The Commissioner Of Income Tax -6, Mumbai v. Aarti Drugs Limited

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.3545 OF 2010 The Commissioner of Income Tax -6, Mumbai Versus Aarti Drugs Limited ..Appellant. ..Respondent. Mr.Vimal Gupta for the appellant. Mr.Ajay R. Singh & Mr.Paras S. Savla for the respondent. CORAM : J.P. Devadhar & K.K. Tated, JJ. P.C. : DATE : 18[th] August, 2011. 1.The appeal is admitted on the following substantial questions of law. (i)Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the entire amount received on the sale of DEPB entitlement does not represent profit chargeable under Section 28(iiid) of the Income Tax Act, 1961 ?Tribunal was justified in holding that the entire amount received on the sale of DEPB entitlement does not represent profit chargeable under Section 28(iiid) of the Income Tax Act, 1961 ? (ii)Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the profit referred to in Section 28(iiid) requires any artificial cost to be interpolated ?Tribunal was justified in holding that the profit referred to in Section 28(iiid) requires any artificial cost to be interpolated ? (iii)Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that only the export incentive actually received by the assessee is to be considered for the purpose of computation of income even though the AO rightly included these export incentive on accrual basis as the assessee is following mercantile system of accounting and as per Tribunal was justified in law in holding that only the export incentive actually received by the assessee is to be considered for the purpose of computation of income even though the AO rightly included these export incentive on accrual basis as the assessee is following mercantile system of accounting and as per provisions of Section 145 of the Income Tax Act, income is to be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee ? (iv)Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee is entitled to deduction under Section 80-IB in respect of interest, commission and other income if the same are relatable to the business being carried on by the industrial undertaking even though the said decision is contrary to the ratio laid down by the Supreme Court in the case of Pandian Chemicals Limited V/s CIT (262 ITR 278), as the above mention three income’s are not derived from the business of industrial undertaking ?Tribunal was justified in law in holding that the assessee is entitled to deduction under Section 80-IB in respect of interest, commission and other income if the same are relatable to the business being carried on by the industrial undertaking even though the said decision is contrary to the ratio laid down by the Supreme Court in the case of Pandian Chemicals Limited V/s CIT (262 ITR 278), as the above mention three income’s are not derived from the business of industrial undertaking ? 2.Heard. By consent of both the parties, taken up for final hearing. 3.Counsel for the parties state that the first two questions have already been answered by this Court in favour of the Revenue in the case of Commissioner of Income Tax V/s. Kalpataru Colours and Chemicals reported in (2010) 328 ITR 451 (Bom). Accordingly, first two questions are answered in favour of the Revenue and against the assessee. 2.Heard. By consent of both the parties, taken up for final hearing. 3.Counsel for the parties state that the first two questions have already been answered by this Court in favour of the Revenue in the case of Commissioner of Income Tax V/s. Kalpataru Colours and Chemicals reported in (2010) 328 ITR 451 (Bom). Accordingly, first two questions are answered in favour of the Revenue and against the assessee. 4.As regards third question is concerned, the dispute is whether the Income Tax Appellate Tribunal was justified in deleting the additions made by the assessing officer on the ground that they are liable to be taxed on accrual basis. The Income Tax Appellate Tribunal has recorded a finding of fact that in the present case the assessee has been consistently following cash system of accounting since the assessment year 1993-94 which has been accepted and in these circumstances for the sake of uniformity and consistency, the export incentives have to be taxed on cash basis. No fault can be found with the order of the Income Tax Appellate Tribunal. Accordingly, the third question cannot be entertained. 5.As regards fourth question is concerned, the Income Tax Appellate Tribunal has restored the issue to the file of the Assessing Officer for fresh consideration. Since the issue is restored to the file of the Assessing Officer for fresh consideration, we see no reason to entertain the fourth question. 6.The appeal is accordingly disposed off with no order as to costs. (K.K. Tated, J.) (J.P. Devadhar, J.)