Varun Industries Ltd v. Income Tax Officer,7(3) (1), Mumbai & Anr

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 6308 OF 2010 Varun Industries Ltd. ..... Appellant Vs. Income Tax Officer,7(3) (1), Mumbai & Anr. ..... Respondents Ms.Aarti Vissanji with Mr.S.J.Mehta for the Appellant. Mr.Vimal Gupta, i./b. Ms.Padma Divakar for the Respondents. CORAM : DR.D.Y.CHANDRACHUD &R.D. DHANUKA, JJ. P.C.: DATE : APRIL 25, 2012 This Appeal arises from a decision of the Income Tax Appellate Tribunal dated 30 April 2010. The Assessment Year to which the appeal relates is A.Y. 2002 – 03. The Appeal raises the following questions of law : (1)Whether on the facts and circumstances of the case the Tribunal is justified in not deciding the issue regarding reopening of the assessment ? (2)Whether on the facts and circumstances of the case the Tribunal is right in denying netting of the interest received by the Appellant on the fixed deposits placed with the banks as margin money to avail credit facilities against interest paid for the purposes of working out the deducing under sec. 80HHC of the Act? (3)Whether on the facts and circumstances of the case, the Tribunal was right in holding that netting of interest on staff loans and other loans in course of business and the exchange gains in EEFC account received by the Appellant cannot be allowed for the purposes of calculation of deduction under Sec. 80HHC of the Act ? 2.The Learned Counsel appearing on behalf of the assessee states that question (1) is not pressed in view of the fact that question (2) is covered by the Judgment of the Supreme Court in ACG Associated Capsules (P) Ltd. vs. Commissioner of Income Tax[1]. Similarly question (3) is not pressed by the Learned Counsel for the assessee having regard to the smallness of the amount involved. 3.The Appeal is admitted on question (2) and is taken up for final disposal by consent. Question (2) is covered in favour of the assessee and against the revenue by the Judgment of the Supreme Court noted above. The question of law would have to be answered in the negative and in favour of the assessee. The Assessing Officer shall compute the deduction in terms of the judgment of the Supreme Court. 3.The Appeal is accordingly disposed of. 4.There shall be no order as to costs. DR.D.Y.CHANDRACHUD, J. R.D. DHANUKA, J.