ACIT, Sangrur V. M/s H.M.Steels Ltd, Dirba

ITA 1101/CHANDI/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1966 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 01-03-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 26-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K GARG SH VIBHOR GARG
• Keywords: Capital asset; Business income; Depreciation; Proportionate interest; Question of law; Capital receipt
• Section: 80HHC; 234B; 115JB

Judgement Text

, - , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A, CHANDIGARH , . '.., # $, %& BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO. 366/CHD/2013 ' ( / ASSESSMENT YEAR : 2008-09 M/S H.M. STEELS LTD., VS. THE ADDL CIT. SANGRUR ROAD, SANGRUR RANGE, SANGRUR DIBRA, DISTT.SANGRUR PAN NO. AABCH0164Q ./ ITA NO. 583/CHD/2014 ' ( / ASSESSMENT YEAR : 2009-10 THE DCIT, VS. M/S H.M. STEELS LTD., CIRCLE, SANGRUR ROAD, DIBRA, SANGRUR DISTT.SANGRUR PAN NO. AABCH0164Q ./ ITA NO. 589/CHD/2014 ' ( / ASSESSMENT YEAR : 2009-10 M/S H.M. STEELS LTD., VS. THE ADDL CIT. SANGRUR ROAD, SANGRUR RANGE, SANGRUR DIBRA, DISTT. SANGRUR PAN NO. AABCH0164Q ./ ITA NO. 584/CHD/2014 ' ( / ASSESSMENT YEAR : 2010-11 THE DCIT, VS. M/S H.M. STEELS LTD., CIRCLE , SANGRUR ROAD, DIBRA, SANGRUR DISTT.SANGRUR PAN NO. AABCH0164Q ./ ITA NO. 590/CHD/2014 ' ( / ASSESSMENT YEAR : 2010-11 M/S H.M. STEEL LTD., VS. THE ADDL CIT. SANGRUR ROAD, SANGRUR RANGE, SANGRUR DIBRA, DISTT.SANGRUR PAN NO. AABCH0164Q ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 2 ./ ITA NO. 1101/CHD/2016 ' ( / ASSESSMENT YEAR : 2011-12 THE ACIT, VS. M/S H.M. STEEL LTD., CIRCLE, SANGRUR ROAD, DIBRA, SANGRUR DISTT.SANGRUR PAN NO. AABCH0164Q & ./ ITA NO. 585/CHD/2013 ' ( / ASSESSMENT YEAR : 2008-09 THE DCIT, VS. M/S H.M. STEELS LTD., CIRCLE, SANGRUR ROAD, DIBRA, SANGRUR DISTT.SANGRUR APPELLANT BY : SH. N.K.GARG, ADVOCATE SH. VIBHOR GARG, ADVOCATE RESPONDENT BY : SMT. CHANDERKANTA, SR.DR (APPELLANT) (RESPONDENT) DATE OF HEARING : 10.08.2018 DATE OF PRONOUNCEMENT : 05.11.2018 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE CAPTIONED BUNCH OF APPEALS HAVE BEEN PREFER RED BY THE ASSESSEE & REVENUE AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX(A), PATIALA [HEREINAFTER REFERRED TO AS CIT(A)] DATED 31/3/2013 (ITA NOS. 366/CHD/2013), DATED 28.3.2014 (ITA NOS. 583, 584, 589 & 590/CHD/2014), DATED 21/3/2013 (ITA NO. 585/CHD/2013) AND DATED 30.8.2016 (ITA NO. 1101/CHD/2016). ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 3 2. SINCE ALMOST IDENTICAL ISSUES HAVE BEEN RAISED I N THE AFORESAID APPEALS, THEY WERE HEARD TOGETHER AND ARE BEING DIS POSED OF BY THIS COMMON AND CONSOLIDATED ORDER. FOR THE SAKE OF CON VENIENCE, THE FACTS ARE TAKEN FROM THE APPEAL OF THE ASSESSEE IN ITA NO. 366/CHD/2013 (FOR ASSESSMENT YEAR 2008-09) . 3. THE ASSESSEE IN ITS APPEAL (ITA NO. 366/CHD/2013 ) HAS TAKEN THE FOLLOWING GROUNDS:- 1. THAT THE IMPUGNED APPELLATE ORDER IS BAD BOTH ON FACTS AND LAW. 2. THAT THE LEARNED APPELLATE AUTHORITY WRONGLY AN D ILLEGALLY CONFIRMED THE DISALLOWANCE OF DEDUCTION U /S 8OIC BY AN AMOUNT OF RS. 1,70,78,838/- BEING RECEI VED AS TRANSPORT SUBSIDY TO REIMBURSE THE EXCESS TRANSP ORT EXPENSES INCURRED ON TRANSPORTATION OF RAW MATERIAL & FINISHED GOODS IN THE HILLY AREAS IGNORING THE SUBMISSIONS, PLEADING AND EVIDENCE ON RECORD OR ALTERNATIVELY SHOULD BE TREATED AS CAPITAL RECE IPT BEING NON-TAXABLE. 3. THAT THE LEARNED APPELLATE AUTHORITY WRONGLY AND ILLEGALLY CONFIRMED THE DISALLOWANCE OF DEDUCTION U /S 80IC BY AN AMOUNT OF RS.24,98,964/- BEING THE SALE TAX REBATE NOT PAID UNDER SALES TAX DEFERMENT REBATE SCHEME IGNORING THE SUBMISSIONS, PLEADING AND EVIDENCE ON RECORD OR ALTERNATIVELY SHOULD BE TREAT ED AS CAPITAL RECEIPT BEING NON TAXABLE. 4. THAT THE LEARNED APPELLATE AUTHORITY WRONGLY AND ILLEGALLY HELD THAT INTEREST INCOME OF RS.23,00,560 /- ON FDRS OBTAINED FOR ILC/FLC OPENED FOR RAW MATERIAL PURCHASE, IS NOT ELIGIBLE FOR DEDUCTION U/S 80 IC IGNORING THE SUBMISSIONS, PLEADING AND EVIDENCE ON RECORD AND ALTERNATIVELY BE REDUCED FROM THE COST O F RAW MATERIAL IN VIEW OF APEX COURT JUDGMENT IN THE CASE OF KARNAL CO-OP SUGAR MILLS LTD. 5. THAT THE INCOME FROM THE RECEIPTS OF TRANSPORT S UBSIDY, ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 4 SALE TAX DEFERMENT AMOUNT AND BANK INTEREST SHOULD BE DETERMINED UNDER PROPER HEAD OF INCOME AFTER DEDUCTION OF EXPENSES INCURRED DIRECTLY OR INDIRECT LY FOR RECEIPT OF SUCH AMOUNT 6. THAT THE DEPRECIATION, WHILE DETERMINING THE PRO FITS AND GAINS FROM THE INDUSTRIAL UNDERTAKING, SHOULD N OT BE DEDUCTED BECAUSE THE ALLOWANCE OF DEPRECIATION H AS NO DIRECT OR PROXIMATE CONNECTION AS AN EXPENSE INCURRED FOR EARNING ANY INCOME FROM SUCH INDUSTRIA L UNDERTAKING AND IS BEING ALLOWED BECAUSE OF STATUTO RY PROVISIONS LIKE STATUTORY POLICIES. 7. THAT THE LEARNED APPELLATE AUTHORITY WRONGLY AND ILLEGALLY FAILED TO CONSIDER AND GIVE ANY FINDING T HAT INTEREST U/S 234B AND 234-C, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, HAS BEEN WRONGLY AND ILLEGALLY CHARGED AND LEVIED. 8. THAT THE APPELLANT CRAVES PERMISSION TO ELUCIDAT E, AMEND, ALTER, ADD OR DELETE ANY GROUND OF APPEAL AT THE TIME OF HEARING. IT IS THEREFORE PRAYED THAT THE APPEAL MAY KINDLY B E ACCEPTED AND THE ADDITION MAY KINDLY BE DELETED WHO LLY INTER- ALIA ALLOWING THE DEDUCTION U/S 80 IC OR ANY OTHER RELIEF TO WHICH THE APPELLANT MAY FOUND ENTITLED MAY KINDLY B E GRANTED. 4. GROUND NO.1 IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPEC IFIC ADJUDICATION. 5. GROUND NOS. 2, 3 & 5: V IDE GROUND NOS. 2, 3 AND 5 OF THE APPEAL, THE ASSESSEE HAS AGITATED THE DISALLOWANCE OF DEDUC TION CLAIMED U/S 80IC OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') ON A CCOUNT OF THE AMOUNT RECEIVED AS TRANSPORT SUBSIDY AND SALES TAX REBATE GIVEN UNDER SALES TAX DEFERMENT REBATE SCHEME. ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 5 6. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT BOTH THE ISSUES HAVE BEEN DECIDED IN FAVOUR OF THE ASSES SEE BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE OWN CASE OF THE AS SESSEE FOR ASSESSMENT YEAR 2007-08 BEARING SLP (C )NO.8110 8111/2006 D ECIDED ALONG WITH OTHER APPEALS WITH THE LEAD CASE BEING COMMISSION ER OF INCOME TAX VS. VIJAY STEEL INDUSTRIES IN CIVIL APPEAL NO. 5107/201 5 DATED 21.09.2017. THE LD. COUNSEL HAS SUBMITTED THAT SO FAR AS THE IS SUE RELATING TO THE TRANSPORT SUBSIDY IS CONCERNED, THE HONBLE SUPREME COURT HAS DISMISSED THE CIVIL APPEAL NO. 15557 FILLED BY DEPARTMENT AGA INST THE P&H HIGH COURT JUDGEMENT IN ITA NO. 352/2013 DECIDED ON 4.8. 2015 FOR ASSESSMENT YEAR 2007-08, ISSUE BEING COVERED BY MEGHALAYA STEE L LTD.) (PAGE NO.1-23 OF COMPILATION OF JUDGMENTS), WHEREAS, SO FAR AS TH E ISSUE OF SALES TAX REBATE UNDER SALES TAX DEFERMENT SCHEME IS CONCERNE D, THE HON'BLE SUPREME COURT HAS ALLOWED CIVIL APPEAL NO. 15563 & 15564 FILED BY APPELLANT AGAINST THE P&H HIGH COURT JUDGMENT IN CASE NO. ITA 352/2013 DECIDED ON 4.8.2015 FOR ASSESSMENT YEAR 2007-08. THE RELEV ANT PART OF THE ORDER OF THE HON'BLE SUPREME COURT IN GROUP OF CASES WITH TH E LEAD CASE BEING COMMISSIONER OF INCOME TAX VS M/S VIJAY STEEL INDUS TRIES IN CIVIL APPEAL NO.5107/2015 DT.21-09-2017 IS AS UNDER:- AFTER HEARING THE LEARNED COUNSEL FOR THE PARTIES WE FIND THAT THE ISSUE RAISED IN THESE APPEALS IS COVERED AGAINST THE REVENUE BY THE DECISION OF THIS COURT IN ' COMMISSIONER OF INCOME TAX, MADRAS VS. PONNI SUGARS AND CHEMICALS LTD.' REPORTED IN (2008) 9 SCC 337, OR IN THE ALTERNATE, IN 'COMMISSIONER OF INCOME TAX VS. M/S. MEGHALAYA STEELS LTD. ', REPORTED IN (2016) 3 SCALE 192. ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 6 THEREFORE, THE APPEALS OF THE REVENUE ARE DISMISSED AND THE APPEAL (S) OF THE ASSESSEE(S) IS ALLOWED. HOWEVER, IN A PARTICULAR CASE, IF IT IS FOUND THAT THE FACTS OR ISSUE IS DIFFERENT, LIBERTY IS GRANTED TO THE REVENUE TO MAKE AN APPROPRIATE APPLICATION. 7. THE LD. COUNSEL HAS FURTHER INVITED OUR ATTENT ION TO THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS . MEGHALYA STEELS LTD., CIVIL APPEAL NO. 7622 OF 2014, WHEREIN, THE ISSUE O F TRANSPORT SUBSIDY HAS BEEN DISCUSSED AND THE HON'BLE SUPREME COURT WHIL E RELYING UPON ANOTHER DECISION OF THE SUPREME COURT IN THE CASE OF JAI BHAGAWAN OIL & FLOUR MILLS VS. UNION OF INDIA AND OTHERS (2009) 14 SSC) 63 AND SAHNEY STEEL AND PRESS WORKS LTD VS. CIT A.P.-1 HYDERABAD (1997) 7 SCC 764 HAS ALLOWED THE CLAIM OF DEDUCTION U/S 80I B / 80IC OF THE ACT ON ACCOUNT OF TRANSPORT SUBSIDY. HOWEVER, THE ASSESSEE BEFORE US HAS MADE THE CLAI M THAT THE SUBSIDY RECEIVED BY THE ASSESSEE WAS CAPITAL IN NATURE OTHE RWISE. HE, IN THIS RESPECT HAS RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT-I VS. M/S CHAPHALKAR BROTHERS, PUNE A ND OTHERS IN CIVIL APPEAL NOS. 6513-6514 OF 2012 VIDE ORDER DATED 7.12 .2017 REPORTED IN (2017) 88 TAXMAN.COM 278 (SC.) THE LD. COUNSEL IN THIS RESPECT HAS SUBMITTED THAT AS PER THE SCHEME OF THE GOVERNMENT SUBSIDY, VAT DEFERMENT SCHEME AND TRANSPORT SUBSIDY WAS GRANTED AS INCENTIVES WITH THE OBJECT TO DEVELO P PARTICULARLY THE REMOTE AREA IN THE STATE OF HIMACHAL PRADESH FOR TH E INFRASTRUCTURE AND ECONOMIC DEVELOPMENT OF THE AREA AND ALSO TO GENER ATE EMPLOYMENT WITH A ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 7 VIEW TO PROMOTE THE GROWTH OF INDUSTRIES IN THE ARE AS WHICH ARE GEOGRAPHICALLY PLACED AT DISADVANTAGEOUS POSITION A S COMPARED TO INDUSTRIES IN THE PLAIN AREAS. 8. WE FIND THAT THE ISSUE UNDER CONSIDERATION IS NO W SETTLED BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F CIT-I VS. M/S CHAPHALKAR BROTHERS, PUNE AND OTHERS IN CIVIL APP EAL NOS. 6513- 6514 OF 2012 VIDE ORDER DATED 7.12.2017 [2017] 88 T AXMAN.COM 278 (SC). THE HON'BLE SUPREME COURT WHILE DELIBERATIN G ON THE OTHER DECISIONS OF THE SUPREME COURT IN THE CASES OF SAH NEY STEEL & PRESS WORKS LTD. HYDERABAD VS. CIT, A.P.-1, HYDERABAD : 1997 (7) SCC 765, CIT, MADRAS VS. POONI SUGARS AND CHEMICALS LI MITED 2009 (9) SCC 337 AND FURTHER OF THE HON'BLE J&K HIGH COURT I N THE CASE OF SHRI BALAJI ALLOYS VS. CIT (2011) 333 ITR 335, HAS HELD THAT TO HOLD WHETHER ANY OF SUCH RECEIPTS ARE CAPITAL OR REVENU E IN NATURE, PURPOSE TEST IS TO BE APPLIED. IF THE PURPOSE IS FOR THE SETTING UP OF NEW INDUSTRY, THEN THE RECEIPTS ARE TO BE CONSIDERED AS CAPITAL IN NATURE. HOWEVER, IF THE RECEIPTS ARE IN THE NATURE OF FACIL ITATION / HELPING HAND TO THE TRADE, THE SAME ARE TO BE CONSTRUED AS REVEN UE IN NATURE. WHAT IS IMPORTANT IS THE OBJECT FOR WHICH THE SUBSIDY / INCENTIVE IS GRANTED. THAT THE OBJECT IS CARRIED OUT IN A PARTICULAR MANN ER IS IRRELEVANT. ONCE THE OBJECT OF THE SUBSIDY WAS TO INDUSTRIALIZE THE STATE AND TO GENERATE EMPLOYMENT IN THE STATE, THE FACT THAT A SUBSIDY TO OK A PARTICULAR FORM AND THAT IT WAS GRANTED ONLY AFTER COMMENCEMENT OF PRODUCTION, WOULD NOT MAKE ANY DIFFERENCE. THE HON'BLE SUPREME COURT MADE REFERENCE TO ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 8 THE DECISION OF THE HON'BLE J&K HIGH COURT IN THE CASE OF SHRI BALAJI ALLOYS V CIT (SUPRA), WHEREIN, THE HON'BLE HIGH CO URT WHILE CONSIDERING THE SCHEME OF REFUND OF EXCISE DUTY AND INTEREST SUBSIDY, HAS HELD THAT THE RECEIPTS WERE CAPITAL IN NATURE D ESPITE THE FACT THAT THE INCENTIVES WERE NOT AVAILABLE UNTIL AND UNLESS THE COMMERCIAL PRODUCTION HAS STARTED AND DESPITE THE FACT THAT TH ESE INCENTIVES WERE NOT GIVEN TO THE ASSESSEE EXPRESSLY FOR THE PURP OSE OF CAPITAL ASSETS. THE RELEVANT PART OF THE DECISION OF THE HON'BLE SU PREME COURT IN THE CASE OF CIT VS. M/S CHAPHALKAR BROTHERS, PUNE IS REPRODUCED AS UNDER:- FINALLY, IT WAS FOUND THAT, APPLYING THE TEST OF P URPOSE, THE COURT WAS SATISFIED THAT THE PAYMENT RECEIVED B Y THE ASSESSEE UNDER THE SCHEME WAS NOT IN THE NATURE OF A HELPING HAND TO THE TRADE BUT WAS CAPITAL IN NATURE . WHAT IS IMPORTANT FROM THE RATIO OF THIS JUDGMENT I S THE FACT THAT SAHNEY STEEL WAS FOLLOWED AND THE TEST LA ID DOWN WAS THE PURPOSE TEST. IT WAS SPECIFICALLY HELD TH AT THE POINT OF TIME AT WHICH THE SUBSIDY IS PAID IS NOT R ELEVANT; THE SOURCE OF THE SUBSIDY IS IMMATERIAL; THE FORM O F SUBSIDY IS EQUALLY IMMATERIAL. APPLYING THE AFORESAID TEST CONTAINED IN BOTH SAHNE Y STEEL AS WELL AS PONNI SUGAR, WE ARE OF THE VIEW THAT THE OBJECT, AS STATED IN THE STATEMENT OF OBJECTS AND REASONS, OF THE AMENDMENT ORDINANCE WAS THAT SINCE THE AVERAGE OCCUPANCY IN CINEMA THEATRES HAS FALLEN CONSIDERABL Y AND HARDLY ANY NEW THEATRES HAVE BEEN STARTED IN THE RE CENT PAST, THE CONCEPT OF A COMPLETE FAMILY ENTERTAINMEN T CENTRE, MORE POPULARLY KNOWN AS MULTIPLEX THEATRE COMPLEX, HAS EMERGED. THESE COMPLEXES OFFER VARIOUS ENTERTAINMENT FACILITIES FOR THE ENTIRE FAMILY AS A WHOLE. IT WAS NOTICED THAT THESE COMPLEXES ARE HIGHLY CAPITAL INTENSIVE AND THEIR GESTATION PERIOD IS QUITE LONG AND THEREFORE, THEY NEED GOVERNMENT SUPPORT IN THE FORM OF INCENTIVES QUA ENTERTAINMENT DUTY. IT WAS ALSO ADDE D THAT ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 9 GOVERNMENT WITH A VIEW TO COMMEMORATE THE BIRTH CENTENARY OF LATE SHRI V. SHANTARAM DECIDED TO GRAN T CONCESSION IN ENTERTAINMENT DUTY TO MULTIPLEX THEAT RE COMPLEXES TO PROMOTE CONSTRUCTION OF NEW CINEMA HOU SES IN THE STATE. THE AFORESAID OBJECT IS CLEAR AND UNEQUIVOCAL. THE OBJECT OF THE GRANT OF THE SUBSIDY WAS IN ORDER THAT PERSONS COME FORWARD TO CONSTRUCT MULTIP LEX THEATRE COMPLEXES, THE IDEA BEING THAT EXEMPTION FR OM ENTERTAINMENT DUTY FOR A PERIOD OF THREE YEARS AND PARTIAL REMISSION FOR A PERIOD OF TWO YEARS SHOULD GO TOWAR DS HELPING THE INDUSTRY TO SET UP SUCH HIGHLY CAPITAL INTENSIVE ENTERTAINMENT CENTERS. THIS BEING THE CASE, IT IS D IFFICULT TO ACCEPT MR. NARASIMHA'S ARGUMENT THAT IT IS ONLY THE IMMEDIATE OBJECT AND NOT THE LARGER OBJECT WHICH MU ST BE KEPT IN MIND IN THAT THE SUBSIDY SCHEME KICKS IN ON LY POST CONSTRUCTION, THAT IS WHEN CINEMA TICKETS ARE ACTUA LLY SOLD. WE HASTEN TO ADD THAT THE OBJECT OF THE SCHEM E IS ONLY ONE -THERE IS NO LARGER OR IMMEDIATE OBJECT. T HAT THE OBJECT IS CARRIED OUT IN A PARTICULAR MANNER IS IRR ELEVANT, AS HAS BEEN HELD IN BOTH PONNI SUGAR AND SAHNEY STE EL. MR. GANESH, LEARNED SENIOR COUNSEL, ALSO SOUGHT TO RELY UPON A JUDGMENT OF THE JAMMU AND KASHMIR HIGH COURT IN SHRI BALAJI ALLOYS VS. C.I.T. (2011) 333 I.T.R. 335 . WHILE CONSIDERING THE SCHEME OF REFUND OF EXCISE DUTY AND INTEREST SUBSIDY IN THAT CASE, IT WAS HELD THAT THE SCHEME WAS CAPITAL IN NATURE, DESPITE THE FACT THAT THE IN CENTIVES WERE NOT AVAILABLE UNLESS AND UNTIL COMMERCIAL PROD UCTION HAS STARTED, AND THAT THE INCENTIVES IN THE FORM OF EXCISE DUTY OR INTEREST SUBSIDY WERE NOT GIVEN TO THE ASSE SSEE EXPRESSLY FOR THE PURPOSE OF PURCHASING CAPITAL ASS ETS OR FOR THE PURPOSE OF PURCHASING MACHINERY. AFTER SETTING OUT BOTH THE SUPREME COURT JUDGMENTS REFERRED TO HEREINABOVE, THE HIGH COURT FOUND THAT THE CONCESSIONS WERE ISSUED IN ORDER TO ACHIEVE THE TWI N OBJECTS OF ACCELERATION OF INDUSTRIAL DEVELOPMENT I N THE STATE OF JAMMU AND KASHMIR AND GENERATION OF EMPLOYMENT IN THE SAID STATE. THUS CONSIDERED, IT W AS OBVIOUS THAT THE INCENTIVES WOULD HAVE TO BE HELD C APITAL AND NOT REVENUE. MR. GANESH, LEARNED SENIOR COUNSEL , POINTED OUT THAT BY AN ORDER DATED 19.04.2016, THIS COURT STATED THAT THE ISSUE RAISED IN THOSE APPEALS WAS C OVERED, INTER ALIA, BY THE JUDGMENT IN PONNI SUGARS, AND TH E APPEALS WERE, THEREFORE, DISMISSED. ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 10 WE HAVE NO HESITATION IN HOLDING THAT THE FINDING O F THE JAMMU AND KASHMIR HIGH COURT ON THE FACTS OF THE INCENTIVE SUBSIDY CONTAINED IN THAT CASE IS ABSOLUT ELY CORRECT. IN THAT ONCE THE OBJECT OF THE SUBSIDY WAS TO INDUSTRIALIZE THE STATE AND TO GENERATE EMPLOYMENT IN THE STATE, THE FACT THAT THE SUBSIDY TOOK A PARTICULAR FORM AND THE FACT THAT IT WAS GRANTED ONLY AFTER COMMENCEMEN T OF PRODUCTION WOULD MAKE NO DIFFERENCE . WE MAY FURTHER ADD HERE THAT THE DECISION OF THE HO N'BLE JAMMU & KASHMIR HIGH COURT IN THE CASE OF CIT VS. SHRI BA LAJI ALLOYS & ORS (SUPRA) HAS BEEN UPHELD BY THE HON'BLE SUPREME COU RT VIDE ITS DECISION DATED 19.12.2016 REPORTED IN (2016) 95 CCH 0249 SCC / (2016) 138 DTR 0036 (SC). 9. IN VIEW OF THIS PROPOSITION OF LAW LAID DOWN BY THE HON'BLE SUPREME COURT, THE AFORESAID RECEIPTS OF THE ASSESS EE ON ACCOUNT OF SALES TAX / VAT DEFERMENT SUBSIDY AND TRANSPORT SUB SIDY ARE HELD TO BE CAPITAL IN NATURE AND NOT TAXABLE. SINCE THE RECEIP TS HAVE BEEN HELD TO BE CAPITAL IN NATURE, HENCE, NO ADDITION IS ATTRACT ED ON ACCOUNT OF THESE RECEIPTS INTO THE INCOME OF THE ASSESSEE. 10. GROUND NO. 4 : VIDE THIS GROUND, THE ASSESSEE THE ASSESSEE HAS AGITATED THE ACTION OF THE ASSESSING OFFICER IN DEN YING DEDUCTION U/S 80IC OF THE ACT IN RESPECT OF INTEREST INCOME OF RS. 23, 00,560/- ON FDRS OBTAINED FROM ILC/ FLC FOR PURCHASE OF RAW MATERIA L. 11. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE HA S INVITED OUR ATTENTION TO THE ORDER OF THE TRIBUNAL PASSED IN THE OWN CASE OF THE ASSESSEE IN ITA ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 11 NO. 643/CHD/2011 DATED 17.6.2013, WHEREIN, THIS ISS UE HAS BEEN REMANDED BACK BY THE TRIBUNAL TO THE FILE OF THE ASSESSING O FFICER WITH A DIRECTION TO DECIDE THE SAME AFRESH KEEPING IN VIEW THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF VISHAL TOOLS & FORGING PVT LTD. V CIT ORDER DATED 20.5.2011 PASSED IN ITA NO. 121 OF 2011. THE RELEVANT PART OF THE ORDER OF THE TRIBUNAL IN THE EARLIER AS SESSMENT YEAR IS REPRODUCED AS UNDER:- 4. IN THE ABOVE ORDER, IT WAS RECORDED THAT LD. COUNSEL FOR THE ASSESSEE HAD CONCEDED THAT QUESTION NO. (I) TO (III) STOOD CONCLUDED AGAINST THE ASSESS EE AND IN FAVOUR OF THE REVENUE IN VIEW OF JUDGEMENT O F THIS COURT DATED 20.5.2011 IN ITA NO. 121 OF 2011 ( VISHAL TOOLS & FORGINGS PRIVATE LIMITED V. COMMISSIONER OF INCOME TAX, JALANDHAR (PUNJAB). TODAY, ARGUMENT HAVE BEEN ADDRESSED BY LEARNED COUNSEL FOR THE ASSESSEE ON QUESTION NO.(IV) ONLY. HE SUBMITTED THAT NETTING OF INTEREST FOR PURPOSES OF CALCULATION REQUIRED TO BE DONE AND RELYING UPON JUDGEMENT OF THE APEX COURT IN ACG ASSOCIATED CAPSULES PRIVATE LIMITED VS. COMMISSIONER OF INCOME TAX, CENTRAL FV, MUMBAI, (2012) 3 (SC) 321 AND JUDGEMENT OF DELHI HIGH COURT IN COMMISSIONER OF INCOME TAX VS. SHASHI EXPORT HOUSE, (2010) 46 DTK (DEL.) 34, SUBMITTED THAT THE MATTER REQUIRES TO BE REMANDED TO THE ASSESSING OFFICER TO RE-COMPUTE DEDUCTION UNDER SECTION 80HHC OF THE ACT IN TERMS OF THE AFORESAID JUDGEMENT OF THE APEX COURT. 5. LD. COUNSEL FOR THE REVENUE DID NOT DISPUTE THE AFORESAID SUBMISSION. IN VIEW OF THE ABOVE, THE QUESTION NO. (IV) STANDS ANSWERED IN TERMS OF JUDGEMENT OF THE APEX COURT IN ACG ASSOCIATED CAPSULES PRIVATE LIMITEDS CASE (SUPRA) AND THE MATTER IS REMANDED TO THE ASSESSING OFFICER FOR PASSING FRESH ORDER IN TERMS OF THE SA ID JUDGEMENT WITH REGARD TO THE CLAIM OF THE ASSESSEE U/S 80HHC OF THE ACT. ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 12 20. ACCORDINGLY, BY KEEPING IN VIEW THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT THIS IS SUE IS REMANDED BACK TO THE FILE OF THE A.O. FOR FRESH ADJ UDICATION IN ACCORDANCE WITH LAW AND BY KEEPING IN VIEW THE AFORESAID REFERRED TO DECISION OF THE HON'BLE JURIS DICTIONAL HIGH COURT IN THE CASE OF VISHAL INDUSTRIES (SUPRA ) ACCORDINGLY, THE ORDER OF THE LD. CIT(A) IS SET ASI DE AND THE MATTER IS REMANDED BACK TO THE A.O. 12. THE LD. COUNSEL HAS FURTHER INVITED OUR ATTEN TION TO THE ORDER OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF THE ASS ESSEE PASSED IN ITA NO. 352 OF 2013 VIDE ORDER DATED 4.8.2015, WHEREIN, TH E HON'BLE HIGH COURT HAS REFUSED TO INTERFERE IN THE ABOVE ORDER OF THE TRIBUNAL OBSERVING AS UNDER:- NOW RE: QUESTION NO. (V) 16. IT WAS NOTICED BY THE ASSESSING OFFICER THAT TH E ASSESSEE HAD RECEIVED INTEREST ON FDRS KEPT WITH TH E BANK AS MARGIN MONEY. HE TREATED THE SAME AS INCOME FROM OTHER SOURCES AND NOT PROFIT DERIVED FROM INDUSTRIAL UNDERTAKING. ACCORDINGLY, HE DISALLOWED THE DEDUCTION. THE TRIBUNAL REMANDED THE ISSUE TO T HE ASSESSING OFFICER FOR FRESH ADJUDICATION IN ACCORDA NCE WITH LAW AND BY KEEPING IN VIEW A DECISION OF THIS COURT REFERRED TO THEREIN. AS THE MATTER HAS BEEN K EPT OPEN, NO QUESTION OF LAW ARISES. NO INTERFERENCE IS CALLED FOR. IN VIEW OF THIS, THE ISSUE RAISED VIDE GROUND NO.4 IN SIMILAR TERMS IS RESTORED TO THE FILE OF THE ASSESSING OFFICER TO DE CIDE IT AFRESH AS PER THE DIRECTIONS GIVEN IN EARLIER ASSESSMENT YEAR, AS OBS ERVED ABOVE. 13. GROUND NO.6 : NO ARGUMENTS HAVE BEEN ADDRESSED IN RESPECT OF GROUND NO. 6, HENCE, THIS GROUND IS DISMISSED AS N OT PRESSED. ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 13 14. GROUND NO. 7 : THIS GROUND IS CONSEQUENTIAL IN NATURE AND DOES N OT REQUIRE ANY ADJUDICATION. 15. GROUND NO.8 : THIS GROUND IS GENERAL IN NATURE AND NEEDS NO SPECIFIC ADJUDICATION. 16. APART FROM THAT, THE ASSESSEE HAS TAKEN FOLLOWI NG ADDITIONAL GROUND OF APPEAL :- THAT THE AMOUNT VAT DEFERMENT OF RS. 16,96,924/- MAY BE EXCLUDED WHILE COMPUTING BOOK PROFITS U/S 115JB AS BEING THE CAPITAL RECEIPT AND NOT LIABLE T O TAX IN VIEW OF THE PROPOSITION LAID DOWN IN THE CAS E OF SHREE BALAJI ALLOYS & ORS. 17. THOUGH THE LD. DR HAS OBJECTED TO TAKING OF TH E ADDITIONAL GROUND AT THIS STAGE, HOWEVER, CONSIDERING THE FAC TS AND CIRCUMSTANCES OF THE CASE AND ALSO CONSIDERING THE SUBSEQUENT DEC ISIONS OF THE HON'BLE SUPREME COURT IN RESPECT OF NATURE AND CHA RACTER OF THE SUBSIDY RECEIVED ON VAT DEFERMENT AS CAPITAL RECEI PT, WE DEEM IT FIT TO ADMIT THIS ADDITIONAL GROUND. 