M/s Hans Fashion, Ludhiana V. JCIT (OSD), Ludhiana

ITA 103/CHANDI/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68503 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 07-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Additional evidence; Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACOCUNTANT MEMBER ITA NO. 103/CHD/2013 ASSESSMENT YEAR: 2009-10 M/S HANS FASHION, VS. THE JCIT(OSD) E-189, FOCAL POINT CIRCLE I LUDHIANA LUDHIANA PAN NO. AABFH7572D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI AKHILESH GUPTA (DR) DATE OF HEARING : 09/09/2013 DATE OF PRONOUNCEMENT : 13/09/2013 ORDER PER BHAVNESH SAINI, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)- II, LUDHIANA DATED 14.12.2012 FOR THE ASSESSMENT Y EAR 2009-10 CHALLENGING THE ORDER OF LD. CIT(A) IN HOLDING THAT SUBSIDY OF RS. 35,94,590/- RECEIVED BY THE ASSESSEE FROM THE STATE GOVERNMENT UNDER THE STATE INDUSTRIAL POLICY, 1996 IS TRADING / REVENUE RECEIPT WHEREAS THE SAME WAS RECEIVED IN THE NATURE OF CAPITAL RECEIPT S. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF FABRICS AND GARMENTS. IT HAD RECEIVED SUBSIDY OF RS. 35,94,590/- IN ASSESSMENT YEAR UNDER APPEAL. THE ASSESSEE CLAIMED THIS SUBSIDY AS CAPITAL SUBSIDY. THE ASSES SEE WAS ASKED TO JUSTIFY THE CLAIM. THE ASSESSEE SUBMITTED THAT SUBSIDY WAS AVAILED AGAINST CAPITAL INVESTMENT UNDER EXPORT ORIENTED UNIT (EOU) SCHEME ON CERTAIN 2 TERMS AND CONDITIONS AS MENTIONED IN THE IMPUGNED O RDERS. THE CLAIM OF THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFI CER AND ASSESSING OFFICER FOLLOWING THE DECISION OF THE APEX COURT IN THE CASE OF SAHNEY STEELS AND PRESS WORKS LTD V CIT (228 ITR 253) HEL D THAT THE CAPITAL NATURE OF SUBSIDY RECEIVED BY THE ASSESSEE IS NOT C APITAL SUBSIDY BUT REVENUE RECEIPT AND THE SAME WAS ADDED TO THE INCOM E OF THE ASSESSEE THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT(A) AND ITS WRITTEN SUBMISSIONS IS REPRODUCED IN THE APPELL ATE ORDER WHEREIN THE ASSESSEE MADE THE SIMILAR CLAIM THAT SUBSIDY RECEIV ED WAS CAPITAL IN NATURE. THE LD. CIT(A) ALSO ON THE SAME REASONING A ND BY FOLLOWING CERTAIN JUDGMENTS REJECTED THE CLAIM OF THE ASSESSE E AND DISMISSED THE APPEAL OF THE ASSESSEE. 3. THE ASSESSEE HAS FILED APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 29 OF THE APPELLATE TRIBUNAL R ULES. THE ASSESSEE THROUGH THIS APPLICATION SOUGHT THE ADMISSION OF NO TIFICATION DATED 20.3.1996 AND DATED 1.6.1996 OF DEPARTMENT OF INDUS TRIES AND COMMERCE, COPY OF THE SAME IS FILED WITH THE APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE. IT IS SUBMITTED IN THE APPLICATION THAT SUBSIDY WAS RECEIVED BY THE ASSESSEE AS PER INDUSTRIAL POLICY OF PUNJAB, 19 96. THE ASSESSEE COULD NOT FILE THE ADDITIONAL EVIDENCE BEFORE THE AUTHORI TIES BELOW BECAUSE THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY IN T HE YEAR 2011-12 WHICH IS AFTER LONG GAP OF TIME SINCE THE ASSESSEE HAS SE T UP ITS BUSINESS. THE ASSESSEE HAS BEEN GRANTED THE STATUS OF EOU IN THE YEAR 2002 AND IT HAS IN THE YEAR UNDER CONSIDERATION