Income Tax Appellate Tribunal - Bangalore
Bosch Limited , Bangalore vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
"A" BENCH : BANGALORE
BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER
AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER
ITA No.637/Bang/2010
Assessment year : 1994-95
The Deputy Commissioner of
Income Tax, LTU,
Bangalore. : APPELLANT
Vs.
M/s. Bosch Ltd.,
(formerly Motor Industries Co. Ltd.),
P.B. No.3000, Hosur Road,
Adugodi,
Bangalore - 560 030. : RESPONDENT
ITA No.645 to 647/Bang/2010
Assessment years : 1992-93 to 1994-95
M/s. Bosch Ltd.,
(formerly Motor Industries Co. Ltd.),
P.B. No.3000, Hosur Road,
Adugodi,
Bangalore - 560 030. : APPELLANT
Vs.
The Deputy Commissioner of
Income Tax, LTU,
Bangalore. : RESPONDENT
Revenue by : Shri G.V. Gopala Rao, CIT-I(DR)
Respondent by : Shri P.J. Pardiwala, Sr. Counsel
ITA Nos.637 &
645 to 647/Bang/10
Page 2 of 17
ORDER
Per A. Mohan Alankamony, Accountant Member
These four appeals - (i) three appeals instituted by the assessee company; and (ii) another by the Revenue - are directed against the appellate orders of the Ld. CIT (A)-LTU, Bangalore in ITA Nos: 41, 42 & 41 (sic) 43 /LTU/CIT(A)-II/08-09 dated: 17.12.2009, 31.12.2009 & 31.12.2009 for the assessment years 1992-93, 1993-94 and 1994-95 respectively in the case of M/s. Bosch Limited, Bangalore.
I. ITA Nos: 645, 646 & 647/10 - AY 1992-93, 93-94 & 94-95 [By the assessee company]:
2. For these three AYs, the assessee company had raised five identical grounds in which, ground Nos. 4 and 5 being general and no specific issues involved, they have become inconsequential. In the remaining grounds, the issues agitated are reformulated, in a concise manner, as under:
That the Ld. CIT (A)-LTU erred in
(i) holding that the claims made was beyond time limit and, hence, not maintainable;
(ii) upholding the stand of the AO in reducing the eligible profits of business, 90% of interest received while computing deductions u/s 80HHC and 80HHE of the Act;
(iii) not directing the AO to reduce Rs.2.97 crores, Rs.4.38 crores being discounts and Rs.1.58 lakhs (cash incentive) for the AYs 92.93, 93.94 and 94.95 respectively from the total turnover while computing deduction u/s 80HHC and 80HHE of the Act.
ITA Nos.637 & 645 to 647/Bang/10 Page 3 of 17 II. ITA NO: 637/10 - AY 1994-95 [By the Revenue]:
2.1. Even though the Revenue had raised seven grounds, the substance of its grievance is confined to a lone issue which is spelt out as under:
- that the Ld. CIT (A) has erred in directing to exclude the cost of scraps from the total turnover for the purpose of deduction u/s 80HHC and 80HHE though the issue of exclusion of cost of scrap sold was never in dispute in the AY under challenge.
3. As the issues confronted in these appeals being identical and inter-
linked pertaining to the same assessee, for the sake of clarity and convenience, they were heard, considered and adjudicated in this common order.
We shall now take up for consideration the issues raised by the assessee company.
I. ITA NOs: 645, 646 & 647/10 - AY 1992-93, 93-94 & 94.95 [By the assessee]:
4. The assessee company ['the assessee' in short] has been in the business of manufacturing spark plugs, fuel injection equipments for motor vehicles.
Briefly, the assessment orders for the AYs under dispute were originally challenged before the Ld. CIT (A) and disenchantment with some of the findings of the then Ld. CIT (A), the assessee had, subsequently, approached the Hon'ble earlier Bench for succor. While doing so, the assessee had also raised a few of the fresh grounds which were not ITA Nos.637 & 645 to 647/Bang/10 Page 4 of 17 agitated initially before the Ld. CIT (A) for adjudication or claimed in the returns of income.
