Income Tax Appellate Tribunal - Ahmedabad
Angi Plast Pvt. Ltd.,, Ahmedabad vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH "B"
(BEFORE S/SHRI P K BANSAL AND MAHAVIR SINGH)
ITA No.3354/Ahd/2004
(Assessment Year: 2001-02)
Angi Plast Private Ltd., V/s The Assistant
4803, Phase-IV, GIDC, Commissioner of Income-
Vatva, Ahmedabad tax (OSD) Range-1,
Ahmedabad
(Appellant) (Respondent)
ITA No.4121/Ahd/2008
(Assessment Year: 2003-04)
Angi Plast Private Ltd., V/s The Income-tax Officer,
4803, Phase-IV, GIDC, Ward-1(2),
Vatva, Ahmedabad Ahmedabad
(Appellant) (Respondent)
PAN No.: AABCA 8320 P
Appellant by :- Shri Vijay Ranjan
Respondent by:- Shri P M Shukla, Senior DR
ORDER
Per P K Bansal (Accountant Member): These two appeals have been filed by the assessee against two separate orders of the CIT(A) dated 30-09-2004 and -3-10-2008 for Assessment Years (AY) 2001-02 and 2003-04 respectively, by taking the following effective grounds of appeals:-
For AY 2001-02:1
1 In law and in the facts and circumstances of the appellant's case, the CIT(A) has grossly erred in holding that the order passed by the AO does not suffer from any infirmity when he ought to have held that the order passed by the AO u/s 143(3) of the I.T. Act is bad in law and without jurisdiction. In not doing so he has failed to appreciate the following amongst others:
(a) That in terms of the clear provisions of section 143(2)(ii) contained in the Proviso thereto notice u/s 143(2)(ii) ought to have been served within the time prescribed notwithstanding notice issued u/s 143(2)(i);
(b) That there is no dispute that the notice u/s 143(2)(ii) was issued beyond the prescribed time limit.
This Hon'ble Tribunal may, therefore, be pleased to hold that the order passed u/s 143(3) of the I.T. Act is ab initio void and direct the AO to cancel the same.
2 In law and in the facts and circumstances of the appellant's case, the CIT(A) has grossly erred in upholding the disallowance of claim of deduction u/s 80IA amounting to Rs.6,05,536 when he ought to have deleted the same. In not doing so, he has failed to appreciate the following amongst others:
(a) That income of DEPB, dividend and interest aggregating to Rs.25,25,075/- is derived from business undertaking as elaborately dealt with in the SOF as furnished before the learned CIT(A).
This Hon'ble Tribunal may, therefore, be pleased to hold that there is no justification in disallowing the claim of deduction u/s 80IA amounting to Rs.6,05,536 and direct the deletion thereof.
3 In law and in the facts and circumstances of the appellant's case, the CIT(A) has failed to consider the alternative plea that the amount of Rs.22,55,558 received on sale of DEPB licence if not treated as income derived from business undertaking the same should be treated as capital receipt and hence ought to have been held as not liable to tax.
This Hon'ble Tribunal may, therefore, be pleased to so hold and direct the impugned income to be excluded from the total income.
24 In law and in the facts and circumstances of the appellant's case, the CIT(A) has grossly erred in upholding the part of the disallowance u/s 80HHC of the I.T. Act referable to income from interest of Rs.2,44,516 and income from dividend of Rs.25,000 when he ought to have held that the said income is income from business and direct to allow the deduction u/s 80HHC of the I.T. Act.
This Hon'ble Tribunal may, therefore, be pleased to so hold and direct the AO to allow deduction u/s 80HHC of the I.T. Act in respect of interest income and dividend income.
5 In law and in the facts and circumstances of the appellant's case, the CIT(A) has grossly erred in holding that levy of interest u/s 234B and 234C of the I.T. Act are mandatory and consequential when the same ought to have been directed to be deleted as the appellant objected to the levy of such interest.