ONLY THE AMOUNT OF SUB SIDY HAS BEEN RECEIVED BY THE ASSESSEE. THE ASSESSEE HAS APPLIED FOR GRAN T OF SUBSIDY IN THE YEAR 2002 SOON AFTER IT HAD GAINED THE STATUS OF EOU AND AS PER THE INDUSTRIAL POLICY OF PUNJAB 1996, THE ASSESSEE HAD APPLIED FOR THE SAME THROUGH A PROFESSIONAL WHICH DEALS IN THE SUBSIDY WORK AND SO IT HAD NOT THOUGHT OF 3 TAKING ANY COPY OF THE POLICY WITH IT. THE ASSESSE E WAS NOT ABLE TO GET COPY OF THE INDUSTRIAL POLICY, 1996 AT THE TIME OF ASSESSMENT & APPELLATE PROCEEDINGS AS THE SAME WAS AN OLD ALSO. NOW THE A SSESSEE IS ABLE TO GET COPY OF THE INDUSTRIAL POLICY PUNJAB 1996. THE TER MS AND CONDITIONS FOR GRANT OF EOU STATUS AS WELL AS CALCULATION FOR THE SUBSIDY AMOUNT TO BE RELEASED ARE CLEARLY GIVEN IN THE SAID POLICY. IT WAS SUBMITTED THAT THE FACT THAT AMOUNT OF SUBSIDY RECEIVED BY EOU UNITS A S PER THE POLICY IS THE CAPITAL SUBSIDY IS ALSO CLEARLY WRITTEN IN THE SAID POLICY. THE COPY OF THE SAME IS FILED. IT IS THEREFORE, SUBMITTED THAT ALL THE PARTICULARS ARE BEFORE THE AUTHORITIES BELOW AND NO INVESTIGATION OF FACTS ARE REQUIRED. THE ADDITIONAL EVIDENCE GOES TO THE ROOT OF THE MATTER TO DECIDE THE ISSUE. IT IS, THEREFORE, PRAYED THAT ADDITIONAL EVIDENCE MAY BE A DMITTED FOR HEARING. THE ASSESSEE RELIED UPON THE FOLLOWING DECISIONS IN SUPPORT OF ITS CONTENTION. I. CIT V/S MUKTA METAL WORKS 336 ITR 555(P&H) II. UOPLLC* V/S ADDL. DIRECTOR OF INCOME TAX 108 ITD (DEL-TRIB) 186 III. CIT VS SURETECH HOSPITAL & RESEARCH CENTRE LTD . 293 ITR 53 (BOM.) IV. SMT. PRABHAVATI S. SHAH VS CIT 231 ITR 1 V. CIT VS GIANI BHAI WAHAV BHAI 232 ITR 900 VI. ELECTRA JAIPUR PVT. LTD. VS IAC 26 ITD 236 VII. CIT VS. PARIMAL KANTI CHANDA 291 ITR 77 (GAU) VIII. PARAS RICE MILL- 90 TTJ 789 IX. ICHALKARANJI CO-OPERATIVE SPINNING MILLS LTD. V S. DCIT 103 TTJ 593 (PUNE) (TM) 4. THE LD. COUNSEL FOR THE ASSESSEE IN SUPPORT OF A PPLICATION OF ADDITIONAL EVIDENCE REITERATED THE SUBMISSIONS MADE THEREIN AND SUBMITTED 4 THAT AS PER THE ABOVE SCHEME AND NOTIFICATION THE S UBSIDY RECEIVED BY THE ASSESSEE IS CAPITAL IN NATURE, THEREFORE, ADDITION AL EVIDENCE MAY BE ADMITTED FOR HEARING. ON THE OTHER HAND, THE LD. D R SUBMITTED THAT NO REASONS HAVE BEEN GIVEN IN THE APPLICATION FOR ADMI SSION OF ADDITIONAL EVIDENCE AS TO WHY THE SAME WAS NOT PRODUCED BEFORE THE AUTHORITIES BELOW. HE HAS, THEREFORE, OPPOSED THE ADMISSION OF ADDITIONAL EVIDENCE AT THIS STAGE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL ON RECORD. THE DISPUTE BEFORE THE TRIBUNAL IS WITH REGARD TO T HE AMOUNT IN QUESTION RECEIVED BY THE ASSESSEE AS TO WHETHER IT WAS CAPIT AL SUBSIDY OR REVENUE IN NATURE. THE ASSESSEE HAS FILED ADDITIONAL EVIDENCE I.E. NOTIFICATION OF DEPARTMENT OF INDUSTRIES AND COMMERCE DATED 20.3.19 96 & DATED 1.06.1996 AND ACCORDING TO LD. COUNSEL FOR THE ASSE SSEE THE SUBSIDY RECEIVED BY THE ASSESSEE IS IN THE NATURE OF CAPITA L RECEIPT. THE LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT SINCE THE SUBSIDY WAS GRANTED IN THE ASSESSMENT YEAR UNDER APPEAL AT VERY LATE ST AGE, THEREFORE, THE