The Income-tax Officer, Kathua V. M/s. Sidhi Vinayak Alloys Industries, Kathua

ITA 140/ASR/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7728 (ITAT-AMRITSAR)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-06-2012
• Assessment Year: 2009-2010
• Appeal Filed On: 01-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R L CHHANALIA
• Keywords: Capital receipt
• Section: 43B; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO. 140(ASR)/2012 ASSESSMENT YEAR:2009-10 PAN :ABBFS1745A INCOME TAX OFFICER, VS. M/S. SIDHI VINAYAK ALLOYS INDUSTRIES, KATHUA. KATHUA. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. R.L. CHHANALIA, DR RESPONDENT BY:NONE DATE OF HEARING:27/06/2012 DATE OF PRONOUNCEMENT: ORDER PER BENCH ; THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER OF THE CIT(A), JAMMU, DATED 24.02.2012 FOR THE ASSESSMENT YEAR 2009-10 ON THE FOLLOWING GROUNDS: 1 ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN ALLOWING RELIEF ON ACCOUNT OF DEDUCTIO N U/S 80IB ON CENTRAL EXCISE DUTY REFUND & INTEREST SUBSIDY BY R ELYING UPON ORDERS OF HON'BLE HIGH COURT IF J&K, JAMMU WHICH HAS BEEN DELIVERED NOT ON MERITS OF THE ISSUE BUT HOLDING THE RECEIPT TO B E A CAPITAL RECEIPT ONLY BECAUSE THE POLICY UNDER WHICH THE SAME WAS PA ID ENVISAGED TACKLING THE UNEMPLOYMENT IN THE STATE WHICH CANNOT BE SAID TO BE A GOOD TEST FOR DECIDING WHETHER A RECEIPT IS A TRADI NG RECEIPT OR A CAPITAL RECEIPT. ITA NO.140(ASR)/2012 2 2. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN FACTS AND CIRCUMSTANCES AND IN LAW IN NOT APPRECIATING THE JUDGMENTS OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF PONNI SUGAR & SAWHNEY STEEL AND PRESS WORKS LTD, WHEREIN THE HON'BLE SUPREME COURT HAD HELD SUCH RECEIPTS TO BE THE REVE NUE RECEIPTS IN AS MUCH AS IN THAT CASE PAYMENTS WERE MADE ONLY AFTER THE INDUSTRIES HAD BEEN SET UP AND PAYMENTS WERE NOT MADE FOR PURPOSE OF SETTING UP OF INDUSTRIES. 3. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN FACTS AND CIRCUMSTANCES AND IN LAW IN NOT CONSIDERING THE DECISION IN THE CASE OF SEAHAM HARBOUR DOCK COMPANY WHICH LAYS DOWN TWO IMPORTANT TESTS FOR DETERMINING WHETHER RE CEIPTS IS A TRADING RECEIPT OR A CAPITAL RECEIPT. 4. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN FACTS AND CIRCUMSTANCES AND IN LAW IN NOT APPRECIATING AND APPLIED THE PURPOSE TEST AS LAID DOWN BY THE JUDGME NTS OF THE HON'BLE SUPREME COURT. IN THE CASE OF ASSESSEE, THE MONEY RECEIVED BY THE ASSESSEE ON ACCOUNT OF REFUND OF CENTRAL EXCISE WAS NOT SUPPOSED TO BE SPENT IN A PARTICULAR MANNER FOR PURPOSE OF SUBS TANTIAL EXPANSION OF THE INDUSTRY. REGARDING ADDITION ON ACCOUNT OF HIGHER DEDUCTION A ND DISALLOWANCE U/S 36(1)(VA) OF THE INCOME-TAX ACT, 1 961. 1. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN ALLOWING RELIEF ON ACCOUNT OF HIGHER DEDUC TION AND DISALLOWANCE 36(1)(VA) AS THE ASSESSEE HAS CONTRAVE NED THE PROVISIONS OF THE ACT, IN VIEW OF THE DECISION OF JURISDICTION AL BENCH IN THE CASE OF M/S. KASHMIR TUBES REPORTED IN ITA NO.145(ASR)/2 005 DATED 07.12.2007 WHERE SUCH DISALLOWANCES WERE UPHELD BY THE HONBLE ITAT, AMRITSAR. 2. WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVAN T MATERIAL AVAILABLE WITH US. WE ARE OF THE VIEW THAT AS REGARDS THE IS SUES INVOLVED IN GROUND NOS. 1 TO 4 RELATING TO DEDUCTION UNDER SECTION 80 IB ON EXCISE DUTY ITA NO.140(ASR)/2012 3 REFUND AND INTEREST SUBSIDY, IT IS AN ADMITTED FACT THAT THE ISSUES IN DISPUTE HAVE ALREADY BEEN ADJUDICATED AND DECIDED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT O F JAMMU & KASHMIR IN THE CASE OF SHREE BALAJI ALLOYS V. CIT AND ANOTHER (2011) 333 ITR 335 (J&K) BY HOLDING THAT THE EXCISE DUTY REFUND AND IN TEREST SUBSIDY IS TO BE TREATED AS CAPITAL RECEIPT AND NOT LIABLE TO BE T AXED. 2.1. THE LD. FIRST APPELLATE AUTHORITY HAS ALSO DE CIDED THESE ISSUES IN FAVOUR OF THE ASSESSEE BY RELYING UPON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT OF J & K, IN THE CASE OF SHREE BALAJI ALLOYS V. CIT AND ANOTHER (2011) 333 ITR 335 (J&K). THEREFORE , RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONA L HIGH COURT (SURPA), WE DISMISS GROUND NOS. 1 TO 4 OF THE REVENUE RELATING TO EXCISE DUTY REFUND AND INTEREST SUBSIDY. 3. AS REGARDS ADDITION ON ACCOUNT OF HIGHER DEDUCTION AND DISALL OWANCE U/S 36(1)(VA) OF THE INCOME TAX ACT, 1961, WE ARE O F THE VIEW THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE DECISION OF H ONBLE ITAT, AMRITSAR BENCH IN THE CASE OF M/S. SUN PHARMACEUTICALS, IN I TA NO.184(ASR)/2009 FOR THE ASSESSMENT YEAR 2005-06 DATED 11.06.2010 IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. WE FOUND THAT THE LD. CIT (A) HAS ALSO FOLLOWED ITA NO.140(ASR)/2012 4 THE DECISION OF THE ITAT, AMRITSAR BENCH IN THE CAS E OF M/S. SUN PHARMACEUTICALS (SUPRA) WHILE ALLOWING THE GROUND O F THE ASSESSEE. THE RELEVANT PART OF THE FINDINGS OF THE CIT (A) IS RE PRODUCED HEREUNDER FOR THE SAKE OF CLARITY : 9. I HAVE GONE THROUGH THE ASSESSMENT ORDER UNDER APPEAL AND THE CASE CITED BY THE APPELLANTS AUTHORIZED REPRESENTA TIVE AND THE CASE RECORD REGARDING THE DISALLOWANCES MADE BY THE AO U /S 36(1)(VA) OF THE I.T. ACT, 1961. THE ONLY ISSUE OF CONTENTION IS WHETHER ON THIS AMOUNT OF ENHANCE INCOME, THE DEDUCTION U/S 80IB O F THE ACT IS ALLOWABLE OR NOT. THE DECISION OF THE JURISDICTIONA L BENCH OF THE HONBLE ITAT, AMRITSAR ON DEDUCTION U/S 80IB OF THE ACT ON SUCH DISALLOWANCES IN CASE OF M/S. SUN PHARMACEUTICALS I TA NO.184(ASR)/2009 FOR ASSESSMENT YEAR 2005-06 PASSED ON 11.06.2010 WHICH DEALS WITH THE ISSUE AS UNDER: 38 AS REGARDS TO THE ADDITIONAL GROUND NOS.1, 2 AN D 3 CLAIMING CONSEQUENTIAL THE HIGHER DEDUCTION UNDER S ECTION 80IB ON ACCOUNT OF DISALLOWANCE OF REMUNERATION UNDER SE CTION 40(B) AMOUNTING TO RS.33,20,15,856/-, DISALLOWANCE UNDER SECTION 43B AMOUNTING TO RS.18,46,427/- AND DISALLO WANCE UNDER SECTION 40(A)(IA) AMOUNTING TO RS.4,80,301/- FOR CONTRIBUTION OF DEDUCTION UNDER SECTION 80IB. THE LEARNED D.R. RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. 39. WE HAVE CONSIDERED THE ARGUMENTS OF BOTH THE PARTIE S AND CAREFULLY EXAMINED THE RECORDS. WE FIND THAT S ECTION 80AB STATES IN CLEAR TERMS AS UNDER:- SECTION 80AB. WHERE ANY DEDUCTION IS REQUIRED TO BE MADE OR ALLOW ED UNDER ANY SECTION INCLUDED IN THIS CHAPTER UNDER THE HEAD ING C.- DEDUCTIONS IN RESPECT OF CERTAIN INCOMES IN RESPEC T OF ANY INCOME OF THE NATURE SPECIFIED IN THAT SECTION WHIC H IS INCLUDED IN THE GROSS TOTAL INCOME OF THE ASSESSEE, THEN, NO TWITHSTANDING ANYTHING CONTAINED IN THAT SECTION, FOR THE PURPOSE OF COMPUTING THE DEDUCTION UNDER THAT SECTION, THE AMO UNT OF ITA NO.140(ASR)/2012 5 INCOME OF THAT NATURE AS COMPUTED IN ACCORDANCE WIT H THE PROVISIONS OF THIS ACT (BEFORE MAKING ANY DEDUCTION UNDER THIS CHAPTER) SHALL ALONE BE DEEMED TO BE THE AMOUNT OF INCOME OF THAT NATURE WHICH IS DERIVED OR RECEIVED BY THE ASS ESSEE AND WHICH IS INCLUDED IN HIS GROSS TOTAL INCOME. 40. UNDER THE CIRCUMSTANCES TO THE EXTENT DISALLOWA NCE AND/OR THE ADDITIONS ARE MADE, WHICH ARE SUBJECT MA TTER OF ADDITIONAL GROUND, ORIGINAL PROFIT TO THE APPELLANT WOULD STAND ENHANCED OR EVEN ON THIS PROFIT WOULD GET DEDUCTION UNDER SECTION 80IB. ACCORDINGLY, THE ADDITIONS AMOUNTS (RS.32,20,15,856/-, RS.18,46,427/- AND RS.4,80,301/ -) ARE INCLUDED IN THE GROSS TOTAL INCOME, CONSEQUENTLY DE DUCTION UNDER SECTION 80IB IS ALLOWABLE ON SUCH HIGHER AMOU NT. HENCE, THESE ADDITIONAL GROUNDS OF APPEALS ARE ALLO WED SUBJECT TO THE PROVISIONS OF SECTION 70A(2) READ WITH SECTI ON 80AB AND 80B(5) OF THE I.T. ACT. 9.1. RESPECTFULLY FOLLOWING THE DECISION OF HONBLE ITAT, AMRITSAR, IT IS HELD THAT DEDUCTION U/S 80IB OF THE ACT IS AL LOWABLE ON THE AMOUNT OF ENHANCEMENT INCOME IN VIEW OF THE DISALLO WANCE MADE U/S 36(1)(VA) OF THE ACT. ACCORDINGLY, THE AO IS DIRECT ED TO ALLOW DEDUCTION U/S 80IB OF THE ACT ON THE AMOUNT OF RS.9 6,352/- BEING ENHANCEMENT OF INCOME DUE TO DISALLOWANCE U/S 36(1) VA) OF I.T. ACT, 1961. 4. IN VIEW OF THE ABOVE DISCUSSIONS, WE ARE IN CO MPLETE AGREEMENT WITH THE FINDINGS OF THE LD. CIT(A), WHO HAS PASSED A WE LL REASONED ORDER BY FOLLOWING THE DECISION OF ITAT AMRITSAR BENCH, IN T HE CASE OF M/S. SUN PHARMACEUTICALS ITA NO.184(ASR)/2009 FOR ASSESSMENT YEAR 2005-06 DATED ON 11.06.2010 AND HAS RIGHTLY DIRECTED THE AO TO AL LOW DEDUCTION ON ACCOUNT OF HIGHER EDUCATION AND DISALLOWANCE U/S 36 (1)(VA) OF THE ACT. HENCE, THIS GROUND OF THE REVENUE IS DISMISSED. ITA NO.140(ASR)/2012 6 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I N ITA NO.140(ASR)/2012 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3RD JULY, 2012. SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 3RD JULY, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S. SIDHI VINAYAK ALLOYS INDUSTRIES, KATHUA, 2. THE ITO KATHUA. 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.