M/s Shyam Steel Industries Ltd, Kolkata V. D.C.I.T CC - VII,kolkata, Kolkata

ITA 1074/KOL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4764 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 14-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 06-05-2013
• Court: TRIBUNAL
• Department Lawyers: MD GHAYAS UDDIN
• Assessee Lawyers: AMIT KUMAR
• Keywords: Difference of opinion; Capital receipt
• Section: 143(3)

Judgement Text

1 ITA NOS. 1074 & 1075/KOL/2013 M/S. SHYAM STEEL INDUSTRIES LTD IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH KOLK ATA [BEFORE SRI M. BALAGANESH, A M & SRI S.S.VISWANETHR A RAVI, J M] I.T.A. NOS. 1074/KO1/2013 & 1075/KOL/2013 ASSESSMENT YEARS 2008-09 & 2009-10 M/S. SHYAM STEEL INDUSTRIES LTD., KOL. -VS- DCIT , C.C-VII, KOLKATA [PAN.: AAGCS 3838R] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI AMIT KUMAR, C.A. FOR THE RESPONDENT : SHRI MD.GHAYAS UDDIN, JCIT, SR.DR DATE OF HEARING : 14.07.2016 DATE OF. PRONOUNCEMENT : 03.08.2016 ORDER PER SHRI S. S. VISWANETHRA RAVI, J.M.: THESE TWO APPEALS BY THE ASSESSEE FILED AGAINST TH E SEPARATE ORDER DT:18-03- 2013 PASSED BY THE CIT-A, CENTRAL-I, KOLKATA IN APP EAL NOS.319, 265/CC- VII/CIT(A)C-1/10-11 FILED AGAINST THE SEPARATE ASS ESSMENT ORDER FRAMED BY THE AO U/SEC 143(3) OF THE ACT FOR ASSESSMENT YEARS 200 8-09 AND 2009-10. 2. THE APPELLANT ASSESSE RAISED THE FOLLOWING COMMO N GROUNDS: 1. THAT THE CIT-A-C-I , KOLKATA ERRED IN HOLDING TH E POWER SUBSIDY AMOUNTING TO RS.3,97,38,444/- [A.Y 2008-09] & RS.3 ,17,13,892/- [A.Y 2009-10], RECEIVED AS GRANT FOR THE PROMOTION OF IN DUSTRIAL UNIT TO BE REVENUE RECEIPT AS AGAINST THE CLAIM OF ASSESSEE TH AT THE SAME IS A CAPITAL RECEIPT. THE LD. CIT(A) IGNORED THE FACTS THAT THE OBJECT OF THE SUBSIDY WAS TO ENABLE THE ASSESSEE WAS SET UP A NEW PROJECT AT BACKWARD THE AREAS OF THE STATE OF WEST BENGAL AND THE SUBSIDY S O RECEIVED WAS ALSO UTILISED FOR THE REPAYMENT OF THE TERM LOANS. THE P OWER SUBSIDY MAY 2 ITA NOS. 1074 & 1075/KOL/2013 M/S. SHYAM STEEL INDUSTRIES LTD KINDLY BE DIRECTED TO BE TREATED AS A CAPITAL RECEI PT IN THE HANDS OF ASSESSE. 2. THAT THE ASSESSE CLAVES THE LEAVE TO ADD, ALTER, AMEND OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL BEFORE OR AT THE TI ME OF HEARING. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E RECEIVED SUBSIDY ON ACCOUNT OF ELECTRICITY CHARGES AMOUNTING TO RS.3,97,38,444/ - AND RS.3,17,13,892/- FOR ASSESSMENT YEARS 08-09 AND 09-10 RESPECTIVELY FROM THE GOVERNMENT OF WEST BENGAL FOR SETTING UP INDUSTRY IN THE STATE ESPECIA LLY IN THE BACKWARD AREAS. THE SAID SUBSIDY WAS AVAILED OF UNDER THE WEST BENGAL I NCENTIVE TO POWER INTENSIVE INDUSTRIES SCHEME 2005 VIDE NOTIFICATION NO- 276 C1/O/INCENTIVE/052/05/1 DATED 19-05-2005 OF THE DEPARTMENT OF COMMERCE AND INDUS TRIES, GOVERNMENT OF WEST BENGAL. THE ASSESSEE WAS ELIGIBLE FOR THE SAID SUBS IDY FOR SETTING UP NEW PROJECT AT ANGADPUR AND DURGAPUR FOR MANUFACTURING HOT ROLLED STEEL BARDS, STEEL INGOTS/BILLETS AND SPONGE IRON. BASED ON THE ABOVE, WBIDC I.E THE IMPLEMENTING AGENCY HAS ISSUED THE ELIGIBILITY CERTIFICATE DATED 2 ND MARCH 2006 CERTIFYING THAT SUBSIDY FROM 27 TH SEPTEMBER 2003 TO 26 TH SEPTEMBER 2009. ON THE BASIS OF SAID CERTIFICATE THE ASSESSEE AVAILED POWER SUBSIDY AMOU NTING TO RS.3,97,38,444/- AND RS.3,17,13,892/- FOR ASSESSMENT YEARS 08-09 AND 09 -10 RESPECTIVELY FOR SETTING UP NEW UNIT IN THE BACKWARD AREA. ACCORDING TO THE SCH EME UNDER WHICH THE ASSESSEE HAS RECEIVED THE POWER SUBSIDY IS AVAILABLE TO THOS E INDUSTRIES WHICH SET UP NEW UNITS IN BACKWARD AREAS. THE OBJECTIVE OF THE SCHEM E WAS TO BOOST RESURGENCE IN THE INDUSTRIAL SCENARIO IN THE STATE AND TO ATTRACT ENTREPRENEURS FOR SETTING UP INDUSTRIES IN THE STATE ESPECIALLY IN THE BACKWARD AREAS. 4. KEEPING IN VIEW THE OBJECT OF THE SCHEME IT WAS CONSIDERED THAT THE POWER SUBSIDY IS NOT PROVIDING POWER AT A CONCESSIONAL R ATE BUT AS A BOOST TO SET UP NEW INDUSTRY AND AS SUCH IT WAS CONSIDERED AS CAPITAL R ECEIPT. IN SUPPORT OF THE SAID 3 ITA NOS. 1074 & 1075/KOL/2013 M/S. SHYAM STEEL INDUSTRIES LTD STAND VARIOUS CASE LAW WERE ALSO REFERRED. THE ASSE SSING OFFICER, HOWEVER DID NOT AGREE WITH THE CLAIM OF THE ASSESSEE AND ACCORDING TO HIM THE POWER SUBSIDY WAS ONLY THE CONCESSION GIVEN AGAINST THE EXPENDITURE O N ACCOUNT OF POWER CONSUMPTION BY THE INDUSTRY TO MAKE IT MORE PROFITA BLE. 5. ON APPEAL BY THE ASSESSEE, THE COMMISSIONER APPE ALS HELD THAT THE SUBSIDY IN QUESTION WAS REVENUE RECEIPT AND CONFIRMED THE O RDER OF ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF COMMISSIONER APPEALS THE ASSESSEE PREFERRED PRESENT APPEALS BEFORE THE TRIBUNAL. THE GROUNDS OF APPEAL OF THE ASSESSEE ARE COMMON IN BOTH THE APPEALS AS MENTIONED ABOVE. 