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Income Tax Appellate Tribunal, MUMBAI BENCHES “A”, MUMBAI
Before: Shri Joginder Singh & Shri Rajendra
आदेश / O R D E R Per Joginder Singh (Judicial Member) The assessee is aggrieved by the impugned order dated 16/01/2015 of the First Appellate Authority, Mumbai.
The ground No. 1 & 2, raised by the assessee, pertains to treatment of income from manufacturing services as income from other sources amounting to Rs.3,86,88,565/- and lease rental from other sources, amounting to Rs. 3 cores. During hearing, the ld. counsel for the assessee, Shri Anuk Kishnadwala, contended that for earlier year, the Tribunal considered the factual matrix and remanded the matter to the file of the Assessing Officer for fresh examination of facts and to decide accordingly. The Ld. counsel filed paper book running into 16 pages containing the orders of the Tribunal for Assessment Year 2006-07 to 2008-09. This factual matrix was not controverted by Shri R.P. Meena, Ld. CIT-DR.
2.1. We have considered the rival submissions and perused the material available on record. We find that the Tribunal for Assessment Year 2008-09 (ITA No.2572/Mum/2012) order dated 19/11/2014 allowed the appeal of the assessee and held as under:-
“This appeal filed by the assessee opnm 17.4.2012 is against the order of the CIT (A)-22, Mumbai dated 30.11.2011 for the assessment year 2008-2009.
Anushakti Chemicals & Drugs Ltd.
2. In this appeal, assessee raised the following grounds which read as under:
The Appellant submits the following grounds , which are without prejudice to one another:
1. Re: Treatment of income from manufacturing services as income from other sources amounting to Rs 2,70,75,330/-: 1.1 On the facts and in the circumstances of the case and in law, the Commissioner of Income T ax (Appeals) [hereinafter referred to as 'the CIT (A)'J erred in upholding the stand of the Assessing Officer that the income received for manufacturing services rendered is assessable under the head 'Income from Other Sources' on the ground that there was no involvement of the Appellant in the manufacturing activity.
2. Re: Treatment of lease rental as income from other sources - Rs 3,00,00,000/-: 2.1 On the facts and in the circumstances of the case and in law, the CIT (A) erred in upholding the stand of the Assessing Officer that the income from lease rental of the plant and machinery together with building is assessable under the head 'Income from Other Sources' without appreciating that the Appellant continued to develop and deploy its intellectual property rights, engage a huge work force of scientists and engineers for rendering of manufacturing services to the Lessee as a composite arrangement. 2.2.On the facts and in the circumstances of the case and in law, the CIT (A) grossly erred in upholding the stand of the Assessing Officer that since the Appellant did not have the intention of carrying on business, the assets of the Appellant ceased to be commercial assets.
3. Re: Treatment of other income amounting to Rs. 3,86,542/- as income from other sources: 3.1.On the facts and in the circumstances of the case and in law, the CIT (A) erred in holding the contention of the AO by treating other income of Rs. 3,86,542/- as income from other sources.
Anushakti Chemicals & Drugs Ltd.
4. Re: Disallowance of expenditure pertaining to the business activity. 4.1.On the facts and in the circumstances of the case and in law, CIT (A) grossly erred in upholding the disallowance by the AO of the entire expenditure claimed by the appellant against its business income on the ground that the appellant was not actively engaged in the manufacturing and running of business activity during the year. 4.2 Without prejudice to the above, the CIT (A) erred in denying the deduction u/ s 57 in respect of the actual expenditure incurred for earning the above income.
5. Deduction u/s 35 (1) (i) in respect of expenditure incurred for R&D activity: 5.1 On the facts and in the circumstances of the case and in law, the CIT (A) grossly erred in upholding the disallowance u/s 35(1)(i) claimed by the Appellant. 5.2 Without prejudice to the above, the CIT (A) grossly erred in not allowing deduction u/ s. 37 (1) or u/s. 57 with regard to the R&D expenditure incurred. 6. Re: Disallowance of deduction u/s. 35(1){iv) of Rs. 2,08,27,122/.: 6.1 On the facts and in the circumstances of the case and in law, the CIT (A) erred in upholding the disallowance of deduction u/s 35(1) (iv) claimed by the Appellant on the capital expenditure incurred on building for its in-house research centre on the ground that no business activity was carried on. 7. Book profit u/s 115JB wrongly considered: 7.1.On the facts and in the circumstances of the case and in law, the CIT (A) erred in upholding incorrect working of book profit u/s 115JB. 3. At the outset, Ld Counsel for the assessee mentioned that there is a delay of 65 days in filing the appeal before the Tribunal. In this regard he brought our attention to the affidavit dated 13.4.2012 filed by the Anushakti Chemicals & Drugs Ltd.
