ACIT, Bangalore v. M/s. Kudremukh Iron Ore Co. Ltd., Bangalore

ITA 909/BANG/2007 | 2004-2005
Pronouncement Date: 22-01-2010 | Result: Dismissed

Appeal Details

RSA Number 90921114 RSA 2007
Bench Bangalore
Appeal Number ITA 909/BANG/2007
Duration Of Justice 2 year(s) 6 month(s) 13 day(s)
Appellant ACIT, Bangalore
Respondent M/s. Kudremukh Iron Ore Co. Ltd., Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 22-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 22-01-2010
Date Of Final Hearing 19-01-2010
Next Hearing Date 19-01-2010
Assessment Year 2004-2005
Appeal Filed On 09-07-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE A BENCH BANGALORE BEFORE SHRI K.P.T.THANGAL VICE PRESIDENT AND SHRI N.L.KALRA AM ITA NO.909(BANG.)/2007 (ASSESSMENT YEAR : 2004-05) THE ASST. COMMISSIONER OF INCOME-TAX CIRCLE-11(5) BANGALORE APPELLANT VS M/S KUDREMUKH IRON ORE CO.LTD. 2 ND BLOCK SARJAPUR ROAD KORAMANGALA BANGALORE. RESPO NDENT AND ITA NO.911(B)/2007 (ASSESSMENT YEAR : 2004-05 M/S KUDREMUKH IRON ORE CO.LTD. 2 ND BLOCK SARJAPUR ROAD KORAMANGALA BANGALORE. APPELLANT VS THE ASST. COMMISSIONER OF INCOME-TAX CIRCLE-11(5) BANGALORE RESPONDENT REVENUE BY SHRI JASON P BOAZ ASSESSEE BY : SHRI H.N.KHINCHA O R D E R PER SHRI N.L.KALRA AM; ITA NO.909 & 911(B)/07 2 THE REVENUE AS WELL AS THE ASSESSEE FILED APPEALS A GAINST THE ORDER OF LEARNED CIT(A)-II BANGALORE DATED 28-03-2 007. 2. FIRST WE WILL TAKE UP THE APPEAL FILED BY THE REVENUE. THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE LEARNED C IT(A) HAS ERRED IN DIRECTING THE AO TO RECOMPUTE THE DEDUCTION U/S 80H HC BY EXCLUDING EXCISE DUTY AND SALES TAX FROM THE TOTAL TURNOVER FOLLOWING THE DECISION OF THE HONBLE HIGH COURT IN THE CASE OF CIT VS BEML IN 268 ITR 232. THE ISSUE AS RAISED BY THE REVENUE HAS BEEN DECIDED BY THE HONBLE APEX COURT IN THE CASE OF CIT VS M /S LAKSHMI MACHINE WORKS REPORTED IN 290 ITR 667(2007) IN WHIC H IT HAS BEEN HELD THAT THE EXCISE DUTY AND SALES TAX CANNOT FORM PART OF THE TOTAL TURNOVER U/S 80HHC AS PER THE DEFINITION OF WORD T URNOVER AS CONTAINED IN SEC.80HHC OF THE IT ACT. 3. THE DEFINITION OF TOTAL TURNOVER AS CONTAINED IN EXCISE OR SALES TAX ACT CAN NOT BE APPLIED IN VIEW OF THE WORD TOTA L TURNOVER DEFINED U/S 80 HHC. HENCE THE LEARNED CIT(A) WAS RIGHT I N HOLDING THAT EXCISE DUTY AND SALES TAX CANNOT NOT BE PART OF TO TAL TURNOVER AS THERE ARE NOT ART OF EXPORT TURNOVER. 4. THE ASSESSEE IN ITS APPEAL IS AGGRIEVED ADDITION OF RS.21 26 41 000/- AS INTEREST ON THE AMOUNT WHICH W AS ADVANCED TO KISCO. THE ASSESSEE WAS NOT GIVEN PERMISSION TO AGI TATE THE ISSUE OF ITA NO.909 & 911(B)/07 3 CONFIRMING THE ADDITION OF RS.82.75 LAKHS BY THE CO D. SINCE THE PERMISSION HAS NOT BEEN GIVEN BY THE COD IN RESPECT OF CONFIRMATION OF ADDITION OF RS.82.75 LAKHS THE GROUND NO.4 OF T HE ASSESSEES APPEAL IS THEREFORE DISMISSED. 