Itxa/2410/2009 Of The Commissioner Of Income Tax-Bangalore v. M/S. Ingersoll Rand (India) Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.2410 OF 2009 The Commissioner of Income TaxBangalore-I ..Appellant. V/s. M/s. Ingersoll-Rand (India) Ltd. ..Respondent. Mr. Suresh Kumar for appellant. Mr. P.J. Pardiwala, senior Advocate i/b. Chitnis & Co. for respondent. CORAM : J.P. DEVADHAR AND MRS. MRIDULA BHATKAR, JJ. MRS. MRIDULA BHATKAR, JJ. DATED : 15TH FEBRUARY, 2011 P.C. :- 1.Heard. Admit on the following questions of law:- 1)Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in deleting the disallowance made by the AO, confirmed by the CIT (A), for warranty amounting to Rs.4.72 crore on account of replacement of spares and accessories on machineries which were under warranty ?law, the Tribunal was right in deleting the disallowance made by the AO, confirmed by the CIT (A), for warranty amounting to Rs.4.72 crore on account of replacement of spares and accessories on machineries which were under warranty ? 2)Whether on the facts and in the circumstances of the case and in law, the Tribunal was correct in law in holding that provision made for meeting liability on account of replacement of spares and accessories of Rs.4,72,54,323/- admissible deductions ?law, the Tribunal was correct in law in holding that provision made for meeting liability on account of replacement of spares and accessories of Rs.4,72,54,323/- admissible deductions ? 3)Whether on the facts and in the circumstances of the case and in law, the Tribunal is right in holding the income from services rendered and sundry income as part of business profits and hence entitled to deduction u/s. 80HHC in respect of such income when it has no nexus with the business for which deduction u/s.80HHC is claimed ? 4)Whether on the facts and in the circumstances of the case and in law, the Tribunal is right in directing the AO to follow its own order for AY 1997-98 wherein the AO had included the income from services rendered and sundry income in business profits, whereas in the AY 1998-99, the AO had excluded such income from the business profits ?law, the Tribunal is right in directing the AO to follow its own order for AY 1997-98 wherein the AO had included the income from services rendered and sundry income in business profits, whereas in the AY 1998-99, the AO had excluded such income from the business profits ? 5)Whether on the facts and in the circumstances of the case and in law, the Tribunal is right in directing the AO to follow the decision of the Special Bench in case of Lalsons Enterprises on the issue of netting of expenditure to determine profits as per explanation (baa) for computing the deduction u/s.80HHC, while ignoring the decision of the Madras High Court in the case of K.S. Subhiah Pillai & Co. (260 ITR 304) which is in favour of revenue ?law, the Tribunal is right in directing the AO to follow the decision of the Special Bench in case of Lalsons Enterprises on the issue of netting of expenditure to determine profits as per explanation (baa) for computing the deduction u/s.80HHC, while ignoring the decision of the Madras High Court in the case of K.S. Subhiah Pillai & Co. (260 ITR 304) which is in favour of revenue ? 2.By consent of parties, the appeal is heard finally. 3.As regards question Nos.1 & 2 are concerned, counsel on both sides agree that the aforesaid two questions are answered in favour of the assessee and against the revenue by the decision of Apex Court in the case of Rotork Controls India P. Ltd. V/s. CIT reported in [2009] 314 I.T.R. 62 (S.C.). Accordingly, the said questions are answered in favour of the assessee and against the revenue. 4.As regards question Nos.3 & 4 are concerned, the Tribunal following the decision in the case of the assessee for AY 1997-98 has remanded back the matter to the file of the assessing officer to 2.By consent of parties, the appeal is heard finally. 3.As regards question Nos.1 & 2 are concerned, counsel on both sides agree that the aforesaid two questions are answered in favour of the assessee and against the revenue by the decision of Apex Court in the case of Rotork Controls India P. Ltd. V/s. CIT reported in [2009] 314 I.T.R. 62 (S.C.). Accordingly, the said questions are answered in favour of the assessee and against the revenue. 4.As regards question Nos.3 & 4 are concerned, the Tribunal following the decision in the case of the assessee for AY 1997-98 has remanded back the matter to the file of the assessing officer to reconsider the issue in the light of its decision for assessment year 1997-98. Hence we do not consider it necessary to answer question Nos.3 & 4. However, it is made clear that the assessing officer while reconsidering the issue shall take into consideration the decisions of this Court in the case of CIT V/s. Dresser Rand India P. Ltd. reported in [2010] 323 I.T.R. 429 (Bom) and CIT V/s. Pfizer Ltd. reported in [2011] 330 I.T.R. 62 (Bom). 5.As regards question No.5 is concerned, counsel on both sides agree that the said question be also remanded back to the assessing officer to reconsider the question in the light of the judgment of this Court in the case of CIT V/s. Asian Star Co. Ltd. reported in [2010] 326 I.T.R. 56 (Bom). Hence the 5th question is restored to the file of A.O. for fresh consideration in the light of the decision of this Court in the case of Asian Star Ltd. (supra). 6.The appeal is disposed off accordingly with no order as to costs. (MRS. MRIDULA BHATKAR, J.) (J.P. DEVADHAR, J.)