2019 (7) TMI 694 - HC - Income Tax

Commission to sole selling agent - whether should be included in the total turnover when actually the said sum is not received by the assessee at all? - HELD THAT - Issue considered in favour of the assessee. In the earlier decision in the assessee's own case for the AY 2003-04 and 2004-2005, the appeal filed by the Revenue against the said order of the Tribunal was dismissed. Accordingly, substantial question of law No.1 has decided in favour of the assessee Deduction u/s 80HHC - Royalty income which treated as business income - Whether the interest and profit of sale of assets do not qualify for deduction under Section 80 IB as profits not derived from industrial undertaking ? - Whether License fee received for Makshi unit, can be under clause (baa) of Section 80HHC even though there is no reference to License fee in clause (baa)? - HELD THAT - As in the assessee's own case for the Assessment Years 2003-04 and 2004-05, the questions were considered against the assessee and such decision was upheld by this Court. Therefore, substantial questions of law Nos.2 to 6 have to be answered in favour of the Revenue and against the assessee.

Summary

Issues:
1. Inclusion of "Commission to sole selling agent" in total turnover when not received by assessee.
2. Requirement for detailed and reasoned order by Tribunal.
3. Treatment of "Royalty income" as business income under Section 80HHC.
4. Eligibility of interest and profit of sale of assets for deduction under Section 80 IB.
5. Consideration of "License fee" for Makshi unit under Section 80HHC.

Analysis:
1. The appeal under Section 260-A of the Income Tax Act, 1961 challenged the order by the Income Tax Appellate Tribunal regarding the Assessment Year 2002-03. The substantial questions of law raised included the inclusion of "Commission to sole selling agent" in the total turnover despite not being received by the assessee. The Court decided in favor of the assessee based on a previous decision in their favor for another assessment year.

2. The Tribunal's duty to provide a detailed and reasoned order was questioned in the appeal. The Court noted that in previous cases for the Assessment Years 2003-04 and 2004-05, decisions were made against the assessee, and such decisions were upheld. Therefore, the substantial questions of law related to this issue were answered in favor of the Revenue and against the assessee.

3. Regarding the treatment of "Royalty income" as business income under Section 80HHC, the Court upheld the decision in favor of the Revenue and against the assessee. The eligibility of interest and profit of sale of assets for deduction under Section 80 IB was also considered, and the Court ruled against the assessee in this regard.

4. The issue of whether "License fee" received for the Makshi unit could be considered under Section 80HHC, even though there was no specific reference to it in the relevant clause, was addressed. The Court decided in favor of the Revenue and against the assessee on this matter. In conclusion, the appeal was partly allowed, with substantial question of law No.1 answered in favor of the assessee, and substantial questions of law Nos.2 to 6 answered against the assessee and in favor of the Revenue. No costs were awarded in this judgment.