18. IN THE ADDITIONAL GROUND, THE ASSESSEE HAS CLAI MED THAT SINCE THE SUBSIDY ON ACCOUNT OF VAT DEFERMENT IS AS CAPITAL R ECEIPT, THE SAME IS NOT LIABLE TO BE TAXED TAKING INTO CONSIDERING WHIL E COMPUTING THE BOOK PROFIT U/S 115JB OF THE ACT. HE IN THIS RESPECT HAS RELIED UPON THE DECISION OF THE LUCKNOW BENCH OF THE TRIBUNAL IN TH E CASE OF ACIT VS. L.H. SUGAR FACTORY LTD AND ANR IN ITA NOS. 33 9, 417 & 418/LKW/2013, 518 & 53/LKW/569 & CO NO. 26 & 27/LKW /2013 ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 14 ORDER DATED L9.2.2016. THE RELEVANT ISSUE HAS BEEN DISCUSSED IN PARA 50 OF THE SAID ORDER, WHICH IS REPRODUCED FOR THE SAKE OF CONVENIENCE. 50. FROM THE ABOVE PARAS, WE FIND THAT THE TRIBUNA L HAS DULY CONSIDERED THE JUDGMENT OF THE HONBLE APE X COURT RENDERED IN THE CASE OF APOLLO TYRES LTD. ((S UPRA) AND THEREAFTER, IT WAS NOTED BY THE TRIBUNAL IN THI S CASE THAT AS PER THE DECISION OF SPECIAL BENCH OF THE TR IBUNAL RENDERED IN THE CASE OF RAIN COMMODITIES LTD. VS. D CIT, 41 DTR 449, IF PROFIT AND LOSS ACCOUNT IS NOT IN ACCORDANCE WITH PART II & PART III OF SCHEDULE VI T O THE COMPANIES ACT, 1956 BECAUSE IT IS PREREQUISITE FOR SECTION 115JB OF THE ACT. THE TRIBUNAL IN THIS CASE ALSO CONSIDERED TWO ANOTHER TRIBUNALS ORDERS RENDERED I N THE CASE OF DCIT VS. BOMBAY DIAMOND COMPANY LTD. 33 DTR 59 AND SYNDICATE BANK VS. ACIT, 7 SOT 51 BANGALORE WHERE IT WAS HELD BY THE TRIBUNAL AFTER CONSIDERING THE DECISION OF HONBLE APEX COURT REND ERED IN THE CASE OF APOLLO TYRES LTD. (SUPRA), AND AFTER 28 EXPLAINING THE SAME THAT ADJUSTMENT TO PROFIT AND L OSS ACCOUNT IS POSSIBLE TO MAKE IT COMPLIANT WITH SCHED ULE VI PART II AND PART III OF THE COMPANIES ACT, 1956 WHICH IS PREREQUISITE OF SECTION 115JB OF THE ACT. ON THI S BASIS, THE TRIBUNAL IN THE CASE OF SHREE CEMENT LTD . (SUPRA) DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSE E AND IT WAS HELD THAT CAPITAL RECEIPT IN THE FORM OF SAL ES TAX SUBSIDY NEEDS TO BE EXCLUDED FROM PROFIT AS PER P&L ACCOUNT FOR THE PURPOSE OF COMPUTING BOOK PROFIT U/ S 115JB OF THE ACT. BY RESPECTFULLY FOLLOWING THESE TRIBUNALS ORDERS, WE HOLD THAT IN THE PRESENT CASE ALSO, THE RECEIPT ON ACCOUNT OF TRANSFER OF CARBON CREDIT WHICH IS HELD TO BE A CAPITAL RECEIPT NEEDS TO BE EXCLUDE D FROM PROFIT AS PER P&L ACCOUNT FOR THE PRESENT YEAR WHIL E COMPUTING THE BOOK PROFIT U/S 115JB OF THE ACT. TH IS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND ACCORDINGLY GROUND NOS.1 TO 5 ARE ALLOWED. THE ASSE SSEE GETS RELIEF OF RS.27,70,880/- AND CONSEQUENT INTERE ST BEING 10% OF AMOUNT RECEIVED BY THE ASSESSEE ON SAL E OF CARBON CREDIT OF RS.277,08,800/-. 19. SINCE IN THE LIGHT OF THE VARIOUS DECISIONS OF THE HON'BLE SUPREME COURT IT HAS ALREADY BEEN HELD THAT THE SUBSIDY ON ACCOUNT OF VAT ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 15 DEFERMENT IS A CAPITAL RECEIPT, HENCE, IN THE LIGHT OF THE ABOVE DECISION OF THE TRIBUNAL, THE SAME NEED TO BE EXCLUDED FROM THE PROFITS AS PER THE PROFIT AND LOSS ACCOUNT OF THE PRESENT YEAR WHI LE COMPUTING THE BOOK PROFIT U/S 115JB OF THE ACT. THIS ADDITIONAL G ROUND OF THE ASSESSEE, IS THEREFORE, ALLOWED. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ITA NO.583/CHD/2014 (A.Y. 2009-10)-REVENUES APPEAL : 20. THE REVENUE IN THIS HAS TAKEN THE FOLLOWING EF FECTIVE GROUNDS:- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN HOLDING THAT THE TRANSPORT SUBSIDY RECEIVE D FROM THE HIMACHAL GOVT. BY THE ASSESSEE IS ALLOWED TO BE INCLUDED AS PROFIT DERIVED FROM INDUSTRIAL UNDERTAK ING AND ELIGIBLE AS DEDUCTION U/S 80IC OF THE INCOME TA X ACT, 1961, WHEN IT HAS BEEN CLEARLY LAID DOWN BY SUPREME COURT IN ITS DECISION IN THE CASES OF CAMBAY ELECTR IC SUPPLY INDUSTRIAL CO. LTD. VS. CIT 1978 (TR/SC) 50: 1978) 1/3 ITR 84/SC) THAT THE WORDS DERIVED FROM REFERRED TO IN THE SECTION 80IC HAS NARROWER MEANING THAN ATTRIBUT ABLE TO AND THE FREIGHT SUBSIDY CANNOT BE TREATED AS PRO FIT DERIVED FROM INDUSTRIAL UNDERTAKING THROUGH IT MAY BE ATTRIBUTABLE TO INDUSTRIAL UNDERTAKING? 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN HOLDING THAT THE TRANSPORT SUBSIDY WAS RIG HTLY TAKEN INTO CONSIDERATION BY THE ASSESSEE IN WORKING OUT THE PROFITS AND GAINS OF THE BUSINESS UNDERTAKING R ELYING ON THE DECISION OF CALCUTTA HIGH COURT IN THE CASE OF MERINO PLY AND CHEMICALS LTD. VS. CIT (1004) 122 CT R (CAL) 262 :(1994) 209 ITR 508 (CAL.) WHERE THE POIN T IN ISSUE WAS WHETHER A RECEIPT ON ACCOUNT OF TRANSPORT/FREIGHT SUBSIDY WAS OF A REVENUE NATURE A ND WAS INSEPARABLY CONNECTED WITH THE BUSINESS AND NOT WHE THER IT WAS INCOME DERIVED FROM THE BUSINESS OF THE INDU STRIAL UNDERTAKING AND ELIGIBLE FOR DEDUCTION U/S 80HH/80IA/80IB OF THE INCOME TAX ACT. 1961? 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 16 ERRED IN NOT APPRECIATING THE JUDGMENT OF HON'BLE HIMACHAL PRADESH HIGH COURT IN ITS DECISION IN THE CASE OF CIT VS. KIRAN ENTERPRISES REPORTED IN 327 ITR 52 0 AND M/S MEHAR PACKAGING PVT. LTD. VS. CIT REPORTED IN 2 4 TAXMAN 204 WHICH ARE APPLICABLE IN THIS CASE WHEREI N IT HAS ALREADY BEEN HELD THAT THE AMOUNT OF TRANSPORT/ FREIGHT SUBSIDY RECEIVED FROM THE GOVT. BY THE ASSESSEE IS NOT A PROFIT DERIVED FROM BUSINESS SINCE IT IS NOT AN OPE RATIONAL PROFIT. THE SOURCE OF SUBSIDY IS NOT THE BUSINESS OF ASSESSEE BUT SCHEME OF CENTRAL GOVT. AND CANNOT BE INCLUDED IN THE PROFITS ELIGIBLE FOR DEDUCTION U/S 80IC. THE ITAT WAS ALSO NOT RIGHT IN LAW IN NOT APPRECIAT ING THE RATIO OF HON'BLE SUPREME COURT IN THE CASES OF M/S LIBERTY INDIA VS. CIT 225 CTR 233(SC), CIT VS. STER LING FOODS 153 CTR 439, 237 ITR 589, VELLORE ELECTRIC CORPORATION LTD. VS. CIT 227 ITR 557 (SC). 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN HOLDING THAT THE INCOME FROM DEFERRED VAT REBATE RECEIVED BY THE ASSESSEE IS ALLOWED TO BE IN CLUDED AS PROFITS DERIVED FROM INDUSTRIAL UNDERTAKING AND ELIGIBLE FOR DEDUCTION U/S 80IC OF THE INCOME TAX A CT, 1961, WHEN THE ASSESSEE RECEIVED IT FROM THE HIMACH AL GOVT. FOR THE BENEFIT OF ANY INCENTIVE OF SALES TAX LEVIABLE ON THE SALE OF MANUFACTURED GOODS UNDER HIMACHAL PRADESH GENERAL SALES TAX ACT. 1968 AND THE INCOME DERIVED FROM SUCH REBATE IS NOT AN INCOME DERIVED F ROM INDUSTRIAL UNDERTAKING. HOWEVER, THE IMMEDIATE SOUR CE OF THIS REBATE WAS THE SCHEME OF GOVT. TO GIVE SUCH RE BATE AND NOT THE CONDUCT OF THE BUSINESS OF THE INDUSTRI AL UNDERTAKING. 5 IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN ALLOWING THE RELIEF ON ACCOUNT OF DISALLOWANCE OF BANK INTEREST OF RS.21,49,556/- UND ER SECTION 80IC OF THE INCOME TAX ACT, 1961, WITHOUT APPRECIATING THE FACT THAT THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF HON'BLE ITAT IN ITA NO.643/CHD/2011 DATED 17.06.2013 ON THE ISSUE OF DEDUCTION UNDER SECTION 80IC AND THE DEPARTMENT HAS PREFERRED AN APPEAL BEFORE THE HON'BLE PUNJAB AND HARYANA HIGH COURT, CHANDIGARH. ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 17 6. IT IS PRAYED THAT THE ORDER OF LD. CIT(A) BE SET ASIDE AND THAT OF THE AO RESTORED 7. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND FINALLY DISPOSED OF. 21. GROUND NOS. 1, 2, 3 & 4 : AS REGARDING THESE GROUNDS ARE CONCERNED, IN VIEW OF OUR FINDINGS GIVEN ABOVE WHILE DECIDING ITA NO. 366/CHD/2013 VIDE GROUNDS NO.2, 3 & 5 OF THE APPEAL OF THE ASSES SEE, THESE ISSUES ARE ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE. 22. GROUND NO.5 : VIDE THIS GROUND, THE REVENUE HAS AGITATED THE ACTION OF THE CIT(A) IN ALLOWING ON DEDUCTION U/S 80IC OF THE ACT IN RESPECT OF BANK INTEREST ON FDRS. THIS ISSUE HAS BE EN DEALT WITH BY US WHILE DECIDING GROUND NO.4 OF THE APPEAL OF THE ASS ESSEE IN ITA NO. 366/CHD/2013. IN VIEW OF OUR ABOVE OBSERVATION, THIS ISSUE IS AC CORDINGLY RESTORED TO THE FILE OF THE ASSESSING OFFICER TO DECIDE IT A FRESH, AS PER DIRECTIONS, GIVEN ABOVE. GROUND NOS. 6 & 7 ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION THIS APPEAL OF THE REVENUE STANDS PARTLY ALLOWED. ITA NO.589/CHD/2014 (A.Y. 2009-10)-ASSESSEES APP EAL 23. THE ASSESSEE HAS FILED THIS CORRESPONDING APPEA L RELATING TO ASSESSMENT YEAR 2009-10. THE ASSESSEE IN THIS APPE AL HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE IMPUGNED APPELLATE ORDER IS BAD BOTH ON FA CTS AND LAW TO THE EXTEND THE ADDITIONS/ DISALLOWANCES HAVE BEEN CONFIRMED. ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 18 2. THAT THE LEARNED APPELLATE AUTHORITY WRON GLY AND ILLEGALLY DISALLOWED THE NETTING OF IN COME OF INTEREST OF RS. 34,85,564/- BY DEDUCTIN G THE INTEREST AMOUNT WHICH HAS BEEN INCURRED IN RELATION TO THE AMOUNTS ON WHICH INTEREST OF RS. RS.34,85,564/- WAS CHARGED IGNORING THE PLEADINGS , EVIDENCE AND MATERIAL ON RECORD ALTERNATIVELY THE TOTAL INTEREST INCOME OF RS. 52182 69 /- SHOULD BE PROPERLY COMPUTED AFTER DEDUCTING T HE EXPENSES INCURRED. 3. THAT THE LEARNED APPELLATE AUTHORITY WRON GLY AND ILLEGALLY CONFIRMED THE ADDITION OF R S. 19000/- BEING THE REVERSAL ENTRY OF ADVANC E RENT PAID AND CLAIMED EXPENSE IN AY 2007-08 IGNORIN G THE PLEADINGS, ADMITTED MATERIAL AND PRO VISION OF SECTION 41(L)(A] APPLICABLE AS EXPENSE CLAIM ED IN EARLIER YEAR. 4. THAT THE LEARNED APPELLATE AUTHORITY WRONG LY AND ILLEGALLY DISALLOWED THE CLAIM OF DEDUCTIO N @ 30% ON RENTAL INCOME OF RS. 24000/- U/S 24. 5. THAT THE LEARNED APPELLATE AUTHORITY WRONGLY AND ILLEGALLY FAILED TO CONSIDER AND GIVE ANY FINDING THAT INTEREST U/S.234-B AND 234-C, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WHICH HAS BEEN WRONGLY AND ILLEGALLY CHARGED AND LEVIED, 6. THAT THE APPELLANT CRAVES PERMISSION TO ELUCIDATE, AMEND, ALTER, ADD OR DELETE ANY GROUND OF APPEAL AT THE TIME OF HEARING. IT IS THEREFORE PRAYED THAT THE APPEAL MAY KINDLY BE ACCEPTED AND THE ADDITION MAY KINDLY BE DELETED WHO LLY INTER-ALIA ALLOWING THE DEDUCTION U/S 80IC OR ANY O THER RELIEF TO WHICH THE APPELLANT MAY FOUND ENTITLED MA Y KINDLY BE GRANTED 24. GROUND NO.1 IS GENERAL IN NATURE AND NEEDS NO ADJUDICATION . ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 19 25. GROUND NO.2 : VIDE THIS GROUND, THE ASSESSEE HAS AGITATED THE ACTION OF THE CIT(A) IN NOT ALLOWING CERTAIN PART OF THE INTEREST INCOME FOR NETTING FOR THE PURPOSE OF DEDUCTION OF CLAIM U /S 80IC OF THE ACT. THE CLAIM OF THE ASSESSEE IS THAT THE CIT(A) ALLOWE D THE NETTING IN RESPECT OF ONE PART OF THE INTEREST INCOME AND DIS ALLOWED ANOTHER PART OF THE INTEREST INCOME. SINCE, WHILE DECIDING GROUN D NO.4 OF THE REVENUE APPEAL, THIS ISSUE HAS BEEN RESTORED TO THE FILE OF THE ASSESSING OFFICER, ACCORDINGLY THIS GROUND OF THE APPEAL OF THE ASSESSEE IS ALSO RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR A DJUDICATION AFRESH AS PER THE DIRECTIONS GIVEN ABOVE WHILE DECIDING THE R ELEVANT ISSUE IN REVENUE APPEAL. 26. GROUND NOS. 3 & 4 : NO ARGUMENTS HAVE BEEN ADDRESSED IN RESPECT OF GROUND NOS. 3 & 4 OF THE APPEAL, HENCE, THE SAME ARE DISMISSED AS NOT PRESSED. 27. GROUND NO.5 IS CONSEQUENTIAL IN NATURE AND DOES NOT REQUIRE AN D ADJUDICATION. 28. GROUND NO.6 IS GENERAL IN NATURE AND NEEDS NO SPECIFIC ADJUDICATION. 29. APART FROM ABOVE, THE ASSESSEE HAS TAKEN FOLLOW ING ADDITIONAL GROUND OF APPEAL :- THAT THE AMOUNT VAT DEFERMENT OF RS. 89,41,810/- MA Y BE EXCLUDED WHILE COMPUTING BOOK PROFITS U/S 115JB AS BEING THE CAPITAL RECEIPT AND NOT LIABLE TO TAX IN VIEW OF THE PROPOSITION LAID DOWN IN THE CASE OF SHREE BALA JI ALLOYS & ORS. ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 20 30. THE ISSUE RAISED IN THIS ADDITIONAL GROUND HAS ALREADY BEEN DEALT WITH AND ADJUDICATED BY US IN FAVOUR OF THE ASSESSE E WHILE DECIDING THE ADDITIONAL GROUND OF APPEAL RAISED IN ITA NO. 366/C HD/2013. THIS GROUND IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSE SSEE. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS PART LY ALLOWED. ITA NO.584/CHD/2014 (A.Y. 2010-11)-REVENUES APPEA L 31. THE REVENUE IN THIS APPEAL HAS TAKEN THE FOLLO WING EFFECTIVE GROUNDS:- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN HOLDING THAT THE TRANSPORT SUBSIDY RECEIVED FROM THE HIMACHAL GOVT. BY THE ASSESSEE IS ALLOWED TO BE INCLUDED AS PROFIT DERIVED FROM INDUSTRIAL UNDERTAKING AND ELIGIBLE AS DEDUCTION U/ S 80IC OF THE INCOME TAX ACT, 1961, WHEN IT HAS BEEN CLEARLY LAID DOWN BY SUPREME COURT IN ITS DECISION IN THE CASES OF CAMBAY ELECTRIC SUPPLY INDUSTRIAL CO. LTD. VS. CIT 1978 (TR/SC) 50:1978) 1/3 ITR 84/SC) THAT THE WORDS DERIVED FROM REFERRED TO IN THE SECT ION 80IC HAS NARROWER MEANING THAN ATTRIBUTABLE TO AND THE FREIGHT SUBSIDY CANNOT BE TREATED AS PROFIT DER IVED FROM INDUSTRIAL UNDERTAKING THROUGH IT MAY BE ATTRIBUTABLE TO INDUSTRIAL UNDERTAKING? 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN HOLDING THAT THE TRANSPORT SUBSIDY WAS RIGHTLY TAKEN INTO CONSIDERATION BY THE ASSESSEE IN WORKING OUT THE PROFITS AND GAINS OF THE BUSINESS UNDERTAKING RELYING ON THE DECISION OF CALCUTTA HIG H COURT IN THE CASE OF MERINO PLY AND CHEMICALS LTD. VS. CIT (1004) 122 CTR (CAL) 262 :(1994) 209 ITR 508 (CAL.) WHERE THE POINT IN ISSUE WAS WHETHER A RECEIPT ON ACCOUNT OF TRANSPORT/FREIGHT SUBSIDY WAS OF A REVENUE NATURE AND WAS INSEPARABLY CONNECTED WITH THE BUSINESS AND NOT WHETHER IT WAS INCOME DERIVED FROM THE BUSINESS OF THE INDUSTRIAL UNDERTAKING AND ELIGIBLE FOR DEDUCTION U/S 80HH/80IA/80IB OF THE ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 21 INCOME TAX ACT. 1961? 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN NOT APPRECIATING THE JUDGMENT OF HON'B LE HIMACHAL PRADESH HIGH COURT IN ITS DECISION IN THE CASE OF CIT VS. KIRAN ENTERPRISES REPORTED IN 327 I TR 520 AND M/S MEHAR PACKAGING PVT. LTD. VS. CIT REPORTED IN 24 TAXMAN 204 WHICH ARE APPLICABLE IN THIS CASE WHEREIN IT HAS ALREADY BEEN HELD THAT THE AMOUNT OF TRANSPORT/FREIGHT SUBSIDY RECEIVED FROM T HE GOVT. BY THE ASSESSEE IS NOT A PROFIT DERIVED FROM BUSINESS SINCE IT IS NOT AN OPERATIONAL PROFIT. TH E SOURCE OF SUBSIDY IS NOT THE BUSINESS OF ASSESSEE B UT SCHEME OF CENTRAL GOVT. AND CANNOT BE INCLUDED IN T HE PROFITS ELIGIBLE FOR DEDUCTION U/S 80IC. THE ITAT W AS ALSO NOT RIGHT IN LAW IN NOT APPRECIATING THE RATIO OF HON'BLE SUPREME COURT IN THE CASES OF M/S LIBERTY INDIA VS. CIT 225 CTR 233(SC), CIT VS. STERLING FOODS 153 CTR 439, 237 ITR 589, VELLORE ELECTRIC CORPORATION LTD. VS. CIT 227 ITR 557 (SC). 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN HOLDING THAT THE INCOME FROM DEFERRED VAT REBATE RECEIVED BY THE ASSESSEE IS ALLOWED TO B E INCLUDED AS PROFITS DERIVED FROM INDUSTRIAL UNDERTAKING AND ELIGIBLE FOR DEDUCTION U/S 80IC OF THE INCOME TAX ACT, 1961, WHEN THE ASSESSEE RECEIVED IT FROM THE HIMACHAL GOVT. FOR THE BENEFIT OF ANY INCENTIVE OF SALES TAX LEVIABLE ON THE SALE OF MANUFACTURED GOODS UNDER HIMACHAL PRADESH GENERAL SALES TAX ACT. 1968 AND THE INCOME DERIVED FROM SUC H REBATE IS NOT AN INCOME DERIVED FROM INDUSTRIAL UNDERTAKING. HOWEVER, THE IMMEDIATE SOURCE OF THIS REBATE WAS THE SCHEME OF GOVT. TO GIVE SUCH REBATE AND NOT THE CONDUCT OF THE BUSINESS OF THE INDUSTRI AL UNDERTAKING. 