4.1. Considering the state of affairs of the issues, the Hon'ble Bench was pleased to remit back such additional grounds raised by the assessee for the first time for adjudication to the files of the Ld. CIT (A) vide its common order in ITA Nos. 396 to 399/B/1998 dated: 31.5.2004 for the reasons recorded therein.
4.2. Consequently, the Ld. CIT (A)-LTU, Bangalore vide his impugned orders cited supra though held the claim made is beyond the time limit, decided the issues on merits partly in favour of the appellant, the details of grounds raised and the findings thereon are, briefly, extracted as under:
[ITA Nos.41, 42 and 43/LTU/CIT(A) dt: 17.12.09 & 31.12.09 respectively] Additional grounds:
A.Y.92-93:
'(i) that the Joint Commissioner erred in reducing from the eligible 'profits of business' 90% of interest received (ignoring altogether the interest expenditure incurred by the appellant) by invoking the provisions of Explanation (baa) to s.80HHC and Expln. (d) to s. 80HHE while calculating deduction u/s 80HHC and 80HHE.
(ii) The Hon'ble Tribunal may be pleased to direct the JCIT (Asst) S.R. 3 to reduce Rs.2,97,44,080 from the total turnover being discount to customers for purposes of granting deduction u/s 80HHC and 80HHE.' A.Y.93-94:
(i) The Hon'ble Tribunal may be pleased to direct the JCIT (Asst) S.R. 3 to reduce Rs.4,38,70,940 from the total turnover being discount to customers for purposes of granting deduction u/s 80HHC and 80HHE.' '(ii) that the Joint Commissioner erred in reducing from the eligible 'profits of business' 90% of interest received (ignoring altogether the ITA Nos.637 & 645 to 647/Bang/10 Page 5 of 17 interest expenditure incurred by the appellant) by invoking the provisions of Explanation (baa) to s.80HHC and Expln. (d) to s. 80HHE while calculating deduction u/s 80HHC and 80HHE A.Y.94-95:
'(i) that the Joint Commissioner erred in reducing from the eligible 'profits of business' 90% of interest received (ignoring altogether the interest expenditure incurred by the appellant) by invoking the provisions of Explanation (baa) to s.80HHC and Expln. (d) to s. 80HHE while calculating deduction u/s 80HHC and 80HHE.
'(ii) that the Joint Commissioner erred in including cash incentive as part of total turnover which is contrary to the definition of term 'total turnover' contained in Expln. (ba) to s.80HHC and Expln. (e) to s.80HHE."
A.Ys.92-93:, 93-94 & 94-95:
4.3. After taking into account the facts of the issues, assessee's submission, remand report of the AO and also extensively quoting the finding of the Hon'ble ITAT in 2746/Bang/2004 dt.4.5.2007 for the AY 1998- 99 [wherein the matter was restored to the AO with a direction to follow the decision of the special Bench of ITAT in the case of Lalson Enterprises 89 ITD 25], the Ld. CIT (A) took a divergent view for all the AYs under dispute by observing thus -
(i) In respect of interest:
"3.11. in the instant case, 'interest' on bank deposits and other account is credited in the profit and loss account for Rs.2,27,49,608/- [Rs.2.67 crores & Rs.2.80 crores for the AYs 93.94 & 94.95 respectively] from the details furnished, interest to the extent of Rs.90,37,990/-[Rs.30.55 lakhs & Rs.48.17 lakhs for the AYs 93.94 & 94.95 respectively] is from banks and interest of Rs.1,37,11,618/- [Rs.2.36 crores & Rs.2.32 crores for AYs 93-94 & 94-95] is from others. Against the interest earned, the appellant claimed to have paid Rs.5,17,41,487/-[Rs.4.96 crores & Rs.6.01 crores for the AYs. 93.94 & 94-95] by way of interest in bank overdraft, cash credits, letter of credits, packing credits on export bills, inland bills discounted, import loan ITA Nos.637 & 645 to 647/Bang/10 Page 6 of 17 and interest payable to M/s. Bosch. Thus, it can be inferred that interest was paid on overdraft and other facilities which was utilized in the export business. The interest paid on overdraft facilities had no direct or immediate nexus with the earning of interest income and, hence, not allowable against the interest received. In this view of the matter, the appellant's claim is not acceptable on this issue.
(ii) With regard to trade discount:
The Ld. CIT (A) observed, for all the AYs under dispute, thus -
"3.13. A plain reading of the decision of the Hon'ble Punjab & Haryana High Court [in the case of CIT v. Avon Cycles Ltd. (2008) 303 ITR 345] shows that sales tax and excise duty do not form part of the total turnover.
However, as regards the trade discount, it is not expressly mentioned in the said order but in principle allowed in favour of the assessee. Moreover, in the case relied upon, the AO has not accepted the claim of the assessee and the trade discount was considered as 'total turnover. In the instant case, the appellant had excluded while claiming deduction u/s 80HHC and 80HHE and the AO did not dispute the same. Thus, the facts of the case are distinguishable and, therefore, it is of no assistance to the appellant."
5. Aggrieved, the assessee has come up with the present appeals. After due consideration of the rival submissions, meticulous perusal of the relevant records and also the documentary evidence advanced by the Ld. A R during the course of hearing in the shape of a paper book, the issues raised by the assessee are adjudicated in a chronological order as under:
5.1. The first common ground raised in all the AYs under consideration is that the Ld. CIT (A)-LTU erred in holding that the claims made was beyond time limit and, hence, not maintainable.
5.1.1. On a perusal of the impugned orders of the Ld. CIT (A), we find that the issue has been exhaustively dealt with by the Ld. CIT (A) for all the AYs under dispute with reference to the date(s) of furnishing of returns, ITA Nos.637 & 645 to 647/Bang/10 Page 7 of 17 total income, tax auditors' reports, claims u/s 80HHC (4) of the Act etc. As the reasons adduced by the Ld. CIT (A) were identical for all the AYs and for the sake of convenience, the reasons recorded by the Ld. CIT (A) for the AY 1992-93 are extracted as under:
A.Y. 1992-93:
"3.5. I have considered the facts of the case, the appellant's submissions and the AO's remand report. The material facts available on record reveal that the return of income for the assessment year under consideration was filed on 31.12.1992, declaring the total income at Rs.55,24,43,680/-. It also reveals that the appellant furnished tax auditor's report in Form No.3CD, form No.10CCZAC, 10CCAF along with the return of income.
The audit report in form no.10CCAC for the relevant previous year is required for the claim u/s 80HHC (4) of the Act. Similar audit report in Form No.10CCAF is required for the claim u/s 80HHE (4) of the Act. The relevant provision is reproduced as under:
'(4) The deduction under sub-section (1) shall not be admissible unless the assessee furnished in the prescribed form, along with the return of income, the report of an Accountant as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed in accordance with the provisions of this section.' 3.6. A perusal of the said audit report shows that, in order to claim the deduction u/s 80HHC, the total turnover, total export turnover and profit of the business have been worked out as under:
i) Total turnover Rs. 396,13,58,198 ii) Total export turnover Rs. 42,88,82,450 iii) Total profit of the business Rs. 58,62,21,615
(i) Further, while making the adjustment referred to in Explanation (baa) to section 80HHC, the auditor has given the working as follows:
90% of export incentive (Rs.97,10,6210) Rs. 87,31,449 Rent included under business income(Rs.187053) Rs. 1,68,448 Interest included under business income Rs.13711618) Rs. 1,23,40,456 Total Rs. 2,12,40,253 ITA Nos.637 & 645 to 647/Bang/10 Page 8 of 17 3.7. The original assessment order was passed on 24.3.1995 and it is seen from the computation of income, the AO has accepted the appellant's claim in toto in respect of total turnover and export turnover. As regards the business profit, there is some variation due to additions/disallowances.
