M/s. LUBRIZOL INDIA PVT. LTD., MUMBAI v. DCIT CIR. 6(3), MUMBAI

ITA 4840/MUM/2004 | 2000-2001
Pronouncement Date: 30-11-2011 | Result: Partly Allowed

Appeal Details

RSA Number 484019914 RSA 2004
Assessee PAN AAACL0126H
Bench Mumbai
Appeal Number ITA 4840/MUM/2004
Duration Of Justice 7 year(s) 5 month(s) 18 day(s)
Appellant M/s. LUBRIZOL INDIA PVT. LTD., MUMBAI
Respondent DCIT CIR. 6(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted G
Tribunal Order Date 30-11-2011
Date Of Final Hearing 14-09-2011
Next Hearing Date 14-09-2011
Assessment Year 2000-2001
Appeal Filed On 11-06-2004
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH: MUMBAI BEFORE SHRI P.M. JAGTAP ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NO.4840/MUM/2004 (ASSESSMENT YEAR: 2000-01) LUBRIZOL INDIA PRIVATE LTD. VIP HOUSE 2 ND FLOOR 88-C OLD PRABHADEVI ROAD MUMBAI -400 025 ....... APPELLANT VS THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 6(3) MUMBAI ..... RESPONDENT PAN: AAACL 0126 H APPELLANT BY: MR. P.J. PARDIWALA RESPONDENT BY: MR. NIRAJ SHETH DATE OF HEARING: 14.09.2011 DATE OF PRONOUNCEMENT: 30.11.2011 O R D E R PER R.S. PADVEKAR JM: IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE IMPU GNED ORDER OF THE LD. CIT (A) 26 MUMBAI DATED 13.07.2004 FOR THE A.Y. 2000-01. THE FIRST ISSUE IS IN RESPECT OF DENIAL OF DEDUCTIO N OF RS.2 73 42 767/- U/S. 80I OF THE I.T. ACT IN RESPECT OF DISPERSANT U NIT WHICH WAS CLAIMED @30% AND THIS ISSUE ARISES FROM GROUND NOS .1 & 2. 2. BRIEFLY STATED THE FACTS PERTAINING TO THE ISSU E ARE AS UNDER. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF CHEMICALS ADDITIVES. IN THE A.Y. 2000-01 THE ASSES SEE CLAIMED THE DEDUCTION OF RS.2 73 42 967/- U/S.80I OF THE ACT @ 30% ON THE INCOME FROM EXPANSION OF DISPERSANT UNIT. INCOME FR OM EXPANSION OF DISPERSANT UNIT WAS SHOWN AT RS.9 11 43 224/-. THE A.O. HAD ITA 4840/MUM/2004 LUBRIZOL INDIA PRIVATE LTD. 2 RESERVATION ALLOWING THE DEDUCTION TO THE ASSESSEE ON THE REASON THAT EVEN IF THERE IS AN EXPANSION OF THE UNIT THE OLD A ND NEW PLANT AND MACHINERY WERE CONTINUED TO BE USED IN THE NEW EXPA NSION. THE A.O. GAVE THE FOLLOWING REASONING FOR REJECTING THE CLAI M OF THE ASSESSEE U/S.80I:- THE ABOVE SUBMISSION OF THE ASSESSEE COMPANY HAS B EEN DULY CONSIDERED BUT IT WAS NOT FOUND ACCEPTABLE. FROM T HE ABOVE REPLY OF THE ASSESSEE IT IS NOTICED THAT ASSESSEE HAS BE EN ALREADY RUNNING AN EXISTING DISPERSANT UNIT SINCE F.Y. 1976 -77 WHEN THE CAPACITY OF THE UNIT WAS 6000MTPA. SUBSEQUENTLY IN F.Y. 1983- 84 THE CAPACITY WAS