5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.2,19,320/- MADE ON ACCOUNT OF MISCELLANOUS RECEIPTS, WITHOUT APPRECIATING THE FACT THAT THESE RECEIPTS HAVE NOT BEEN DERIVED BY THE ASSESSEE FROM THE BUSINESS ACTIVITIE S OF THE INDUSTRIAL UNDERTAKING ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 22 6. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN ALLOWING THE RELIEF ON ACCOUNT OF DISALLOWANCE OF BANK INTEREST OF RS.21,49,556/- UND ER SECTION 80IC OF THE INCOME TAX ACT, 1961, WITHOUT APPRECIATING THE FACT THAT THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF HON'BLE ITAT IN ITA NO.643/CHD/2011 DATED 17.06.2013 ON THE ISSUE OF DEDUCTION UNDER SECTION 80IC AND THE DEPARTMENT HAS PREFERRED AN APPEAL BEFORE THE HON'BLE PUNJAB AND HARYANA HIGH COURT, CHANDIGARH. 7. IT IS PRAYED THAT THE ORDER OF LD. CIT(A) BE SET AS IDE AND THAT OF THE AO RESTORED 8. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND FINALLY DISPOSED OF 32. GROUND NOS. 1, 2, 3 & 4 : THESE GROUNDS RAISED BY THE REVENUE ARE SQUARELY COVERED BY OUR FINDINGS GIVEN ABOVE WHILE DECIDING GROUNDS NOS. 2, 3 & 5 OF THE APPEAL OF THE ASSESSEE IN ITA NO. 3 66/CHD/2013. THUS, THESE ISSUES ARE ACCORDINGLY DECIDED IN FAVOUR OF T HE ASSESSEE AND AGAINST THE REVENUE. 33. GROUND NO.5 : VIDE GROUND NO.5, THE REVENUE HAS AGITATED THE ACTION OF THE CIT(A) IN DELETING THE ADDITION OF RS . 2,19,320/- MADE ON ACCOUNT OF MISC. RECEIPTS. THE ASSESSING OFFICER DI SALLOWED THE DEDUCTION U/S 80IC OF THE ACT IN RESPECT OF THE AFORESAID RE CEIPTS OBSERVING THAT SAID RECEIPTS HAVE NOT BEEN DERIVED BY THE ASSESSEE FROM THE BUSINESS ACTIVITY OF THE INDUSTRIAL UNDERTAKING. 34. THE LD. CIT(A) DURING APPELLATE PROCEEDINGS OBS ERVED THAT THE AFORESAID RECEIPTS WERE ON ACCOUNT OF REIMBURSEMENT OF CST PAID AND POWER EXPENSES PAID WHICH ARE OUT OF THE EXPENDITUR E CLAIMED EARLIER AND, ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 23 HENCE, THE SAME BEING REIMBURSEMENT OF THE EXPENDIT URE WOULD AMOUNT TO INCOME EARNED FROM THE BUSINESS ACTIVITY OF THE ASS ESSEE. HE, THEREFORE, HELD THAT THE SAME INCOME WAS FROM THE BUSINESS ACT IVITY OF THE ASSESSEE AND THE ASSESSEE WAS ENTITLED TO CLAIM DEDUCTION IN RESPECT OF THE SAME U/S 80IC OF THE ACT. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CI T(A) ON THIS ISSUE AND THE SAME IS UPHELD. 35. GROUND NO.6 : THIS GROUND IS IN RESPECT OF THE DENIAL OF DEDUCTI ON ON ACCOUNT OF BANK INTEREST. THIS ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER IN THE LIGHT OF THE DIRECTIONS GI VEN ABOVE WHILE DECIDING GROUND NO.4 IN ITA NO. 366/CHD/2013 FOR ASSESSMEN T YEAR 2007-08. 36. GROUND NOS. 7 & 8 ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLO WED. ITA NO.590/CHD/2014 (A.Y. 2010-11)- ASSESSEES APP EAL 37. THE ASSESSEE IN THIS APPEAL HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE IMPUGNED APPELLATE ORDER IS BAD BOTH ON FACTS AND LAW TO THE EXTEND THE ADDITIONS/ DISALLOW ANCES HAVE BEEN CONFIRMED. 2. THAT THE LEARNED APPELLATE AUTHORITY WRONGLY AND ILLEGALLY DISALLOWED THE INTEREST O F RS. 16,84,582/- WITHOUT THE NETTING OF INCOME OF INTEREST BY DEDUCTING THE INTEREST AMOUNT WHIC H HAS BEEN INCURRED IN RELATION TO THE AMOUNTS ON WHICH ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 24 INTEREST OF RS. 1684582/- IGNORING THE PLEADINGS, EVIDENCE AND MATERIAL ON RECORD ALTERNATIVELY THE T OTAL INTEREST INCOME OF RS. 3834078/- SHOULD BE PROPERL Y COMPUTED AFTER DEDUCTING THE EXPENSES INCURRED. 3. THAT THE LEARNED APPELLATE AUTHORITY WRONGLY AND ILLEGALLY CONFIRMED THE DISALLOWANCE OF RS. 4969652 /- BEING THE MEMORANDUM ENTRIES RELATING TO THE PURCHA SE VALUE IN FOREIGN EXCHANGE OF IMPORT OF RAW MATERIAL ON CREDITS PAYMENTS AND PAYMENTS THEREOF LATER ON, WHI LE COMPUTING THE PROFIT AND GAINS U/S 80IC WITHOUT CONSIDERING THE PLEADINGS AND EVIDENCE ON RECORD. 4. THAT THE LEARNED APPELLATE AUTHORITY WRONGLY AN D ILLEGALLY CONFIRMED THE DISALLOWANCE OF RS. 1,63,06 4/- BEING PROFIT ON SALE OF BUS WHILE COMPUTING THE PRO FIT AND GAINS FOR DEDUCTION U/S 80IC OR ALTERNATIVELY T HE AMOUNT SHOULD NOT BE ADDED AFTER DISALLOWANCE BEING NOT LIABLE TO TAX U/S 32, WITHOUT CONSIDERING AND IGNOR ING THE PLEADINGS AND EVIDENCE/MATERIAL ON RECORD. 5. THAT THE LEARNED APPELLATE AUTHORITY WR ONGLY AND ILLEGALLY IS ALLOWED THE CLAIM OF DEDUCT ION @ 30% ON RENTAL INCOME OF RS.351340/- U/S 24. 6. THAT THE LEARNED APPELLATE AUTHORITY WR ONGLY AND ILLEGALLY CONFIRMED THE DISALLOWANCE OF PAYME NT OF INTEREST RS. 1,70,005/- U/S 36(III) AGAINST TH E FACTS AND CIRCUMSTANCES OF THE CASE WITHOUT CON SIDERING THE PLEADINGS AND EVIDENCE/MATERIAL ON RECORD. 7. THAT THE LD. APPELLATE AUTHORITY WRONGLY AND ILLEGALLY FAILED TO CONSIDER AND GIVE ANY FINDING T HAT INTEREST U/S 234-B AND 234-C, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WHICH HAS BEEN WRONGLY A ND ILLEGALLY CHARGED AND LEVIED. 8. THAT THE APPELLANT CRAVES PERMISSION TO ELUCIDAT E, AMEND, ALTER, ADD OR DELETE ANY GROUND OF APPEAL AT THE TIME OF HEARING. ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 25 IT IS THEREFORE, PRAYED THAT THE APPEAL MAY KINDLY BE ACCEPTED AND THE ADDITION MAY KINDLY BE DELETED WHOLLY INTER-ALIA ALLOWING THE DEDUCTION U/S 80-IC OR ANY OTHER RELIEF TO WHICH THE APPELLANT MAY FOUND ENTITLED MAY KINDLY BE GRANTED. 38. GROUND NO.1 : GROUND NO. 1 IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 39. GROUND NO. 2: THE GROUND NO.2 IS RELATING TO THE CLAIM OF THE ASSESSEE REGARDING INTEREST INCOME WHETHER TO BE IN CLUDED WHILE COMPUTING THE DEDUCTION U/S 80IC OF THE ACT. IN TH E LIGHT OF OUR OBSERVATION MADE ABOVE, THIS GROUND IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION AFRESH AS PER FI NDINGS GIVEN ABOVE WHILE DECIDING GROUND NO. 4 IN ITA NO.366/CHD/2013. 40. GROUND NO.3 : VIDE THIS GROUND THE ASSESSEE HAS AGITATED THE ACTION OF THE LOWER AUTHORITIES IN MAKING / CONFIRM ING THE DISALLOWANCE OF RS. 49,69,652/- BEING THE DIFFERENCE IN FLUCTUAT ION OF EXCHANGE RATE. 41. THE FACTS RELATING TO THIS ISSUE ARE THAT THE A SSESSEE HAD SHOWN AN INCOME OF RS. 49,69,652/- UNDER HEAD GAIN ON FORE IGN EXCHANGE FLUCTUATION'. DURING THE ASSESSMENT PROCEEDINGS, T HE APPELLANT SUBMITTED THAT 'DURING THE YEAR ASSESSEE HAS IMPORTED RAW MATERIAL FOR USE IN THE MANUFACTURING IN THE INDUSTRIAL UNDERTAKING SITUAT ED IN KALE-AAM. FOR IMPORT OF RAW MATERIAL, ASSESSEE'S COMPANY HAS OPEN ED LETTER OF CREDIT IN FAVOUR OF THE SUPPLIER OF THE RAW MATERIAL. THE PAY MENT AGAINST FLC IS MADE AFTER SOME PERIOD AFTER THE RECEIPT OF MATERIA L I.E. THE SUPPLIERS ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 26 EXTEND THE CREDITS AGAINST THE FLC. THE APPELLANT P ASSES THE ENTRY IN HIS BOOK OF PURCHASE OF MATERIAL IN INDIAN CURRENCY ON THE DATE OF RECEIPT OF THE MATERIAL AND CONVERSION RATE OF INDIAN RUPEES A ND US$ IS CONSIDERED. THE PAYMENT OF FLC WAS MADE BY THE ASSESSEE TO THE BANK AT A LATER DATE I. E. ON EXPIRY ON FLC. BANK CHARGES AT THE CONVERSION RATE APPLICABLE ON THAT DATE. COPY OF THE STATEMENT SHOWING THE VALUE OF INDIAN RUPEES ON THE DATE OF RECEIPT OF MATERIAL WHEN A RELEVANT ENTRY P ASSED IN THE BOOKS OF ACCOUNT ALTHOUGH NO PAYMENT WAS MADE AND IN COLUMN- 6 AMOUNT ACTUALLY PAID IN INDIAN RUPEES ON DUE DATE, IS ENCLOSED. APP ELLANTS REAL AND ACTUAL LIABILITY OF THE PAYMENT IS WHEN THE PAYMENT IS MAD E TO THE BANK AND NOT WHEN THE GOODS ARE RECEIVED IN THE PREMISES. THE FI RST ENTRY WAS CONTRA- GENERAL ENTRIES AND DUE TO RATE FLUCTUATION, THE PL US OR MINUS DIFFERENCE ARE TAKEN TO FOREIGN CURRENCY EXCHANGE FLUCTUATION ACCOUNT. ANY PLUS OR MINUS, DIRECTLY EFFECTS THE COSTS OF THE RAW MATERI AL TO THE ASSESSEE COMPANY. THE DIFFERENCE IS NOT THE REAL INCOME OR L OSS ARISING TO THE ASSESSEE. THE PAYMENT IS MADE AT A PREDETERMINED TI ME WHICH IS MENTIONED IN THE FLC DOCUMENTS. WE, THEREFORE, SUBMIT THAT TH E SUM OF RS. 49,69,652/- THOUGH SHOWN SEPARATELY INFACT SHOULD B E REDUCED FROM THE COSTS OF THE RAW MATERIAL. IT IS, THEREFORE, SUBMIT TED THAT THE AMOUNT OF RS.49,69,652/- IS INTRINSICALLY AND DIRECTLY CONNE CTED WITH THE ACTIVITIES OF THE INDUSTRIES UNDERTAKING AND MAINLY RELATED TO TH E EXPENSES INCURRED AND IT IS NOT A INDEPENDENT INCOME NOR IT IS A REAL INC OME AND, THEREFORE, IT SHOULD NOT BE EXCLUDED FROM THE PROFIT AND GAINS OF THE INDUSTRIAL UNDER TAKING .' ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 27 HOWEVER, THE A.O. DIDN'T ACCEPT THE SUBMISSION OF THE APPELLANT OBSERVING THAT THE CONTENTION OF THE APPELLANT IS N OT CONVINCING. 42. THE LD. CIT(A) CONFIRMED THE FINDINGS OF THE AS SESSING OFFICER OBSERVING AS UNDER:- 7.3 I HAVE CONSIDERED THE SUBMISSIONS MADE. THE APPELLANT HAS BOOKED THE EXPENSE ON THE DATE OF PURCHASE. THE INCOME OF RS. 49,69,652/- IS EARNED O N ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION AND IT IS BASICALLY A PREMIUM EARNED ON EXCHANGE FLUCTUATION AGAINST THE FLC OPENED. THEREFORE, IN MY OPINION, T HIS AMOUNT CAN'T BE HELD TO BE DIRECTLY ATTRIBUTABLE OR DERIVED FROM THE BUSINESS OF THE APPELLANT. THUS, T HIS GROUND OF APPEAL IS DISMISSED. 43. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND HA VE ALSO GONE THROUGH THE RECORD. IN THIS CASE, THE ASSESSEE IMP ORTED RAW MATERIAL AND THE PAYMENT WAS REQUIRED TO BE MADE ON A FIXED DATE IN FOREIGN CURRENCY. HOWEVER, THE ASSESSEE PASSED ON THE ENTRY IN THE BOOKS OF ACCOUNT IN INDIAN CURRENCY ON THE DATE OF RECEIPT O F MATERIAL. SINCE THE PAYMENT TO THE BANK WAS MADE ON STIPULATED DATE, HE NCE THE GAIN, IF ANY, AND DUE TO THE FLUCTUATION IN THE FOREIGN EXC HANGE, IN OUR VIEW, IS NOTHING BUT IT GOES ON TO REDUCE THE COST OF RAW MA TERIAL. 44. WE DO NOT AGREE WITH THE FINDINGS OF THE CIT(A) THAT IT IS BASICALLY A PREMIUM EARNED ON EXCHANGE FLUCTUATION AGAINST THE FLC OPENED. MERE PASSING OF ENTRY ON THE DATE OF RECEIP T OF MATERIAL, IN OUR VIEW, DOES NOT AFFECT THE NATURE OF THE GAIN EARNED BY THE ASSESSEE DUE TO FLUCTUATION IN FOREIGN EXCHANGE AS THE SAME IS D IRECTLY LINKED TOWARDS THE REDUCTION IN THE COST OF RAW MATERIAL. THIS CANNOT BE SAID TO ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 28 BE AN INCOME EARNED BY THE ASSESSEE. RATHER, IT IS THE EFFECT OF REDUCTION OF COST OF EXPENDITURE IN THE RAW MATERIA L AND THE RESULTANT BENEFIT IS NOTHING BUT THE BUSINESS INCOME OF THE A SSESSEE LIABLE FOR DEDUCTION U/S 80IC OF THE ACT. THIS ISSUE IS ACCOR DINGLY DECIDED IN FAVOUR OF THE ASSESSEE. 45. GROUND NO.4 : THE ASSESSEE VIDE THIS GROUND HAS AGITATED THE DISALLOWANCE OF RS. 1,63,064/- BEING PROFIT ON SALE OF BUS, WHILE COMPUTING THE PROFIT AND GAINS FOR DEDUCTION U/S 80 IC OF THE ACT. THE LD. COUNSEL OF THE ASSESSEE HAS SUBMITTED THAT THE PROFIT EARNED ON SALE OF BUS IS A CAPITAL RECEIPT, HENCE, NOT LIABLE FOR DEDUCTION U/S 80IC OF THE ACT. HOWEVER, HE HAS FURTHER SUBMITTED THAT SI NCE THE SALE PRICE IS ADJUSTABLE IN BLOCK OF ASSET AS PER SECTION 32, HEN CE, THIS INCOME NEEDS TO BE EXCLUDED EVEN FROM THE TOTAL ASSESSED INCOME. 46. WE AGREE WITH THE ABOVE CONTENTION OF THE LD. C OUNSEL FOR THE ASSESSEE THAT THE SAID AMOUNT BEING CAPITAL RECEIPT IS REQUIRED TO BE ADJUSTED IN THE VALUE OF THE BLOCK OF ASSET , HOWEVER, THE SAME IS NOT LIABLE TO BE TAKEN INTO CONSIDERATION WHILE COMPUTI NG TAXABLE INCOME OF THE ASSESSEE. THIS ISSUE IN THE ABOVE TERMS IS ALLO WED IN FAVOUR OF THE ASSESSEE. 47. GROUND NO.5 : THE ASSESSEE VIDE GROUND NO.5 HAS AGITATED THE ACTION OF THE LOWER AUTHORITIES IN DISALLOWING THE CLAIM OF STANDARD DEDUCTION @ 30% ON ACCOUNT OF RENTAL INCOME. IN OUR VIEW, THE LOWER ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 29 AUTHORITIES HAVE RIGHTLY DENIED THE CLAIM OF RENTA L INCOME TO BE ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT. HOWEVER , WE FIND FORCE IN THE CONTENTION OF THE LD. AR THAT THE STANDARD DE DUCTION OF 30% OUT OF RENTAL INCOME IS ALLOWABLE TO THE ASSESSEE AS PER THE STATUTORY PROVISIONS OF SECTION 24 OF THE INCOME TAX ACT. THIS GROUND IS ACCORDINGLY ALLOWED AND THE ASSESSIN G OFFICER IS DIRECTED TO ALLOW THE STANDARD DEDUCTION AS PER THE PROVISIONS OF THE ACT OUT OF THE RENTAL INCOME WHILE COMPUTING THE TO TAL INCOME OF THE ASSESSEE. 48. GROUND NO.6 : THIS GROUND IS IN RELATION TO DISALLOWANCE OF INTEREST EXPENDITURE U/S 36(I) (III) OF THE I.T. A CT. THE ASSESSING OFFICER AS WELL AS THE CIT(A) DISALLOWED THE AFORES AID AMOUNT U/S 36(I)(III) OBSERVING THAT THE ASSESSEE HAD USED INT EREST BEARING FUNDS FOR NON-BUSINESS PURPOSES. HOWEVER, THE LD. COUNSEL FO R THE ASSESSEE, BEFORE US, HAS SUBMITTED THAT THE AMOUNT IN QUESTIO N WAS GIVEN TO THE CONCERNED AUTHORITIES ON ACCOUNT OF BUSINESS EXIGEN CIES. FURTHER, THAT THE ASSESSEE HAD OWN SURPLUS FUNDS MORE THAN THE IN TEREST FREE ADVANCES GIVEN. THE ASSESSEE HAS ITS OWN FUNDS OF MORE THAN RS. 49 CRORES. THE SECURED LOANS TAKEN BY THE ASSESSEE COMPANY WERE TA KEN FOR SPECIFIC BUSINESS PURPOSES AND THAT THE SAME WERE NOT USED O F NON-BUSINESS PURPOSES. THE ADVANCES WERE MADE BY THE ASSESSEE O UT OF ITS OWN FUNDS. THE LOWER AUTHORITIES HAVE NOT DOUBTED THE A BOVE CLAIM OF THE ASSESSEE BUT HAVE DISALLOWED THE CLAIM OF THE ASSES SEE THAT THE FUNDS WERE MIXED FUNDS. HOWEVER, AS PER THE LAW LAID DOWN BY THE HON'BLE ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 30 JURISDICTIONAL HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF CIT VS. KASPSONS ASSOCIATES, 381 ITR 204 (P&H) AND FUR THER OF THE HON'BLE SUPREME COURT IN THE CASE OF HERO CYCLES LTD., 379 ITR 347 (SC), SINCE THE ASSESSEES OWN FUNDS WERE SUFFICIENT TO MEET TH E AFORESAID INTEREST FREE ADVANCES AND ALSO TAKING INTO CONSIDERATION TH E CLAIM OF THE ASSESSEE THAT THE FUNDS WERE GIVEN OUT OF BUSINESS EXPEDIENCY, WE DO NOT FIND ANY JUSTIFICATION ON THE PART OF THE LOWER AUTHORITIES IN DISALLOWING THE AFORESAID CLAIM OF THE ASSESSEE. THIS ISSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE AND THE DISALLOWANCE MADE BY THE LOWER AUTHORITIES IS HEREB Y ORDERED TO BE DELETED. 49. GROUND NO.7 : GROUND NO. 7 IS CONSEQUENTIAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. 