5. DURING THE COURSE OF PROCEEDINGS BEFORE US LEA RNED AR HAS FILED COPY OF THE ORDER DATED 18-06-2007 BY THE BOA RD FOR INDUSTRIAL & FINANCIAL RECONSTRUCTION (BIFR). IN PARA-11 OF T HE ORDER IT IS HELD BY THE BIFR THAT THE ASSESSEE IS REQUIRED TO WAIVE OFF THE INTEREST ACCRUED BUT NOT ACCOUNTED FOR ON THE LOAN OF RS.227 .50 CRORES ADVANCED TO KISCO TILL THE EFFECTIVE DATE OF MERGER . THE LEARNED AR DREW OUR ATTENTION TO SEC.32 OF TH4 SICK INDUSTRIAL COMPANIES (SPL. PROVISIONS) ACT 1985 (SIC ACT 1985). AS PER SEC.3 2 IT IS MENTIONED THAT THE PROVISIONS OF THIS ACT (SIC ACT 1985) ANY RULES OR SCHEMES MADE THERE UNDER SHALL HAVE EFFECT NOT WITHSTANDING ANYTHING INCONSISTENT THEREWITH CONTAINED IN ANY OTHER LAW E XCEPT THE PROVISIONS OF THE FOREIGN EXCHANGE REGULATION ACT 1973( 46 OF 1973) AND THE URBAN LAND (CEILING AND REGULATION) ACT. T HE LEARNED AR ALSO FILED COPY OF THE REHABILITATION SCHEME. THE LEARNED AR THEREFORE SUBMITTED THAT THE SCHEME AS MENTIONED U NDER S.I.C.ACT 1985 WILL ALSO HAVE EFFECT FOR CONSIDERING THE APPL ICABILITY UNDER THE INCOME-TAX ACT. THE INTEREST CANNOT BE SUBJECTED T O INCOME-TAX AS ITA NO.909 & 911(B)/07 4 PER ORDER OF BIFR. THE LEARNED AR ALSO RELIED ON T HE FOLLOWING DECISIONS VIDE WHICH IT HAS BEEN HELD THAT THE ORDE RS OF BIFR IS TO BE GIVEN EFFECT UNDER THE INCOME-TAX ACT. 1. M/S EZY SLIDE FASTNERS LTD. VS JCIT (269 ITR 54 8(2008) 2. CIT VS M/S SHEE PIPES LTD. (301 ITR 248(2008) 6. AFTER HEARING BOTH THE PARTIES AND CONSIDERING THE PROVISIONS AS CONTAINED IN THE SICK IND.CO.ACT 1985 IT IS CL EAR THAT THE SCHEME AS APPROVED BY THE BIFR HAS TO BE ACCEPTED AND IS T O BE BINDING ON THE INCOME-TAX AUTHORITIES. THE INCOME-TAX AUTHORI TIES CAN FILE THE APPEAL AGAINST THE ORDER OF BIFR. THERE IS NO SUCH MATERIAL BEFORE US TO SUGGEST THAT THE REVENUE HAS FILED AN APPEAL AGA INST THE ORDER OF BIFR. SINCE BIFR HAS HELD THAT THE ASSESSEE COMPANY IS NOT REQUIRED TO PAY INCOME-TAX ON THE INTEREST WAIVED ON THE SIC K IND. CO. AND THEREFORE THE INTEREST WOULD NOT HAVE INCLUDED IN THE INCOME OF THE ASSESSEE BY HOLDING THAT SUCH INCOME HAS ACCRUED TO THE ASSESSEE. HENCE THE LEARNED CIT(A) WAS NOT JUSTIFIED IN UPHO LDING THE ADDITION OF RS.21 26 41 000/- AND THE SAME IS DELETED AS SUC H INTEREST WAS NOT TAXABLE ON THE GROUND THAT SUCH INTEREST WAS NO T TO BE TAXED AS PER THE ORDER OF BIFR. LAST GRIEVANCE OF THE ASSES SEE IS AGAINST THE LEVYING OF INTEREST U/S 234B AND 234D OF THE IT ACT . THE ASSESSEE WILL ITA NO.909 & 911(B)/07 5 GET CONSEQUENTIAL RELIEF IN RESPECT OF INTEREST BE CAUSE THE INTEREST IS MANDATORY AND IS COMPENSATORY IN NATURE. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED AND THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22-01-2010. (K.P.T.THANGAL (N.L.KALRA) VICE PRESIDENT ACCOUNTANT MEMBER PLACE: BANGALORE DATED: AM* COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3. CIT(A) 4. CIT 5. DR 6. GF(BLORE) 7. GF(DELHI) BY ORDER AR ITAT BANGALORE