Acg Associated Capsules Private Limited v. Dy. Commissioner Of Income Tax, Central Circle -43,Mumbai & Another

agk IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.484 OF 2011 ACG Associated Capsules Private Limited..Appellant. Versus Dy. Commissioner of Income Tax, Central Circle -43,Mumbai & Another..Respondents. Mr.Atul K. Jasani for the appellant.Mr.Vimal Gupta, Senior Advocate with Ms.Padma Divakar for the respondents. CORAM : J.P. Devadhar &M.S. Sanklecha, JJ. DATE : 5[th] November 2012 P.C. : 1.Heard. Admit on the following substantial questions of law. a)Whether the Tribunal ought to have held that no disallowance could be made under Section 14A of the Act on an ad-hoc basis ?made under Section 14A of the Act on an ad-hoc basis ? b)Having concluded that the Respondent No.1 had not given any basis for determination of expenditure relatable to dividend income, the Tribunal ought to have deleted the disallowance made under Section 14A of the Act and erred in setting aside the issue to the Respondent No.1 for fresh examination ?for determination of expenditure relatable to dividend income, the Tribunal ought to have deleted the disallowance made under Section 14A of the Act and erred in setting aside the issue to the Respondent No.1 for fresh examination ? c)Whether the dividend income on which tax is now collected from the dividend paying company can be regarded as an amount which is exempt from tax i.e. In respect of which no tax is payable in light of the provisions of Section 115-O ?dividend paying company can be regarded as an amount which is exempt from tax i.e. In respect of which no tax is payable in light of the provisions of Section 115-O ? d)Whether Sections 115-O and 10(33) constitute a scheme which clearly evidences that the dividend income is not an item on which tax is not payable?evidences that the dividend income is not an item on which tax is not payable? e)Whether the provisions of Section 14A of the Act can be applied for the purposes of making a disallowance of expenditure incurred by an assessee (shareholder) in relating to dividend from companies in respect of which income-tax is charged on the Company under section 115-O ?purposes of making a disallowance of expenditure incurred by an assessee (shareholder) in relating to dividend from companies in respect of which income-tax is charged on the Company under section 115-O ? f)Whether the profits eligible for deduction under Section 80HHC of the Act can be reduced by the amount of deduction allowed under Section 80-IV of the Act ?Act can be reduced by the amount of deduction allowed under Section 80-IV of the Act ? g)Assuming without admitting that such reduction is to be carried out, whether the Tribunal ought to have held that such reduction should be restricted to the amount of export profits comprised in the income eligible for deduction under Section 80-IB of the Act ?whether the Tribunal ought to have held that such reduction should be restricted to the amount of export profits comprised in the income eligible for deduction under Section 80-IB of the Act ? h)Whether the Tribunal erred in denying deduction in respect of income arising from DEPB of Rs.503,39,230/- under Section 80 HHC of the Act?arising from DEPB of Rs.503,39,230/- under Section 80 HHC of the Act? i)Whether the Tribunal erred in denying deduction in respect of miscellaneous income of Rs.74,84,451/- under Section 80 HHC of the Act ?miscellaneous income of Rs.74,84,451/- under Section 80 HHC of the Act ? j)Whether the Tribunal erred in holding that the exclusion in respect of interest income under clause (baa) of the explanation to Section 80 HHC should be of the gross interest and not net interest income ?interest income under clause (baa) of the explanation to Section 80 HHC should be of the gross interest and not net interest income ? h)Whether the Tribunal erred in denying deduction in respect of income arising from DEPB of Rs.503,39,230/- under Section 80 HHC of the Act?arising from DEPB of Rs.503,39,230/- under Section 80 HHC of the Act? i)Whether the Tribunal erred in denying deduction in respect of miscellaneous income of Rs.74,84,451/- under Section 80 HHC of the Act ?miscellaneous income of Rs.74,84,451/- under Section 80 HHC of the Act ? j)Whether the Tribunal erred in holding that the exclusion in respect of interest income under clause (baa) of the explanation to Section 80 HHC should be of the gross interest and not net interest income ?interest income under clause (baa) of the explanation to Section 80 HHC should be of the gross interest and not net interest income ? k)Whether the Tribunal erred in denying deduction in respect of interest and miscellaneous income relatable to the eligible undertakings under Section 80IB of the Act ?and miscellaneous income relatable to the eligible undertakings under Section 80IB of the Act ? 2.As regard questions (a) to (e) are concerned, the Income Tax Appellate Tribunal has restored the matter to the file of the assessing officer for passing fresh order in the light of the judgment of this Court in the case of Godrej & Boyce V/s. DCIT reported in 328 ITR 81. Since the Income Tax Appellate Tribunal has remanded the issue, we are not inclined to entertain questions (a) to (e). 3.As regards question (f) is concerned, counsel for the parties state that the said question stands answered in favour of the assessee and against the Revenue by the decision of this Court in the case of Associated Capsules P Limited V/s. Dy. Commissioner of Income-tax reported in (2011) 332 ITR 42 (Bom). Accordingly, question (f) is answered in favour of the assessee and against the Revenue. 4.As regards question (g) is concerned, the said question has become academic in view of question (f) being answered in favour of the assessee. Hence, question (g) is not answered. 5.As regards question (h) is concerned, counsel for the parties state that the said question stands answered in favour of the assessee by the decision of the Apex Court in the case of Topman Exports V/s. Commissioner of Income-tax reported in (2012) 342 ITR 49 (S.C.). Accordingly, question (h) is answered in favour of the assessee. 6.As regards question (i) is concerned, counsel for the parties state that the said question stands answered in favour of the Revenue by the decision of this Court in the case of Commissioner of Income-tax V/s. Dresser Rand India P Limited reported in (2011) 330 ITR 453 (Bom). Accordingly, question (i) is answered in favour of the Revenue and against the assessee. 7.As regards question (j) is concerned, counsel for the parties state that the said question stands answered in favour of the assessee by the decision of the Apex Court in the case of ACG Associates Capsules Private Limited V/s. Commissioner of Income Tax reported in (2012) 343 ITR 89 (S.C.). Accordingly, question (j) is answered in favour of the assessee and against the Revenue. 8.As regards question (k) is concerned, counsel for the parties state that the said question stands answered in favour of the Revenue by the decision of the Apex Court in the case of Liberty India V/s. Commissioner of Income Tax reported in (2009) 317 ITR 218 (S.C.). Accordingly, question (k) is answered in favour of the Revenue and against the assessee. 9.The appeal is disposed of in above terms with no order as to costs. (M.S. Sanklecha, J.) (J.P. Devadhar, J.)