50. GROUND NO. 8 : THIS GROUND IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 51. APART FROM ABOVE, THE ASSESSEE HAS TAKEN FOLLOW ING ADDITIONAL GROUND OF APPEAL :- THAT THE AMOUNT VAT DEFERMENT OF RS. 25,53,547/- MA Y BE EXCLUDED WHILE COMPUTING BOOK PROFITS U/S 115JB AS BEING THE CAPITAL RECEIPT AND NOT LIABLE TO TAX IN VIEW OF THE PROPOSITION LAID DOWN IN THE CASE OF SHREE BALA JI ALLOYS & ORS. 52 THE ISSUE RAISED IN THIS ADDITIONAL GROUND HAS A LREADY BEEN DEALT WITH AND ADJUDICATED BY US IN FAVOUR OF THE ASSESSE E WHILE DECIDING THE ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 31 ADDITIONAL GROUND OF APPEAL RAISED IN ITA NO. 366/C HD/2013. THIS GROUND IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSE SSEE. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS PART LY ALLOWED ITA NO.1101/CHD/2016 (A.Y. 2011-12 - REVENUES APPEAL) 53. IN THIS APPEAL, THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. C1T(A) HAS ERRED IN DELETING THE ADDITION OF RS.64,29,094/- MADE BY THE AO ON ACCOUNT OF INTEREST FREE ADVANCES WITHOUT APPRECIATING THE JUDGMENT GIVEN BY HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF M/S. ABHISHEK INDUSTRIES LTD. (2006) 286 ITR. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.54,75,479/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF PROPORTIONATE INTEREST ON INVESTMENTS MADE WITHOUT APPRECIATING THE JUDGMENT GIVEN BY HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF M/S. ABHISHEK INDUSTRIES LTD.(2006) 286 ITR. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1,64,980/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED U/S 80IC OF THE INCOME TAX ACT, 1961 IN RESPECT OF MISC. RECEIPTS. 4. IT IS PRAYED THAT THE ORDER OF LD. CIT(A) BE SET ASIDE AND THAT OF THE AO BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND FINALLY DISPOSED OFF. ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 32 54. GROUND NO.1 : THI S GROUND RELATES TO THE ACTION OF THE CIT(A) IN DELETING THE ADDITION OF RS. 64,29,094/- MADE BY TH E ASSESSING OFFICER U/S 36(I) (III) OF THE ACT ON ACCOUNT OF INTEREST F REE ADVANCES GIVEN BY THE ASSESSEE. THIS ISSUE HAS BEEN DISCUSSED BY THE LD. CIT(A) IN PARA 7.2 OF THE IMPUGNED ORDER, WHEREIN, HE HAS GIVEN A FINDING THAT THE ASSESSEE WAS POSSESSED OF OWN SURPLUS FUNDS MORE TH AN THE INTEREST FREE ADVANCES GIVEN. HE HAS OBSERVED THAT THE ASSESSEE H AD SHARE CAPITAL OF RS. 10.10 CRORES AND FREE RESERVES OF RS. 43.06 CRO RES, WHEREAS, THE INTEREST FREE ADVANCES GIVEN TO THE ASSESSEE WERE T O THE TUNE OF RS. 12.28 CRORES. HE, THEREFORE, RELIED ON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KASPSONS ASSOCIATES, (2015) 381 ITR 204 (P&H) AND FURTHER OF THE HON'BL E SUPREME COURT IN THE CASE OF HERO CYCLES LTD., (2011) 379 ITR 347 (SC), AND DEL ETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THIS ISSUE. 55. AFTER HEARING THE LD. REPRESENTATIVES OF THE P ARTIES, WE DO NOT FIND ANY REASON TO INTERFERE IN THE WELL JUSTIFIED ORDER OF THE CIT(A) ON THIS ISSUE AND, THEREFORE, THIS ISSUE IS ACCORDINGLY DE CIDED IN FAVOUR OF THE ASSESSEE. 56. GROUND NO.2 : VIDE GROUND NO. 2, THE REVENUE HAS AGITATED THE ACTION OF THE CIT(A) IN DELETING THE ADDITION OF RS . 54,75,479/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE O F PROPORTIONATE INTEREST ON INVESTMENTS MADE. THIS ISSUE RAISED VIDE THIS GR OUND IS IDENTICAL OF THE ISSUE RAISED IN GROUND NO.1. THE LD. CIT(A) HAS DI SCUSSED THIS ISSUE IN PARA 8 OF THE IMPUGNED ORDER, WHEREIN, HE HAS OBSER VED THAT THE ASSESSEE ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 33 WAS POSSESSED OF SUFFICIENT OWN FUNDS TO MAKE THE A FORESAID INVESTMENTS. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE C IT(A) ON THIS ISSUE ALSO. 57. GROUND NO. 3 : THE REVENUE VIDE GROUND NO.3 HAS AGITATED THE ACTION OF THE CIT(A) IN DELETING THE ADDITION OF R S. 1,64,980/- MADE ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED U/S 80IC OF THE ACT IN RESPECTS OF MISC. RECEIPTS. THIS ISSUE HAS BEEN DIS CUSSED BY THE LD. CIT(A) IN PARA 9 OF THE ORDER. THE ASSESSING OFFICE R HELD THAT THE MISC. RECEIPTS OF RS. 1,64,980/- WAS NOT INCOME EARNED FR OM THE BUSINESS ACTIVITY OF THE ASSESSEE AND, HENCE, WAS NOT ELIGI BLE FOR DEDUCTION U/S 80IC OF THE ACT. THE LD. CIT(A), HOWEVER, HAS GIVEN A FINDING THAT THESE RECEIPTS WERE IN FACT RE-IMBURSEMENT OF THE E XPENDITURE CLAIMED BY THE ASSESSEE IN EARLIER YEARS AND, HENCE, THESE WERE RELATING TO THE BUSINESS ACTIVITY OF THE ASSESSEE AND THUS THE REI MBURSEMENT OF THE SAME GOES INTO INCREASE THE INCOME OF THE ASSESSEE WHICH OTHERWISE WAS ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT. IN VIEW OF THIS, WE DO NOT FIND ANY INFIRMITY IN TH E ORDER OF THE CIT(A). THIS APPEAL OF THE REVENUE IS THEREFORE, DI SMISSED. 58. GROUND NOS.4 & 5 ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY SPECIFIC ADJUDICATION. IN THE RESULT, THIS APPEAL OF THE REVENUE IS DISMI SSED ITA NO. 585/CHD/2013 (A.Y. 2008-09) - REVENUES AP PEAL:- 59. IN THIS APPEAL, THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 34 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. C1T(A) HAS ERRED IN DELETING THE PENALTY OF RS. 71,63,840/- IMPOSED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 IN RESPECT OF ADDITION OF RS. 2,10,76,322/- MADE ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S 80IC ON TRANSPORT SUBSIDY, DEFERRED VAT LIABILITY AND INTEREST INCOME EVEN THOUGHT THE DEDUCTION WAS CLEARLY NOT ALLOWABLE. 2. IT IS PRAYED THAT THE ORDER OF LD. CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 3. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND FINALLY DISPOSED OF. 60. GROUND NO. 1: THIS APPEAL OF THE REVENUE IS AGAINST THE ACTION OF THE CIT(A) IN DELETING THE PENALTY OF RS. 71,63,84 0/- MADE U/S 271(1)(C) OF THE ACT IN RESPECT OF THE ADDITION OF RS. 2,10,76,322/- MADE ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S 8 0IC OF THE ACT ON TRANSPORT SUBSIDY, DEFERRED VAT LIABILITY AND INTER EST INCOME. 61. SO FAR AS THE ISSUE RELATING THE DEDUCTION U/S 80IC OF THE ACT ON TRANSPORT SUBSIDY AND DEFERRED VAT LIABILITY IS CON CERNED, THE SAME HAS BEEN DEALT WITH BY US WHILE DECIDING THE APPEAL OF THE ASSESSEE IN ITA NO. 366/CHD/2013. WE HAVE ALREADY HELD THE SAME AS CAPITAL RECEIPT AND IN THE ALTERNATIVE ELIGIBLE FOR CLAIMIN G OF DEDUCTION U/S 80IC OF THE ACT, HENCE, THE LEVY OF PENALTY ON THIS ISSUE DOES NOT SURVIVE. SO FAR AS THE CLAIM REGARDING INTEREST INC OME IS CONCERNED, THE ISSUE HAS ALREADY BEEN RESTORED BY US TO THE FILE O F THE ASSESSING OFFICER ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 35 OF ADJUDICATION AFRESH, HENCE, AT THIS STAGE; PENAL TY IS NOT SUSTAINABLE ON THIS ISSUE ALSO. 62 GROUND NOS.2 & 3 : THESE GROUNDS ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY SPECIFIC ADJUDICATION. IN THE RESULT, THIS APPEAL OF THE REVENUE IS PARTLY ALLOWED. 63. TO SUM UP ALL THE APPEALS OF THE ASSESSEE ARE R EVENUE ARE PARTLY ALLOWED EXCEPT THE APPEAL OF THE REVENUE FOR ASSESS MENT YEAR 2011-12 IN ITA NO. ITA NO.1101/C/2016 WHICH STANDS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 05.11.2018 SD/- SD/- '.., # $ ( B.R.R. KUMAR) %& / ACCOUNTANT MEMBER (SANJAY GARG ) / JUDICIAL MEMBER *' /DATE: 05.11. 2018 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. CIT 4. THE CIT(A) 5. '#$%&#$'%()*+ DR, ITAT, CHANDIGARH 6. *,-. GUARD FILE ' / BY ORDER, /012 ASSISTANT REGISTRAR ITA NOS..366/CHD/2013, 583 TO 584 & 589 TO 590/CHD/ 2014,585/CHD/2013 587/CHD/2014 & 1101/CHD/2016- H.M. STEELS & PADMAWA TI STEEL LTD., SANGRUR 36