This Hon'ble Tribunal may, therefore, be pleased to so hold and direct the deletion of interest levied u/s 234B and 234C of the I.T. Act.
For AY 2003-04:
1 On the facts and in the circumstances of the case the CIT(A) erred in dismissing the assessee's appeal.
2 Without prejudice, on the facts and in the circumstances of the case, the CIT(A) erred in not upholding assessee's contention(s) that neither reopening u/s 147/148 nor the completion of reassessment was in accordance with law. Therefore, the CIT(A) should have upheld the assessee's contention that the reassessment made was a nullity in law and hence deserves to be cancelled.
3 On the facts and in the circumstances of the case the CIT(A) erred in not accepting the quantum and quantification of deductions claimed under Chapter VIA of the I.T. Act.
4 On the facts and in the circumstances of the case the CIT(A) erred in not upholding the assessee's contention that in quantum and quantification of deduction u/s 80-IA / 80-IB -3
(i) DEPB credit received by the assessee from the Custom Department was required to be considered as profit derived from the industrial undertaking; and
(ii) Interest income even if considered as not derived from the industrial undertaking was required to be netted against the interest outgo.
5 Without prejudice, on the facts and in the circumstances of the case the CIT(A) erred in not upholding the assessee's contention that in quantum and quantification of deduction u/s 80HHC -
(i) DEPB credit received by the assessee from the Customs Department was required to be considered as profit derived from the industrial undertaking;
(ii) Interest income even if considered as not derived from the industrial undertaking was required to be netted against the interest outgo; and
(iii) Deduction allowable u/s 80-IA / 80-IB was not required to be deducted from the business profits.
6 On the facts and in the circumstances of the case the CIT(A) erred in not upholding the assessee's contention that it was not at all a fit case for levy of interest u/s 234B, 234C and 234D of the I.T. Act.
ITA No.3354/Ahd/2004 for AY 2001-02:2 Ground No.1 in this appeal was not pressed by the learned AR. Therefore, the same stands dismissed, as not pressed.
3 Ground No.2 relates to the disallowance of assessee's claim of deduction under section 80IA of the Income-tax Act, 1961 ['the Act' for short] amounting to Rs.6,05,536/-. The assessee claimed the deduction u/s 80IA on the following amounts:-
4 [i] DEPB Income Rs.22,55,558/-
[ii] Dividend Income Rs. 25,000/-
[iii] Interest Income Rs.02,44,516/-
-----------------
Rs.25,25,075/-
===========
In respect of income from DEPB, the AO observed that this income is not directly derived from the manufacturing activities but it is an incentive given by the Government and accordingly took the view that the assessee cannot be eligible for deduction on this income u/s 80IA in view of the decision of the Hon'ble Supreme Court in the case of CIT v Sterling Foods (1999) 237 ITR 579 (SC). In respect Dividend Income and Interest Income it was observed that the nature and source of the receipts clearly denote that it is not derived from the Industrial Undertaking and he denied the deduction u/s 80IA. The assessee went in appeal before the CIT(A). The CIT(A) produced the submissions of the assessee in para-5 of the order and after considering the same, relying on the decisions of the Hon'ble Supreme Court in the cases of CIT v Sterling Foods (1999) 237 ITR 579 (SC) and Pandian Chemicals Ltd. v CIT (2003) 262 ITR 278 (SC), confirmed the order of the AO. The relevant finding has been given by the CIT(A) in para-4.3 at page-10 of his order.
4 Before us, the learned AR vehemently relied on the following decisions:-
[i] CIT v Eltek SGS P. Ltd. (2008) 300 ITR 6 (Delhi) [ii] CIT v India Gelatine and Chemicals Ltd. (2005) 275 ITR 284 (Guj) 5 On the basis of above decisions, it was contended that the provisions of section 80IB were amended. Section 80IB now requires the profit and gains should be derived from any business of an Industrial Undertaking. The profit by way of DEPB income are profits and gains of the business of assessee in view of section 28[iiid]. In the case of CIT v Eltek SGS P. Ltd. (2008) 300 ITR 6 (Delhi), the Hon'ble Delhi High Court has duly discussed the decision of the Hon'ble Supreme Court in the case of CIT v Sterling Foods (1999) 237 ITR 579 (SC) and also the decision of the Hon'ble Gujarat High Court in the case of CIT v India Gelatine and Chemicals Ltd. (2005) 275 ITR 284 (Guj).
5 The learned DR, on the other hand, supported the order of the tax authorities below and contended that the decision of the Hon'ble Supreme Court still will hold good so far as the DEPB income is concerned but for the Dividend Income and Interest Income, it was contended that the issue is duly covered by the decision of the Hon'ble Supreme Court in the case of Pandian Chemicals Ltd. v CIT (2003) 262 ITR 278 (SC).
6 We have carefully considered the rival submissions and, perused the material on record. We have also gone through the decisions as have been relied upon by the parties. This is an admitted fact that the assessee has claimed deduction u/s 80IA in respect of the following income:-
[i] DEPB Income Rs.22,55,558/-
[ii] Dividend Income Rs. 25,000/-
[iii] Interest Income Rs.02,44,516/-
-----------------
Rs.25,25,075/-
===========
6
So far as the income from DEPB is concerned, in view of the provisions of section 28[iiid] this is regarded to be the income from business. Clause [iiid] has been inserted in section 28 by the Taxation (Laws) Amendment Act, 2005 with effect from 01- 04-1998. The objective of DEPB is to neutralize the incidence of Customs duty on the import content of the export product. The neutralization is provided by way of grant of duty credit against the export product. Therefore, whenever an exporter makes exports of the product in which the imported goods are used and the assessee has paid the customs duty on the import of this input, the assessee is entitled for the credit of the duty paid. The method of calculation of the credit is given under the Duty Entitlement Pass Book Scheme. Therefore, in our opinion, whatever credit the assessee gets at the time of export of the goods under this Scheme, it represents the cost incurred by the assessee for obtaining the Duty Entitlement credit. DEPB is freely transferable and if the assessee gets the income on the transfer of such DEPB, that income is chargeable to tax and is related with the eligible undertaking. The Hon'ble Gujarat High Court in the case of CIT v India Gelatine and Chemicals Ltd. (2005) 275 ITR 284 (Guj) although took the view in respect of Cash Compensatory Support (Cash Assistance) received by the assessee not to constitute income derived from an Industrial Undertaking but for the Duty Drawback, it took the view that it is derived from the Industrial Undertaking and eligible for relief u/s 80J. Here the reasoning given is reproduced as under:-
"The object of the duty drawback scheme is to reimburse exporters for tariffs paid on the imported raw materials and intermediates and Central excise duties paid on domestically produced inputs which enter into export production. Customs duties and excise duties on 7 inputs raise the cost of production in industries and thereby affect the competitiveness of exports. Therefore, exporters need to be assisted for neutralizing the escalation in their costs attributable to such customs and excise duties. Duty drawback is, therefore, intended to reduce the cost of production. Hence, duty drawback is an integral part of the pricing of the goods and, therefore, duty drawback has to be treated as 'derived from' the industrial undertaking."
From this it is apparent that wherever export incentives in the form of Duty Drawback and DEPB are given towards the cost of production of the goods exported, such incentives will be regarded to have been derived from the eligible undertaking. Similar view has been taken by the Hon'ble Delhi High Court in the case of CIT v Eltek SGS P. Ltd. (2008) 300 ITR 6 (Delhi), in which the Hon'ble High Court has held as under:-
"We are of the opinion that it is not necessary for us to go as far as the Gujarat High Court has done in coming to the conclusion that duty drawback is profit or gain derived from an industrial undertaking. It is difficult if we stick to the language used in section 80-IB of the Act and come to the conclusion that duty drawback is profit or gain derived from the business of an industrial undertaking. The language used in section 80-IB of the Act is not as broad as the expression "attributable to" referred to by the Supreme Court in Sterling Foods (1999) 237 ITR 579 and Cambay Electric (1978) 113 ITR 84 (SC) nor is it as narrow as the expression "derived from". The expression "derived from the business of an industrial undertaking" is somewhere in between.
Consequently, we are of the view that the source of the duty drawback is the business of the industrial undertaking which is to manufacture and export goods out of raw material that is imported and on which customs duty is paid. The entitlement for duty drawback arises from section 75(1) of the Customs Act, 1962 read with the relevant notification issued by the Central Government in that regard.
Learned counsel for the Revenue also drew our attention to Pandian Chemicals Ltd. v CIT (2003) 262 ITR 278 (SC). However, on a reading of the judgment we find that that also deals with section 80HH of the Act and does not lay down any principle different from Sterling Foods (1999) 234 ITR 579 (SC). In fact, in Pandian 8 Chemicals (2003) 262 ITR 278 (SC) reliance has been placed on Cambey Electric Supply Industrial Co. Ltd. (1978) 113 ITR 84 (SC) and the decision seems to suggest, as we have held above, that the expression "derived from an industrial undertaking" is a step removed from the business of the industrial undertaking.
In view of the law laid down and explained by various decisions, in our opinion, no substantial question of law arises for consideration.
The appeal is dismissed. We assess counsel's fee at Rs.10,000. The Revenue will deposit this amount by a cheque drawn in favour of the Registrar General of this court four weeks from today."
In view of the nature of DEPB, we are of the view that it is an income derived from the eligible undertaking and, therefore, eligible for deduction u/s 80IA and we accordingly direct the AO to allow the deduction to the assessee u/s 80IA on the sum of Rs.22,55,558/- in accordance with law which represents the income from DEPB.
7 So far as the claim of the assessee on the income derived by way of Interest and Dividend is concerned, we find that this issue is no more res integra in view of the decision of the Hon'ble Supreme Court in the case of Pandian Chemicals Ltd. v CIT (2003) 262 ITR 278 (SC), in which the Hon'ble Supreme Court has held as under:-
"The words "derived from" in section 80HH of the Income-tax Act, 1961, must be understood as something which has a direct or immediate nexus with the assessee's industrial undertaking. Although electricity may be required for the purposes of the industrial undertaking, the deposit required for its supply is a step removed from the business of the industrial undertaking.
Held accordingly, that interest derived by the industrial undertaking of the assessee on deposits made with the Electricity Board for the supply of electricity for running the industrial undertaking could not 9 be said to flow directly from the industrial undertaking itself and was not profits or gains derived by the undertaking for the purpose of the special deduction under section 80HH."
In view of the decision of the Hon'ble Supreme Court we do not agree with the plea of the assessee that the interest earned by the assessee even though relates to fixed deposits made as margin money cannot be regarded to have been derived from the business of the eligible undertaking. We accordingly confirm the order of the CIT(A) so far as it relates to the claim of deduction u/s 80IA for the Dividend amounting to Rs.25,000/- and Interest amounting to Rs.2,44,516/- is concerned. Similar view has been taken by this Tribunal in the case of ITO v Gujarat Paguthan Energy Corporation Ltd. [ITA No.2140/Ahd/06 & C O No.275/Ahd/06, order dated 15-05-2009]. Thus, Ground No.2 is partly allowed.
8 Ground No.3 taken by the assessee is an alternate plea relating to the income from DEPB licence. Since we have already allowed the deduction u/s 80IA to the assessee on the income derived from DEPB licence, therefore, this ground, in our opinion, has become infructuous. We accordingly dismiss this ground.
9 Ground No. 4 was not pressed by the learned counsel for the assessee at the time of hearing. Therefore, the same is dismissed, as not pressed.
10 Ground No.5 relating to levy of interest u/s 234B and 234C is consequential and therefore the AO is directed to levy interest u/s 234B and 234C after giving effect to this order.
10 ITA No.4121/Ahd/2008 for AY 2003-04:11 Ground Nos.1 and 3 in this appeal are general in nature and do not require any adjudication.
12 In respect of Ground No.2, the learned AR vehemently contended that the assessee submitted the return on 31-10-2003. Notice u/s 143(2) was issued on 25-11-2004. The assessee has challenged the delay in the issuance of notice, vide letter dated 23-07-2005 before the AO. In view of section 143(2) read with section 148, notice u/s 143(2) must have been issued within 12 months. Since the notice was not issued within 12 months, therefore, the assessment framed u/s 143(3) read with section 148 is bad in law. Reliance was placed in this regard on the decision of the Third Member Delhi Bench in the case of ACIT v O P Chawla 306 ITR (AT) 328. The learned DR, on the other hand, contended that this ground has been taken by the assessee for the first time, otherwise also he contended that the assessment was not barred by limitation.
13 We have carefully considered the rival submissions and, perused the material on record. We were surprised to note that the learned AR is not aware of the proviso which was added u/s 148 by the Finance Act, 2006 with effect from 01-10-1991. In view of this proviso even if the notice u/s 143(2) has been issued after the expiry of 12 months, every such notice shall be deemed to be valid one. In view of the insertion of the proviso by the Finance Act, 2006 with effect from 01-10-1991, we are of the view that the decision of the Third Member in the case of ACIT 11 v O P Chawla 306 ITR (AT) 328 stands overruled and is no more applicable. We accordingly dismiss Ground No.2 taken by the assessee.
14 Ground No.4 relates to the disallowance of assessee's claim of deduction under section 80IA of the amounting to Rs.35,73,664/-. The assessee claimed the deduction u/s 80IA on the following amounts:-
[i] DEPB Income Rs.34,16,715/-
[ii] Dividend Income Rs. 19,087/-
[iii] Interest Income Rs.01,37,862/-
-----------------
Rs.35,73,664/-
===========
In respect of income from DEPB, the AO observed that this income is not directly derived from the manufacturing activities but it is an incentive given by the Government and accordingly took the view that the assessee cannot be eligible for deduction on this income u/s 80IA in view of the decision of the Hon'ble Supreme Court in the case of CIT v Sterling Foods (1999) 237 ITR 579 (SC). In respect Dividend Income and Interest Income it was observed that the nature and source of the receipts clearly denote that it is not derived from the Industrial Undertaking and he denied the deduction u/s 80IA. The assessee went in appeal before the CIT(A). The CIT(A) produced the submissions of the assessee in para-5 of the order and after considering the same, relying on the decisions of the Hon'ble Supreme Court in the cases of CIT v Sterling Foods (1999) 237 ITR 579 (SC) and Pandian Chemicals Ltd. v CIT (2003) 262 ITR 278 (SC), confirmed the order of the AO. The relevant finding has been given by the CIT(A) in para-2 of his order.
1215 Before us, the learned AR vehemently relied on the following decisions:-
[i] CIT v Eltek SGS P. Ltd. (2008) 300 ITR 6 (Delhi) [ii] CIT v India Gelatine and Chemicals Ltd. (2005) 275 ITR 284 (Guj) On the above basis of above decisions, it was contended that the provisions of section 80IB were amended. Section 80IB now requires the profit and gains should be derived from any business of an Industrial Undertaking. The profit by way of DEPB income are profits and gains of the business of assessee in view of section 28[iiid]. In the case of CIT v Eltek SGS P. Ltd. (2008) 300 ITR 6 (Delhi), the Hon'ble Delhi High Court has duly discussed the decision of the Hon'ble Supreme Court in the case of CIT v Sterling Foods (1999) 237 ITR 579 (SC) and also the decision of the Hon'ble Gujarat High Court in the case of CIT v India Gelatine and Chemicals Ltd. (2005) 275 ITR 284 (Guj).
16 The learned DR, on the other hand, supported the order of the tax authorities below and contended that the decision of the Hon'ble Supreme Court still will hold good so far as the DEPB income is concerned but for the Dividend Income and Interest Income, it was contended that the issue is duly covered by the decision of the Hon'ble Supreme Court in the case of Pandian Chemicals Ltd. v CIT (2003) 262 ITR 278 (SC).
17 We have carefully considered the rival submissions and, perused the material on record. We have also gone through the decisions as have been relied upon by the parties. This is an 13 admitted fact that the assessee has claimed deduction u/s 80IA in respect of the following income:-
[i] DEPB Income Rs.34,16,715/-
[ii] Dividend Income Rs. 19,087/-
[iii] Interest Income Rs.01,37,862/-
-----------------
Rs.35,73,664/-
===========
So far as the income from DEPB is concerned, in view of the provisions of section 28[iiid] this is regarded to be the income from business. Clause [iiid] has been inserted in section 28 by the Taxation (Laws) Amendment Act, 2005 with effect from 01- 04-1998. The objective of DEPB is to neutralize the incidence of Customs duty on the import content of the export product. The neutralization is provided by way of grant of duty credit against the export product. Therefore, whenever an exporter makes exports of the product in which the imported goods are used and the assessee has paid the customs duty on the import of this input, the assessee is entitled for the credit of the duty paid. The method of calculation of the credit is given under the Duty Entitlement Pass Book Scheme. Therefore, in our opinion, whatever credit the assessee gets at the time of export of the goods under this Scheme, it represents the cost incurred by the assessee for obtaining the Duty Entitlement credit. DEPB is freely transferable and if the assessee gets the income on the transfer of such DEPB, that income is chargeable to tax and is related with the eligible undertaking. The Hon'ble Gujarat High Court in the case of CIT v India Gelatine and Chemicals Ltd. (2005) 275 ITR 284 (Guj) although took the view in respect of Cash Compensatory Support (Cash Assistance) received by the 14 assessee not to constitute income derived from an Industrial Undertaking but for the Duty Drawback, it took the view that it is derived from the Industrial Undertaking and eligible for relief u/s 80J. Here the reasoning given is reproduced as under:-
"The object of the duty drawback scheme is to reimburse exporters for tariffs paid on the imported raw materials and intermediates and Central excise duties paid on domestically produced inputs which enter into export production. Customs duties and excise duties on inputs raise the cost of production in industries and thereby affect the competitiveness of exports. Therefore, exporters need to be assisted for neutralizing the escalation in their costs attributable to such customs and excise duties. Duty drawback is, therefore, intended to reduce the cost of production. Hence, duty drawback is an integral part of the pricing of the goods and, therefore, duty drawback has to be treated as 'derived from' the industrial undertaking."
From this it is apparent that wherever export incentives in the form of Duty Drawback and DEPB are given towards the cost of production of the goods exported, such incentives will be regarded to have been derived from the eligible undertaking. Similar view has been taken by the Hon'ble Delhi High Court in the case of CIT v Eltek SGS P. Ltd. (2008) 300 ITR 6 (Delhi), in which the Hon'ble High Court has held as under:-
"We are of the opinion that it is not necessary for us to go as far as the Gujarat High Court has done in coming to the conclusion that duty drawback is profit or gain derived from an industrial undertaking. It is difficult if we stick to the language used in section 80-IB of the Act and come to the conclusion that duty drawback is profit or gain derived from the business of an industrial undertaking. The language used in section 80-IB of the Act is not as broad as the expression "attributable to" referred to by the Supreme Court in Sterling Foods (1999) 237 ITR 579 and Cambay Electric (1978) 113 ITR 84 (SC) nor is it as narrow as the expression "derived from". The expression "derived from the business of an industrial undertaking" is somewhere in between.15
Consequently, we are of the view that the source of the duty drawback is the business of the industrial undertaking which is to manufacture and export goods out of raw material that is imported and on which customs duty is paid. The entitlement for duty drawback arises from section 75(1) of the Customs Act, 1962 read with the relevant notification issued by the Central Government in that regard.
Learned counsel for the Revenue also drew our attention to Pandian Chemicals Ltd. v CIT (2003) 262 ITR 278 (SC). However, on a reading of the judgment we find that that also deals with section 80HH of the Act and does not lay down any principle different from Sterling Foods (1999) 234 ITR 579 (SC). In fact, in Pandian Chemicals (2003) 262 ITR 278 (SC) reliance has been placed on Cambey Electric Supply Industrial Co. Ltd. (1978) 113 ITR 84 (SC) and the decision seems to suggest, as we have held above, that the expression "derived from an industrial undertaking" is a step removed from the business of the industrial undertaking.
In view of the law laid down and explained by various decisions, in our opinion, no substantial question of law arises for consideration.
The appeal is dismissed. We assess counsel's fee at Rs.10,000. The Revenue will deposit this amount by a cheque drawn in favour of the Registrar General of this court four weeks from today."
In view of the nature of DEPB, we are of the view that it is an income derived from the eligible undertaking and, therefore, eligible for deduction u/s 80IA and we accordingly direct the AO to allow the deduction to the assessee u/s 80IA on the sum of Rs.34,16,715- in accordance with law which represents the income from DEPB.
18 So far as the claim of the assessee on the income derived by way of Interest and Dividend is concerned, we find that this issue is no more res integra in view of the decision of the Hon'ble Supreme Court in the case of Pandian Chemicals 16 Ltd. v CIT (2003) 262 ITR 278 (SC), in which the Hon'ble Supreme Court has held as under:-
"The words "derived from" in section 80HH of the Income-tax Act, 1961, must be understood as something which has a direct or immediate nexus with the assessee's industrial undertaking. Although electricity may be required for the purposes of the industrial undertaking, the deposit required for its supply is a step removed from the business of the industrial undertaking.
Held accordingly, that interest derived by the industrial undertaking of the assessee on deposits made with the Electricity Board for the supply of electricity for running the industrial undertaking could not be said to flow directly from the industrial undertaking itself and was not profits or gains derived by the undertaking for the purpose of the special deduction under section 80HH."
In view of the decision of the Hon'ble Supreme Court we do not agree with the plea of the assessee that the interest earned by the assessee even though relates to fixed deposits made as margin money cannot be regarded to have been derived from the business of the eligible undertaking. We accordingly confirm the order of the CIT(A) so far as it relates to the claim of deduction u/s 80IA for the Dividend amounting to Rs.19,087/- and Interest amounting to Rs.1,37,862/- is concerned. Similar view has been taken by this Tribunal in the case of ITO v Gujarat Paguthan Energy Corporation Ltd. [ITA No.2140/Ahd/06 & C O No.275/Ahd/06, order dated 15-05-2009]. Thus, Ground No.4 is partly allowed.
19 Ground No.6 relating to levy of interest u/s 234B and 234C is consequential in nature and therefore, the AO is directed to levy interest u/s 234B and 234C after giving effect to our this order.
1720 So far as levy of interest u/s 234D is concerned, the issue is covered in favour of the assessee by the decision of the Special Bench of ITAT Delhi in the case of ITO v Ekta Promoters Pvt. Ltd. (2008) 305 ITR 1, in which the Tribunal has taken a view that this interest can be charged only from AY 2004-05 and we accordingly direct the AO to delete the interest charged u/s 234D of the Act.
21 In the result, both the appeals are partly allowed.
Order pronounced in the open court on 28-08-2009 Sd/- Sd/-
(MAHAVIR SINGH) (P K BANSAL)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Date : 28-08-2009
Copy of the order forwarded to :
1. Angi Plast Private Ltd., 4803, Phase-IV, GIDC, Vatva, Ahmedabad
2. The ACIT (OSD) Range-1, Ahmedabad / The ITO, Ward-1(2), Ahmedabad
3. The CIT concerned
4. The CIT(A)-V / VI, Ahmedabad
5. The DR, ITAT, Ahmedabad
6. Guard File BY ORDER DY.R/AR, ITAT, AHMEDABAD 18