The Commissioner Of Income Tax-5 v. M/S. Jayant Oil Products Pvt. Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. INCOME TAX APPEAL (LODG.) NO.3007 OF 2009 The Commissioner of Income Tax-5..Appellant.Vs.M/s. Jayant Oil Products Pvt. Ltd...Respondent. .... Ms. Suchitra Kamble for the Appellant.Mr. Jitendra Jain with Ms. Nidhi Singh i/b Joy Legal Consulta for the Respondent. ..... CORAM : DR.D.Y.CHANDRACHUD & J.P.DEVADHAR, JJ. P.C. : 5[th] February, 2010. 1.The office objections are waived. The registry is directed to register the Appeal. 2.The following substantial question of law has been formulated by the revenue in the Appeal under Section 260-A of the Income Tax Act, 1961 : “Whether on the facts and circumstances of the case and in law,the Hon ble ITAT is justified in directing the Assessing Officer to’recompute the deduction allowable under Section 80HHC without deducting 90% of hire income amounting to Rs.74,92,860/-, ignoring that 90% of hire and charter income was reduced from eligible profit for deduction under Section 80HHC so it was covered by any other receipt of similar nature as mentioned in the provision of Section 80HHC (4C) Explanation (baa)?” 3.In the present case, it needs to be noted at the outset that the return of income was filed declaring a book profit of Rs.8,33,164/- on 30[th ]November, 2000. The assessee is engaged in the manufacture of chemical based derivatives and in addition owns a fleet of trucks/ tankers which are given on hire. The assessee had an income of Rs.74,92,860/- during the assessment year 2000-01 from the hiring activities which was reflected in the Profit and Loss Account. The assessee had also incurred expenses of Rs.79,67,674/- in relation to the earning of such income which were debited to the Profit and Loss Account. The assessing officer reduced 90% of the gross income while computing the deduction under Section 80 HHC. The Tribunal has held that the hire charges are in the nature of operational income and that against the operational income the assessee had claimed expenses which were more than the receipts shown by the assessee. Therefore, while computing both the profit as well as deduction, the income and the expenses had to be taken into consideration and if both were netted off, it was seen that the income of the assessee was lesser than the expenses. In these circumstances, the reduction of 90% effected by the assessing officer for the purpose of computing the deduction under Section 80- HHC was held not to be justified. In our view, the question which is raised by the revenue is rendered academic in view of the circumstance that admittedly as noted earlier the return is filed declaring a book profit for the relevant assessment year. In these circumstances, the Appeal as filed does not give rise to any substantial question of law and shall accordingly stand dismissed. (Dr. D.Y.Chandrachud, J.) (J.P. Devadhar, J.)