However, the method of calculation adopted by the AO is not disputed by the appellant. As a matter of fact, the appellant itself claimed deduction on the gross interest as per Explanation (baa) to section 80HHC. Similarly, the AO has not disputed the total turnover as computed by the appellant. Moreover, the claim was made in Form No.10CCAC and 10CCAF and certified by an accountant as required by sub-section (4) of s.80HHC which is mandatory.
3.8. It is observed that this issue has been raised before the Hon'ble ITAT and not before the AO at the time of assessment. It is relevant to extract the sub-section (5) of section 139, which reads as under:
'(5) If any person.........................................................whichever is earlier.' 3.9. A plain reading of the foregoing section shows that any omission or any wrong statement therein is to be furnished by filing a revised return before the expiry of one year from the end of the relevant assessment year.
As such, the appellant ought to have furnished its revised return of income on or before 31.3.1994. However, it is seen that the claim was made on 22/3/2001 i.e., after expiry of almost seven years. Therefore, in my considered opinion, the claim made is beyond the time limit as discussed above. In view of the procedural and technical lapses as discussed in the preceding paragraphs, the appellant's claim is not maintainable. 5.1.2. At the same time, the assessee had not come up with any plausible reasoning before us to rebut the stand of the Ld. CIT (A) with regard to the maintainability of the assessee's claims. 5.1.3. We have cautiously perused the provisions of s.80HHC (4), s.80HHE (4) as well as s. 139(5) of the Act. As judiciously pointed out by the Ld. CIT (A), the Ld. AO had accepted the assessee's claim in toto in respect of (i) total turnover, (ii) total export turnover (AY 92-93), (i) total turnover; (ii) excluding sales tax, excise duty and sale of scraps (AYs 93- 94& 94-95). Moreover, the method of calculation adopted by the AO was ITA Nos.637 & 645 to 647/Bang/10 Page 9 of 17 not disputed by the assessee. As a matter of fact [as could be seen from the findings of the Ld. CIT (A)] the assessee itself claimed deduction on the gross interest as per Explanation (baa) to s.80HHC. Strangely, the issues have been raised before the earlier Bench after a lapse of a considerable time frame.
5.1.4. In this connection, we recall the provisions of s. 139(5) of the Act, according to which, the assessee for having furnished a return, discovered any omission or any wrong statement therein, it ought to have furnished a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment whichever was earlier. For record, the assessee had not placed any material either before the first appellate authority or before this Bench for such a lapse on the part of the assessee.
5.1.5. The CIT (A) had, however, taken up the appellant's claim for consideration on merits. This stand of the Ld. CIT (A) in taking up the assessee's claim for consideration on merits is mainly attributable to the earlier Bench's directions that -
"30. The assessee has preferred additional grounds. Admittedly, these grounds were not raised before the learned CIT (A), so there was no occasion with the first appellate authority to deal with the issue since raised for the first time. As the assessment year before us is 1994-95 and the amendment was made in section 80HHC w.e.f. 1.4.92, the first appellate authority is directed to take a view in the light of the said amendment. So these grounds are sent to the file of the learned first appellate authority and to decide in view of the amended provisions."
ITA Nos.637 & 645 to 647/Bang/10 Page 10 of 17 5.1.6. During the course of hearing, the Ld. DR vehemently argued that since the claim was never made by the assessee while filing the return of income and it was for the first time claimed before the Tribunal and such claim on issues never raised before any authority is not maintainable. Ld. DR further stressed that the provisions of section 139(5) of the Act cannot be overlooked which is statutory. On this issue, we do recollect the order of the Hon'ble Apex Court in the case of National Thermal Power Company Ltd. v. CIT (229 ITR 383) and Goetz India ltd. v. CIT (284 ITR 323). However, we restrain from passing any comments on this issue since the issue was considered by the earlier Bench and remitted back the issues for adjudication on merits. However, the Revenue may exercise its right to raise the maintainability of the appeals by invoking the provisions of s.139(5) of the Act before the higher judiciary.
6. Reverting back to the issues which have since been disposed of by the Ld. CIT (A) on merits, we shall take up the same for consideration as below:
6.1. The Ld. CIT (A)-LTU, Bangalore vide his impugned orders cited supra had decided the issues against the assessee, the details of grounds raised and the findings are, briefly, extracted as under:
I. Adjustment as per Explanation (baa) to s.80HHC and Expln. (d) to s. 80HHE, interest received being lower than interest expenditure incurred 90% of the same should not have been reduced from eligible profit of business while granting deduction u/s 80HHC and 80HHE.
6.1.1. After taking into account the facts of the issue, assessee's submission, the remand report of the AO and also extensively quoting the ITA Nos.637 & 645 to 647/Bang/10 Page 11 of 17 finding of the Hon'ble High court of Delhi in the case of CIT v. Delhi Brass and Metal Work Ltd. (2009) 313 ITR 352 (Del), the Ld. CIT (A) took a divergent view to that of the assessee, thus -
"3.11. in the instant case, 'interest' on bank deposits and other account is credited in the profit and loss account for Rs.2,27,49,608/- from the details furnished, interest to the extent of Rs.90,37,990/- is from banks and interest of Rs.1,37,11,618/- is from others. Against the interest earned, the appellant claimed to have paid Rs.5,17,41,487/- by way of interest in bank overdraft, cash credits, letter of credits, packing credits on export bills, inland bills discounted, import loan and interest payable to M/s.Bosch.
Thus, it can be inferred that interest was paid on overdraft and other facilities which was utilized in the export business. The interest paid on overdraft facilities had no direct or immediate nexus with the earning of interest income and, hence, not allowable against the interest received. In this view of the matter, the appellant's claim is not acceptable on this issue.
6.1.2. Incidentally, an identical issue that of the present one had cropped up before the earlier Bench in the case of the assessee for the AYs 2002-03 and 2003-04 and after due consideration of the issue, the Hon'ble Bench in its finding in ITA Nos.706 & 707/Bang/2010 dated:
22/10/2010 had observed thus -
"(4) (d). We have duly considered the rival submissions and also diligently perused the ruling of various High Courts on which the Revenue had placed its faith to drive home its point. We have also perused the findings of the earlier Bench on a similar issue in the assessee's own case for the AYs 98.99, 99-00, 2000-01 and 01-02. The Hon'ble Bench in its finding for the AYs 2000-01 and 01-02 in ITA Nos.335 & 336/B/2005 dated: 12.6.2008 had deliberated the issue at length. For the appreciation of facts, we venture to reproduce the relevant portions of its finding as under:
'10. In respect of ground of appeal No.6.2.[that the CIT(A) erred in upholding the action of the AO in excluding 90% of gross interest receipts...], we reproduce para 30 of the order of this Tribunal dt:
4.5.2007:
ITA Nos.637 & 645 to 647/Bang/10 Page 12 of 17 'We have heard both the parties. The Ld. Delhi High Court in the case of Shri Ram Honda Power Equip (supra) has held that the word 'interest' in clause (baa) of Explanation connotes net interest and not gross interest. If the AO has treated the interest receipts as business income, then deduction in terms of Explanation (baa) should be with reference to net interest. The Ld. Delhi High court was required to consider the following question:
'(c) If the expression 'interest' implies net interest, then should netting not be allowed where the interest income is computed to be business income?' The ld. Delhi High court at page 507 answered the above question as under:
'We accordingly hold that where, as a result of the computation of profits and gains of business and profession, the AO treats the interest receipt as business income, then deduction should be permissible, in terms of Explanation (baa) of the net interest i.e., the gross interest less the expenditure incurred for the purpose of earning such interest.' Following our order in the case of the assessee for earlier, the assessing officer is directed to disallow 90% of the net interest.'
(e) As the jurisdictional Tribunal had decided the issue in favour of the assessee for the reasons reproduced supra, we are inclined to agree with the finding of the Ld. CIT (A). It is ordered accordingly."
6.1.3. In conformity with the finding of the earlier Bench on a similar issue in the assessee's own case, the Ld. AO is directed to adopt the finding of the earlier Bench for the assessment years under dispute. It is ordered accordingly.
