Commissioner Of Income Tax-Ii v. Kloeckner Desma Machnery Pvt. Ltd.....opponent(S

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1088 of 2008 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER ==================================== 1Whether Reporters of Local Papers may be allowed to see the judgment?2To be referred to the Reporter or not?3Whether their Lordships wish to see the fair copy of the judgment?4Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder?5Whether it is to be circulated to the civil judge? ==================================== COMMISSIONER OF INCOME TAX-II....Appellant(s) Versus KLOECKNER DESMA MACHNERY PVT. LTD.....Opponent(s) ==================================== Appearance: MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1MR MANISH J SHAH, ADVOCATE for the Opponent(s) No. 1 ==================================== CORAM: HONOURABLE MR.JUSTICE KS JHAVERIand HONOURABLE MR.JUSTICE K.J.THAKER Date : 19/12/2014 ORAL JUDGMENT(PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1.By way of this appeal, the appellant has challenged the judgment and order of the Tribunal, whereby, the Tribunal has partly allowed the appeal preferred by the department. While admitting the matter, this Court has framed following substantial questions of law: “(A)Whether the Appellate Tribunal is right in law on facts in confirming order passed by the CIT (A) directing the Assessing Officer to exclude sales tax and excise duty from the total turnover while computing deduction u/S. 80HHC of the Act, despite insertion of Section 145A of the Act? (C)Whether the Appellate Tribunal is right in law and on facts in holding that only the net service charges, after allowing the expenses relatable thereto, are required to be excluded while computing deduction u/s. 80 IB of the Act?” 2.The identical question to question (A) raised in this appeal had come up for consideration before this Court in Tax Appeal No. 874 of 2008 and the Court, while deciding the said identical case by judgment and order 21/12/2013, has held in paragraph No. 7 as under: “7.Applying the ratio laid down by the Hon’ble Supreme Court in the case of Lakshmi Machine Works (Supra) and Shiva Tex Yarn Ltd. (Supra) as well as recent decision of this Court in Tax Appeal No. 884 of 2006 and other allied appeals, to the facts of the case on hand the question raised in the present Tax Appeal is answered against the revenue and it is held that the learned Tribunal has not committed any error in holding that the components of sales tax and central excise do not form part of sale proceeds for the purpose of Section 80HHC of the Act despite insertion of Section 145 A of the Act.” 3.The next question (C) is also governed by the decision of this Court in CIT Vs. Nirma Ltd., reported in [2014] 367 ITR 12 (Guj) in which, the decision of the Hon’ble the Apex Court in ACG Associated Capsules P. Ltd. Vs. CIT, reported in [2012] 343 ITR 89 has been followed, and held as under: “(i)that in computing the special deductions under sections 80-I, 80-IA and 80HH net incomes derived from industrial undertaking should be excluded.” (ii)That the Tribunal was right in granting the benefit of deduction under Section 80-I of the Act on various incomes, such as job work receipt, sale of empty soda ash bardan, sale of empty barrels and plastic waste. (iii)That the assessee's claim for deduction under Section 80-I of the Act on the interest received on late payment for sale consideration as amount derived from eligible business was allowable. “(i)that in computing the special deductions under sections 80-I, 80-IA and 80HH net incomes derived from industrial undertaking should be excluded.” (ii)That the Tribunal was right in granting the benefit of deduction under Section 80-I of the Act on various incomes, such as job work receipt, sale of empty soda ash bardan, sale of empty barrels and plastic waste. (iii)That the assessee's claim for deduction under Section 80-I of the Act on the interest received on late payment for sale consideration as amount derived from eligible business was allowable. (iv)That the assessee had claimed soda ash project interest expenses and lab project interest. The Commissioner (Appeals) and the Tribunal concurrently came to the conclusion that there was inter-connection, inter-lacing, and inter-dependance of the management, financial and administrative control of various units of the assessee. The assessee through its existing administrative mechanism started a new facility for production of soda ash and had also set up a facility for production of a material called “lab” for its captive consumption for the purpose of its existing manufacturing business. It was an expansion of the existing business. The interest payments were, therefore, deductible.” 4.There is no dispute amongst both the learned counsels that the aforesaid decisions will apply in the facts of this case also, as the 5. hiren facts and the questions of law raised, are identical and therefore, we are not giving elaborate reasons. Accordingly, we answer the questions, “Whether the Appellate Tribunal is right in law on facts in confirming order passed by the CIT (A) directing the Assessing Officer to exclude sales tax and excise duty from the total turnover while computing deduction u/S. 80HHC of the Act, despite insertion of Section 145A of the Act?” and “Whether the Appellate Tribunal is right in law and on facts in holding that only the net service charges, after allowing the expenses relatable thereto, are required to be excluded while computing deduction u/s. 80 IB of the Act?”, in favour of the assessee and against the department. The appeal stands dismissed accordingly. [ K. S. Jhaveri, J. ][ K. J. Thaker, J. ]