INCREASED FROM 6000 MTPA TO 90 00 MTPA AND AGAIN IN F.Y. 1986-87 THE CAPACITY WAS INCREAS ED FROM 9000 MTPA TO 12000 MTPA. THE PHASE IV BEING THE 4TH EXPA NSION TOOK PLACE IN F.Y. 1990-91 WHEN THE CAPACITY WAS INCREA SED BY 4000 MTPA AND THE TOTAL CAPACITY BECOMES 16000 MTPA AFTE R THE EXPANSION. THE ASSESSEES CONTENTION THAT BY EXPAND ING THE CAPACITY IT HAS INSTALLED NEW INDUSTRIAL UNIT IS NO T TENABLE. DISPERSANT CAPACITY (MT) F.Y. COMMISSIONED LAST F.Y. FOR BENEFIT U/S.80I CLAIMED BY ASSESSEE PHASE I UNIT 6000 1976-77 1983-84 PHASE II UNIT 3000 1983-84 1990-91 PHASE III UNIT 3000 1986-87 1993-94 PHASE IV UNIT 4000 1990-91 1999-2000 4.5 FROM THE REPLY OF ASSESSEE IT IS CLEAR THAT M OST OF THE EXISTING MANUFACTURING ASSETS/CAPACITY CONTINUED TO BE USED. ONLY SOME CRITICAL COMPONENTS WERE CHANGED SO AS TO INCREASE THE CAPACITY OF PRODUCTION. ASSESSEES CASE DOES NO T CONSIST OF A PARALLEL NEW UNIT SET UP IN THE EXISTING PLANT TO P RODUCE SOME ITEM AND AS SUCH INCREASING THE CAPACITY OF PRODUCTION. RATHER ASSESSEE COMPANY BEING THE CHEMICAL UNIT THE EXIST ING PLANT AND MACHINERY HAS BEEN MOSTLY USED. FEW IMPORTANT ITEMS LIKE REACTOR CONDENSER TRAP TANK AGITATORS PUMPS ET C. HAVE BEEN CHANGED AND HIGHER CAPACITY EQUIPMENT HAVE BEEN INS TAL1ED. AS ITA 4840/MUM/2004 LUBRIZOL INDIA PRIVATE LTD. 3 EXPLAINED BY ASSESSEE IN THIS LETTER THE CAPACITY OF DISPERSANT UNIT HAS BEEN INCREASED FROM 12000 MTPA TO 16000 MT PA BY ADDING BALANCING EQUIPMENTS IN THE EXISTING UNIT. T HUS THE CAPACITY EXPANSION HAS NOT TAKEN PLACE BY THE SETTI NG UP A NEW DISPERSANT ASSEMBLY LINE BUT HAS BEEN OBTAINED BY B ALANCING THE EQUIPMENTS IN THE EXISTING SET UP. THE EXPANSION AN D CAPACITY OBTAINED BY INCORPORATION OF BALANCING EQUIPMENT HA S BEEN CLAIMED BY ASSESSEE TO BE ENTITLED FOR DEDUCTION U/ S 801A. THE EQUIPMENTS WHICH HAVE BEEN INSTALLED BY ASSESSEE DO NOT CONSTITUTE PLANT ON THEIR OWN. THEY ARE A PART OF PLANT. AS PER SECTION 80(I)(2) THE SECTION DOES NOT APPLY TO ANY INDUSTRIAL UNDERTAKING WHICH IS FORMED BY SPLITTING UP OR REC ONSTRUCTION OF BUSINESS ALREADY IN EXISTENCE TRANSFERRED OF OLD AND USED MACHINERY OR PLANT TO THE NEW BUSINESS. NOW IN THE LIGHT OF THESE TWO PROVISIONS THE CLAIM OF ASSESSEE IS EXAMINED. SINCE ASSESSEE HAS CONTINUED TO USE MOST OF THE OLD PLANT AND MACHINERY ONLY THE BALANCING EQUIPMENT HAVE BEEN I NSTALLED WHICH HAVE RESULTED IN INCREASE OF CAPACITY. IT IS THEREFORE CLEAR THAT THE OLD AND USED PLANT AND MACHINERY HAS CONTI NUED TO BE USED IN THE NEW EXPANSION UNIT. AS PER SECTION 801A (2) IF