HEARING 8.11.2011 DATE OF PRONOUNCEMENT 18.11.2011 ORDER PER R.K. PANDA A.M. THESE ARE CROSS APPEALS THE FIRST ONE FILED BY THE ASSESSEE AND THE SECOND ONE FILED BY THE REVENUE AND ARE DIRECTED AGAINST T HE ORDER DT. 15.02.2010 OF THE CIT(A)- 41 MUMBAI RELATING TO A.Y. 2006-07. TH ESE APPEALS WERE HEARD 2 IT A 3457 & 3552/ M/2010 EXCEL INDUSTRIES LTD. TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON O RDER FOR THE SAKE OF CONVENIENCE. ITA NO. 3457/MUM/2010 (BY ASSESSEE) 2. GROUND OF APPEAL NO. 1 BY THE ASSESSEE READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFI RMING THE ACTION OF THE DEPUTY COMMISSIONER OF INCOME-TAX IN COMPUTI NG THE DISALLOWANCE UNDER SECTION 14A IN RESPECT OF EXPEND ITURE INCURRED FOR EARNING TAX-FREE INCOME AS PER RULE 8D INSERTED BY THE INCOME- TAX )FIFTH AMENDMENT) RULES 2008. 2.1 AFTER HEARING BOTH THE SIDES WE FIND THE A.O. D ISALLOWED AN AMOUNT OF RS. 66 77 562/- U/S 14A OF THE ACT BEING EXPENDITURE IN CURRED FOR EARNING EXEMPT INCOME. IN APPEAL THE LD. CIT(A) HELD THAT THE DISALLOWANCE M ADE BY THE A.O. U/S 14A R.W. RULE 8-D IS JUSTIFIED. HE ACCORDINGLY CONFIRMED TH E DISALLOWANCE MADE BY THE A.O. IN OUR OPINION RULE 8-D WHICH WAS NOTIFIED W.E .F. 24.3.2008 WILL BE APPLICABLE W.E.F. ASSESSMENT YEAR 2008-09 ONWARDS I N VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F GODREJ BOYCE MFG. LTD. VS. ACIT REPORTED IN 328 ITR 81. HOWEVER FOR EARLIER YEARS THE A.O. HAS TO APPLY REASONABLE METHOD FOR QUANTIFYING THE EXPENDITURE. WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN C ASE FOR A.Y. 2005-06 AND THE TRIBUNAL VIDE ORDER DTD. 13 TH JULY 2011 IN ITA NO. 4095/MUM/2009 RESTORED THE ISSUE TO THE FILE OF THE A.O. BY HOLDI NG AS UNDER:- WE HAVE HEARD THE LD DR AND THE LD AR OF THE ASSES SEE 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 D EDUCTION U/S 80M AND NOT U/S 14A. MOREOVER THE DISALLOWANCE U/S 14A FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IS WITH RESPECT TO THE INTEREST EXPEN DITURE WHICH REQUIRES PROPER EXAMINATION AND VERIFICATION OF THE FACT REGARDING THE USE OF INTEREST BEARING FUNDS FOR EARNING THE DIVIDEND INCOME/EXEMPT INCOME . AS REGARD THE APPLICABILITY OF RULE 8D IS CONCERNED IN VIEW OF THE DECISION OF THE JURISDICTIONAL 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 CONSIDERATION. THEREFORE IN VIEW OF T HE DECISION OF THE 3 IT A 3457 & 3552/ M/2010 EXCEL INDUSTRIES LTD. JURISDICTIONAL HIGH COURT CITED SUPRA THIS ISSUE I S REMANDED TO THE RECORDS OF THE ASSESSING OFFICER TO DECIDE THE SAME AFRESH IN TERMS OF THE SAID DECISION. 2.2 RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNA L IN ASSESSEES OWN CASE FOR A.Y. 2005-06 WE RESTORE THE ISSUE TO THE FILE OF T HE A.O. FOR CALCULATING REASONABLE DISALLOWANCE IN THE LIGHT OF THE DECISIO N OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ BOYCE MFG. LTD. (S UPRA). THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 3. GROUND OF APPEAL NO. 2 BY THE ASSESSEE READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFI RMING THE ACTION OF THE DEPUTY COMMISSIONER OF INCOME-TAX IN DISALLO WING A SUM OF RS. 22 26 000/- OUT OF INTEREST PAID ATTRIBUTABLE T O LOAN TO A SUBSIDY. 