Commissioner Of Income Tax v. Suzlon Energy Ltd.....opponent(S

O/TAXAP/1437/2005 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1437 of 2005 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ?the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ?judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ?to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ COMMISSIONER OF INCOME TAX....Appellant(s) Versus SUZLON ENERGY LTD.....Opponent(s) ================================================================ Appearance: MR NITIN K MEHTA, ADVOCATE for the Appellant(s) No. 1 MR TUSHAR P HEMANI, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERIandHONOURABLE MR.JUSTICE K.J.THAKER Date : 21/11/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. Being aggrieved and dissatisfied with the impugned judgment and order passed by the Income Tax Appellate Tribunal, Ahmedabad Bench ‘B’ (hereinafter referred to as ‘the Tribunal’) dated 16.02.2005 in ITA No. 3457/Ahd/2003 for the Assessment Year 2000-01, the revenue has preferred the present Tax Appeal for consideration of the following substantial question of law which was framed while admitting this appeal: “Whether the Appellate Tribunal is right in law and on facts in holding that net interest is to be excluded while working out deduction u/s 80IB of the Act instead of gross income required to be excluded?” 2. The assessment order under section 143(3) of the I.T. Act, 1961 was passed in respect of the assessee. During the course of assessment proceedings, the assessing officer noticed that the assessee had claimed deduction u/s 80IB of I.T Act. The Assessing Officer rejected the claim of the assessee for deduction u/s 80IB treating interest on fixed deposit as ‘other income’. On appeal the CIT (Appeals) allowed the same and directed the Assessing Officer to modify the deduction u/s 80IB of the Act on the ground that the interest on fixed deposits was placed with the banks in the form of margin money against which the appellant was issued LCs without which the appellant could not have imported WTGS. 3. On appeal before the Tribunal by the revenue, by impugned order, Tribunal partly allowing the appeal, upheld the order passed by CIT(A) and directed the Assessing Officer to rework the profit of industrial undertaking for the purpose of Section 80IB of the Act after allowing adequate opportunity of being heard to the assessee. 4. Being aggrieved and dissatisfied with the impugned order passed by the Tribunal, the revenue has preferred the present Tax Appeal for consideration of the aforesaid substantial question of law. 3. On appeal before the Tribunal by the revenue, by impugned order, Tribunal partly allowing the appeal, upheld the order passed by CIT(A) and directed the Assessing Officer to rework the profit of industrial undertaking for the purpose of Section 80IB of the Act after allowing adequate opportunity of being heard to the assessee. 4. Being aggrieved and dissatisfied with the impugned order passed by the Tribunal, the revenue has preferred the present Tax Appeal for consideration of the aforesaid substantial question of law. 5. The issue involved in the present Tax Appeal is now not res integra in view of the decision of the Hon’ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. vs. CIT reported in [2012] 343 ITR 89 (SC) wherein the Hon’ble Supreme Court has held that for the purpose of Section 80HHC of the Income Tax Act, 1961 it is not the entire amount received by the assessee on sale of DEPB credit but the sale value less the face value of the DEPB that will represent profit on transfer of DEPB credit by the assessee. It is also held that if any quantum of any receipt of the nature mentioned in clause (1) of Explanation (baa) has not been included in the profits of business of an assessee as computed under the head ‘Profits and gains of business or profession’, ninety per cent of such quantum of the receipt cannot be deducted under Explanation (baa) to section 80HHC. 6.Mr. Mehta, learned advocate on behalf of the revenue is not in a position to dispute the above and is not in a position to show and/or point out any contrary decision. 7. Having heard learned advocates appearing on behalf of the assessee and the revenue and the question posed for consideration before us reproduced hereinabove and considering the decision of the Hon’ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd (Supra), the question, which is raised in the present appeal is required to be answered in favour of the assessee. We are not giving any elaborate reasons for the same as in the case of ACG Associated Capsules Pvt. Ltd (Supra) it is held by the Hon’ble Supreme Court that ninety percent of not the gross rent or gross interest but only the net interest or net rent which had been included in the profits of business of the assessee as computed under the head “Profits and gains of business or profession” was to be deducted under clause (1) of Explanation (baa) to section 80HHC for determining the profits of the business. Accordingly, the question is answered in the affirmative i.e. against the appellant – revenue and in favour of the assessee. 8. In view of the above, the impugned judgment and order passed by the Tribunal is confirmed. Hence, the present Tax Appeal is dismissed. (K.S.JHAVERI, J.) divya (K.J.THAKER, J)