Managing Director of the assessee and read out the relevant contents of the same which read as under:
1….. 2…… The CIT (A) passed the order dated 30.11.2011 which was received on 14.12.2012 by Mr. Sanjay Diwedi and the same was passed on to Mr. Prashant Shelar, Accounts Officer of the Appellant Company. Mr. Prashant Shelar left the company on 3.2.2012 and failed to handover the said order to the tax advisors / Senior Executives for filing an appeal to the Income Tax Appellate Tribunal. The appellant came to know about the CIT (A) order when the Tax Advisors and Authorized Representative of the appellant, CA Deepesh Chhedda enquired with the office of CIT (A) regarding the order and was informed that the order was already passed and dispatched to the appellant some time back. On receiving the said information from Tax Advisors, the impugned order was found. The CIT (A) order was received by the appellant on 14.12.2011 and due date of filing an appeal to ITAT was on 12.2.2012 hence there is a delay of 64 days in fling the appeal.
4. Considering the above, we are of the opinion that there is a sufficient and reasonable cause for not filing the appeal before the ITAT within the stipulated time. Therefore, we condone the delay of 65 days in filing the appeal before the ITAT and proceed to adjudicate the appeal on merits.
5. At the very outset, Ld Counsel for the assessee brought our attention to the grounds and mentioned that all the grounds revolve around the issue of charging of certain receipts under the head „income from other sources‟ and allowability of the claim of expenditure against the said receipts. Assessee received such receipts out of manufacturing services as well as rental receipts and offered the same under the head „income from business or profession‟ and claimed certain expenditure against the same. AO held that the said receipts have to be taxed under the head „income from other sources‟. Matter travelled to the CIT (A).
Anushakti Chemicals & Drugs Ltd.
During the proceedings before the CIT (A), after considering the submissions of the assessee, CIT (A) partly allowed the appeal of the assessee. Aggrieved with the decision of the CIT (A), assessee is in appeal before the Tribunal.
During the proceedings before us, Ld Counsel for the assessee filed a copy of the orders of the Tribunal in assessee‟s own case vide (AY 2006-07) dated 10.7.2013 and ITA No.9240/M/2010 (AY 2007-2010) dated 15.7.2014, wherein the identical issues were adjudicated by the Tribunal and the issues were remanded to the file of the AO for fresh adjudication in both the years.
On the other hand, Ld DR relied on the order of the AO / CIT (A).
We have heard both the parties and perused the orders of the Revenue Authorities as well as the cited orders of the Tribunal (supra). On perusal of the said orders of the Tribunal, we find the ITAT adjudicated the identical issues and remanded the grounds to the file of the AO for a fresh adjudication. Respectfully following the orders of the Tribunal (supra) as well as following the principle of consistency, we remand the grounds raised in the present appeal also with identical directions given by the Tribunal in the AYs 2006- 2007 and 2007-2008 to the file of the AO for adjudicating them afresh. Accordingly ground nos.1 to 7 raised by the assessee are allowed for statistical purposes.
10.. In the result, appeal of the assessee is allowed for statistical purposes.”
We find that in the aforesaid order, the Tribunal followed the earlier years of the Tribunal (ITA No.9039/Mum/2010) (Assessment Year 2006-07), (Assessment Year 2007-08) and on Anushakti Chemicals & Drugs Ltd. the principle of consistency, with identical direction, remanded the matter back to the file of the Ld. Assessing Officer for fresh adjudication. Adopting the same principle, on identical directions, we also remand this ground to the file of the Ld. Assessing Officer for fresh adjudication. The assessee be given opportunity of being heard. Thus, this ground of the assessee is allowed for statistical purposes.
The next ground pertains to disallowance of expenditure pertaining to business activities, this ground was argued to consequential in nature. The Ld. CIT-DR did not object to the argument of the assessee that this is consequential in nature. Since, we have remanded the above grounds to the file of the Ld. Assessing Officer, for fresh adjudication, therefore, this ground is also sent to his file being consequential in nature. The Ld. Assessing Officer is directed to examine the factual matrix and after giving opportunity to the assessee to decide afresh, consequently, allowed for statistical purposes.
The next ground pertains to set off of business loss of earlier years. This ground was also argued to be consequential in nature. The Ld. Assessing Officer is directed to examine the issue afresh. The assessee be given opportunity, thus, set-aside to the file of the Assessing Officer, being consequential in nature.
The last ground pertains to treatment of interest income as income from other sources. This ground of the Anushakti Chemicals & Drugs Ltd.
assessee is also sent to the file of the Assessing Officer to examine the factual matrix and decide in accordance with law. Thus, this ground of the assessee is allowed for statistical purposes.
Finally, the appeal of the assessee is allowed for statistical purposes.
This order was pronounced in the open in the presence of ld. representatives from both sides at the conclusion of the hearing on 19/04/2017.