ADDITIONAL EVIDENCE WAS NOT WITHIN THE POWER AND PO SSESSION OF THE ASSESSEE. ON GOING THROUGH THE ADDITIONAL EVIDENCE MENTIONED ABOVE, WE FIND THAT THE SAME GOES TO THE ROOT OF THE MATTER A ND IS RELEVANT FOR THE PURPOSE OF DECIDING THE ISSUE BETWEEN THE PARTIES. THE EXAMINATION OF THE ADDITIONAL EVIDENCE IS NECESSARY FOR PASSING THE JU ST ORDER IN THE MATTER AS WELL AS FOR THE SUBSTANTIAL CAUSE. FURTHER, OUR ABO VE VIEW FINDS SUPPORT FROM THE DECISION OF HON'BLE DELHI HIGH COURT IN TH E CASE OF CIT V TEST HUNDRED INDIA PVT LTD [2013] 351 ITR 57 (DELHI), WH EREIN IT HAS BEEN HELD AS UNDER:- HELD, DISMISSING THE APPEALS, THAT THE REASON WHIC H WAS GIVEN BY THE ASSESSEE IN SUPPORT OF ITS PLEA FOR AD MISSION OF ADDITIONAL EVIDENCE WAS THAT THE ASSESSEE COULD NOT 5 PRODUCE THESE RECORDS BEFORE THE LOWER AUTHORITIES DUE TO NON-RETRIEVABILITY OF E-MAIL ON THE DATE BECAUSE OF TECHNOLOGICAL DIFFICULTIES. THIS REASON WAS SPECIFI CALLY MENTIONED IN THE APPLICATION FILED. NO REPLY TO THI S APPLICATION WAS FILED REFUTING THIS AVERMENT, THOUG H THE DEPARTMENTAL REPRESENTATIVE HAD OPPOSED THE ADMISSI ON OF THE ADDITIONAL EVIDENCE. THE GROUND PLEADED BY THE ASSESSEE WAS NOT CONFRONTED. IN THIS BACKDROP, THE TRIBUNAL LOOKED INTO THE ENTIRE MATTER AND ARRIVED AT A CONC LUSION THAT THE ADDITIONAL EVIDENCE WAS NECESSARY FOR DECI DING THE ISSUE AT HAND. IT WAS, THUS, CLEAR THAT THE TRIBUNA L FOUND THE REQUIREMENT OF THE EVIDENCE FOR PROPER ADJUDICA TION OF THE MATTER AND IN THE INTEREST OF SUBSTANTIAL CAUSE . RULE 29 CATEGORICALLY PERMITS THE TRIBUNAL TO ALLOW SUCH DO CUMENTS TO BE PRODUCED FOR ANY SUBSTANTIAL CAUSE. ONCE THE TRIBUNAL HAS PREDICATED ITS DECISION ON THAT BASIS, THERE WAS NO REASON TO INTERFERE WITH THE SAME. THERE IS NO DISPUTE THAT ADDITIONAL EVIDENCE IS REL EVANT FOR THE DECISION IN THE MATTER, THEREFORE, WE EXERCISE OUR POWERS UNDER RULE 29 OF THE APPELLATE TRIBUNAL RULES AND ADMIT THE ADDITIONAL E VIDENCE FOR THE PURPOSE OF HEARING. SINCE THE ADDITIONAL EVIDENCE IS FILED FOR THE FIRST TIME BEFORE THE TRIBUNAL, THEREFORE, WE ARE OF THE VIEW THAT THE MATTER SHOULD BE REMANDED BACK TO THE ASSESSING OFFICER FO R REEXAMINATION BY THE ASSESSING OFFICER IN THE LIGHT OF THE ADDITIONA L EVIDENCE SO ADMITTED ABOVE. 6. WE ACCORDINGLY SET ASIDE THE ORDER OF THE AUTHOR ITIES BELOW AND RESTORE THE MATTER IN ISSUE TO THE FILE OF THE ASSE SSING OFFICER WITH A DIRECTION TO RE-DECIDE THE ISSUE OF RECEIPT OF SUBS IDY WHETHER CAPITAL OR REVENUE IN THE NATURE IN THE LIGHT OF THE ADDITIONA L EVIDENCE SO ADMITTED ABOVE. THE ASSESSING OFFICER SHALL GIVE REASONABLE AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND, AS SESSEE IS DIRECTED TO 6 FILE THE COPY OF THE ADDITIONAL EVIDENCE BEFORE TH E ASSESSING OFFICER FOR HIS CONSIDERATION IN ACCORDANCE WITH LAW. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13/09/2013. SD/- SD/- (T.R. SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13 TH SEPTEMBER, 2013 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER, (ASSISTANT REGISTRAR) ITAT, CHANDIGARH