THE NEW UNDERTAKING IS FORMED BY TRANSFER OF OLD AND US ED PLANT & MACHINERY IT WILL NOT BE ENTITLED FOR DEDUCTION U/ S 801A. FURTHER AS PER SECTION 80I(2)(I) IF THE UNDERTAKING IS FOR MED BY SPLITTING UP OR RECONSTRUCTION OF BUSINESS ALREADY IN EXISTENCE IT WILL NOT BE ENTITLED TO DEDUCTION. IN THE CASE OF ASSESSEE OLD AND EXISTING PLANT IS BEING SPLIT AND IS ALSO BEING USED ALONG W ITH NEW BALANCING EQUIPMENT INSTALLED BY ASSESSEE. THEREFOR E THE CONDITION MENTIONED IN SECTION 801A(2)(II) ARE ALSO SATISFIED. CONDITIONS U/S 801A(2)(II) ARE ALSO SATISFIED. EXTE NT OF INVOLVEMENT OF OLD PLANT AND MACHINERY VIS--VIS TH E INVESTMENT IN NEW PLANT AND MACHINERY IS NOT KNOWN. NEVERTHELE SS IT CAN BE SAID THAT THE EXPANSION HAS BEEN SET UP BY UTILIZIN G THE OLD PLANT AND MACHINERY OF THE EXISTING PLANT. ACCORDINGLY B ESIDES THE ITA 4840/MUM/2004 LUBRIZOL INDIA PRIVATE LTD. 4 REASONS MENTIONED IN A.Y. 1995-96 ASSESSEE IS NOT ENTITLED FOR THE DEDUCTION U/S 801A IN RESPECT OF EXPANSION OF D ISPERSANT UNIT - PHASE IV FOR THESE REASONS. 3. THE ORIGINAL DISPERSANT UNIT WAS COMMISSIONED IN THE FINANCIAL YEAR 1976-77 WITH THE CAPACITY 6000 MTPA. PHASE-WISE CAPACITY WAS INCREASED IN 1983-84 AND THEN IN 1986- 87 AND FURTHER CAPACITY OF 4000 MTPA WAS INCREASED IN THE FINANCIA L YEAR 1990-91. THE A.O. REJECTED THE CLAIM OF THE ASSESSEE BY GIVI NG THE REASON THAT EVEN IF THE CAPACITY OF DISPERSANT UNIT HAS BEEN IN CREASED FROM 12000 MTPA TO 16000 MTPA BY ADDING BALANCING EQUIPMENT IN THE EXISTING UNIT BUT THAT CANNOT BE SAID TO BE A SETTING-UP A N EW INDUSTRIAL UNIT WHICH CAN BE ENTITLED TO DEDUCTION U/S.80IA. THE A SSESSEE CARRIED THE ISSUE BEFORE THE LD. CIT (A) BUT ONLY WITH DISAPPOI NTMENT AS THE LD. CIT (A) APPROVED THE FINDINGS OF THE A.O. BY HIS CR YPTIC OBSERVATION. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORDS. MR. P.J. PARDIWALA THE LD. SENIOR C OUNSEL SUBMITS THAT SO FAR AS 4TH STAGE OF THE EXPANSION OF THE DISPERS ANT UNIT IN THE FINANCIAL YEAR 1990-91 IS CONCERNED FOR THE FIRST TIME THE DEDUCTION WAS CLAIMED IN THE A.Y. 1991-92. HE SUBMITS THAT I N THE SAID YEAR THE ASSESSMENT WAS ORIGINALLY COMPLETED U/S.143(3) OF T HE ACT AND ASSESSEE WAS ALLOWED THE DEDUCTION WITHOUT REFERRIN G TO THE REASONS GIVEN BY THE A.O. IN THE PRESENT YEAR. HE SUBMITS THAT THOUGH SUBSEQUENTLY THE A.O. INITIATED THE REASSESSMENT PR OCEEDINGS IN THE A.Y. 1991-92 BY ISSUING THE NOTICE U/S.148 AND THE REASON WAS THAT THE ASSESSEE HAD CLAIMED THE EXCESS DEDUCTION BY EN HANCING THE PROFIT BY NOT REDUCING THE RESEARCH AND