3.1 AFTER HEARING BOTH THE SIDES WE FIND THE A.O. D ISALLOWED AN AMOUNT OF RS. 22 26 000/- ON ACCOUNT OF INTEREST ATTRIBUTABLE TO LOAN TO A SUBSIDIARY. IN APPEAL THE LD. CIT(A) FOLLOWING THE ORDER FOR A.Y. 1999-2000 TO 2005-06 DECIDED THE ISSUE AGAINST THE ASSESSEE. IT IS THE SUBMISSI ON OF THE LD. COUNSEL FOR THE ASSESSEE THAT NO SPECIFIC BORROWINGS WERE MADE FOR ADVANCING THE SAID LOANS AND THE LOANS WERE MADE FROM OWN/MIXED FUNDS AND AR E ELIGIBLE FOR DEDUCTION U/S 36(1)(III) OF THE ACT. FURTHER IT IS ALSO THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE LOANS WERE GRANTED OUT OF COM MERCIAL EXPEDIENCY. 3.2 WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING ASSESSMENT YE AR. THE TRIBUNAL AT PARA 14 & 15 OF THE ORDER HAS DECIDED THE ISSUE AND REST ORED THE SAME TO THE FILE OF THE A.O. BY HOLDING AS UNDER: - 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 CONSID ERED THE ISSUE AS UNDER: 4 IT A 3457 & 3552/ M/2010 EXCEL INDUSTRIES LTD. 12 THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE OUT OF THE CLAIM OF DEDUCTION ON ACCOUNT OF INTEREST IN RESPECT OF THE LOANS 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 (20 07) 288 ITR 1 (SC). RELIANCE HAS ALSO BEEN PLACED ON VARIOUS OTHER HIGH COURT DECISI ONS TO SUPPORT THE CONTENTION THAT THE ASSESSEE IS ENTITLED TO DEDUCTION IN RESPE CT OF THE INTEREST PAID ON THE BORROWINGS UTILISED 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 THA T THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MUNJAL SALES C ORPORATION 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 SUPRE ME COURT THE ISSUE REQUIRES RECONSIDERATION WE SET ASIDE THE ORDERS OF THE CIT (A) AS WELL AS THAT OF THE ASSESSING OFFICER RELATING TO THIS ISSUE AND RESTOR E THE SAME TO THE FILE OF THE ASSESSING OFFICER FOR THE PURPOSE OF FRESH DECISION IN ACCORDANCE WITH LAW IN PARTICULAR CONSIDERING THE DECISIONS OF THE HONBLE SUPREME COURT REFERRED TO ABOVE. THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES FOR BOTH THE YEARS UNDER CONSIDERATION. 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 A SSESSMENT YEAR 1996-97 & 97-98. 3.3 RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNA L IN ASSESSEES OWN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR WE RESTO RE THE ISSUE TO THE FILE OF THE A.O. FOR FRESH ADJUDICATION IN THE LIGHT OF THE DIRECTIONS GIVEN BY THE TRIBUNAL IN THE EARLIER YEAR. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 4. GROUND OF APPEAL NO. 3 BY THE ASSESSEE READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFI RMING THE ACTION 5 IT A 3457 & 3552/ M/2010 EXCEL INDUSTRIES LTD. OF THE DEPUTY COMMISSIONER OF INCOME-TAX IN DISALLO WING A SUM OF RS. 224 000/- OUT OF INTEREST PAID ATTRIBUTABLE TO OTHER LOANS. 