The Commissioner Of Income Tax – 1, Mumbai v. M/S.grindwell Norton Limited

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.2628 OF 2009 The Commissioner of Income Tax – 1, Mumbai..Appellant. Versus M/s.Grindwell Norton Limited ..Respondent. Mr.Suresh Kumar for the appellant.Mr.Atul K. Jasani for the respondent. CORAM : Dr.D.Y. Chandrachud & J.P. Devadhar, JJ. DATE : 30[th] March 2010. P.C. : 1.In the appeal by the revenue under Section 260A of the Income Tax Act, 1961, the following four questions of law have been formulated. a)Whether on the facts and circumstances of the case and in law, the ITAT is right in holding that the technical know how fee of Rs.89,09,024/- paid by the Respondent is revenue in nature and further holding that the Respondent did not acquire any asset or advantage of an enduring nature ?the ITAT is right in holding that the technical know how fee of Rs.89,09,024/- paid by the Respondent is revenue in nature and further holding that the Respondent did not acquire any asset or advantage of an enduring nature ? b)Whether on the facts and circumstances of the case and in law, the ITAT is right in holding that interest income, other than interest on short term deposit with banks, is to be considered as part of business income while computing the deduction u/s.80HHC of the Act and netting had to be done with interest paid as there was nexus between the interest paid and received or both were related to the business of the Respondent ?the ITAT is right in holding that interest income, other than interest on short term deposit with banks, is to be considered as part of business income while computing the deduction u/s.80HHC of the Act and netting had to be done with interest paid as there was nexus between the interest paid and received or both were related to the business of the Respondent ? c)Whether on the facts and circumstances of the case and in law, the ITAT is right in relying on the decision of the Special Bench of Income Tax Appellate Tribunal, Delhi in the case of Lalsons Enterprises V/s DCIT reported in 89 ITD 25 to hold that interest income, other than interest on short term deposit with banks, is to be considered as part of business income while computing the deduction u/s.80HHC of the Act ?the ITAT is right in relying on the decision of the Special Bench of Income Tax Appellate Tribunal, Delhi in the case of Lalsons Enterprises V/s DCIT reported in 89 ITD 25 to hold that interest income, other than interest on short term deposit with banks, is to be considered as part of business income while computing the deduction u/s.80HHC of the Act ? d)Whether on the facts and in the circumstances of the case and in law, the ITAT is right in remanding the matter of netting of interest to the file of the Assessing Officer with a view to enable the Respondent to establish nexus between the interest on short term deposit and business of the Respondent ?law, the ITAT is right in remanding the matter of netting of interest to the file of the Assessing Officer with a view to enable the Respondent to establish nexus between the interest on short term deposit and business of the Respondent ? 2.In so far as question (a) is concerned, we are of the view that it would be appropriate and proper to remand the proceedings back to the Tribunal for fresh consideration. The Tribunal has dealt with the question as to whether the technical know how fee of Rs.89,09,254/- paid by the assessee was revenue expenditure in para 24 of its judgment. Ex-facie, the Tribunal has not considered the diverse clauses of the collaboration agreement dated 1[st] July 1998 between the assessee and Norton Company Incorporated. In order to obviate the expression of any opinion by this Court on the merits of the rival contentions, it would be appropriate for this Court to refrain from discussing the merits of the case while remanding the matter. All the rival contentions of the parties are kept open. 2.In so far as question (a) is concerned, we are of the view that it would be appropriate and proper to remand the proceedings back to the Tribunal for fresh consideration. The Tribunal has dealt with the question as to whether the technical know how fee of Rs.89,09,254/- paid by the assessee was revenue expenditure in para 24 of its judgment. Ex-facie, the Tribunal has not considered the diverse clauses of the collaboration agreement dated 1[st] July 1998 between the assessee and Norton Company Incorporated. In order to obviate the expression of any opinion by this Court on the merits of the rival contentions, it would be appropriate for this Court to refrain from discussing the merits of the case while remanding the matter. All the rival contentions of the parties are kept open. 3.In so far as question Nos.(b), (c) and (d) are concerned, both the learned counsel appearing on behalf of the Revenue and the learned Counsel appearing for the assessee are agreed in stating before the Court that in view of the judgment of this Court in Commissioner of Income Tax V/s. Asian Star Company Limited in Income Tax Appeal No.200 of 2009 delivered on 18/19[th] March 2010, it would be appropriate for this Court to remand the proceedings back to the Tribunal for reconsideration. In order to facilitate an order on remand, the impugned order of the Tribunal is set aside to that extent. 4.Both the appeals are restored to the file of the Tribunal, only insofar as the aforesaid issues are concerned. The appeal is disposed of in the aforesaid terms. There shall be no order as to costs. (J.P. Devadhar, J.)(Dr.D.Y. Chandrachud, J.)