M/s Rajratan Gustav Wolf Ltd., v. The ACIT, Cir. 5(1),

ITA 768/IND/2006 | misc
Pronouncement Date: 26-02-2010 | Result: Partly Allowed

Appeal Details

RSA Number 76822714 RSA 2006
Assessee PAN AABCR4510Q
Bench Indore
Appeal Number ITA 768/IND/2006
Duration Of Justice 3 year(s) 2 month(s) 7 day(s)
Appellant M/s Rajratan Gustav Wolf Ltd.,
Respondent The ACIT, Cir. 5(1),
Appeal Type Income Tax Appeal
Pronouncement Date 26-02-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 26-02-2010
Date Of Final Hearing 25-02-2010
Next Hearing Date 25-02-2010
Assessment Year misc
Appeal Filed On 19-12-2006
Judgment Text
PAGE 1 OF 15 - I.T.A.NO. 768/IND/2006 RAJRATAN G USTAV WOLF LIMITED IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER PAN NO. : N.A. I.T.A.NO.768/IND/2006 A.Y. : 2003-04 M/S.RAJRATAN GUSTAV WOLF LIMITED ACIT 11/2 MEERAPATH DHENU MARKET VS CIRCLE 5(1) INDORE. INDORE. APPELLANT RESPONDENT PAN NO. : AABCR4510Q I.T.A.NO.350/IND/2008 A.Y. : 2004-05 M/S.RAJRATAN GLOBAL WIRE LIMITED ( FORMERLY KNOWN AS RAJRATAN GUSTAV WOLF LIMITED) ACIT 11/2 MEERAPATH DHENU MARKET VS CIRCLE 5(1) INDORE. INDORE. APPELLANT RESPONDENT PAN NO. : AABCR4530Q I.T.A.NO.351/IND/2008 A.Y. : 2005-06 PAGE 2 OF 15 - I.T.A.NO. 768/IND/2006 RAJRATAN G USTAV WOLF LIMITED M/S.RAJRATAN GLOBAL WIRE LIMITED ACIT 11/2 MEERAPATH DHENU MARKET VS CIRCLE 5(1) INDORE. INDORE. APPELLANT RESPONDENT APPELLANT BY : SHRI P. D. NAGAR C. A. RESPONDENT BY : SMT. APARNA KARAN SR. DR DATE OF HEARING : 25.02.2010 O R D E R PER V.K. GUPTA A.M. THESE APPEALS BELONG TO THE SAME ASSESSEE AND INVOL VE COMMON ISSUES HENCE THESE WERE HEARD TOGETHER AND THESE ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER FOR THE SAKE OF CON VENIENCE. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. FIRST WE SHALL TAKE UP ASSESSEES APPEAL IN I.T.A. NO. 768/IND/2006. 4. IN FIRST GROUND THE ASSESSEE IS AGGRIEVED BY THE D ECISION OF THE LD. CIT(A) IN CONFIRMING THE ACTION OF A.O. IN RESP ECT OF ADJUSTMENT OF PAGE 3 OF 15 - I.T.A.NO. 768/IND/2006 RAJRATAN G USTAV WOLF LIMITED THE VALUE OF CLOSING STOCK BY THE AMOUNT OF EXCISE DUTY U/S 145A OF THE ACT. 5. THE FACTS IN BRIEF ARE THAT THE ASSESSEE VALUED I TS CLOSING STOCK OF RAW MATERIAL AT NET OF EXCISE DUTY. THE A.O. HEL D THAT THE PROVISIONS OF SECTION 145A WERE MANDATORY HENCE SUCH CLOSING ST OCK SHOULD HAVE BEEN VALUED AFTER INCLUDING EXCISE DUTY. THE A.O. ACCORDINGLY MADE AN ADDITION OF RS. 45 89 259/-. IN THE APPEAL BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED THAT IT WAS RECORDING PURCHASES SALES AS PER NET METHOD CONSISTENTLY. HENCE NO ADJUSTMENT WAS REQUI RED IN THE VALUATION OF CLOSING STOCK. IT WAS ALSO SUBMITTED THAT IF ADJ USTMENTS WERE REQUIRED THEN THE VALUE OF OPENING STOCK PURCHASES AND SALE S SHOULD HAVE ALSO BEEN ADJUSTED AND IN THAT SITUATION THERE WOULD NO T BE ANY IMPACT ON THE PROFITS OF THE ASSESSEE FOR THE YEAR UNDER CONSIDER ATION. THE ASSESSEE ALSO RELIED ON VARIOUS JUDICIAL DECISION IN THIS REGARD. THE LD. CIT(A) HOWEVER HELD THAT IT WAS A ONE TIME ADDITION FOR T HE ASSESSMENT YEAR 1999-2000 AND IN SUBSEQUENT YEARS NO ADJUSTMENT WOU LD BE REQUIRED AS BOTH THE OPENING AND CLOSING STOCKS WOULD BE IN TUN E WITH THE PROVISIONS OF SECTION 145A OF THE ACT. IN THIS REGARD THE LD. CIT(A) PLACED RELIANCE ON THE DECISION OF THE TRIBUNAL IN THE CASE OF WAST E PAPER MILLS AS REPORTED IN 286 ITR 252 ( A.T.). ACCORDINGLY HE CO NFIRMED THE ACTION OF THE A.O. AGGRIEVED BY THIS THE ASSESSEE IS IN APPE AL BEFORE US. PAGE 4 OF 15 - I.T.A.NO. 768/IND/2006 RAJRATAN G USTAV WOLF LIMITED 6. THE LEARNED COUNSEL FOR THE ASSESSEE NARRATED THE F ACTS AND CONTENDED THAT METHOD OF ACCOUNTING NET OF EXCISE D UTY WAS DULY APPROVED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA AND IN CASE THE ADJUSTMENT WAS TO BE MADE ALL THE ITEMS COVERE D U/S 145A WERE TO BE ADJUSTED. AS REGARDS THE DECISION OF THE TRIBUNAL I N THE CASE OF WEST COAST PAPER MILS THE LEARNED COUNSEL SUBMITTED THA T THERE WERE SEVERAL OTHER TRIBUNAL DECISIONS IN FAVOUR OF THE ASSESSEE AND AFTER AFORESAID DECISION OF THE TRIBUNAL THE HON'BLE DELHI HIGH CO URT IN THE CASE OF MAHAVIR ALLUMINIUM LIMITED AS REPORTED IN 297 ITR 77 HAD HELD THAT IN CASE OF ADJUSTMENTS TO BE MADE AS PER THE PROVISION S OF SECTION 145A THE VALUE OF OPENING STOCK WAS ALSO TO BE ADJUSTED. HEN CE THE DECISION OF THE TRIBUNAL IN THE SAID CASE WAS NO LONGER A GOOD LAW. 7. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND PLACED STRONG RELIANCE ON THE ORDER OF LD. CIT(A) AND ALSO SUBMITTED THAT EARLIER YEARS WOULD ALSO BE REQUIRED TO BE REOPENED IF THE VALUE OF OPENING STOCK WAS DISTURBED. 8. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 9. IT IS NOTED THAT THE ASSESSEE IS RECORDING PURCHASE S SALES OPENING STOCK AND CLOSING STOCK ACCORDING TO THE NE T METHOD I.E. WITHOUT CONSIDERING THE EXCISE DUTY/MODVAT. HENCE AS PER P ROVISIONS OF PAGE 5 OF 15 - I.T.A.NO. 768/IND/2006 RAJRATAN G USTAV WOLF LIMITED SECTION 145A NECESSARY ADJUSTMENTS HAVE TO BE CARR IED OUT IN THE VALUE OF ALL SUCH ITEMS AND NOT IN THE VALUE AS CLOSING STOC K ONLY. THIS VIEW IS DULY SUPPORTED BY THE DECISION OF HON'BLE DELHI HIGH COU RT IN THE CASE OF MAHAVIR ALLUMINIUM LIMITED (SUPRA). WE FURTHER FIND THAT IN THE TAX AUDIT REPORT AS WELL AS DURING THE COURSE OF ASSESS MENT PROCEEDINGS AS STATED BY THE LEARNED COUNSEL NECESSARY DETAILS H AVE BEEN FURNISHED WHICH GO TO SHOW THAT IF ADJUSTMENTS U/S 145A ARE CARRIED OUT IN ALL THE FOUR ITEMS THEN THERE WOULD NOT BE ANY IMPACT ON T HE PROFITS OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. WE ARE F URTHER OF THE VIEW THAT THERE IS NO NECESSITY TO OPEN THE ASSESSMENT OF EAR LIER YEARS AS THE PROFITS OF THOSE YEARS HAVE BEEN ASSESSED AS PER DIFFERENT METHOD OF ACCOUNTING AND THIS BEING THE FIRST YEAR OF CHANGE NECESSARY ADJUSTMENTS HAVE TO BE CARRIED OUT ONLY IN THE OPENING STOCK TO GIVE EFFEC T TO SUCH PROVISIONS. ACCORDINGLY THIS GROUND OF THE ASSESSEE STANDS ALL OWED. 10. IN GROUND NO.2 THE ASSESSEE IS AGGRIEVED BY THE D ECISION OF LD. CIT(A) IN COMPUTING THE DISALLOWANCE OF RS. 1 38 85 0/- MADE BY THE ASSESSING OFFICER U/S 40A(2)(B) OF THE ACT TOWARDS EXCESS PAYMENT OF INTEREST TO SPECIFIED PERSONS. 11. THE FACTS IN BRIEF ARE THAT THE A.O. FOUND THAT T HE ASSESSEE WAS PAYING INTEREST ON BANK LOAN @ 13.25 % PER ANNUM W HEREAS ON THE LOAN TAKEN FROM THE DIRECTOR ON WHOM THE PROVISIONS OF S ECTION 40A(2)(B) PAGE 6 OF 15 - I.T.A.NO. 768/IND/2006 RAJRATAN G USTAV WOLF LIMITED WERE APPLICABLE THE INTEREST @ 15% HAD BEEN PAID. THE A.O. CONSIDERED IT UNREASONABLE/EXCESSIVE. HENCE HE DISALLOWED A S UM OF RS. 1 38 850/- BY HOLDING THAT THE INTEREST TO THE DIRECTOR SHOULD HAVE ALSO BEEN PAID @ 13.25 % PER ANNUM. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHEREIN DETAILED SUBMISSIONS WERE MADE SO AS TO JUSTIFY THE RATE OF INTEREST. IT WAS ALSO SUBMITTED THAT SUCH DEPOSITS WERE UNSECURED ASK COMPARED TO BANK LOAN FACILITY AND BA NK WAS DEBITING INTEREST ON QUARTERLY BASIS AS AGAINST FLAT 15% PER ANNUM BEING CHARGED FROM THE ASSESSEE BY THE DIRECTOR ON ANNUAL BASIS. THE LD. CIT(A) HOWEVER CONFIRMED THE ACTION OF THE A.O. STILL AGG RIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 12. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE EARLIER YEAR SIMILAR DISALLOWANCE WAS MADE AND THE TRIBUNAL ACCEPTED THE CONTENTIONS OF THE ASSESSEE BY DELETING SUCH DISALL OWANCE. IN THIS REGARD HE REFERRED TO PAGE 11 TO 16 OF THE PAPER BOOK CONT AINING COPIES OF ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 1997-98 WH ERE INTEREST PAID @ 20 % WAS PAID TO SPECIFIED PARTY WAS HELD AS REASONABL E. THE LEARNED COUNSEL FURTHER REFERRED TO THE ORDER OF THE LD. CI T(A) FOR ASSESSMENT YEAR 2002-03 WHEREIN DISALLOWANCES MADE BY THE ASS ESSING OFFICER HAD BEEN DELETED BY THE LD. CIT(A) AND THE DEPARTMENT HAD ACCEPTED SUCH PAGE 7 OF 15 - I.T.A.NO. 768/IND/2006 RAJRATAN G USTAV WOLF LIMITED DECISION BY NOT FILING FURTHER APPEAL. SIMILARLY I N 2004-05 AND 2005-06 INTEREST PAID TO SUCH PERSON WAS FOUND REASONABLE. 13. THE LEARNED COUNSEL FURTHER SUBMITTED THAT RATE OF 20 % IN 1997-98 THE ASSESSEE REDUCED THE RATE TO 12 % IN A SSESSMENT YEAR 2005- 06 IN ACCORDANCE WITH REDUCING PATTERN OF INTEREST RATE. HENCE THE ACTION OF THE ASSESSEE WAS BONA FIDE AND COMMERCIALLY JUST IFIED. 14. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND PLACED STRONG RELIANCE ON THE ORDER OF THE LD. CIT(A). 15. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 16. IT IS NOTED THAT THE ASSESSEE HAS PAID INTEREST O N BANK LOANS @ 13.25 % PER ANNUM WHICH IS BEING CHARGED ON QUARTE RLY BASIS. HENCE THE ASSESSEE IS IN FACT REQUIRED TO PAY INTEREST ON INTEREST DEBITED ON QUARTERLY BASIS ALSO AND THEREFORE ACTUAL EFFECTI VE RATE THE INTEREST WOULD NOT BE LESS THAN 14 %. FURTHER BOTH PRIMARY AS WEL L AS COLLATERAL SECURITIES ARE TO BE PROVIDED TO THE BANK AS AGAINS T NO SECURITY GIVEN TO SUCH PARTY. HENCE TAKING INTO CONSIDERATION THESE FACTS WE FIND NO JUSTIFICATION FOR MAKING SUCH DISALLOWANCES. ACCORD INGLY THE SAME IS DELETED. PAGE 8 OF 15 - I.T.A.NO. 768/IND/2006 RAJRATAN G USTAV WOLF LIMITED 17. BEFORE PARTING WE MAY ALSO ADD THAT THE DECISION O F THE TRIBUNAL IN ASSESSEES OWN CASES FOR EARLIER YEAR A LSO SUPPORT THE CLAIM OF THE ASSESSEE. THUS THIS GROUND OF THE ASSESSEE IS ALSO ALLOWED. 18. IN GROUND NO.3 THE ASSESSEE IS AGGRIEVED BY THE DE CISION OF THE LD. CIT(A) IN NOT CONSIDERING FOLLOWING RECEIPTS EL IGIBLE FOR DEDUCTION U/S 80HHC. (1) INTEREST RECEIVED RS. 4 70 674/- (2) INSURANCE CLAIM RS. 3 74 165/- (3) SALE OF EMPTY DRUMS RS. 43 310/- (4) REIMBURSEMENT OF I.S.O. FEE. RS. 75 000/- RS. 9 63 149/- 19. THE FACTS IN BRIEF ARE THAT THE A.O. WHILE COMPUT ING THE QUANTUM OF DEDUCTION U/S 80HHC EXCLUDED IMPUGNED IT EMS FROM THE PROFIT OF BUSINESS. THE LD. CIT(A) ON APPEAL BY TH E ASSESSEE HELD THAT INSURANCE MONEYS RECEIVED IN RESPECT OF GOODS THE COST OF WHICH HAD BEEN EARLIER ALLOWED HAD TO BE TREATED AS PROFITS A ND GAINS OF BUSINESS. SIMILARLY SALE OF BY PRODUCT WAS ALSO TO BE INCLUD ED IN THE BUSINESS PROFITS. HE HOWEVER CONFIRMED THE ACTION OF A.O. IN REGARD TO INTEREST PAGE 9 OF 15 - I.T.A.NO. 768/IND/2006 RAJRATAN G USTAV WOLF LIMITED RECEIVED BY THE ASSESSEE AND REIMBURSEMENT OF I. S. O. FEE. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BEFORE US. 20. THE LEARNED COUNSEL FOR THE ASSESSEE NARRATED THE FACTS AND CONTENDED THAT THE INTEREST RECEIVED COMPRISED OF I NTEREST RECEIVED FROM CUSTOMERS TO THE TUNE OF RS. 1 71 757/- FOR DELAYED PAYMENT AGAINST THE SALE BILLS AND INTEREST RECEIVED FROM BANK ON FDR P LEDGED AS MARGIN MONEY TO THE TUNE OF RS. 2 98 917/-. HE FURTHER CON TENDED THAT IN CASE INTEREST WAS NOT TO BE CONSIDERED ELIGIBLE FOR DEDU CTION U/S 80HHC THEN ONLY NET INTEREST SHOULD HAVE BEEN EXCLUDED AND NOT THE GROSS INTEREST. FOR THIS PROPOSITION HE RELIED ON THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF CIT VS. HONDA POWER EQUIP 289 ITR 475. AT THIS STAGE A QUERY WAS PUT ABOUT THE FACT OF EXISTENCE OF NEXUS IN RES PECT OF INTEREST RECEIVED ON FDR PLEDGED AS MARGIN MONEY AND HAS BORROWED FUN D UTILIZED FOR MAKING SUCH FDRS. THE LEARNED COUNSEL REQUIRED THAT THIS ASPECT HAD NOT BEEN EXAMINED. HENCE THE MATTER COULD BE RESTORED TO THE FILE OF A.O. FOR EXAMINATION THEREOF. AS REGARDS TO INTEREST ON DELA YED PAYMENT BY CUSTOMERS THE LEARNED COUNSEL FOR THE ASSESSEE WA S CONFRONTED WITH THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F K.RAVINDRANATHAN NAIR AS REPORTED IN 295 ITR 228 WHEREBY RECEIPTS H AVING NO NEXUS WITH EXPORT WERE HELD TO BE EXCLUDED FROM BUSINESS PROFI TS AND IF SUCH RECEIPTS HAD AN ELEMENT OF TURNOVER THEN TO BE INCLUDED IN THE TOTAL TURNOVER IN PAGE 10 OF 15 - I.T.A.NO. 768/IND/2006 RAJRATAN GUSTAV WOLF LIMITED COMPUTING DEDUCTION U/S 80HHC. THE LEARNED COUNSEL FAIRLY CONCEDED ON THIS ASPECT. ACCORDINGLY WE HOLD THAT INTEREST RECEIVED FROM DOMESTIC CUSTOMERS SHALL NOT FORM PART OF PROFITS OF BUSINES S AND IT BEING A PART AND PARCEL OF SALE CONSIDERATION THE SAME SHALL BE INC LUDED IN THE TOTAL TURNOVER OF THE ASSESSEE. AS REGARD TO INTEREST ON FDRS WE ARE OF THE VIEW THAT ONLY 90 % OF NET INTEREST SHOULD BE EXCLU DED UNDER CLAUSE (BAA) OF EXPLANATION TO SECTION 80HHC PROVIDED THE ASSESS EE IS ABLE TO ESTABLISH THE NEXUS BETWEEN THE INTEREST SO RECEIV ED AND INTEREST PAID AND FOR EXAMINATION OF NEXUS WE RESTORE THE ISSUE TO T HE FILE OF A.O. WHO SHALL DECIDE THIS ISSUE AFTER GIVING AN ADEQUATE OP PORTUNITY OF HEARING TO THE ASSESSEE. WE ALSO MAKE IT CLEAR THAT THE BURDEN TO PROVE SUCH NEXUS SHALL BE ON THE ASSESSEE AND FAILING WHICH THE ASSE SSEE SHALL NOT BE ELIGIBLE FOR ANY SET OFF OF INTEREST RECEIVED AND I NTEREST PAID IN COMPUTING THE PROFITS OF THE BUSINESS FOR COMPUTING QUANTUM O F DEDUCTION U/S 80HHC OF THE ACT. 21. THE LD. CIT(A) HAS ALREADY HELD THAT SALE OF EMPTY DRUMS HAD TO BE CONSIDERED AS PART OF PROFITS OF THE BUSINESS . HENCE THIS PART OF THIS GROUND OF THE ASSESSEE IS INFRUCTUOUS HENCE DISMI SSED. 22. AS REGARD TO REIMBURSEMENT OF I. S. O. FEE WE ARE OF THE VIEW THAT IF THE I. S. O. FEE HAD BEEN DEBITED AS EXPEND ITURE IN COMPUTING THE EXPORT PROFITS OF INDUSTRIAL UNDERTAKING THEN THE REIMBURSEMENT OF ANY PAGE 11 OF 15 - I.T.A.NO. 768/IND/2006 RAJRATAN GUSTAV WOLF LIMITED PART THEREOF SHOULD ALSO BE TREATED AS PROFITS OF B USINESS IN COMPUTING THE DEDUCTION U/S 80HHC. HAVING STATED SO WE FIND SOME MERIT IN THE CONTENTION OF THE LD. DEPARTMENTAL REPRESENTATIVE T HAT THE FACT THAT SUCH EXPENSES HAD BEEN DEDUCTED IN COMPUTING THE EXPORT PROFITS AT THE INSTANCE NEED BE EXAMINED AND IF THAT IS FOUND CORR ECT THEN ONLY SUCH REIMBURSEMENT COULD BE CONSIDERED AS PART OF PROFIT OF BUSINESS. ACCORDINGLY WE RESTORE THIS ASPECT TO THE FILE OF A.O. FOR VERIFICATION OF THIS FACT AND FOUND TO BE CORRECT THEN TO CONSIDER THE REIMBURSEMENT OF I. S. O. FEE AS PART OF PROFITS OF BUSINESS. 23. AS REGARD TO INSURANCE CLAIM RECEIVED ON PLANT AND MACHINERY REPAIRS AND VEHICLE REPAIRS THE ASSESSEE IS ENTITL ED FOR CONSIDERATION THEREOF AS PART OF BUSINESS PROFITS AS THE INSURANC E PREMIUM AS WELL AS EXPENDITURE ON SUCH REPAIRS HAVE BEEN DEBITED IN TH E PROFIT AND LOSS ACCOUNT IN COMPUTING THE EXPORT PROFITS. HENCE WE ACCEPT THIS PART OF THIS GROUND OF THE ASSESSEE. THUS GROUND NO.3 OF THE AS SESSEE IS PARTLY ALLOWED. 24. IN GROUND NO.4 THE ASSESSEE IS AGGRIEVED BY THE D ECISION OF THE LD. CIT(A) IN NOT CONSIDERING FOLLOWING RECEIPTS AS ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT. PAGE 12 OF 15 - I.T.A.NO. 768/IND/2006 RAJRATAN GUSTAV WOLF LIMITED A.Y. 2003-04 RS. (A) EXPORT INCENTIVES 54 50 875/- (B) SALE OF BY- PRODUCTS(LEAD ASH) 4 74 643/- (C) REFUND OF ISO FEES AT 75 000/- (D) INSURANCE CLAIM AT 3 74 165/- (E) INTEREST 4 70 675/- 68 45 358/- 25. THE IMPUGNED RECEIPTS WERE NOT FOUND TO BE ELIGIB LE FOR DEDUCTION U/S 80IB AS BOTH THE REVENUE AUTHORITIES WERE OF THE OPINION THAT THIS COULD NOT BE CONSIDERED AS DERIVED FROM I NDUSTRIAL UNDERTAKING. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BEFORE US. 26. AS REGARD INCENTIVE ( D.E.P.B) THE LEARNED COUNSEL FAIRLY CONCEDED THAT THIS ISSUE WAS COVERED AGAINST THE AS SESSEE BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS. CIT AS REPORTED IN 317 ITR 218. ACCORDINGLY WE DISMISS TH IS PART OF THIS GROUND OF THE ASSESSEE. PAGE 13 OF 15 - I.T.A.NO. 768/IND/2006 RAJRATAN GUSTAV WOLF LIMITED 27. AS REGARD SALE OF BY-PRODUCT AND INSURANCE CLAIM W E ACCEPT THE CLAIM OF THE ASSESSEE FOR CONSIDERATION OF THEM AS PROFITS DERIVED FROM THE INDUSTRIAL UNDERTAKING FOR THE REASONS GIVEN BY OR WHILE DISPOSING OF THE ASSESSEES GROUND IN RESPECT OF CONSIDERATION OF TH ESE RECEIPTS FOR COMPUTATION OF DEDUCTION U/S 80HHC. 28. AS FAR AS ASSESSEES CLAIM FOR CONSIDERATION OF REF UND OF I. S. O. FEE AS PROFITS OF INDUSTRIAL UNDERTAKING IS CONCERN ED THIS IS RESTORED TO THE FILE OF A.O. TO BE DISPOSED OF IN THE MANNER AS DEC IDED BY US WHILE CONSIDERING THE IMPUGNED RECEIPTS AS ELIGIBLE FOR I NCLUSION IN PROFITS OF BUSINESS FOR COMPUTING DEDUCTION U/S 80HHC. 29. AS REGARD THE INTEREST ON FDR IS CONCERNED THE SAM E CANNOT BE CONSIDERED AS DERIVED FROM INDUSTRIAL UNDERTAKING. HENCE WE HOLD THAT THE SAME IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT. 30. AS REGARD THE INTEREST RECEIVED FROM DOMESTIC CUSTO MERS ON DELAYED PAYMENT OF PURCHASES MADE BY THEM FROM THE ASSESSEE. IN OUR OPINION THE SAME IS IN THE NATURE DERIVED FROM IND USTRIAL ACTIVITIES HENCE THE SAME IS ELIGIBLE FOR CONSIDERATION IN COMPUTING DEDUCTION U/S 80-IB. 31. THUS THIS GROUND OF THE ASSESSEE STANDS PARTLY ALL OWED. 32. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE STA NDS PARTLY ALLOWED. PAGE 14 OF 15 - I.T.A.NO. 768/IND/2006 RAJRATAN GUSTAV WOLF LIMITED 33. NOW WE SHALL TAKE UP THE ASSESSEES APPEAL IN I.T. A.NO. 350/IND/2008. 34. THE ISSUE RAISED IN GROUND NO.1 IS IDENTICAL TO ISS UE RAISED IN GROUND NO.1 OF I.T.A.NO. 768/IND/2006 HENCE ACCEP TED FOLLOWING THE SAME REASONS. 35. THE ISSUE RAISED IN GROUND NO.2 IS REGARDING DISALL OWANCE U/S 40A(2)(B) OUT OF INTEREST WHICH WAS NOT PRESSED BY THE LEARNED COUNSEL FOR THE ASSESSEE AS HE HAD GOT THE DUE RELIEF HEN CE THE SAME IS DISMISSED AS NOT PRESSED. 36. IN GROUND NO. 3 THE ISSUE INVOLVED IS REGARDING CO NSIDERATION OF INTEREST RECEIVED INSURANCE CLAIMS AND SALE OF EMP TY DRUMS FOR COMPUTING DEDUCTION U/S 80HHC WHICH HAS BEEN ADJUD ICATED BY US IN GROUND NO.3 OF ASSESSEES APPEAL IN I.T.A.NO. 768/I ND/2006. HENCE THESE ISSUES ARE DECIDED IN IDENTICAL MANNER. THUS THIS GROUND OF THE ASSESSEE STANDS PARTLY ALLOWED. 37. IN GROUND NO.3 THE ISSUE IS REGARDING CONSIDERATIO N OF EXPORT INCENTIVE SALE OF BY PRODUCTS INSURANCE CLAIM AND INTEREST FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80-IB. 38. THESE ISSUES WERE THERE IN ASSESSEES APPEAL IN I.T .A.NO. 768/IND/2006 HENCE DECIDED IN IDENTICAL MANNER. T HUS THIS GROUND OF THE ASSESSEE IS PARTLY ALLOWED. PAGE 15 OF 15 - I.T.A.NO. 768/IND/2006 RAJRATAN GUSTAV WOLF LIMITED 39. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE STA NDS PARTLY ALLOWED. 40. NOW WE SHALL TAKE UP THE ASSESSEES APPEAL IN I.T. A.NO. 351/IND/2008 41. THE ISSUE RAISED IN GROUND NO.1 IS IDENTICAL TO ISS UE RAISED IN GROUND NO.1 OF I.T.A.NO. 768/IND/2006. HENCE THIS GROUND IS ACCEPTED FOR THE SAME REASONS. 42. THE ISSUE RAISED IN GROUND NO.2 IS RELATED TO DISAL LOWANCE MADE BY THE ASSESSING OFFICER U/S 40A(2)(B) WHICH WAS N OT PRESSED AS THE ASSESSEE HAD GOT THE DUE RELIEF SUBSEQUENTLY. HENCE THE SAME IS DISMISSED AS NOT PRESSED. 43. IN THE RESULT THIS APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. 44. TO SUM UP ALL THE APPEALS STAND PARTLY ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 26 TH FEBRUARY 2010. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :26 TH FEBRUARY 2010. CPU* 25262