Mr. F v. Th April, 2010

IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. INCOME TAX APPEAL NO.4168 OF 2009 The Commissioner of Income Tax-6..Appellant.Vs.M/s. Dresser Rand India Pvt. Ltd...Respondent. .... Mr. F. V. Irani with Mr. A.K. Jasani for the Appellant.Mr. Suresh Kumar for the Respondent. .... CORAM : DR. D.Y.CHANDRACHUD & J.P. DEVADHAR, JJ. 8th April, 2010. P.C.: 1.The Appeal by the Revenue under Section 260-A of the Income Tax Act, 1961 arises out of an order of the Income Tax Appellate Tribunal dated 23rd April, 2009 in relation to Assessment Year 2003-04. The Appeal is admitted on the following two questions: “i)Whether on the facts and in the circumstances of the case, the Hon’ble ITAT is correct in holding that receipts from ‘Interest on deposits’ and ‘Miscellaneous Income (reversal of LD charges)’ are derived from the business of industrial undertaking and therefore are eligible for claim of deduction u/s. 80IB, despite there being no direct nexus between source of these receipts and business of industrial undertaking; ii)Whether on the facts and in the circumstances of the case, the Hon’ble ITAT is right in holding that 90% of receipts from freight and insurance, packing charges, sales tax set off and gross service income are not to be excluded from the profits of the business in terms of explanation (baa) to section 80HHC of the Act, despite there being no direct nexus between the source of these receipts and the export business of the assessee;” 2.Counsel appearing on behalf of the Revenue and counsel appearing on behalf of the assessee are agreed in stating before the Court that question (ii) as formulated shall stand covered against the assessee and in favour of the Revenue in terms of the decision of the Court rendered today in the Commissioner of Income Tax v. Dresser Rand India Pvt. Ltd. (ITA 2186 of 2009). Since both the appeals relate to the same issue and involve similar questions, they have been heard together. In view of the statement made before the Court, question (ii) shall stand answered in favour of the Revenue and against the assessee. Insofar as question (i) is concerned, the learned counsel state that the issue as to whether interest on deposits would be allowable towards the deduction under Section 80IB is covered by the decision of the Supreme Court in Liberty India v. Commissioner of Income Tax[1]. In the circumstances, the question of law as regards interest on deposits is answered against the assessee and in favour of the Revenue in terms of the judgment of the Supreme Court in Liberty India. As regards the question of miscellaneous income (reversal of LD charges), counsel appearing on behalf of the assessee and the Revenue are agreed that the issue may be remanded back to the Tribunal for fresh consideration, in the light of the judgment of the Supreme Court in Liberty India. Ordered accordingly. The Appeal is accordingly allowed in the aforesaid terms. There shall be no order as to costs. (Dr. D.Y.Chandrachud, J.) (J.P. Devadhar, J.)