Tax Appeal v. M. Salgaoncar & Brotherprivate Limited, Salgaocarhouse, Off Francisco Luisgomes Road, Vasco-Da-Gama

IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO. 14 OF 2011 V. M. Salgaoncar & BrotherPrivate Limited, SalgaocarHouse, Off Francisco LuisGomes Road, Vasco-Da-Gama, Goa, 403 802. ... Appellant V e r s u s Commissioner of Income Taxhaving office at AayakarBhavan, Patto Plaza, Panaji, Goa 403 001. ... Respondent Mr. A. F. Diniz and Mr. Ryan Menezes, Advocates for theAppellant. Ms. Amira Razaq, Standing Counsel for the Respondent. Coram :-M. S. SONAK &C. V. BHADANG, JJ. Date : 22nd nd November, 2019. JUDGMENT(Per M. S. Sonak, J.) 1. Heard Mr. A. F. Diniz, learned Counsel for the appellant and Ms. Amira Razaq, learned Standing Counsel for theDepartment. 2.This appeal was admitted on 05.09.2011 on the following substantial questions of law : (i)Whether on the facts and in law, the Tribunalwas right in upholding the action of the Assessingofficer of deducting 90% of the income from truckhire charges, barge hire charges, ore processingreceipts, trans-shipper loader charges, machineryhire charges and launch hire charges whilecomputing the "profits of the business" inaccordance with Clause (baa) of the Explanationbelow Section 80HHC? ii) Whether on the facts and in law, the Tribunalwas right in not following its earlier Order datedFebruary 26, 2010 in the Appellant's own case forthe earlier Assessment year i.e. 1997-1998, wherethe Tribunal had upheld the Appellant's claim thatno part of the income from truck hire charges, bargehire charges, ore processing receipts, trans-shipperloader charges and machinery hire charges was tobereduced while computing the profits of thebusiness for the purpose of deduction under Section80HHC? iii) Whether the Tribunal was right in law inholding that Clause (baa) of the Explanation below Section 80HCC, requires 90 % of the gross receiptsinstead of net receipts when the only controversybefore it was the manner of computation of netreceipts? iv) Whether on the facts and in law, the Tribunalwas right in not permitting adding of losses fromexport of trading goods in respect of disclaimedturnover to the profit eligible for deduction underSection 80HHC of the Act? v) Whether the Tribunal was right in confirmingthedisallowanceonofexpenditurebrokerage/commission incurred while computingthe income chargeable under the head "Incomeform House Property"? 3.Mr. Diniz, learned Counsel for the appellant, at the very outset states that the substantial question at (ii) above does not really arise in this appeal and, consequently, the same is notpressed. He also makes a statement that the substantial questionof law at (v) is also not being pressed. Accordingly, what survivesin this appeal is the consideration of substantial question at (i),(iii) and (iv). 4. Insofar as the substantial questions of law at (i) and (iii) areconcerned, the same are covered by our separate judgments andorders dated 22.11.2019 passed in TXA No.21 of 2011 and TXANo.28 of 2011. For the reasoning recorded therein, we hold thatthe Tribunal was right in upholding the action of the AssessingOfficer of deducting 90% of the income from truck hire charges,barge hire charges, ore processing receipts, trans-shipper loadercharges, machinery hire charges and launch hire charges whilecomputing the profits of the business in accordance with Clause(baa) of the Explanation below Section 80HHC of the IncomeTax Act (IT, Act). 5.However, such deduction ought to have been made on thebasis of net receipts and not gross receipts as held by the Hon'bleSupreme Court in the case of ACG Associated Capsules (P) Ltd.vs. Commissioner of Income Tax, 2012 18 Taxman.com137(SC). The impugned orders are modified accordingly. 6.Insofar as the substantial question of law at (iv) isconcerned, the same stands entirely covered in favour of theassessee and against the revenue in terms of our decision dated27.03.2012 in the case of The Commissioner of Income Tax vs. 5.However, such deduction ought to have been made on thebasis of net receipts and not gross receipts as held by the Hon'bleSupreme Court in the case of ACG Associated Capsules (P) Ltd.vs. Commissioner of Income Tax, 2012 18 Taxman.com137(SC). The impugned orders are modified accordingly. 6.Insofar as the substantial question of law at (iv) isconcerned, the same stands entirely covered in favour of theassessee and against the revenue in terms of our decision dated27.03.2012 in the case of The Commissioner of Income Tax vs. V. M. Salgaonkar & Brothers Ltd. & anr. in Income Tax AppealNos.5, 6 and 7 of 2002. Incidentally, all these appeals were in thecase of the present assessee and the ITAT had in fact held infavour of the present assessee. The appeals instituted by therevenue were accordingly dismissed. The substantial question oflaw at (iv) is consequently answered in favour of the assessee-appellant and against the revenue-respondent. The impugnedorders are modified accordingly. 7.The present appeal is disposed off in the aforesaid terms.There shall be no order as to costs. C. V. BHADANG, J. M. S. SONAK, J.