The Commissioner Of Income Tax-2,Mumbai v. Raymond Ltd

srk IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTIONINCOME TAX APPEAL NO.3085 OF 2009 The Commissioner of Income Tax-2,Mumbai ...Appellant Versus Raymond Ltd. ...Respondent Mr.Suresh Kumar for appellant. Mr.Percy J. Pardiwala, Senior Advocate with Mr.Mohan Salian, Ms.Vaijayanta Shete and Mr.Jainuddin Khan i/b. Gagrats for respondents. CORAM: DR.D.Y. CHANDRACHUD & M.S.SANKLECHA, JJ. March 21, 2012. P.C. 1.This appeal by the Revenue arises from a decision of the Income Tax Appellate Tribunal dated 25 February 2009; the Assessment Year to which the appeal relates being AY 1998-99. The following questions of law are raised on behalf of the Revenue: (a)Whether on the facts and in the circumstances of the case and in law, the ITAT was justified in setting aside the order of the CIT(A) by holding that preoperative expenses incurred on setting of manufacturing activity for another type of product was not capital in nature but was of revenue in nature; (b)Whether on the facts and in the circumstances of the case and in law, the ITAT was justified in setting aside the order of CIT(A) by holding that the trial run expenditure incurred which were preoperative expenses were revenue in nature; (c)Whether on the facts and in the circumstances of the case and in law, the ITAT was justified in holding that the interest for preoperative period had to be treated as business expenditure since the expenses incurred on CRGO and CRNGO plants was for a new business; (d)Whether on the facts and in the circumstances of the case and in law, the ITAT justified in holding that the expenses on foreign travel on the spouse and children of the employees related to business expenses; (e)Whether on the facts and in the circumstances of the case and in law, the ITAT was justified in setting aside the order of CIT(A) by holding that there is no provision in the explanation for making any addition on account of prior period expenses which are on account of ascertained liabilities; (f)Whether on the facts and in the circumstances of the case and in law, the ITAT was justified in setting aside the order of CIT(A) by holding that the reserve created for redemption of debentures will not be treated as part of the book profit under Section 115JA; (g)Whether on the facts and in the circumstances of the case and in law, the ITAT was justified in confirming the orders of CIT(A) that MODVAT credit was not to be included for the purpose of closing stock valuation; (h)Whether on the facts and in the circumstances of the case and in law, the ITAT was justified in confirming the order of CIT(A) that technical know how fees had to be allowed in installments as provided in Section 35AB; (i)Whether on the facts and in the circumstances of the case and in law, the ITAT was justified in confirming the order of CIT(A) that expenses on account of VRS liability was allowable as revenue expenditure? 2.Counsel appearing on behalf of the Revenue and the counsel appearing on behalf of the assessee are agreed in stating before the Court that these questions of law shall stand governed in favour of the assessee and against the Revenue in the following terms: 1. Questions (a) and (b) are covered by the decision rendered on 20 March 2012 in Income Tax Appeal No.189 of 2011 pertaining to AY 1990-91;March 2012 in Income Tax Appeal No.189 of 2011 pertaining to AY 1990-91; 2. Question (c) would stand covered against the Revenue by the decision of the Supreme Court in Deputy Commissioner of Income Tax Vs. Core Health Care Ltd.[1]decision of the Supreme Court in Deputy Commissioner of Income Tax Vs. Core Health Care Ltd.[1] 3. Question (d) would stand covered against the Revenue by the judgment of this Court in CIT v. Alfa Laval (I) Ltd.[2]judgment of this Court in CIT v. Alfa Laval (I) Ltd.[2] that these questions of law shall stand governed in favour of the assessee and against the Revenue in the following terms: 1. Questions (a) and (b) are covered by the decision rendered on 20 March 2012 in Income Tax Appeal No.189 of 2011 pertaining to AY 1990-91;March 2012 in Income Tax Appeal No.189 of 2011 pertaining to AY 1990-91; 2. Question (c) would stand covered against the Revenue by the decision of the Supreme Court in Deputy Commissioner of Income Tax Vs. Core Health Care Ltd.[1]decision of the Supreme Court in Deputy Commissioner of Income Tax Vs. Core Health Care Ltd.[1] 3. Question (d) would stand covered against the Revenue by the judgment of this Court in CIT v. Alfa Laval (I) Ltd.[2]judgment of this Court in CIT v. Alfa Laval (I) Ltd.[2] 4. Question (e) would stand covered in favour of the assessee by the judgment rendered on 20 March 2012 in Income Tax Appeal No.1556 of 2011 and by the judgment of the Supreme Court in Apollo Tyres Ltd. Vs. Commissioner of Income-tax[3].judgment rendered on 20 March 2012 in Income Tax Appeal No.1556 of 2011 and by the judgment of the Supreme Court in Apollo Tyres Ltd. Vs. Commissioner of Income-tax[3]. 5. Question (f) would stand covered against the Revenue by the decision rendered by this Court in Income Tax Appeal No.1324 of 2010 on 20 March 2012 for AY 1997-98 pertaining to the assessee.decision rendered by this Court in Income Tax Appeal No.1324 of 2010 on 20 March 2012 for AY 1997-98 pertaining to the assessee. 1. [2008] 298 ITR 194 2. [2006] 282 ITR 445 (Bom) 3. [2002] 255 ITR 273 6. Question (g) would stand covered in favour of the assessee by the judgment of the Supreme Court in CIT Vs. Indo Nippon Chemicals Co.Ltd.[4]judgment of the Supreme Court in CIT Vs. Indo Nippon Chemicals Co.Ltd.[4] 7. Question (h) would stand covered in favour of the assessee by the judgment rendered today in Income Tax Appeal No.1357 of 2009 pertaining to the assessee for AY 1994-95.judgment rendered today in Income Tax Appeal No.1357 of 2009 pertaining to the assessee for AY 1994-95. 8. Question (i) would stand covered in favour of the assessee by the judgment of the Supreme Court in The Employers in relation to judgment of the Supreme Court in The Employers in relation to the management of the Indian Cable Co. Ltd. Vs. Their Workmen[5] (Para 20 at page 2199) and by a judgment of this Court in CIT Vs. Bhor Industries[6].Workmen[5] (Para 20 at page 2199) and by a judgment of this Court in CIT Vs. Bhor Industries[6]. 3.Since there is no dispute on the aforesaid position between the counsel appearing on behalf of the Revenue and the counsel appearing on behalf of the assessee and since all the questions of law are covered as noted above, the appeal would not give rise to any substantial question of law and shall accordingly stand dismissed. There shall be no order as to costs. (DR.D.Y. CHANDRACHUD,J.) 4. [2003] 261 ITR 275 5. AIR 1972 SC 2195 6. [2003] 264 ITR 180 (M.S.SANKLECHA, J.)