Itxa/1373/2016 Of The Pr.commissioner Of Income Tax-9 v. M/S.gamplus Jewellery (I) Ltd

Priya Soparkar 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1373 OF 2016 The Pr.Commissioner of Income Tax-9… Appellant V/s. M/s Gamplus Jewellery (I) Ltd.… Respondent --- Mr.Tejveer Singh for the Appellant.--- CORAM : AKIL KURESHI AND SANDEEP K. SHINDE, JJ. DATE : JANUARY 28, 2019. P.C.:- 1.Revenue has filed this appeal against the judgment of the Income Tax Appellate Tribunal dated 27[th] August, 2015, raisingfollowing questions for our consideration:- “(a) Whether on the facts and in the circumstancesof the case and in law, the Tribunal erred in treatingthe net interest and not gross interest for thepurpose of exclusion under Section 10A of theI.T.Act, 1961?(b)Whether on the facts and in the circumstancesof the case and in law, the Tribunal erred in holdingthat the exemption u/s.10A of the I.T.Act should becomputed after excluding freight and insurance from the total turnover?” 3.Respondent-assessee is a exporter and claims deductionunder section 10A of the Income Tax Act, 1961 (“the Act” forshort) in respect of the income earned from such activity.Questions (a) and (b) raised by the revenue relate to theassessee's claim of such deduction in relation to the interestincome. The assessee failed to convince the Assessing Officer, CIT(Appeals) as well as the Tribunal to grant such deduction to theinterest income. However, the Tribunal overruling the orders ofthe Assessing Officer and CIT (Appeals) held that the disallowanceof deduction should be restricted to the net interest income andnot gross. 4.In the context of such facts, we fail to see how the revenuecan raise questions (a) and (b) simultaneously. The question (a)would arise only if the interest income was recognized fordeduction under Section 10A of the Act which is not case in thepresent appeal. Had it been so, automatically question (b) wouldnot arise. 5.Question (a) thus is wrongly framed. We need therefore, todeal with question (b) only. In this context, the Tribunal correctlyheld that the question of disallowing the interest can only relateto the net interest and not gross. In other words, in addition toearning interest income, if the assessee is also expending oninterest, the disallowance cannot be of interest income ignoringthe interest expenditure. Such view is consistently taken by thisCourt in series of judgments. 6.The sole surviving question has been decided in favour ofthe assessee while dismissing the revenue's Income Tax AppealNo.2426 of 2009 by order dated 23[rd] June, 2010 in case of thisvery assessee. No further discussion therefore is needed. 7.Income Tax Appeal is dismissed. (SANDEEP K. SHINDE, J.) (AKIL KURESHI,J.)….