Principal Commissioner Of Income Tax, Kolkata-4 v. M/S. Berger Paints India Limited

OD-10 IN THE HIGH COURT AT CALCUTTASpecial Jurisdiction (Income tax)ORIGINAL SIDE IA No.GA 2 of 2017 (Old No.GA 2154 of 2017) In ITAT 256 of 2017 PRINCIPAL COMMISSIONER OF INCOME TAX, KOLKATA-4Vs.M/S. BERGER PAINTS INDIA LIMITED BEFORE: The Hon'ble JUSTICE T. S. SIVAGNANAM AND The Hon’ble JUSTICE HIRANMAY BHATTACHARYYADate : 14[th] December, 2021. Appearance:Mr. P.K. Bhowmik, Adv.Mr. Madhu Jana, Adv.…for the appellant.Mr. J.P. Khaitan, Sr., Adv. Mrs. Nilanjana Banerjee Pal, Adv.…for the respondent. The Court : This appeal by the revenue filed under Section 260A ofthe Income Tax Act (the ‘Act’ in brevity) is directed against the order dated14[th] December, 2016 passed by the Income Tax Appellate Tribunal, A-Bench,Kolkata (the ‘Tribunal’) in ITA Nos.1105/1403/Kol/2013 for the AssessmentYear 2008-09. The revenue has raised the following substantial questions of law forconsideration: i)Whether on the facts and in the circumstances of the case theLearned Tribunal has erred in law in upholding the order ofCIT(Appeal) in allowing deduction under Section 80IB of IncomeTax Act, 1961 in respect of “common expenses” of Rs.10,21,06,200/- in respect of its Units at Pandicharry, Goa andJammu by dis-regarding that it was not correctly apportioned ? ii)Whether on the facts and in the circumstances of the case theLearned Tribunal has erred in law in upholding the order of CIT(Appeal) in allowing deduction under Section 80IB of Income TaxAct, 1961 in respect of “interest income” of Rs.57,93,000/- on saleof scrap by treating it as income derived from profits and gains ofindustrial undertaking? iii) Whether on the facts and in the circumstances of the case theLearned Tribunal has erred in law in deleting the addition ofRs.38,07,778/- made by the Assessing Officer under Section 14Aof the Income Tax Act, 1961 read with Rule 8D of the Income TaxRules, 1962 by disregarding that there were borrowed capitals ofRs.78.05 crores and investments out of such borrowed funds werealso made in making investments that yielded exempt income?Learned Tribunal has erred in law in deleting the addition ofRs.38,07,778/- made by the Assessing Officer under Section 14Aof the Income Tax Act, 1961 read with Rule 8D of the Income TaxRules, 1962 by disregarding that there were borrowed capitals ofRs.78.05 crores and investments out of such borrowed funds werealso made in making investments that yielded exempt income? We have heard Mr. P. K. Bhowmik, learned standing Counsel assistedby Mr. Madhu Jana, learned junior standing counsel appearing for theappellant/revenue and Mr. J.P. Khaitan, learned Senior Counsel assisted byMrs. Nilanjana Banerjee Pal, learned junior standing Counsel appearing forthe respondent/assessee. So far as the first substantial question of law is concerned, theTribunal followed the assessee’s own case for the assessment years, namely,2000-01 and 2001-02 and allowed the deduction as claimed under Section80IB of the Act. As against the said order of the Tribunal, the revenue preferred appeal before this Court and the appeal preferred by the revenue inITA No.117 of 2009 was dismissed by a judgement dated 20[th] November,2009 on the ground of unexplained and inordinate delay. With regard to the assessment year 2002-03, the Tribunal grantedrelief to the assessee and the revenue carried the matter on appeal to thisCourt in ITA No.230 of 2009 which was dismissed by judgement dated 2[nd]September, 2019 on the ground that no question of law arises forconsideration. Thus, the decision rendered by the Tribunal does not call forany interference. preferred appeal before this Court and the appeal preferred by the revenue inITA No.117 of 2009 was dismissed by a judgement dated 20[th] November,2009 on the ground of unexplained and inordinate delay. With regard to the assessment year 2002-03, the Tribunal grantedrelief to the assessee and the revenue carried the matter on appeal to thisCourt in ITA No.230 of 2009 which was dismissed by judgement dated 2[nd]September, 2019 on the ground that no question of law arises forconsideration. Thus, the decision rendered by the Tribunal does not call forany interference. The second substantial question of law concerns the claim fordeduction under Section 80IB on the sale of scrap. This issue is no longer resintegra and there are several decisions which are in favour of the assesseeand the Tribunal had followed the decision of this Court in the case of ReckittBenckiser (India) Ltd. –vs- Additional Commissioner of Income Tax, Range –12, Kolkata, reported in [2015] 56 taxmann.com 415 (Calcutta) and grantedrelief to the assessee. We find that the revenue has not made out any groundto interfere with the said finding rendered by the Tribunal which is takennote of the correct legal position. With regard to the third substantial question of law, the Tribunalgranted relief taking note of the decision in favour of the assessee by placingreliance in the case of Commissioner of Income Tax, Central-I, Calcutta –vs-Ashish Jhunjhunwala, reported in 2015(12) TMI 905. The said decision laysdown the correct legal principle. Therefore, there is no error in the orderpassed by the Tribunal. In the result, the appeal fails and the same stands dismissed. Thesubstantial questions of law are answered against the revenue. The connected application also stands dismissed. (T. S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.) S.Das/pa