M/s Braza Tyres (P) Ltd., Paonta Sahib V. DCIT, Circle , Shimla

ITA 1417/CHANDI/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3601 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-05-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 26-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Capital receipt
• Section: 14A

Judgement Text

ITA NOS. 1417 & 1416/CHD/2016- M/S BRAZA TYPES PVT LTD & CHIQ MIRCRON CHEM (P) LT D., PAONTA SAHIB 2 2. SINCE THE FACTS AND ISSUE INVOLVED IN BOTH THE A PPEALS ARE IDENTICAL, HENCE, THESE WERE CLUBBED TOGETHER VIDE ORDER DATED 23.5.2018 OF HON'BLE VICE PRESIDENT, ITAT AND HE ARD IN A BEACH OF ITAT CHANDIGARH AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. FOR THE SAKE OF CONVENIENCE, THE ITA NO. 1417/CHD/2017 IS TAKEN AS A LEAD CASE FOR DISCUSSION. ITA NO. 1417/CHD/2017 3. THE ASSESSEE IN THIS APPEAL HAS TAKEN THE FOLLOW ING REVISED GROUNDS:- 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), SHIMLA IS DEFECTIVE BOTH IN. LAW AND FACTS OF THE CASE. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), SHIMLA IS UNJUSTIFIED IN UPHOLDING THE ORDER OF THE LD. ASSESSING OFFICER REGARDING DISALLOWANCE OF DEDUCTION U/S 80IC ON ACCOUNT OF SALES TAX INCENTIVE OF RS. 17,92,165/- AS PER GENER AL SALES TAX (DEFERRED PAYMENT OF TAX) SCHEME 2005 BY THE HIMACHAL PRADESH GOVERNMENT WHICH IS PART OF THE PROFIT AND GAINS OF BUSINESS DERIVED FROM THE INDUSTRIAL UNDERTAKING ELIGIBLE FOR DEDUCTION U/S 8 0IC OF THE I.T. ACT, 1961 AS PER CIRCULAR NO. 39/2016 DATED 29-11-2016 AND CIT VS MEGHALYA STEELS LTD. (383 ITR 217) (SC). THIS ADDITION IS UNCALLED FOR A ND DESERVES TO BE DELETED. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), SHIMLA IS UNJUSTIFIED IN UPHOLDING THE ORDER OF THE LD. ASSESSING OFFICER REGARDING ADDITI ON OF RS.L,19,533/- U/S 14A OF THE I.T. ACT, 1961 ON T HE GROUND OF INVESTMENT OF RS.51,00,000/- IN SHARE APPLICATION MONEY OF OTHER COMPANY AS THE APPELLANT HAS NOT EARNED ANY EXEMPT INCOME DURING THE YEAR AND PROVISIONS OF SECTION 14A ARE NOT APPLICABLE TO THE APPELLANT. THIS ADDITION IS UNCALLED FOR AND DESERVES TO BE DELETED. ITA NOS. 1417 & 1416/CHD/2016- M/S BRAZA TYPES PVT LTD & CHIQ MIRCRON CHEM (P) LT D., PAONTA SAHIB 4 7. THOUGH ORIGINALLY THE ASSESSEE HAD CLAIMED THAT THE AFORESAID INCENTIVE RECEIVED BY THE ASSESSEE WAS LIABLE TO BE TAKEN AS EXEMPT U/S 80IC OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') AS THE SAME WAS PART OF THE PROFITS OF THE BUSINESS DERIVED FRO M THE INDUSTRIAL UNDERTAKING ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT, HOWEVER, IN THE ADDITIONAL GROUND OF APPEAL THE ASSESSEE RELYIN G UPON THE LATEST DECISIONS OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SHREE BALAJI ALLOYS & ORS 138 DTR 36 (SC) AND CIT VS. CHAPHALKAR BROTHERS (400 ITR 279) HAS CLAIMED THAT THE SAID RECEIPT WAS CAPITAL RECEIPT NOT LIABLE TO TAX UNDER THE PR OVISIONS OF INCOME TAX ACT. 8. THE LD. DR HAS OPPOSED THE TAKING OF THIS ADDITI ONAL GROUND AT THIS STAGE. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THE ASSESSEE FROM THE VERY BEGINNING HAS BEEN CONTESTIN G THE LIABILITY TO PAY TAX ON THE AFORESAID SALES TAX INCENTIVES RECEI VED BY THE ASSESSEE FROM THE STATE GOVERNMENT UNDER THE GENERAL SALES T AX (DEFERRED PAYMENT OF TAX) SCHEME 2005. THE ISSUE REGARDING T HE NATURE OF THE SAID RECEIPTS AS WELL AS THE QUESTION OF ALLOWABILI TY OF THE SAME AS DEDUCTION U/S 80IC OF THE ACT HAD BEEN RAISED BY S EVERAL ASSESSEES IN VARIOUS CASES AND THE MATTER IN OTHER CASES TRAV ELLED UP TO THE HON'BLE SUPREME COURT. THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. CHAPHALKAR BROTHERS (SUPRA) WHILE DELIBERA TING ON THE OTHER DECISIONS OF THE SUPREME COURT HELD THAT TO H OLD WHETHER ITA NOS. 1417 & 1416/CHD/2016- M/S BRAZA TYPES PVT LTD & CHIQ MIRCRON CHEM (P) LT D., PAONTA SAHIB 6 THE ASSESSEE, IN OUR VIEW, IN THE LIGHT OF THE LAT EST DECISION OF THE HON'BLE SUPREME COURT (SUPRA), THE ASSESSEE IS WEL L WITHIN ITS RIGHT TO TAKE THIS LEGAL PLEA EVEN AT THE APPELLATE STAGE BEFORE US. THE QUESTION AS TO WHETHER THE ASSESSEE CAN TAKE AN ADDITIONAL GROUND AT APPELLATE STAGE EVEN WHEN THE SAME HAS NOT BEEN RAISED BEFORE THE LOWER AUTHORITIES HAS BEEN THOROUGHLY DISCUSSED BY CO-ORDINATE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF PANDOO P. NAIG IN ITA NO.7089/MUM/2011 DECIDED ON 24.06.2016 [2016 ( 9) TMI 1062]. THE TRIBUNAL, WHILE RELYING UPON THE DECISI ON OF THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWE R COMPANY LTD. VS. CIT 229 ITR 383, FULL BENCH OF THE HONBL E HIGH COURT IN THE CASE OF AHMEDABAD ELECTRICITY CO. LTD. VS. CIT (1993) 199 ITR 351, ANOTHER DECISION OF THE HONBLE BOMBAY HIGH CO URT IN THE CASE OF CIT VS. CIT VS. PRUTHVI BROKERS AND SHAREHOLDE RS PVT. LTD. (2012) 349 ITR 336 (BOM.) HAS HELD THAT THE APPELLA TE AUTHORITIES HAVE JURISDICTION TO DEAL NOT MERELY WITH ADDITIONA L GROUND WHICH BECAME AVAILABLE ON ACCOUNT OF CHANGE OF CIRCUMSTAN CES OR LAW, BUT WITH ADDITIONAL GROUNDS WHICH WERE AVAILABLE WHEN T HE RETURN WAS FILED. 11. THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OU R ATTENTION TO THE VARIOUS CLAUSES OF THE SCHEME TO DEMONSTRATE TH AT THE AFORESAID SCHEME OF GENERAL SALES TAX (DEFERRED PAY MENT OF TAX) IS APPLICABLE ON SETTING UP OF NEW INDUSTRIAL UNIT IN THE STATE AND ALSO ON SUBSTANTIAL EXPANSION IN RESPECT TO INDUSTR IAL UNITS EXISTING BEFORE 7.1.2003. IT HAS BEEN PROVIDED THAT TO AVAIL BENEFIT ITA NOS. 1417 & 1416/CHD/2016- M/S BRAZA TYPES PVT LTD & CHIQ MIRCRON CHEM (P) LT D., PAONTA SAHIB 8 EXPENDITURE INCURRED FOR EARNING OF TAX EXEMPT INC OME UNDER THE PROVISIONS OF SECTION 14A OF THE INCOME TAX ACT. 13. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE DID N OT EARN ANY TAX EXEMPT INCOME FROM THE INVESTMENTS MADE. HE, THERE FORE, HAS SUBMITTED THAT IN THE LIGHT OF THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT FAR IDABAD VS. LAKHANI MARKETING INC. LTD, ITA NO. 970 OF 2008 (O&M), NO DISALLOWANCE WAS ATTRACTED U/S 14A OF THE ACT. 14. THE LD. DR, ON THE OTHER HAND, HAS RELIED ON TH E FINDINGS OF THE ASSESSING OFFICER. 15. WE FIND THAT THE ISSUE IS NOW SQUARELY COVERED BY THE FOLLOWING DECISIONS OF THE DIFFERENT HIGH COURTS IN FAVOUR OF THE ASSESSEE. CIT, FARIDABAD VS. LAKHANI MARKETING INC. 226 TAXMAN 45 (P&H) CIT VS. WINSOME TEXTILES (2009) 319 ITR 204 (P&H) CHEMINVEST LTD VS. ITO (2015) 378 ITR 33 (DELHI) CORRTECH ENERGY P. LTD. (2014) 45 TAXMAN.COM 116 (GUJARAT HIGH COURT) CIT VS. M/S SHIVAM MOTORS (P) LTD (2014) 272 CTR (ALL) 277 IN ALL THE ABOVE REFERRED TO CASE LAWS, THE HON'BLE HIGH COURTS HAVE BEEN UNANIMOUS TO HOLD THAT NO DISALLOWANCE IS ATTR ACTED U/S 14A OF ITA NOS. 1417 & 1416/CHD/2016- M/S BRAZA TYPES PVT LTD & CHIQ MIRCRON CHEM (P) LT D., PAONTA SAHIB 10 20. WE ACCORDINGLY RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE CONTENTION RAISED BY THE ASS ESSEE AND TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW. 21. GROUND NO. 5 IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION 22. IN VIEW OF THE ABOVE OBSERVATIONS, THIS APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 1416/CHD/2017 23. GROUND NO.1 : GROUND NO.1 IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 24. GROUND NO.2 & ADDITIONAL GROUND OF APPEAL : THE ISSUE RAISED BY THE ASSESSEE IN THIS GROUND IS IDENTICAL TO THAT HAS BEEN TAKEN AND ADJUDICATED UPON BY US IN ITA NO. 1417/C HD/2017 ABOVE. OUR FINDINGS IN THIS RESPECT WILL MUTATIS-MUTANDIS APPLY AND THIS ISSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE. 25. GROUND NO.3 :THE ISSUE TAKEN BY THE ASSESSEE IN GROUND NO.3 IS REGARDING DISALLOWANCE U/S 14A OF THE ACT AND AN IDENTICAL PLEA HAS BEEN TAKEN BY THE ASSESSEE THAT NO TAX EXEMPT I NCOME HAD BEEN EARNED BY THE ASSESSEE DURING THE YEAR UNDER CONSID ERATION. IN VIEW OF OUR FINDINGS GIVEN ABOVE, WHILE DECIDING THE GROUND NO.3 OF THE APPEAL IN ITA NO.1417/CHD/2017, THIS I SSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE.