Txa-28-2011.Doc v. M. Salgaoncar & Brotherprivate Limited, Salgaocarhouse, Off Francisco Luisgomes Road, Vasco-Da-Gama

IN THE HIGH COURT OF BOMBAY AT GOATAX APPEAL NO. 28 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 November, 2019. JUDGMENT(Per M. S. Sonak, J.) 1. Heard Mr. A. F. Diniz, learned Counsel for the appellantand Ms. Amira Razaq, learned Standing Counsel for the Department. 2.This appeal was admitted on 09.01.2012 on the following substantial questions of law : i) Whether on the facts and in law, the Tribunal wasright in allowing deduction of 90% of the incomefrom truck hire charges, barge hire charges, oreprocessing receipts, trans-shipper loader charges,machinery hire charges and launch hire chargeswhile calculating the “profit of the business” inaccordance with Clause (baa) of the Explanationbelow Section 80 HHC for the purpose ofcomputing “Total Income” under the regularprovisions of the Act as well as for the purpose ofcomputing 'book profit' under Section 115JB of theAct ? ii) Whether on the facts and in law, the Tribunal wasright in not following its earlier Order datedFebruary 26, 2010 in the Appellant's own case forthe earlier Assessment Year i.e. 1997-98, where theTribunal had upheld the Appellant's claim that nopart of the income from truck hire charges, bargehire charges, ore processing receipts, transhipperloader charges and machinery hire charges was to be reduced while calculating the 'profit of the business'under Section 80HHC for the purpose ofcomputing 'Total Income' under the provisions ofthe Act ? iii) Whether on the facts and in law, the Tribunalwas right in holding that both for the purpose ofcomputing 'Total Income' under the provisions ofthe Act as well as for the purpose of computing'book profit' under Section 115JB of the Act, Clause(baa) of the Explanation below Sec. 80HHC,requires 90% of the gross receipts instead of netreceipts (i.e. after allowing related expenses) fromtruck hire, barge hire, ore processing receipts,transhipper loader and machinery hire activities bereduced from the profits of the business for thepurposes of calculation of deduction under Section80HHC of the Act ? iv) Whether the Tribunal was right in holding thatfor the purpose of computing 'Total Income' underthe provisions of the Act as well as for the purposeof computing 'book profit' under Section 115JB ofthe Act, Clause (baa) of the Explanation belowSection 80HHC, requires reduction of 90 % of the gross receipts instead of new receipts, which resultedinto enhancing the income of the Appellant ? v) Whether the Order of the Tribunal insofar as itholds that Clause (baa) of the Explanation belowSection 80HHC, requires reduction of 90% of thegross receipts instead of net receipts is beyondjurisdiction and hence deserves to be quashed? vi) Whether on the facts and and in law, theTribunal was right in not permitting adding of lossesfrom export of trading goods in respect ofdisclaimed turnover to the profit eligible fordeduction under Section 80HHC of the Act for thepurpose of computing 'Total Income' under theprovisions of the Act as well as for the purpose ofcomputing 'book profit' under Section 115JB of theAct ? 3.Mr. Diniz, learned Counsel for the appellant, at the veryoutset submits that the substantial question of law at (ii) does not really arise in this matter and, in any case, the same is not pressed. 4.The substantial questions at (i), (iii), (iv) and (v) arevirtually similar to the substantial question of law framed in Tax Appeal No.21 of 2011. We hold that the Tribunal in the presentcase as well was right in allowing deduction of 90% of the income from truck hire charges, barge hire charges, ore processingreceipts, transhipper loader charges, machinery hire charges and 3.Mr. Diniz, learned Counsel for the appellant, at the veryoutset submits that the substantial question of law at (ii) does not really arise in this matter and, in any case, the same is not pressed. 4.The substantial questions at (i), (iii), (iv) and (v) arevirtually similar to the substantial question of law framed in Tax Appeal No.21 of 2011. We hold that the Tribunal in the presentcase as well was right in allowing deduction of 90% of the income from truck hire charges, barge hire charges, ore processingreceipts, transhipper loader charges, machinery hire charges and launch hire charges while calculating the profit of the business inaccordance with Clause (baa) of the Explanation below Section80HHC for the purpose of computing total income under theregular provisions of the Act as well as for the purpose ofcomputing book profit under Section 115JB of the Act. 5.However, such deduction ought to have been made on thebasis of net receipts as was held by the Hon'ble Apex Court in thecase of ACG Associated Capsules (P) Ltd. vs. Commissioner ofIncome Tax, 2012 18 Taxman.com 137(SC). We answer thesubstantial questions of law at (i), (iii), (iv) and (v) accordingly.The impugned orders are modified accordingly. 6.Insofar as the substantial question of law at (vi) isconcerned, we find that the same is entirely covered in terms of our decision dated 27.03.2012 in the case of The Commissioner of Income Tax vs. V. M. Salgaonkar & Brothers Ltd. & anr. inIncome Tax Appeal Nos.5, 6 and 7 of 2002. Incidentally, all theseappeals were in the case of the present assessee and the ITAT had in fact held in favour of the present assessee. The appeals instituted by the revenue were accordingly dismissed. Thesubstantial question of law at (vi) is consequently answered in favour of the assessee-appellant and against the revenue-respondent. The impugned orders 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. arp/*