M/S. ZENITH FIBRES LTD, MUMBAI v. THE ACIT RG 8(3), MUMBAI

ITA 6368/MUM/2007 | 2004-2005
Pronouncement Date: 29-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 636819914 RSA 2007
Assessee PAN AAACZ0426C
Bench Mumbai
Appeal Number ITA 6368/MUM/2007
Duration Of Justice 3 year(s) 9 month(s) 13 day(s)
Appellant M/S. ZENITH FIBRES LTD, MUMBAI
Respondent THE ACIT RG 8(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted G
Tribunal Order Date 29-07-2011
Date Of Final Hearing 11-07-2011
Next Hearing Date 11-07-2011
Assessment Year 2004-2005
Appeal Filed On 16-10-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH MUMBAI BEFORE SHRI J. SUDHAKAR REDDY ACCOUNTANT MEMBER A ND SMT. ASHA VIJAYRAGHAVAN JUDICIAL MEMBER ITA NO. 6368/MUM./2007 (ASSESSMENT YEAR : 2004-05 ) DATE OF HEARING 11.7.2011 M/S. ZEHITH FIBRES LTD. A-2 JITENDRA ESTATE OPP. SANGAM THEATRE ANDHERI KURLA ROAD ANDHERI (E) MUMBAI 400 093 PAN AAACZ0426C .. APPELLANT V/S ASSTT. COMMISSIONER INCOME TAX RANGE-8(3) AAYAKAR BHAVAN 101 M.K. ROAD MUMBAI 400 020 .... RESPONDENT ASSESSEE BY : MR. SHEKHAR GUPTA REVENUE BY : MR. A.K. NAYAK O R D E R PER J. SUDHAKAR REDDY A.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 22 ND AUGUST 2007 PASSED BY THE COMMISSIONER (APPEALS)-XXIX MUMBAI FOR ASSESSMENT YEAR 2004-05 ON THE FOLLOWING GROUNDS:- 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON THE F ACTS OF THE CASE IN SUSTAINING THE ORDER OF THE ASSESSING OFFICER IN DISALLOWING THE CLAIM OF THE APPELLANT TREATING SALES TAX SUBSIDY OF ` 34 83 585 AS REVENUE RECEIPT INSTEAD OF CAPITAL RECEIPT. ZENITH FIBRES LTD. ITA NO.6368/M./2007 2 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN SUSTAINING THE ORDER OF THE ASSESSING OFFICER REDUC ING 90% OF INTEREST OF ` 17 61 606 WHICH INCLUDED INTEREST RECEIVED FROM CU STOMERS FOR DELAYED PAYMENTS; ` 5 86 944 INTEREST RECEIVED ON I.C. DEPOSITS ` 11 09 497 AND INTEREST RECEIVED ON SHORT TERM FIXED DEPOSITS ` 65 165. 3. WITHOUT PREJUDICE TO GROUND NO.2 THE LEARNED CI T(A) HAS ERRED IN NOT ALLOWING NETTING-OFF THE INTEREST RECEIVED A GAINST INTEREST PAID RELYING ON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN K.S. SUBBIAH PILLAI & CO. (INDIA) P. LT.D V/S CIT 260 I TR 304 AS AGAINST THE DECISION OF HON'BLE DELHI HIGH COURT IN CIT V/S SHRI RAM HONDA POWER EQUIP 289 ITR 475 AND THE DECISION OF HONB LE ORISSA HIGH COURT IN TATA SPONGE IRON LTD. V/S CIT 292 ITR 175 . 2. AFTER HEARING RIVAL CONTENTIONS WE FIND THAT GROUN D NO.1 IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF G BENCH OF THE TRIBUNAL IN ITA NO.3325 & 3326/MUM./2007 VIDE ORDER DATED 9 TH FEBRUARY 2009 IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2002-03 AN D 2003-04. THE TRIBUNAL HAS HELD THAT THE ISSUE IN QUESTION IS IDE NTICAL TO THE ISSUE WHICH WAS CONSIDERED BY THE MUMBAI SPECIAL BENCH OF THE T RIBUNAL IN RELIANCE INDUSTRIES 273 ITR (AT) 16 (MUM.) AND THAT THE CL AIM OF THE ASSESSEE SHOULD BE ALLOWED. RESPECTFULLY FOLLOWING THE SAME WE ALLOW GROUND NO.1. 3. ON GROUND NO.2 THE ASSESSEE HAS NOT PRESSED THE IS SUE OF DISALLOWANCE OF INTEREST RECEIVED ON IC DEPOSITS AN D INTEREST RECEIVED ON SHORT TERM FIXED DEPOSIT. THE ASSESSEES CLAIMS THA T 90% OF THE INTEREST RECEIVED FROM CUSTOMERS ON DELAYED PAYMENT SHOULD N OT BE EXCLUDED WHILE COMPUTING DEDUCTION UNDER SECTION 80HHC. IN OUR OPI NION THIS CLAIM OF THE ASSESSEE IS DEVOID OF MERIT. INTEREST RECEIVED FROM CUSTOMER FOR DELAYED PAYMENT IS TO BE ASSESSED UNDER THE HEAD PROFITS & GAINS OF BUSINESS OR PROFESSION. THE ACT MANDATES THAT 90% OF THE INTERE ST SHOULD BE ELIMINATED WHILE COMPUTING RELIEF UNDER SECTION 80HHC AS INTER EST FALLS UNDER CLAUSE (BAA) OF EXPLANATION TO SECTION 80HHC. THUS GROUND NO.2 IS DISMISSED. 4. GROUND NO.3 IS DISMISSED AS NOT PRESSED. ZENITH FIBRES LTD. ITA NO.6368/M./2007 3 5. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.7.2011 SD/- ASHA VIJAYRAGHAVAN JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI DATED: 29.7.2011 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A) MUMBAI CONCERNED; (4) THE CIT MUMBAI CITY CONCERNED; (5) THE DR G BENCH ITAT MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT MUMBAI BENCHES MUMBAI