6.2. The other common ground raised by the assessee is with regard to the stand of the Ld. CIT (A) in not directing the AO to reduce Rs.2.97 crores, Rs.4.38 crores and Rs.1.58 lakhs (cash incentive) for the AYs 92.93, 93.94 & 94-95 respectively from the total turnover being ITA Nos.637 & 645 to 647/Bang/10 Page 13 of 17 discount to customers while computing deduction u/s 80HHC and 80HHE of the Act.
6.2.1. After due consideration of the assessee's submission on the issue, the Ld. CIT (A) viewed that a "plain reading of the decision of the Hon'ble Punjab & Haryana High court [in the case of CIT v. Avon Cycles Ltd. (2008) 303 ITR 345] shows that sales tax and excise duty do not form part of the total turnover. However, as regards the trade discount, though it is not expressly mentioned in the said order, but, in principle allowed in favour of the assessee. 6.2.2. We do faithfully subscribe to the decision of the Hon'ble High Court. Trade discount is an incentive given to customers leading to decrease in value of sales. Therefore, it is obvious that the trade discount has to be reduced from the total turnover. Thus, this issue is decided in favour of the assessee.
We shall now proceed to deal with the issue raised by the Revenue. ITA NO: 637/10 - AY 1994-95 [By the Revenue]:
7. The Revenue in its appeal had raised a lone ground to the effect that the Ld. CIT (A) was not justified in directing to exclude the cost of scraps from the total turnover for the purpose of deduction u/s 80HHC and 80HHE though the issue of exclusion of cost of scrap sold was never in dispute in the AY under challenge.
ITA Nos.637 & 645 to 647/Bang/10 Page 14 of 17 7.1. In this connection, we recall the finding of the Hon'ble earlier Bench, in its consolidated order in ITA Nos.396, 397, 398 & 399/Bang/1998 dated: 31.5.2004 wherein for the AY 1994-95, had observed that -
"30. The assessee has preferred additional grounds in the form of ground Nos.10, 11 and 12. Admittedly, these grounds were not raised before the learned CIT (A), so there was no occasion with the first appellate authority to deal with the issue since raised for the first time. As the assessment year before us is 1994-95 and the amendment was made in section 80HHC w.e.f. 1.4.92, the first appellate authority is directed to take a view in the light of the said amendment. So these grounds are sent to the file of the learned first appellate authority and to decide in view of the amended provision."
7.1.2. Therefore, the Ld. CIT (A) was within his dominion to take up the issue for adjudication and the Revenue's view that (i) the issue of exclusion of the cost of scrap sold from the total turnover was never in dispute in this AY; (ii) the Ld. CIT (A) had allowed an issue which was never in existence was barely on misconception on the part of the Revenue.
7.1.3. Turning our attention to the issue on hand, we find that the Ld. CIT (A) had taken up the additional ground raised by the assessee for adjudication. The additional ground of the assessee was that -
"12. That the Joint Commissioner erred in including workshop receipts i.e., scrap sales as part of total turnover."
7.1.4. After considering the issue, the observation of the first appellate authority was that -
"4.3. An identical issue came up for consideration for the assessment year 1993-94 and the Hon'ble ITAT, Bangalore in ITA No.398/Bang/98 dated 31/5/2004 for the assessment year 1993-94 allowed the issue in favour of ITA Nos.637 & 645 to 647/Bang/10 Page 15 of 17 the appellant. Respectfully following the decision of the Hon'ble ITAT, it is held that scrap sales is excludible from the total turnover. However, the appellant has not appended the break-up of the turnover in order to enable the AO to allow deduction u/s 80HHC and 80HHE. The AO is, therefore, directed to verify the same and re-compute accordingly."
7.1.5. However, on a critical perusal of the affidavit furnished by the assessee before the earlier Bench for the AY 1994-95 wherein it has been noticed that the assessee had raised an additional ground with regard to workshop receipts, the relevant portion of which is extracted as under:
"Ground No.12...That the learned Joint commissioner erred in including workshop receipts as part of total turnover."
7.1.6. On a glimpse of the copy of the Tribunal's order (contained only 7 pages which has been serially numbered) produced by the assessee during the course of hearing on 26.4.2011, we find that for the AY 1993-94 the Hon'ble Bench had observed thus -
"ITA NO.398/Bang/98:
21. The assessee has also preferred additional ground (ground No.11) pertains to request the tribunal to direct the revenue to reduce Rs.4,38,70,940/- from the total turnover being discount to customers for purposes of granting deduction u/s 80HHC and 80HHE and the next additional ground raised by the assessee is that the JCIT erred in reducing from the eligible profits of business 90% of interest received by invoking the provisions of Explanation (baa) to section 80HHC and Explanation (d) to section 80HHE while calculating deduction u/s 80HHC and 80HHE.
Since these grounds are raised before us for the first time and were not raised before the learned first appellate authority, we are of the view that these grounds needs to be sent to the file of the first appellate authority in view of the amendment made to the said section, as the assessment year involved is 1993-94 and to decide as per law."
7.1.7. Thus, the Ld. CIT (A) had committed a mistake, perhaps by oversight, in observing that the earlier Bench had allowed the issue in ITA Nos.637 & 645 to 647/Bang/10 Page 16 of 17 favour of the assessee. The issue raised by the assessee was, in fact, for the AY 1994-95 and NOT for the AY 1993-94 which has been wrongly quoted and also decided in favour of the assessee by the Ld. CIT (A) in his impugned order under challenge.
7.1.8. The earlier Bench, in its finding for the AY 1994-95 [in ITA No.399/Bang/98 dated: 31.5.2004 in the assessee's case had however, observed thus -
"30. The assessee has preferred additional grounds. Admittedly, these grounds were not raised before the learned CIT (A), so there was no occasion with the first appellate authority to deal with the issue since raised for the first time. As the assessment year before us is 1994-95 and the amendment was made in section 80HHC w.e.f. 1.4.92, the first appellate authority is directed to take a view in the light of the said amendment. So these grounds are sent to the file of the learned first appellate authority and to decide in view of the amended provisions."
7.1.9. However, to put the record on straight, we would like to observe that incidentally, an identical issue had cropped up in the assessee's own case for the AY 2002-03 wherein the Ld. CIT (A), in conformity with the decisions of the Hon'ble Tribunal in ITA Nos.335 & 336/B/05 dated 12.6.2008 for the AYs 2001.01 and 01.02 [in the assessee's own case], directed the AO to exclude the same from the total turnover of the assessee. However, the finding of the Ld. CIT (A) was hotly contested by the Revenue by taking a cue from the ruling of the Hon'ble jurisdictional High Court in the assessee's own case [(2010) 326 ITR 358 (Kar)] for the assessment year 1993-94 wherein the issue has been decided by the Hon'ble Court against the assessee with the following observations:
"While computing the total turnover for the purposes of s.80HHC, the amounts received by sale of scraps in domestic market are 'includible'.
ITA Nos.637 & 645 to 647/Bang/10 Page 17 of 17 7.1.10. In conformity with the ruling of the Hon'ble court, the Hon'ble earlier Bench, in its findings in ITA Nos.706 & 707/Bang/2010 for the AYs 2002-03 & 2003-04 dated: 22/10/2010, had decided the issue against the assessee [Para 6(1) (e) on Page 4]. The finding of the earlier Bench in an identical issue holds good for the issue on hand. It is ordered accordingly.
8. In the result:
(i) the assessee's appeals for the AYs. 1992-93 & 93-94 are partly allowed; &
(ii) the Revenue's appeal for the AY 94-95 is allowed.
Pronounced in the open court on this 17th day of June, 2011.
Sd/- Sd/-
( SMT. P. MADHAVI DEVI ) (A. MOHAN ALANKAMONY )
Judicial Member Accountant Member
Bangalore,
Dated, the 17th June, 2011.
Ds/-
Copy to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT, Bangalore.
6. Guard file (1+1)
By order
Assistant Registrar
ITAT, Bangalore.