2016 (10) TMI 1064 - HC - Income Tax

Addition being the difference between the net present value of Sales Tax loan liability and actual liability - Held that - It is an agreed position between the parties that the issue raised herein stands concluded by the decision of this court in Commissioner of Income-Tax vs. Sulzer India Ltd. 2014 (12) TMI 267 - BOMBAY HIGH COURT in favour of the Respondent assessee. Excluding the deduction u/s 80IB from the profits of the business for determining deduction u/s 80HHC in view of section 80IA(9) - Held that - Tribunal has allowed the Respondent assessee s appeal before it following the decision of this court in Associated Capsules P. Ltd. vs. Deputy Commissioner of Income Tax 2011 (1) TMI 787 - BOMBAY HIGH COURT as well as its own decision in the case of the same Respondent assessee for the Assessment Year 2003-04. Although an appeal has been preferred to the Supreme Court from the decision of this court in Associated Capsules P.Ltd. (supra) it has not been stayed. Therefore it continues to be binding upon us. The fact that the Apex Court in Micro Labs Ltd. (2015 (12) TMI 708 - SUPREME COURT ) has on account of difference of view between members of its Bench referred this issue to its Larger Bench would not by itself reduce the binding character of the decision of this court in Associated Capsules P.Ltd. (supra) and we are bound by it. Including interest on delayed payments as income of the unit while working out deduction u/s 80IB - Held that - This very issue viz. availability of Section 80IB of the Act which arises for our consideration in Commissioner of IncomeTax vs. Vidyut Corporation 2010 (4) TMI 229 - BOMBAY HIGH COURT wherein held the price realised by the assessee from the sale of goods manufactured by the industrial undertaking constitutes a component of the profits and gains derived from the eligible business. The purchaser on account of the delay in payment of the sale price also pays to the assessee interest. This forms a component of the sale price and is paid towards the lag which has occurred in the payment of the price of the goods sold by the assessee. On these facts therefore the payment of interest on account of the delay in payment of the sale price of the goods supplied by the undertaking partakes of the same nature and character as the sale consideration. The delayed payment charges consequently satisfy together with the sale price. Revenue appeal dismissed.

Summary

Issues:
1. Challenge to the order of the Income Tax Appellate Tribunal (Tribunal) for Assessment Year 2004-05.
2. Questions of law raised by the Revenue:
(i) Deletion of addition made under section 41(1).
(ii) Exclusion of deduction under section 80IB for determining deduction under section 80HHC.
(iii) Inclusion of interest on delayed payments as income of the unit for working out deduction under section 80IB.

Analysis:

1. Deletion of addition under section 41(1):
- The issue was concluded by a previous court decision in favor of the Respondent assessee, hence not entertained as it did not raise any substantial question of law.

2. Exclusion of deduction under section 80IB:
- The Tribunal's decision was based on a previous court ruling and the issue was still binding despite being referred to the Supreme Court for further consideration. The question was not entertained as it did not give rise to any substantial question of law.

3. Inclusion of interest on delayed payments under section 80IB:
- The Tribunal allowed the Respondent assessee's appeal based on a previous order for the Assessment Year 2000-01. The Revenue argued against this decision, citing an appeal that was dismissed due to low tax effect. However, the court referred to a judgment in a similar case where interest received was considered part of the sale price and satisfied the requirements of Section 80IB. The issue was concluded by a previous court decision in favor of the Respondent assessee, and hence, did not raise any substantial question of law.

Therefore, the appeal was dismissed, and no costs were awarded.