4.1 AFTER HEARING BOTH THE SIDES WE FIND THE A.O. DISALLOWED AN AMOUNT OF RS.2 24 000/- OUT OF INTEREST PAID ATTRIBUTABLE TO OTHER LOANS. IN APPEAL THE LD. CIT(A) FOLLOWING THE ORDERS OF HIS PREDECESSOR FOR A.Y. 1999-2000 TO 2005-06 UPHELD THE ACTION OF THE A.O. WE FIND SIMILAR ISSU E HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR VIDE ITA NO. 4134/MUM/2009. WE FIND THE TRIBUNAL A T PARA NO. 17 & 18 OF THE ORDER HAS DECIDED THE ISSUE AND RESTORED THE SA ME TO THE FILE OF THE A.O. FOR FRESH ADJUDICATION. FOLLOWING THE SAME RATIO THIS GROUND BY THE ASSESSEE IS RESTORED TO THE FILE OF THE A.O. FOR FRESH ADJUDICA TION IN TERMS OF THE DECISION OF THE TRIBUNAL IN THE PRECEDING ASSESSMENT YEAR. THIS GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PUR POSE. 5. GROUND NO. 4 BY THE ASSESSEE READS AS UNDER:- W ITHOUT PREJUDICE TO THE GROUNDS OF APPEAL NOS. 2 AN D 3 THE THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFI RMING THE ACTION OF THE DEPUTY COMMISSIONER OF INCOME-TAX IN CONSIDE RING THE RATE OF INTEREST ON BORROWINGS @ 14% FOR MAKING THE AFORESA ID DISALLOWANCE OUT OF INTEREST PAID. 5.1 AFTER HEARING BOTH THE SIDES WE FIND THIS IS AN ALTERNATIVE GROUND TO GROUNDS OF APPEAL NO. 3 & 4 BY THE ASSESSEE. WE FI ND THE ASSESSEE HAD TAKEN SIMILAR GROUND IN THE PRECEDING ASSESSMENT YEAR AND THE TRIBUNAL HELD THAT THIS GROUND IS CONSEQUENTIAL AND ACCORDINGLY SET AS IDE THE ISSUE TO THE FILE OF THE A.O. IN VIEW OF THE FACT THAT GROUNDS OF APPEAL NO. 2 & 3 HAS ALREADY BEEN RESTORED TO THE FILE OF THE A.O. FOR FRESH ADJUDICA TION. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEEDING ASSESSMENT YEAR THIS GROUND IS SET ASIDE TO THE FIL E OF THE A.O. THIS GROUND BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 6 IT A 3457 & 3552/ M/2010 EXCEL INDUSTRIES LTD. 6. GROUND OF APPEAL NO. 5 BY THE ASSESSEE READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN NOT A DMITTING THE GROUND OF APPEAL IN RESPECT OF INTEREST UNDER SECTI ON 244A. 6.1 AFTER HEARING BOTH THE SIDES WE FIND THE A.O. G RANTED INTEREST U/S 244A TO THE EXTENT OF RS. 3 89 330/- WHICH IS UP TO THE DATE OF PASSING OF THE INTIMATION IE. DECEMBER 2007. THE A.O. DID NOT GR ANT INTEREST UPTO THE DATE OF GRANTING OF REFUND/DATE OF REFUND ORDER. IT IS THE CASE OF THE ASSESSEE THAT AS PER THE PROVISIONS OF SECTION 244A INTEREST HAS TO BE GRANTED UP TO THE DATE OF GRANT OF INTEREST/DATE OF REFUND ORDER WHICH IN THE INSTANT CASE IS FEBRUARY 2008. IN APPEAL THE LD. CIT(A) DID NOT ENTERTAIN T HE GROUND RAISED BY THE ASSESSEE BY HOLDING THAT THIS ISSUE HAS NOT BEEN DI SCUSSED IN THE BODY OF THE ASSESSMENT ORDER AND THIS IS NOT A SUBJECT MATTER O F THE ASSESSMENT ORDER PASSED U/S 143(3). THIS IS A MISTAKE APPARENT FROM RECORD FROM THE PROCESSING MADE U/S 143(1) OF THE ACT BY THE A.O. ON 10 TH DECEMBER 2007 AND THE ASSESSEE IS FREE TO FILE RECTIFICATION PETITION U/S 154 AGAINST THE INTIMATION DTD. 10.12.2007. AGGRIEVED WITH SUCH ORDER OF THE LD. CI T(A) THE ASSESSEE IS IN APPEAL BEFORE US. 6.2 AFTER HEARING BOTH THE SIDES WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL DURING A.Y. 2005-06 AND THE TRIBUNAL F OLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF JA Y BROS INVESTMENT AND TRADING CO. (P) LTD. VS. DCIT REPORTED IN 74 TTJ 74 8 (MUM) ALLOWED THE CLAIM OF THE ASSESSEE FOR INTEREST UPTO THE DATE OF GRANT ING REFUND. WE THEREFORE RESTORE THE ISSUE TO THE FILE OF THE A.O. WITH A DI RECTION TO GRANT INTEREST UP TO THE DATE OF GRANTING OF REFUND. THIS GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. ITA NO. 3552/MUM/2010 (BY REVENUE) 7 IT A 3457 & 3552/ M/2010 EXCEL INDUSTRIES LTD. 7. GROUNDS OF APPEAL NO. 1 3 & 4 READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE CIT(A) ERRED IN DELETING THE ADDITION OF RS 22 85 550/- MADE BY THE AO ON ACCOUNT OF ADVANCE LICENSE BENEFIT BY HOL DING THAT NO BENEFIT HAD ACCRUED TO THE ASSESSEE WHATEVER MAY BE THE ENTRIES THAT MIGHT HAVE BEEN PASSED BY THE ASSESSEE WITHOUT APP RECIATING THE REASONS GIVEN BY THE AO IN THE ASSESSMENT ORDER FOR THE SAID ADDITION. HE ALSO FAILED TO APPRECIATE THE VIEW TAK EN AN THE SAID ADDITION BY THE CIT(A) IN HIS ORDER NO. CIT(A)XXXII /380/IT/95-96 DATED 12/3/1998 FOR THE A.Y 1993-94 IN ASSSESSES OWN CASE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE CIT(A) ERRED IN HOLDING THAT DFRC BENEFIT OF RS 57 33 438/- ACCRUED TO THE ASSESSEE IS NOT BE TAXED IN THIS YEA R IGNORING THE FACTS AND REASONS GIVEN BY THE AO IN THE ASSESSMENT ORDER . 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE CIT(A) ERRED IN HOLDING THAT SINCE THE REVERSAL OF ADVANCE LICENSE OBLIGATION AMOUNTING TO RS 3 1 65 581/- WAS NOT CLA IMED AS DEDUCTION IN THE EARLIER YEAR THE REVERSAL OF THE SAME CANNOT BE TAXED AS INCOME. 7.1. AFTER HEARING BOTH THE SIDES WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN THE IMMEDIAT ELY PRECEDING ASSESSMENT YEAR. WE FIND THE TRIBUNAL IN ITA NO. 4095/MUM/200 9 ORDER DTD. 13 TH JULY 2011 HAS DISCUSSED THE ISSUE AND DISMISSED THE GROU NDS RAISED BY THE REVENUE. THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL READS AS UNDER:- 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 THIS ISSUE BY FOLLOWING THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A YS 1995-96 TO 2004-05. AT THE OUTSET WE NOTE THAT THIS TRIBUNAL IN ASSESEES OWN CASE FOR AY 2001-02 IN ITA NO.6969/MUM/2008 VIDE ORDER DATED 29.4.2011 ADJUDIC ATED THIS ISSUE IN PARAS 5 TO 7 AS UNDER: 5. IN ANSWER TO THE WRITTEN SUBMISSIONS AND THE DEC ISION OF THE SPECIAL BENCH (SUPRA) THE LEARNED COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KALPATARU COLOURS AND CHEMICALS (2010) 328 ITR 451 (BOM). IN THIS JUDGME NT THE HONBLE HIGH COURT WAS ASKED TO ANSWER THE FOLLOWING TWO QUESTIONS OF LAW: - 8 IT A 3457 & 3552/ M/2010 EXCEL INDUSTRIES LTD. (A) WHETHER THE TRIBUNAL IS JUSTIFIED IN HOLDING T HAT THE ENTIRE AMOUNT RECEIVED ON THE SALE OF THE DUTY ENTITLEMENT PASSBO OK DOES NOT REPRESENT PROFITS CHARGEABLE UNDER SECTION 28(IIID) OF THE INCOME TAX ACT 1961 AND THAT THE FACE VALUE OF THE DUTY ENTI TLEMENT PASSBOOK SHALL BE DEDUCTED FROM THE SALE PROCEEDS? (B) WHETHER THE TRIBUNAL IS JUSTIFIED IN HOLDING T HAT THE FACE VALUE OF THE DUTY ENTITLEMENT PASSBOOK IS CHARGEABLE TO TAX UNDER SECTION 28(IIIB) AT THE TIME OF ACCRUAL OF INCOME I.E. WHE N THE APPLICATION FOR DUTY ENTITLEMENT PASSBOOK IS FILED WITH THE COMPETE NT AUTHORITY PURSUANT TO THE EXPORTS MADE AND THAT THE PROFITS O N THE SALE OF DUTY ENTITLEMENT PASSBOOK REPRESENTING THE EXCESS O F THE SALE PROCEEDS OVER THE FACE VALUE IS LIABLE TO BE CONSID ERED UNDER SECTION 28(IIID) 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 UNSUS TAINABLE AND THAT THE FIRST QUESTION IS TO BE ANSWERED IN THE NEGATIVE. IN SO FAR AS THE SECOND QUESTION WAS CONCERNED THE HIGH COURT OPINED THAT THEY WERE NOT IN AGREEMENT WITH THE VIEW OF THE TRIBUNAL THAT THE FACE VALUE OF THE DEPB IS CHARGEABLE TO TAX UNDER SECTION 28(IIIB) AT THE TIME OF ACCRUAL OF INCOME I.E. WHE N THE APPLICATION FOR DEPB IS FILED WITH THE COMPETENT AUTHORITY PURSUANT TO THE EXPORT S MADE. THE DECISION OF THE SPECIAL BENCH WAS THUS REVERSED. IN THE LIGHT OF T HE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT WE ARE UNABLE TO ACCEPT THE WRIT TEN SUBMISSIONS FILED BY THE LEARNED CIT DR BASED ON THE ORDER OF THE SPECIAL BE NCH. 6 FOR THE AFORESAID REASONS WE UPHOLD THE DECISION OF THE CIT(A) IN RESPECT OF THE TAXABILITY OF THE ADVANCE LICENCE BENEFITS RECE IVABLE 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 AVAILE D OF BY THE ASSESSEE. THIS IS IN THE ORDER DATED 12 TH JANUARY 2009 WHICH IS A COMBINED ORDER FOR THE AS SESSMENT YEARS 1996-97 AND 1997-98. THUS THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BOTH BY THE HONBLE BOMBAY HIGH COURT (SUP RA) AND BY THE TRIBUNAL IN THE ASSESSEES OWN CASE. WE THEREFORE AFFIRM THE D ECISION OF THE CIT(A) IN RESPECT OF THIS GROUND ALSO. 9 IT A 3457 & 3552/ M/2010 EXCEL INDUSTRIES LTD. SINCE THE CIT(A) HAS FOLLOWED THE ORDER OF THIS TRI BUNAL; 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 ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR E ARLIER YEARS. THE GROUND TAKEN BY THE REVENUE IS ACCORDINGLY DISMISSE D. 7.2 SINCE THE LD. CIT(A) IN THE INSTANT CASE HAS FO LLOWED THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE THEREFORE IN ABSE NCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE THESE GROUNDS BY THE REVENUE ARE DISMISSED. 8. GROUND OF APPEAL NO. 2 BY THE REVENUE READS AS U NDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE CIT(A) ERRED IN DELETING THE ADDITION OF RS 3 1 74 030/- ON ACCOUNT OF PASS BOOK BENEFIT BY HOLDING THAT THE SAID AMOUNT I S NOT ASSESSABLE IN THE YEAR OF EXPORT OF GOODS WHEN THE BENEFIT IS CREDITED TO THE PASS BOOK BUT IN THE YEAR THE BENEFIT RECEIVABLE RECEIV ABLE IS ACTUALLY AVAILED OF BY THE ASSESSEE IGNORING THE FACTS AND REASONS GIVEN BY THE AO IN THE ASSESSMENT ORDER RELATING TO THE SAID ISSUE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE CIT(A) ERRED IN HOLDING THAT DFRC BENEFIT OF RS 57 33 438/- ACCRUED TO THE ASSESSEE IS NOT BE TAXED IN THIS YEAR IGNORI NG THE FACTS AND REASONS GIVEN BY THE AO IN THE ASSESSMENT ORDER. 8.1 AFTER HEARING BOTH THE SIDES WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN THE IMMEDIAT ELY PRECEDING ASSESSMENT YEAR AND THE TRIBUNAL DISMISSED THE APPEAL OF THE R EVENUE BY HOLDING AS UNDER:- WE HAVE HEARD THE LD DR AND THE LD AR OF THE ASSES SEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. WE FIN D THIS ISSUE IS ALSO COVERED BY THE ORDER OF THE TRIBUNAL IN ASS ESEES OWN CASE FOR AY 2001-02 AS WELL 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 T HE ASSESSEE. ACCORDINGLY THIS ISSUE IS ALSO DECIDED I N FAVOUR OF THE ASSESSEE. 10 IT A 3457 & 3552/ M/2010 EXCEL INDUSTRIES LTD. 8.2 RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNA L IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING YEAR AND IN ABSENCE OF AN Y CONTRARY MATERIAL BROUGHT TO OUR NOTICE THIS GROUND RAISED BY THE RE VENUE IS DISMISSED. 9. GROUND OF APPEAL NO. 5 BY THE REVENUE READS AS U NDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE CIT(A) WAS NOT CORRECT IN HOLDING THAT THE AMOUNTS PAID WITHIN GRACE PERIOD WILL BE ALLOWED U/S 43B WITHOUT APPRECIATING THE FACT THAT SECTION 43B OF THE IT ACT IS AN OVERRIDING PROVISIO N AND THE DUE DATE AS PER EXPLANATION BELOW CLAUSE (VA) OF SUB SECTION (1) OF SECTION 36 OF THE IT ACT MEANS DUE DATE BY WHICH THE ASSESSEE WAS REQUIRED TO PAY THE P.F. AND CANNOT BE EXTENDED TO GRACE PERIOD. 9.1 AFTER HEARING BOTH THE SIDES WE FIND THE A.O. D ISALLOWED AN AMOUNT OF RS. 3 47 144/- BEING EMPLOYEES CONTRIBUTION TO PF PAID BEYOND THE DUE DATE BUT WITHIN THE GRACE PERIOD. IN APPEAL THE LD. CIT(A) FOLLOWING THE ORDER OF HIS PREDECESSOR FOR A.Y. 2001-02 TO 2005-06 IN THE CASE OF THE ASSESSEE AND ON THE BASIS OF VARIOUS OTHER DECISIONS CITED BEFORE HIM D IRECTED THE A.O. TO ALLOW THE EMPLOYEES CONTRIBUTION TO PF WHICH IS PAID WITHIN THE GRACE PERIOD AFTER DUE VERIFICATION. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(AS) THE REVENUE IS IN APPEAL BEFORE US. 9.2 AFTER HEARING BOTH THE SIDES WE FIND THE CO-ORD INATE BENCHES OF THE TRIBUNAL ARE TAKING THE CONSISTENT VIEW THAT EMPLOY EES CONTRIBUTION TO PF IF PAID WITHIN THE GRACE PERIOD HAS TO BE ALLOWED AS DEDUCTION. SINCE THE ASSESSEE IN THE INSTANT CASE HAS PAID THE EMPLOYEES CONTRIBUTION TO PF WITHIN THE GRACE PERIOD THEREFORE THE ORDER OF THE LD. C IT(A) BEING IN CONFORMITY WITH THE CONSISTENT VIEW OF THE TRIBUNAL IS UPHELD. THE GROUND RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 11 IT A 3457 & 3552/ M/2010 EXCEL INDUSTRIES LTD. 10. IN THE RESULT ASSESSEES APPEAL IN ITA NO. 345 7/MUM/2010 FOR A.Y. 2006-07 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE A ND REVENUES APPEAL IN ITA NO. 3552/MUM/2010 FOR A.Y. 2006-07 IS DISMISSED. ORDER PRONOUNCED ON 18.11.2011. SD/- SD/- (VIJAY PAL RAO) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED 18.11.2011. RK COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 41 MUMBAI 4. THE CIT CENTRAL III MUMBAI 5. THE DR BENCH J 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI