ACIT, Chandigarh V. M/s Green Field Enterprises, Chandigarh

ITA 1114/CHANDI/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5156 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 21-02-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 02-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Capital receipt
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.1114/CHD/2016 (ASSESSMENT YEAR : 2012-13) THE A.C.I.T., VS. M/S GREEN FIELD ENTERPRISES, CIRCLE 5(1), SCO 36, 1 ST FLOOR, SECTOR 26, CHANDIGARH. CHANDIGARH. PAN: AAGFG6666C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANJIT SINGH, DR RESPONDENT BY : SHRI T.N. SINGLA DATE OF HEARING : 22.05.2017 DATE OF PRONOUNCEMENT : 02.06.2017 O R D E R PER ANNAPURNA GUPTA, A.M . : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF CIT(APPEALS)-2, CHANDIGARH DATED 9.8.2 016 RELATING TO ASSESSMENT YEAR 2012-13. 2. THE GROUNDS RAISED BY REVENUE ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING APPEAL O F THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE EXCISE D UTY REFUND OF RS. 1,65,02,244/- RECEIVED BY THE ASSESSEE CONSTITUTED A CAPITAL RECEIPT NOT LIABLE TO TAX UND ER THE PROVISIONS OF INCOME TAX ACT, 1961. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ADDITIO N OF RS. 11,22,561/- ON ACCOUNT OF REBATE & DISCOUNT RELATES TO PURCHASE OF MATERIAL WHICH WAS SHOWN ON THE CREDIT SIDE OF THE PROFIT & LOSS ACCOUNT AND THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ADDITION OF 2 RS. 77,249/- ON ACCOUNT OF INTEREST RECEIVED ON FDRS WHICH WAS SHOWN ON THE CREDIT SIDE OF THE PROFIT & LOSS ACCOUNT AND THE ASSESSEE IS LIABLE FOR DEDUCTION U/S 80IB. 5. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE S ET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OFF. 3. GROUND NOS.1, 5 AND 6 BEING GENERAL IN NATURE NEED NO ADJUDICATION AND ARE, THEREFORE, NOT BEING DEALT WITH BY US. 4. GROUND NO.2 RAISED BY THE REVENUE IS AGAINST TH E ACTION OF THE LD.CIT(APPEALS) IN HOLDING THE EXCISE DUTY REFUND RECEIVED BY THE ASSESSEE, AMOUNTING TO RS.1,65,02,244/-, AS BEING CAPITAL IN NATURE AND TH US DELETING THE ADDITION MADE BY THE ASSESSING OFFICER BY TREATING THE SAME AS REVENUE AND FURTHER NOT ELIG IBLE FOR DEDUCTION U/S 80IB OF THE INCOME TAX ACT,1961. 5. BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT THE ASSESSEE HAD CLAIMED DEDUCTION OF RS.1,65,02,244/- U/S 80IB OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT ) ON EXCISE DUTY REFUND. THE ASSESSING OFFICER DISALLOW ED THE CLAIM, HOLDING THAT IT CANNOT BE SAID TO BE DERIVE D FROM THE BUSINESS OF THE ASSESSEE, WHICH IS A PREREQUISITE F OR CLAIMING THE SAID DEDUCTION, SINCE ITS SOURCE WAS N OT FROM THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE BUT THE SCHEME OF THE CENTRAL GOVERNMENT. 6. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD.CIT(APPEALS), WHERE THE ASSESSEE ARGUED THAT THE HON'BLE JAMMU & KASHMIR HIGH COURT IN THE CASE OF M/S SHREE 3 BALAJI ALLOYS & OTHERS VS. CIT IN ITA NO.2 OF 2010 & OTHERS DATED 31.1.2011 HAD HELD THAT THE EXCISE DUTY REFUN D RECEIVED BY THE ASSESSEE BY VIRTUE OF THE POLICY OF GOVERNMENT OF JAMMU & KASHMIR WAS A CAPITAL RECEIPT AND HENCE NOT LIABLE TO TAX IN THE HANDS OF THE ASSESSE E. THE ASSESSEE ALSO POINTED OUT THAT THIS DECISION HAS B EEN UPHELD BY THE HON'BLE APEX COURT REPORTED IN 138 DT R 36. THE ASSESSEE ALSO STATED THAT THE ITAT, IN THE ASSE SSEES OWN CASE FOR ASSESSMENT YEAR 2010-11 HAD HELD THE R EFUND OF THE EXCISE DUTY AS CAPITAL IN NATURE. THE LD.CIT (APPEALS) AFTER CONSIDERING THE ASSESSEES SUBMISSIONS DELETE D THE ADDITION MADE BY FOLLOWING THE ORDER OF THE I.T.A.T . IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2010-11 VID E ITS ORDER IN ITA NO.971/CHD/2013 DATED 2.5.2016. 7. AGGRIEVED BY THE SAME, THE REVENUE HAS NOW COME UP IN APPEAL BEFORE US. WHILE THE LD. DR RELIED UP ON THE ORDER OF THE ASSESSING OFFICER AND STATED THAT THE EXCISE DUTY REFUND RECEIPT WAS REVENUE IN NATURE AND HAVIN G NO DIRECT NEXUS WITH THE BUSINESS OF THE ASSESSEE BUT HAVING BEEN EARNED BY THE ASSESSEE ON ACCOUNT OF THE SCHEM E OF GOVERNMENT IN THIS REGARD, IT WAS NOT LIABLE TO DED UCTION U/S 80IB OF THE ACT. 8. THE LD. COUNSEL FOR ASSESSEE, ON THE OTHER HAND , RELIED UPON THE ORDER OF THE LD.CIT(APPEALS). 9. HAVING HEARD THE RIVAL CONTENTIONS, WE FIND NO MERIT IN THE PRESENT GROUND RAISED BY THE REVENUE. THE ISSUE IN THE PRESENT GROUND PERTAINING TO THE NATUR E OF THE 4 SUBSIDY RECEIVED IN THE FORM OF EXCISE DUTY REFUND WHETHER CAPITAL OR REVENUE AND ITS DEDUCTIBILITY U/S 80IB, WE FIND THAT THE SAME HAS ATTAINED FINALITY IN VIEW OF THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF M/S SHREE BAL AJI ALLOYS & OTHERS (SUPRA) AND IN THE CASE OF CIT VS. MEGHALAYA STEELS 383 ITR 217 (SC). THE HON'BLE APE X COURT IN THE CASE OF M/S SHREE BALAJI ALLOYS & OTHERS (SU PRA) DISMISSED THE APPEAL OF THE REVENUE AGAINST THE ORD ER OF THE HON'BLE JAMMU & KASHMIR HIGH COURT FOLLOWING IT S DECISION RENDERED IN THE CASE OF CIT VS. MEGHALAYA STEELS (SUPRA). THE HON'BLE JAMMU & KASHMIR HIGH COURT HA D IN TURN HELD THAT EXCISE DUTY REFUND WAS CAPITAL IN NA TURE SINCE IT WAS GRANTED TO ACHIEVE THE PURPOSE OF ACCE LERATION OF INDUSTRIAL DEVELOPMENT IN THE STATE AND GENERATI ON OF EMPLOYMENT WHICH WERE PUBLIC PURPOSES AND THUS COUL D NOT BE CONSTRUED AS OPERATIONAL INCENTIVES. THUS IT IS SETTLED THAT SUBSIDY RECEIVED BY WAY OF REFUND OF EXCISE DU TY FOR SETTING UP NEW INDUSTRIAL UNDERTAKING IS A CAPITAL RECEIPT AND NOT TAXABLE AS INCOME. 10. IN VIEW OF THE SAME, WE FIND NO REASON TO INTE RFERE IN THE ORDER OF THE LD.CIT(APPEALS) DELETING THE A DDITION MADE ON ACCOUNT OF EXCISE DUTY REFUND AMOUNTING TO RS.1,65,02,244/-. GROUND NO.2 RAISED BY THE REVENU E IS, THEREFORE, DISMISSED IN THE ABOVE TERMS. 11. GROUND NO.3 RAISED BY THE REVENUE IS AGAINST T HE ACTION OF THE LD.CIT(APPEALS) IN DELETING THE ADDI TION OF RS.11,22,561/- MADE ON ACCOUNT OF REBATE AND DISCOU NT 5 RELATING TO PURCHASE OF MATERIAL AND HOLDING THAT T HE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB ON THE SAME. 12. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80IB ON REBATE A ND DISCOUNT AMOUNTING TO RS.11,22,561/-. THE ASSESSING OFFICER DENIED THE SAME FOR THE REASON THAT RECEIVI NG REBATE AND DISCOUNT WAS NOT THE PRIMARY BUSINESS OF THE AS SESSEE AND, THEREFORE, THERE WAS NO DIRECT NEXUS OF THE IN COME ARISING ON ACCOUNT OF REBATE AND DISCOUNT WITH THE BUSINESS ACTIVITY OF THE ASSESSEE AND THUS THE ASSESSEE WAS NOT ENTITLED TO CLAIM DEDUCTION U/S 80IB OF THE ACT ON ACCOUNT OF THE SAME. 13. BEFORE THE LD.CIT(APPEALS), THE ASSESSEE CONTENDED THAT REBATE AND DISCOUNT HAS BEEN RECEIVE D BY THE ASSESSEE ON PURCHASES MADE BY IT IN ITS UNIT SE T UP IN JAMMU & KASHMIR, WHICH WAS ELIGIBLE TO CLAIM DEDUCT ION OF ITS PROFITS U/S 80IB, AND THE ASSESSEE HAD INSTEAD OF DEDUCTING THIS AMOUNT FROM PURCHASES HAD SHOWN THE SAME SEPARATELY ON THE CREDIT SIDE OF THE PROFIT & LOSS ACCOUNT. THE ASSESSEE SUBMITTED THAT THESE AMOUNTS WERE DIRE CTLY RELATED TO THE PURCHASE AND THUS HAD DIRECT NEXUS W ITH THE INCOME EARNED FROM THE ELIGIBLE BUSINESS OF THE ASS ESSEE. THE ASSESSEE CONTENDED THAT IT WAS, THEREFORE, ELIG IBLE TO CLAIM DEDUCTION ON ACCOUNT OF THE SAME. IT WAS ALS O POINTED OUT BY THE ASSESSEE THAT SIMILAR DISALLOWAN CE MADE IN ASSESSMENT YEAR 2010-11 IN THE CASE OF THE ASSES SEE HAD BEEN DELETED BY THE I.T.A.T. VIDE ITS ORDER IN ITA 6 NO.971/CHD/2013 DATED 2.5.2016. THE LEARNED CIT (APPEALS) AFTER CONSIDERING THE ASSESSEES SUBMISSI ONS DELETED THE DISALLOWANCE MADE RELYING UPON THE DECI SION OF THE I.T.A.T. IN ASSESSEES OWN ASSESSEE FOR ASSESSM ENT YEAR 2010-11. 14. BEFORE US, THE LEARNED D.R. RELIED UPON THE OR DER OF THE ASSESSING OFFICER, WHILE THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF THE LEARNED CIT ( APPEALS). 15. HAVING HEARD BOTH THE PARTIES, WE FIND NO MERI T IN THE GROUND RAISED BY THE REVENUE. UNDISPUTEDLY, ID ENTICAL ISSUE OF ALLOWANCE OF DEDUCTION U/S 80IB ON REBATES AND DISCOUNTS EARNED BY THE ASSESSEE ON PURCHASES MADE BY IT HAD ARISEN IN THE CASE OF THE ASSESSEE IN ASSESSMEN T YEAR 2010-11 WHEREIN THE I.T.A.T. HAD HELD THAT THE ASSE SSEE WAS ENTITLED TO DEDUCTION ON THE SAME. NO CHANGE IN FA CTS HAVE BEEN BROUGHT TO OUR NOTICE BY THE LEARNED D.R. FROM THE ASSESSMENT YEAR 2010-11. IN VIEW OF THE SAME, SINC E THE ISSUE HAS ALREADY BEEN DECIDED BY THE I.T.A.T., ON IDENTICAL SET OF FACTS IN ASSESSMENT YEAR 2010-11, IN FAVOUR OF THE ASSESSEE, WE SEE NO REASON TO INTERFERE IN THE ORDE R OF THE LEARNED CIT (APPEALS) WHO HAS ALLOWED THE ASSESSEE S APPEAL BY FOLLOWING THE DECISION OF THE I.T.A.T. IN ASSES SEES OWN CASE IN ASSESSMENT YEAR 2010-11. IN VIEW OF THE SA ME GROUND NO.3 RAISED BY THE REVENUE IS DISMISSED. 16. GROUND NO.4 RAISED BY THE REVENUE IS AGAINST T HE ACTION OF THE LEARNED CIT (APPEALS) IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.77,249/- ON ACC OUNT OF 7 INTEREST RECEIVED ON FDRS BY DENYING DEDUCTION U/S 80IB ON THE SAME. 17. BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT THE ASSESSEE HAS SHOWN INCOME FROM INTEREST ON FDRS AND INTEREST FROM OTHERS TOTALLING RS.2,20,834/-. THE ASSESSING OFFICER SHOW CAUSED THE ASSESSEE AS TO WHY THE DEDU CTION U/S 80IB BE NOT DISALLOWED ON THE INTEREST INCOME S INCE IT WAS NOT PROFIT FROM ELIGIBLE BUSINESS IN THE ABSEN CE OF ANY EXPLANATION OFFERED BY THE ASSESSEE THE ASSESSING O FFICER DISALLOWED DEDUCTION UNDER SECTION 80IB ON THE INTE REST INCOME AND MADE ADDITION OF RS.2,20,834/-. 18. BEFORE THE LEARNED CIT (APPEALS), THE ASSESSEE CONTENDED THAT OUT OF THE TOTAL INTEREST CREDITED T O THE PROFIT AND LOSS ACCOUNT OF RS.2,20,834/-, RS.68,220 /- WAS INTEREST RECEIVED ON FDRS AND RS.1,52,614/- WAS INT EREST RECEIVED FROM OTHER SOURCES. THE ASSESSEE SUBMITTE D THAT NO DEDUCTION U/S 80IB HAD BEEN CLAIMED ON RS.1,43, 585/-. THE LEARNED CIT (APPEALS) AFTER CONSIDERING ASSESSE ES SUBMISSIONS AND AFTER PERUSING THE COMPUTATION OF I NCOME FOUND THAT THE ASSESSEE HAD NOT CLAIMED DEDUCTION O N INTEREST INCOME OF RS.1,43,585/-. HE, THEREFORE, D IRECTED THE ASSESSING OFFICER TO ALLOW DEDUCTION AS PER LAW AFTER DUE VERIFICATION. 19. BEFORE US, THE LEARNED D.R. ARGUED THAT THE LEARNED CIT (APPEALS) HAD ERRED IN ALLOWING DEDUCTI ON UNDER SECTION 80IB ON THE INTEREST AMOUNTING TO RS.77,249 /-. 8 20. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, POINTED OUT THAT THE LEARNED CIT (APPEALS) HA D NOT ALLOWED THE ASSESSEE DEDUCTION ON THE INTEREST OF RS.77,249/- BUT HAD IN FACT DIRECTED THE ASSESSING OFFICER TO ALLOW DEDUCTION ON THE SAME UNDER SECTION 80IB O F THE ACT AS PER LAW AFTER DUE VERIFICATION. THE LD. COUN SEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE ORDER OF THE LEA RNED CIT (APPEALS) GIVING THE AFORESAID DIRECTIONS AT PARA 8 .3. 21. WE HAVE HEARD THE RIVAL CONTENTIONS. WE ARE N OT IN AGREEMENT WITH THE CONTENTION RAISED BY THE LD .DR. ON PERUSAL OF THE ORDER OF THE LEARNED CIT (APPEALS) W E FIND THAT THE LEARNED CIT (APPEALS) AFTER GIVING A CATEG ORICAL FINDING THAT OUT OF THE TOTAL INTEREST CREDITED TO THE PROFIT AND LOSS ACCOUNT OF RS.2,20,834/-, THE ASSESSEE HAD NOT CLAIMED DEDUCTION UNDER SECTION 80IB OF RS.1,43,585 /-, DIRECTED THE ASSESSING OFFICER TO ALLOW DEDUCTION U NDER SECTION 80IB AS PER LAW AFTER DUE VERIFICATION. TH E RELEVANT PORTION OF THE CIT(A) ORDER IS AS UNDER: 8.3 THE SUBMISSION OF THE APPELLANT HAVE BEEN CONS IDERED. ON PERUSAL OF COMPUTATION OF INCOME, IT IS SEEN THA T ASSESSEE HAS ALREADY DEDUCTED INTEREST INCOME OF RS. 1,43,58 5/- TO ARRIVE AT THE DEDUCTION U/S 80IB. THEREFORE, AO IS DIRECTE D TO ALLOW THE DEDUCTION U/S 80IB AS PER LAW AFTER DUE VERIFICATIO N. GROUND OF APPEAL NO 6 IS ALLOWED. 22. IT IS EVIDENT FROM THE ABOVE THAT THE LD.CIT(APPEALS) HAD ONLY ADJUDICATED THE ISSUE BEFO RE IT TO THE EXTENT OF RS.1,43,585/-. THEREFORE THE CONTENTI ON OF THE LD.DR THAT THE ASSESSEE HAS BEEN ALLOWED DEDUCTION U/S 9 80IB ON THE BALANCE PORTION OF RS. 77,249/-, WE FIN D IS INCORRECT. AT THE SAME TIME WE FIND THAT THE LD.COU NSEL FOR THE ASSESSEE HAS MISCONSTRUED THE FINDINGS OF THE LD.CIT(APPEALS) TO MEAN THAT THE ENTIRE ISSUE HAS B EEN RESTORED TO THE ASSESSING OFFICER TO DECIDE AS PER LAW, SINCE THE LD.CIT(APPEALS) HAS NO POWERS TO SET ASIDE A CA SE TO THE AO, AS PER THE PROVISIONS OF SECTION 251(1) OF THE ACT, WHICH DEAL WITH POWERS OF THE CIT(A)S. BUT, WE MAY ADD I N THE SAME BREATH, THAT IT CANNOT BE DENIED THAT THE BALA NCE INTEREST INCOME OF RS.77,249/- HAS NOT BEEN DEALT W ITH BY THE LD. CIT(APPEALS). WE THEREFORE RESTORE THE ISSU E OF ALLOWANCE OF DEDUCTION U/S 80IB ON THE INTEREST INC OME OF RS.77,249/-BACK TO THE FILE OF THE CIT(APPEALS) TO DECIDE IT AFRESH BY PASSING A SPEAKING ORDER AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. 23. GROUND OF APPEAL NO.4 OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 24. IN THE RESULT, THE APPEAL OF THE REVENUE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 2 ND JUNE, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH 10