- (1.) This appeal has been preferred by the Revenue under section 260A of the Income-tax Act, 1961 (in short, "the Act"), against the order dated March 23, 2007, annexure A.3, passed by the Income-tax Appellate Tribunal, Chandigarh Bench "A", Chandigarh (in short, "the Tribunal"), in I.T.A. No. 1336/Chandi/2004, for the assessment year 2000-01. On May 12, 2010, the following order was passed by this court: "The Revenue has approached this court by filing the instant appeal under section 260A of the Income-tax Act, 1961, challenging the order dated March 23, 2007, passed in I.T.A. No. 1336/Chandi/2004 in respect of the assessment year 2000-01. The Revenue has claimed the following substantial questions of law: "(i) Whether, on the facts and in the circumstances of the case, the hon'ble Income-tax Appellate Tribunal was correct in deleting of disallowance of Rs. 1,42,52,223 made on account of interest relatable to investment in capital work-in-progress ignoring Explanation 8 to section 43(1) of the Income-tax Act, 1961, which requires the interest on borrowed capital to be treated as capital expenditure? (ii) Whether, on the facts and in the circumstances of the case, the hon'ble Income-tax Appellate Tribunal was correct in deleting of disallowance of interest amounting to Rs. 87,80,214 made under section 36(1)(iii)? (iii) Whether, on the facts and in the circumstances of the case, the hon'ble Income-tax Appellate Tribunal was correct in law in directing the Assessing Officer to compute the relief under section 80HHC without reducing the deduction eligible under section 80-IA/80-IB disregarding the provisions of section 80-IA(9) read with section 80-IB(13)? (iv) Whether, on the facts and in the circumstances of the case, the hon'ble Income-tax Appellate Tribunal was correct in law in directing the Assessing Officer for not excluding a sum of Rs. 2,10,99,228 from the export turnover for computing the deduction under section 80HHC? (v) Whether, on the facts and in the circumstances of the case, the hon'ble Income-tax Appellate Tribunal was correct in law in directing the Assessing Officer to compute the indirect costs of the Barnala unit in proportion of the export of trading goods to the total turnover of the Barnala unit disregarding Explanation (e) to sub-section (3) of section 80HHC of the Income-tax Act, 1961?" Mr. Sethi, learned counsel for the Revenue, has fairly conceded that question No. 1 stands answered against the Revenue and in favour of the assessee by the Division Bench judgment of this court in I.T.A. No. 396 of 2007, decided on July 25, 2008 (CIT v. Malwa Cotton Spinning Mills Ltd.). The aforesaid judgment is based on the view taken by the Supreme Court in the case of Deputy CIT v. Core Health Care Ltd, 2008 298 ITR 194(SC). Accordingly, the aforesaid question would not emerge for determination. With regard to the second question, Mr. Sethi, has stated that the Tribunal having regard to the view in S.A. Builders Ltd. v. CIT (Appeals), 2007 288 ITR 1(SC) has referred the matter to the Assessing Officer for fresh determination. Accordingly, since the matter is pending before the Assessing Officer and the judgment of S.A. Builders covers the case against the Revenue, therefore, the aforesaid question would also not arise for determination. Mr. Sheti has also stated with regard to questions IV and V that both questions since stand referred to the Assessing Officer which are yet to attain finality, therefore, he has not pressed those questions. However, with regard to question No. 3, the learned counsel has stated that I.T.A. No. 371 of 2007 stands already admitted. In view of the above, we admit the appeal with regard to question No. 3 only. (Sd.)..... M.M. Kumar, Judge (Sd.).... Jitendra Chauhan, Judge" May 12, 2010
(2.) Thereafter, a review petition was filed by the Revenue. On March 18, 2011, the following order was passed: "1. This is an application seeking review of our order dated May 12, 2010, in respect of questions Nos. i, ii, v and iv. 2. Notice of the application has been issued. 3. Mr. Sandeep Goyal, learned counsel for the non-applicant-respondent has put in appearance on behalf of the respondent. The prayer made in the application has been opposed by filing reply to the review application. 4. After hearing learned counsel for the parties, we are of the view that there are sufficient grounds for accepting the review application in respect of questions Nos. i, ii, v and iv. 5. Mr. Dinesh Goyal, learned counsel for the review applicant, has pointed out various objections made in the order of the Tribunal, which shows to the contrary. Those paragraphs have also been cited in the review application. There is no serious dispute with regard to the aforesaid factual position. 6. In view of the above, we recall our order dated May 12, 2010, in respect of questions Nos. i, ii, v and iv. Let the matter be listed for motion hearing as per roster. (Sd.)... M.M. Kumar, Judge (Sd.).... Jitendra Chauhan, Judge March 18, 2011"
(3.) On August 3, 2011, it was noticed that since the appeal has been admitted, therefore, all the issues will be considered at the time of final hearing. Now, we take up all the questions for adjudication.;