DEVELOPMENT EXPENDITURE OF RS.1 42 77 342/- BUT ISSUE OF ELIGIBILITY WAS NEVE R QUESTION. IN THE ASSESSMENT ORDER THE A.O. MADE THE REFERENCE OF TH E NEW EXPANSION UNIT. THE LD. SR. COUNSEL REFERRED TO PAGE NOS.21 TO 24 OF THE PAPER BOOK IN WHICH THE COPY OF THE ASSESSMENT ORDER DATE D 13.11.1997 IS PLACED. HE SUBMITS THAT IN A.YS. 1992-93 AND 1993- 94 IN THE ORIGINAL ITA 4840/MUM/2004 LUBRIZOL INDIA PRIVATE LTD. 5 ASSESSMENT ORDERS WERE PASSED U/S.143(3) THE CLAIM U/S.80I WAS DISALLOWED IN RESPECT OF THE FOURTH UNIT OF THE DIS PERSANT PLANT BUT NOT ON THE REASON GIVEN BY THE A.O. IN THE A.Y. 2000-01 . IN THE A.Y. 1995- 96 THE ASSESSEE WAS DENIED THE DEPRECIATION ON THE 4 TH (FOUR) STAGE OF THE EXPANSION OF THE DISPERSANT UNIT BUT ON APPEAL BEFORE THE LD. CIT (A) THE ASSESSEES CLAIM WAS ALLOWED. COPY OF THE ORDER OF THE LD. CIT (A) IS PLACED AT PAGE NOS.54 TO 65 OF THE COMPILATI ON. HE SUBMITS THAT THE DENIAL OF THE DEDUCTION WAS FOR THE FIRST TIME IN THE A.Y. 1995-96 ON THE REASON THAT THE 4 TH STAGE OF THE EXPANSION BY INCREASING PRODUCTION CAPACITY IS NOT A NEW INDUSTRIAL UNIT. THE LD. SR. COUNSEL SUBMITS THAT AS THE ASSESSEE HAS CLAIMED THE DEDUCT ION FOR THE FIRST TIME IN THE A.Y. 1991-92 AND AS THE A.O. HAS ALLOWE D THE DEDUCTION THEN WITHOUT WITHDRAWING THE DEDUCTION IN THE FIRST YEAR HE CANNOT KEEP WITHDRAWING THE DEDUCTIONS IN SUBSEQUENT YEARS ON THE REASON THAT DISPERSANT UNIT 4 TH STAGE EXPANSION IS NOT ELIGIBLE FOR DEDUCTION U/S.80I. THE LD. COUNSEL PLACED HEAVY RELIANCE ON THE FOLLOWING PRECEDENTS:- (I) CIT VS. PAUL BROTHERS -216 ITR 548(BOM) (II) SAURASHTRA CEMENT & CHEMICALS INDUSTRIES LTD. VS. CIT -123 ITR 669(GUJ) (III) ASSOCIATED CEMENT CO. LTD. -118 ITR 406 (BOM) 5. HE FURTHER SUBMITS THAT ON MERIT ALSO THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE IN VIEW OF THE DECISION OF T HE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. AS SOCIATED CEMENT CO. LTD. 118 ITR 406 IN WHICH ON THE IDENTICAL SET OF FACTS THE DEDUCTION U/S.115C OF THE 1922 ACT WHICH WAS PARI MATERIA TO THE SECTION 80J OF 1961 OF THE I.T. ACT WAS ALLOWED. HE THEREFORE P LEADED FOR ALLOWING THE DEDUCTION. WE HAVE ALSO HEARD THE LD. D.R. WHO HAVE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. WE FIND THAT THE ISSUE IN CONTROVERSY RELATES T O THE 4TH STAGE OF EXPANSION OF THE DISPERSANT UNIT WHICH WAS COMMISS IONED IN THE ITA 4840/MUM/2004 LUBRIZOL INDIA PRIVATE LTD. 6 FINANCIAL YEAR 1990-91 WHICH INCREASED PRODUCTION CAPACITY BY 4000 MTS. THE ASSESSEE CLAIMED THE DEDUCTION U/S.80I FO R THE FIRST TIME IN THE A.Y. 1991-92. WE HAVE ALREADY GIVEN THE FACTS IN RESPECT OF THE CLAIM OF DEDUCTION HEREINABOVE. WE FIND FORCE IN T HE ARGUMENTS OF THE LD. COUNSEL. FOR THE FIRST TIME IN THE A.Y. 1995-9 6 THE A.O. WAS OF THE OPINION THAT THE EXPANSION OF THE DISPERSANT UNIT O F 4TH STAGE MADE IN 1991 WAS NOT ELIGIBLE FOR DEDUCTION U/S.80I. IN THE ORIGINAL ASSESSMENT ORDER PASSED U/S.143(3) DEDUCTION WAS AL LOWED THOUGH QUANTUM OF DEDUCTION WAS REDUCED. SUBSEQUENTLY TH E A.O. REOPENED THE SAID ASSESSMENT FOR ALLOWING EXCESS DEDUCTION B UT THAT IS FOR CLAIMING THE EXCESS QUANTUM. NOWHERE THE A.O. HAD RESERVATION ON THE LEGALITY OF THE CLAIM. IN THE CASE OF OF PAUL BROTHERS (SUPRA) PRINCIPLES ARE NOW WELL SETTLED ON THE ISSUE WHETHE R ELIGIBILITY OF DEDUCTION CAN BE EXAMINED IN SUBSEQUENT YEARS IF THE DEDUCTION WAS GRANTED IN THE INITIAL ASSESSMENT YEAR? THEN UNLESS THE DEDUCTION IS WITHDRAWN OR REJECTED IN THE INITIAL ASSESSMENT YEA R THE SAME CANNOT BE WITHDRAWN IN THE SUBSEQUENT ASSESSMENT YEARS. I T IS PERTINENT TO NOTE HERE THAT IN THE CASE OF PAUL BROTHERS (SUPRA) THEIR LORDSHIPS HAVE REFERRED TO THE DECISION OF THE HONBLE HIGH C OURT IN THE CASE OF SAURASHTRA CEMENT & CHEMICALS INDUSTRIES LTD. (SUPR A). WE ARE THEREFORE OF THE OPINION THAT DENIAL OF THE DEDUCT ION BY THE A.O. ON THE REASON OF THE LEGALITY IS TOTALLY MISPLACED. W E ACCORDINGLY ALLOW THE GROUND NO.1 & 2 AND DIRECT THE A.O. TO ALLOW TH E DEDUCTION CLAIMED BY THE ASSESSEE. ACCORDINGLY GROUND NO.1 & 2 ARE ALLOWED. 7. THE NEXT ISSUE IS DISALLOWANCE OF THE EXPENDITUR E TOWARDS THE SOCIAL OBLIGATIONS OF RS.4 59 278/-. 8. WE HAVE HEARD THE PARTIES. THE LD. COUNSEL SUBM ITS THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. WE HAV E ALSO HEARD THE LD. D.R. WE FIND THAT FOR THE A.Y. 1992-93 IN ITA 833/ MUM/1996 ORDER DATED 29.12.2006; FOR THE A.YS. 1996-97 AND 1997-98 IN I.T.A. NOS. 2436 & 2437/MUM/2000 ORDER DATED 22.2.2007 THE TRIB UNAL HAS ITA 4840/MUM/2004 LUBRIZOL INDIA PRIVATE LTD. 7 ALLOWED THE CLAIM OF THE ASSESSEE. WE THEREFORE FOLLOWING THE TRIBUNALS ORDER IN THE ASSESSEES OWN CASES ALLOW THE CLAIM OF THE ASSESSEE. ACCORDINGLY GROUND NO.3 IS ALLOWED. 9. GROUND NO.4 IS IN RESPECT OF DISALLOWANCE OF EXC ISE DUTY OF RS.26 84 261/- UNDER SECTION 43B OF THE IT ACT 196 1. 10. WE HAVE HEARD THE PARTIES. THE ONLY PLEA OF TH E LD. SR. COUNSEL IS THAT THE ISSUE MAY BE SET ASIDE TO THE A.O. TO V ERIFY IF THE EXCISE DUTY IS PAID BEFORE THE DUE DATE OF FILING OF THE R ETURN THEN THE A.O. BE DIRECTED TO ALLOW THE SAME. THE LD. D.R. HAS NO T OBJECTION TO SETTING ASIDE THE ISSUE. ACCORDINGLY WE RESTORE G ROUND NO.4 TO THE FILE OF THE A.O. WITH THE DIRECTION ON THAT HE SHOU LD VERIFY THE WHETHER THE ASSESSEE HAS PAID THE EXCISE DUTY BEFORE THE DU E DATE OF FILING OF THE RETURN FOR THE A.Y. 2000-01 AND IF SO ALLOW THE SAME AS PER THE PROVISIONS OF SEC.43B. ACCORDINGLY GROUND NO.4 IS ALLOWED FOR STATISTICAL PURPOSES. 11. GROUND NO.5 IS IN RESPECT OF INCLUSION OF AN AM OUNT OF SALE OF WASTE OIL / SCRAP DRUM OF RS.52 43 907/- IN THE TOT AL TURNOVER FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S.80HHC. 12. WE HAVE HEARD THE PARTIES. THE LD. COUNSEL SUB MITS THAT IN ASSESSEES OWN CASE FOR THE A.Y. 1996-97 THE TRIBUN AL HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE. WE FIND THAT IN ASSESSEES OWN CASE FOR THE A.Y. 1996-97 (ITA NO.2436/M/2000) ORDE R DATED 22.02.2007 COPY PLACED AT PAGE NOS.141 TO 152 OF T HE COMPILATION THE TRIBUNAL HAS ALLOWED THE CLAIM OF THE ASSESSSEE . BUT IN VIEW OF THE PRINCIPLES LAID DOWN IN THE CASE OF K. RAVINDRA NATHAN NAIR 295 ITR 228 (SC) THE SALE OF WASTE OIL AND SCRAP HAS TO BE INCLUDED IN THE TOTAL TURNOVER FOR COMPUTING THE DEDUCTION U/S. 80HHC AS ADMITTEDLY THE SAID AMOUNT IS ALSO INCLUDED IN THE PROFITS OF THE BUSINESS. WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE LD. CIT (A) ITA 4840/MUM/2004 LUBRIZOL INDIA PRIVATE LTD. 8 AND WE ACCORDINGLY CONFIRM THE SAME ON THIS ISSUE. ACCORDINGLY GROUND NO.5 IS DISMISSED. 13. SO FAR AS GROUND NOS.6 & 7 SAME ARE ON EXCLUSI ON OF THE ENTIRE INTEREST INCOME TREATING THE SAME AS INCOME FROM OT HER SOURCES. 14. WE HAVE HEARD THE PARTIES. WE FIND THAT THIS I SSUE IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE JURISDI CTIONAL HIGH COURT IN THE CASE OF CIT VS. ASIAN STAR CO. LTD. 362 ITR 56. WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT ( A) ON THIS ISSUE AND ACCORDINGLY GROUND NO.6 & 7 ARE DISMISSED. 15. THE ASSESSEE HAS TAKEN GROUND NO.8 WHICH READS AS UNDER:- THE LEARNED CIT (A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN EXCLUDING THE 90% OF FOLLOWING RECEIPTS WHILE COMPUTING PROFITS OF THE BUSINESS FOR THE PURPOSE O F DEDUCTION UNDER SECTION 80HHC OF THE IT ACT 1961. A) SALES TAX REFUND RS. 7 04 064/- B) MISCELLANEOUS INCOME RS.44 57 000/- 16. WE HAVE HEARD THE PARTIES. SO FAR AS THE SALES -TAX REFUND IS CONCERNED IN FACT THE SAME WILL NOT FORM THE PART OF THE PROFIT OF THE BUSINESS NOR IT IS PART OF THE TOTAL TURNOVER IN VI EW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF LAKSHMI MA CHINE WORKS 290 ITR 667. THE REFUND HAS TO BE EXCLUDED FROM TH E PROFITS OF THE BUSINESS AS IT HAS NEXUS WITH ELEMENT OF TAX. SO F AR AS MISCELLANEOUS INCOME IS CONCERNED THAT CONSIST OF (I) LIQUIDATED DAMAGES RENT AND INSURANCE CLAIM. SO FAR AS LIQUIDATED DAMAGES IS C ONCERNED IN A.Y. 1996-97 AND A.Y. 1997-98 THE TRIBUNAL HAS RESTORED THE ISSUE TO THE FILE OF THE A.O. FOR FURTHER CONSIDERATION. WE TH EREFORE FOLLOWING THE DIRECTIONS OF THE TRIBUNAL IN THE A.Y. 1996-97 AND 1997-98 IN THE ITA 4840/MUM/2004 LUBRIZOL INDIA PRIVATE LTD. 9 ASSESSEES OWN CASE RESTORE THE ISSUE OF THE LIQUID ITY DAMAGES TO THE FILE OF THE A.O. 17. SO FAR AS THE ISSUE OF RENT IS CONCERNED WE FI ND THAT THE SAME IS DECIDED AGAINST THE ASSESSEE BY THE TRIBUNAL IN THE A.Y. 1996-97 AND 1997-98. WE ACCORDINGLY CONFIRMED THE ORDER OF T HE LD. CIT (A) ON THE ISSUE OF THE RENT. 18. SO FAR AS RECEIPT ON ACCOUNT OF INSURANCE CLAIM IS CONCERNED THE LD. COUNSEL SUBMITS THAT IT IS COVERED IN FAVOU R OF THE ASSESSEE BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT VS. PIFZER LTD. 330 ITR 62 (BOM). IN THE CASE PIFZER L TD. (SUPRA) THE ISSUE WAS IN RESPECT OF INSURANCE CLAIM RELATING TO THE S TOCK-IN-TRADE. THEIR LORDSHIPS HAVE HELD THAT THE INSURANCE CLAIM ON ACC OUNT OF STOCK-IN- TRADE WOULD NOT BE SUBJECTED TO THE DEDUCTION OF TH E 90% AS PER THE EXPLANATION (BAA) TO SEC.80HHC. WE THEREFORE RES TORE THE ISSUE TO THE FILE OF THE A.O. TO DECIDE WHETHER THE SAME REL ATES TO THE STOCK-IN- TRADE AND IF IT IS SO THE SAME SHOULD BE ALLOWED A FTER EXAMINING THIS ISSUE IN THE LIGHT OF PRINCIPLES LAID DOWN IN THE C ASE OF PIFZER LTD. (SUPRA) . NEEDLESS TO SAY THE A.O. SHOULD GIVE OPP ORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY GROUND NO.8 IS PARTLY ALLOWED FOR THE STATISTICAL PURPOSES. 19. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLO WED FOR THE STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 3 0TH NOVEMBER 2011. SD/- SD/- ( P.M. JAGTAP ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI DATE : 30TH NOVEMBER 2011 ITA 4840/MUM/2004 LUBRIZOL INDIA PRIVATE LTD. 10 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)-27 MUMBAI. 4) THE CIT CITY -XIV MUMBAI. 5) THE D.R. G BENCH MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T. MUMBAI *CHAVAN ITA 4840/MUM/2004 LUBRIZOL INDIA PRIVATE LTD. 11 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 17.11.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 18.11.2011 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/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER