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

OD – 4 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE IA NO.GA/2/2017 (Old No. GA/1879/2017)InITAT/223/2017 PRINCIPAL COMMISSIONER OF INCOME TAX, KOLKATA – 4,VS.M/S. BERGER PAINTS INDIA LIMITED BEFORE :THE HON’BLE JUSTICE T.S. SIVAGNANAMA N DTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYA Date : February 2, 2022. [Via Video Conference] Appearance :Mr. P.K. Bhowmik, Adv.… for the appellantMr. J.P. Khaitan, Sr. Adv.Ms. Nilanjana Banerjee Pal, Adv...for the respondent The Court : This appeal filed by the revenue under Section 260Aof the Income Tax Act, 1961 (‘the Act’ for brevity) is directed againstthe order dated 23[rd] November, 2016 passed by the Income TaxAppellate Tribunal “A” Bench, Kolkata (Tribunal) in ITA No.2112/Kol/2013 for the assessment year 2006-07. The revenue has raised the following substantial questions oflaw for consideration : 1.Whether on the facts and in the circumstances of the casethe Learned Tribunal has erred in law in allowing thededuction claimed by the assessee under Section 80IB ofIncome Tax Act, 1961 for an aggregate amount ofRs.33,81,19,725/- instead of Rs.30,21,88,063/- allowedby the Assessing Officer?the Learned Tribunal has erred in law in allowing thededuction claimed by the assessee under Section 80IB ofIncome Tax Act, 1961 for an aggregate amount ofRs.33,81,19,725/- instead of Rs.30,21,88,063/- allowedby the Assessing Officer? 2.Whether on the facts and in the circumstances of the casethe Learned Tribunal has erred in law in rejecting themethodology of deduction under Section 80IB of IncomeTax Act, 1961 computed by the Assessing Officer?the Learned Tribunal has erred in law in rejecting themethodology of deduction under Section 80IB of IncomeTax Act, 1961 computed by the Assessing Officer? 3.Whether on the facts and in the circumstances of the caseconclusion arrived at by the Learned Tribunal in allowingthe deduction under Section 80IB of the Income Tax Act,1961 for an aggregate amount of Rs.33,81,19,725/-claimed by the Assessee instead of Rs.30,21,88,063/- asallowed by the Assessing Officer, is perverse?conclusion arrived at by the Learned Tribunal in allowingthe deduction under Section 80IB of the Income Tax Act,1961 for an aggregate amount of Rs.33,81,19,725/-claimed by the Assessee instead of Rs.30,21,88,063/- asallowed by the Assessing Officer, is perverse? We have heard Mr. P.K. Bhowmik, learned standing counsel forthe appellant/revenue and Mr. J.P. Khaitan, learned senior counselduly assisted by Ms. Nilanjana Banerjee Pal, learned counsel for therespondent/assessee. The above substantial questions of law were considered by us in the assessee’s own case for the assessment year 2008-09 in ITA No.256 of 2017 and by judgment dated 14[th] December, 2021, the appealfiled by the revenue was dismissed. The said judgment is as follows : “The revenue has raised the following substantialquestions of law for consideration: i)Whether on the facts and in the circumstances ofthe case the Learned Tribunal has erred in law in upholding theorder of CIT(Appeal) in allowing deduction under Section 80IB ofIncome Tax Act, 1961 in respect of “common expenses” ofRs.10,21,06,200/- in respect of its Units at Pandicharry, Goaand Jammu by dis-regarding that it was not correctlyapportioned ? ii)Whether on the facts and in the circumstances ofthe case the Learned Tribunal has erred in law in upholding theorder of CIT (Appeal) in allowing deduction under Section 80IB ofIncome Tax Act, 1961 in respect of “interest income” ofRs.57,93,000/- on sale of scrap by treating it as income derivedfrom profits and gains of industrial undertaking? “The revenue has raised the following substantialquestions of law for consideration: i)Whether on the facts and in the circumstances ofthe case the Learned Tribunal has erred in law in upholding theorder of CIT(Appeal) in allowing deduction under Section 80IB ofIncome Tax Act, 1961 in respect of “common expenses” ofRs.10,21,06,200/- in respect of its Units at Pandicharry, Goaand Jammu by dis-regarding that it was not correctlyapportioned ? ii)Whether on the facts and in the circumstances ofthe case the Learned Tribunal has erred in law in upholding theorder of CIT (Appeal) in allowing deduction under Section 80IB ofIncome Tax Act, 1961 in respect of “interest income” ofRs.57,93,000/- on sale of scrap by treating it as income derivedfrom profits and gains of industrial undertaking? iii) Whether on the facts and in the circumstances ofthe case the Learned Tribunal has erred in law in deleting theaddition of Rs.38,07,778/- made by the Assessing Officer underSection 14A of the Income Tax Act, 1961 read with Rule 8D ofthe Income Tax Rules, 1962 by disregarding that there wereborrowed capitals of Rs.78.05 crores and investments out ofsuch borrowed funds were also made in making investmentsthat yielded exempt income? We have heard Mr. P. K. Bhowmik, learned standingCounsel assisted by Mr. Madhu Jana, learned junior standingcounsel appearing for the appellant/revenue and Mr. J.P.Khaitan, learned Senior Counsel assisted by Mrs. NilanjanaBanerjee Pal, learned junior standing Counsel appearing for therespondent/assessee. So far as the first substantial question of law isconcerned, the Tribunal followed the assessee’s own case for theassessment years, namely, 2000-01 and 2001-02 and allowed thededuction as claimed under Section 80IB of the Act. As againstthe said order of the Tribunal, the revenue preferred appeal before this Court and the appeal preferred by the revenue in ITA No.117of 2009 was dismissed by a judgement dated 20[th] November, 2009on the ground of unexplained and inordinate delay. With regard to the assessment year 2002-03, the Tribunalgranted relief to the assessee and the revenue carried the matteron appeal to this Court in ITA No.230 of 2009 which wasdismissed by judgement dated 2[nd] September, 2019 on the groundthat no question of law arises for consideration. Thus, thedecision rendered by the Tribunal does not call for anyinterference. The second substantial question of law concerns the claimfor deduction under Section 80IB on the sale of scrap. This issueis no longer res integra and there are several decisions which arein favour of the assessee and the Tribunal had followed thedecision of this Court in the case of Reckitt Benckiser (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 outany ground to interfere with the said finding rendered by theTribunal which is taken note of the correct legal position. With regard to the third substantial question of law, theTribunal granted relief taking note of the decision in favour of theassessee by placing reliance in the case of Commissioner ofIncome Tax, Central-I, Calcutta –vs- Ashish Jhunjhunwala,reported in 2015(12) TMI 905. The said decision lays down thecorrect legal principle. Therefore, there is no error in the orderpassed by the Tribunal. In the result, the appeal fails and the same standsdismissed. The substantial questions of law are answered againstthe revenue. The connected application also stands dismissed.” Thus, following the above decision of the assessee’s own case,this appeal filed by the revenue is dismissed and the substantialquestions of law are answered against the revenue. Consequently, the stay application stands dismissed. (T. S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.) RS/GH