COMMISSIONER OF INCOME TAX-II, AMRITSAR V. M/S GURDASPUR CO-OPERATIVE SUGAR MILLS LTD. ETC.

ITA/88/2012

AI Insights

The case involves two Income Tax Appeals filed by the Commissioner of Income Tax-II, Amritsar against Gurdaspur Co-operative Sugar Mills Ltd. and The Batala Co-operative Sugar Mills Ltd. The appeals challenged the Tribunal's decision which set aside a penalty imposed on the respondents for inaccurately furnishing particulars of income. The core issue was whether the subsidy received by the respondents should be treated as a capital receipt or a revenue receipt. The Tribunal had confirmed the addition of the subsidy as a revenue receipt, leading to the penalty, which was later contested and set aside by the Tribunal. The High Court, upon reviewing the matter, found no error in the Tribunal's decision and dismissed the appeals, stating that the issue was debatable and did not give rise to any substantial question of law.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 737003 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 21-01-2013
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax vs. ECS Ltd, (2011) 336 ITR 162 (Delhi)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: DINESH GOYAL
• Keywords: Capital receipt; Grant-in-Aid; Inaccurate particulars of income; Income Tax Appeals; Penalty; Revenue receipt; Subsidy Receipt
• Section: 260A

Judgement Text

"ITA No. 88 and 95 of 2012 -1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH Date of decision: 21.01.2013 1. ITA No. 88 of 2012 Commissioner of Income Tax-II, Amritsar ...Petitioner versus Gurdaspur Co-operative Sugar Mills Ltd. ..Respondent 2. I.T.A No. 95 of 2012 Commissioner of Income Tax-II, Amritsar ...Petitioner versus The Batala Co-operative Sugar Mills Ltd. ..Respondent CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA HON'BLE MS. JUSTICE RITU BAHRI Present:- Mr. Dinesh Goyal, Advocate, for the appellant. HEMANT GUPTA, J. (Oral) This order shall dispose of the above mentioned Income Tax Appeals filed under Section 260A of the Income Tax Act, 1961 (for short 'the Act') against the order dated 16.12.2011 passed by the Income Tax Appellate Tribunal, Amritsar (for short 'the Tribunal') arising out of the assessment year 2003-07 raising the following substantial question of law: “The ITAT in the facts and circumstances of case and under law has erred in not appreciating the penalty of Rs.10,50,00,000/- was levied on the basis of furnishing of inaccurate particulars of income by the assessee by treating the revenue receipt of Rs.2,15,00,000/- as capital receipt whereas the subsidy receipt is a revenue receipt and the addition has been confirmed by the Hon'ble ITAT, Amritsar Bench Amritsar?” Learned counsel for the appellant relies upon the Division Bench ITA No. 88 and 95 of 2012 -2- judgment of Delhi High Court reported as Commissioner of Income Tax vs. ECS Ltd, (2011) 336 ITR 162 (Delhi) wherein the deduction of 50% claimed by the assessee under Section 80-O was declined and the Assessing Officer estimated the expenditure in the ratio of proportion of foreign income to the total income. We find that the reliance on above said judgment is not tenable, as in the aforesaid case, the deductions under Section 80-O of the Act was declined for the reason that the assessee has not produced any details of the expenses allegedly incurred by it. The Delhi High Court observed :- “The assessee, for claiming deduction under Section 80-O of the Act, wanted the same at 50 per cent of the gross income received in convertible foreign exchange in India provided by it to its foreign clients. The Assessing Officer, however, was of the view that on correct interpretation under Section 80-O, deduction is restricted to the net income and, therefore, expenditure incurred in India for earning the foreign exchange had to be deducted. The Assessing Officer, therefore, wanted the assessee to furnish the details of expenses. As the assessee failed to do the needful in respect of various particulars demanded, the Assessing Officer was left with no alternative but to estimate such expenditure in the ratio of proportion of foreign income to the total income.” In the present case, there is no dispute about the quantum of receipt of grant in aid from the State Government. The assessee reflected the same as capital receipt, whereas it has been treated as to be revenue receipt. The issue; whether the amount of grant in aid is capital receipt or a revenue receipt, is a debatable issue. The findings returned in the judgment relied upon is on fact of non-furnishing of details of expenses. The issue was not debatable as in the present case. Therefore, the reliance on the Division Bench Judgment is misconceived. In view of the above, we do not find any error in the findings recorded by Tribunal while setting aside the penalty. Consequently, we do not ITA No. 88 and 95 of 2012 -3- find that the order of the Tribunal gives rise to any substantial question of law for the opinion of this court. Dismissed. (HEMANT GUPTA) JUDGE ( RITU BAHRI ) JUDGE January 21, 2013 G.Arora/Vimal "