6. AT THE TIME OF HEARING, IT WAS BROUGHT TO OUR N OTICE THAT THIS TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA 65/KOL/10 AND ITA 66 5/KOL/11 FOR ASSESSMENT YEARS 2006 2007 AND 2007 2008 HELD THAT SIMILAR SUBSIDY RECEIVED BY THE ASSESSEE UNDER VERY SCHEME OF GOVERNMENT OF WEST BE NGAL TO BE CAPITAL SUBSIDY NOT CHARGEABLE TO TAX. PURSUANT TO THE ORDER OF HO NBLE PRESIDENT AS THIRD MEMBER, THE ORDER OF THE TRIBUNAL DATED 15 TH JULY 2016 HAS BEEN PLACED ON RECORD. THE LEARNED DR PLACED RELIANCE ON A DECISIO N RENDERED BY THE B BENCH OF KOLKATA TRIBUNAL IN THE CASE OF LIMTEX TEA & IND USTRIES LIMITED VS ACIT REPORTED IN (2016 ) 65 TAXMANN.COM 222(KOLKATA-TRIB .) THE HONBLE THIRD MEMBER DECIDED THE ISSUE UNDER REFERENCE IN FAVOUR OF THE ASSESSE TAKING INTO CONSIDERATION THE RATIO LAID DOWN BY THE HONBLE SU PREME COURT IN THE CASE OF PONNI SUGARS REPORTED IN 306 ITR 392 , LD.DR URGED THE BENCH TO PLACE SUCH ORDER AS PART AND PARCEL OF THE RECORD, BUT, HOWEVE R, WE ARE OF THE VIEW THAT NO CREDENCE COULD BE GIVEN TO THE SAID ORDER IN VIEW O F THE FACT THAT THIS BENCH IS OCCASIONED TO DISPOSE OFF THE PRESENT APPEALS IN PU RSUANCE OF THE ORDER OF THIRD MEMBER AS IT HAS BECOME BINDING ON US AND ACCORDING LY, THE ORDER PLACED BY THE LD.DR IS ESCHEWED FROM THE RECORD. BE THAT AS IT MA Y, THE ORDER DATED 15 TH JULY 4 ITA NOS. 1074 & 1075/KOL/2013 M/S. SHYAM STEEL INDUSTRIES LTD 2016 OF THE B BENCH OF TRIBUNAL IN ITA 65/KOL/10 AND ITA 665/KOL/11 IS REPRODUCED AS UNDER: WHEN THESE CASES CAME UP BEFORE THE DIVISION BENCH, THERE WAS A DIFFERENCE OF OPINION BETWEEN THE MEMBERS THEN CONS TITUTING THE DIVISION BENCH. ACCORDINGLY THE FOLLOWING QUESTION WAS REFER RED FOR THE ESTEEMED VIEWS OF HONBLE THIRD MEMBER - WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE POWER SUBSIDY RECEIVED BY THE ASSESSEE IS CAPITAL I N NATURE OR REVENUE IN NATURE? 2. HONBLE PRESIDENT, ITAT, IN HIS CAPACITY AS THIR D MEMBER, HAS CONCURRED WITH THE CONCLUSIONS ARRIVED AT BY THE LE ARNED ACCOUNTANT MEMBER. IN ACCORDANCE WITH THE MAJORITY VIEW, THERE FORE, THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. 3. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED. 7. IN VIEW OF THE ABOVE, WE ALLOW THE SOLE GROUND R AISED BY THE ASSESSEE. 8. IN THE RESULT THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD AUGUST, 2016. SD/- SD/- M. BALAGANESH S.S.VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 03 RD /08 /2016 5 ITA NOS. 1074 & 1075/KOL/2013 M/S. SHYAM STEEL INDUSTRIES LTD PP/SR.PS COPY OF ORDER FORWARDED TO: 1 M/S. SHYAM STEEL INDUSTRIES LTD., SHYAM TOWERS, EN- 32, SECTOR-V, SALT LAKE, KOLKATA 700 091. 2 DCIT, CC-VII, KOLKATA 3 THE CIT(A), 4 5 CIT, 5. D.R. TRUE COPY, BY ORDER, ASSTT. REGISTRAR , ITAT, KOLKATA