Innoventive Industries Ltd., Pune V. Deputy Commissioner of Income-tax,

ITA 1360/PUN/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9801 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-11-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 21-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DIVYA BAJPAI
• Keywords: Capital receipt
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO , AM . / IT A NO. 1360 /P U N/201 6 / ASSESSMENT YEAR : 20 1 1 - 1 2 INNOVENTIVE INDUSTRIES LTD., GAT NO.1261, SANASWADI, TAL. SHIRUR, DIST. PUNE 412208 . / APPELLANT PAN: A ABCA4586B VS. THE DY. COMMISSIONER OF INCOME TAX, CI RCLE 1(2) , PUNE . / RESPONDENT / APPELLANT BY : NONE / RESPONDENT BY : MS. DIVYA BAJPAI, CIT / DATE OF HEARING : 2 9 . 1 1 .201 8 / DATE OF PRONOUNCEMENT: 1 2 . 1 2 .201 8 / ORDER PER SUSHMA CHOWLA, J M : TH E APPEAL FILED BY ASSESSEE IS AGAINST ORDER OF CIT (A) - 1 , PUNE , DATED 04 . 0 3 .201 6 RELATING TO ASSESSMENT YEAR 20 1 1 - 1 2 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND S OF APPEAL: - IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 1, PUNE, ERRED IN IT A NO. 1360 /P U N/20 1 6 INNOVENTIVE INDUSTRIES LTD. 2 1) IN RESPECT OF INDUSTRIAL PROMOTION SUBSIDY BY WAY OF REFU ND OF SALES TAX PAID OF RS.305,872,755/ - A . IN TREATING SUBSIDY RECEIVED UNDER THE MEGA PROJECT UNDER PACKAGE SCHEME OF INCENTIVES, 2007 AS CHARGEABLE TO TAX AS AGAINST THE ASSESSEE CLAIM OF CAPITAL RECEIPT. THE LEARNED CIT APPEAL FAILED TO APPRECIATE THE N ATURE OF THE SCHEME AND SUBSIDY RECEIVED IN ITS PROPER PROSPECTIVE. B . IN HOLDING THAT THE SAID SUBSIDY IS IN THE NATURE OF PRODUCTION INCENTIVES AND NOT AN INDUSTRIAL PROMOTION SUBSIDY. THE LEARNED CIT(A) FURTHER ERRED IN HOLDING THAT THE SAID SUBSIDY WAS NOT FOR SETTING UP OF UNIT BUT FOR INCENTIVIZING THE ASSESSEE IN RUNNING THE UNIT. THE LEARNED CIT(A) FAILED TO APPRECIATE THE REAL NATURE AND TRUE IMPORT OF THE SCHEME UNDER WHICH THE SUBSIDY WAS GRANTED. C . IN HOLDING THAT THE SUBSIDY IS REVENUE IN NATURE MERELY BECAUSE THE INCENTIVES WERE PAID AFTER THE PRODUCTION COMMENCED. HE FAILED TO APPRECIATE THE SETTLED LAW IN THIS REGARD IN ITS TRUE PERSPECTIVE. 3. DESPITE SERVICE OF NOTICE, NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY APPLICATION WAS FILED FOR ADJOURNMENT. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE FAIRLY POINTED OUT THAT SIMILAR ISSUE HAS BEEN DECIDED BY THE PUNE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEARS 2009 - 10 AND 2010 - 11. 5. THE ISSUE WHICH A RISES IN THE PRESENT APPEAL IS IN RESPECT OF INDUSTRIAL PROMOTION SUBSIDY BY WAY OF REFUND OF SALES TAX PAID OF 30.58 CRORES. 6. ON PERUSAL OF RECORD AND AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE, WE FIND THAT THE ISSUE WHICH IS RAISED IN THE PRESENT APPEAL IS IN RESPECT OF CLAIM OF ASSESSEE THAT THE SUBSIDY RECEIVED BY IT BY WAY OF REFUND OF SALES TAX PAID IS CAPITAL IN NATURE. THE ASSESSEE HAD REDUCED THE SAID AMOUNT FROM TOTAL INCOME, BUT HOWEVER THE ASSESSING OFFICER HELD THE SAID AMOUNT TO BE TAXABLE IN THE HANDS OF ASSESSEE TREATING THE SAID IT A NO. 1360 /P U N/20 1 6 INNOVENTIVE INDUSTRIES LTD. 3 RECEIPTS AS REVENUE RECEIPTS. THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER. 7. WE FIND THAT SIMILAR ISSUE AROSE BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.601/PN/2013 , RELATING TO ASSESSMENT YEAR 2009 - 10 AND ITA NO.215/PN/2014, RELATING TO ASSESSMENT YEAR 2010 - 11, WHEREIN VIDE CONSOLIDATED ORDER DATED 24.03.2017 , THE TRIBUNAL HAS ELABORATELY CONSIDERED THE SCHEME UNDER WHICH THE ASSESSEE WAS GIVEN THE SAID SUBSIDY AND HAS OBSERVED THAT THE SAID INCENTIVE RECEIVED BY THE ASSESSEE UNDER PSI, 2007 SCHEME IN THE FORM OF REFUND OF SALES TAX WAS CAPITAL RECEIPT AND NOT LIABLE TO TAX. THE SAID RATIO LAID DOWN BY THE TRIBUNAL IS SQUARELY APPLICABLE TO THE FACTS AND ISSUES RAIS ED IN THE PRESENT CASE ALSO , SINCE THE SUBSIDY BY WAY OF REFUND OF SALES TAX HAS BEEN RECEIVED BY THE ASSESSEE UNDER THE SAID SCHEME ITSELF. WE ARE REFERRING TO THE ORDER OF TRIBUNAL IN THIS REGARD BUT THE SAME IS NOT BEING REPRODUCED FOR THE SAKE OF BREV ITY. FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT THE SUBSIDY RECEIVED BY ASSESSEE UNDER THE PSI, 2007 SCHEME BY WAY OF REFUND OF SALES TAX IS NOT TAXABLE BEING CAPITAL RECEIPT, IN THE HANDS OF ASSESSEE. THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE THUS, ALLOWED. 8 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 12 TH DAY OF DECEMBER , 201 8 . SD/ - SD/ - ( D.KARUNAKARA RAO ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 12 TH DECEMBER , 201 8 . GCVSR IT A NO. 1360 /P U N/20 1 6 INNOVENTIVE INDUSTRIES LTD. 4 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 1 , PUNE ; 4. THE CIT - 1 , PUNE ; 5. 6. , , / DR A , ITAT, PUNE ; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE