Appeal details
Counselvise Citation
[2011] 134 COUNSELVISE.COM (IT) 3897 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 month(s) 6 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
27-05-2011
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
B
Next Hearing Date
24-05-2011
Assessment Year
2007-2008
Appeal Filed On
21-03-2011
Judgement Text
ITA NOS. 1422 & 1476/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 1422/DEL/2011 A.Y. : 2007-08 ACIT, CIRCLE 10(1), NEW DELHI VS. M/S DELHI STATE INDUSTRIAL & INFRASTRUCTURE DEVELOPMENT CORPORATION LTD. N-36, BOMBAY LIFE BUILDING, CONNAUGHT PLACE, NEW DELHI (PAN/GIR NO. : AAACD1257F) AND ITA NO. 1476 /DEL/2011 A.Y. 2007-08 M/S DELHI STATE INDUSTRIAL & VS. ACIT, CIRCLE 10(1) INFRASTRUCTURE DEVELOPMENT CR BUILDING, NEW DELH I CORPORATION LTD. N-BLOCK, BOMBAY LIFE BUILDING, CONNAUGHT CIRCUS, NEW DELHI (PAN/GIR NO. : AAACD1257F) (APPELLANT (APPELLANT (APPELLANT (APPELLANT S SS S ) )) ) (RESPONDENT (RESPONDENT (RESPONDENT (RESPONDENT S SS S ) )) ) ASSEESSEE BY : SH. R.S. SINGHVI, CA DEPARTMENT BY : SH RI KRISHNA, C.I.T. (D.R.) ORDER ORDER ORDER ORDER PER PER PER PER SHAMIM YAHYA : AM SHAMIM YAHYA : AM SHAMIM YAHYA : AM SHAMIM YAHYA : AM THESE CROSS APPEALS BY THE REVENUE AND THE ASSESSE E EMANATE OUT OF ORDER OF THE LD. COMMISSIONER OF INCOME TAX ( APPEALS) DATED 29.11.2010 AND PERTAIN TO ASSESSMENT YEAR 2007-08. ITA NOS. 1422 & 1476/DEL/2011 2 REVENUES APPEAL 2. THE FIRST ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE ADDITION OF ` 30,24 ,83,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST RELAT ING TO RELOCATION OF INDUSTRIES. 3. AT THE OUTSET, LD. COUNSEL OF THE ASSESSEE SUB MITTED THAT THIS ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF ASSESSEE ITSELF. THE RELEVANT PORTION OF DISCUSSION ON THIS ACCOUNT BY THE LD. COMMISSIONE R OF INCOME TAX (APPEALS) IS AS UNDER:- I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE AUTHO RIZED REPRESENTATIVE OF THE APPELLANT COMPANY. THIS GROUN D OF APPEAL IS COVERED NOT ONLY BY ORDERS OF LD. COMMISS IONER OF INCOME TAX (APPEALS) AND ITAT BUT ALSO OF HONBLE DELHI HIGH COURT AND SUPREME COURT IN EARLIER YEARS, WHE REIN IT HAS BEEN HELD THAT THE SCHEME OF RELOCATION OF INDU STRIES IN DELHI WAS A SCHEME OF THE DELHI GOVERNMENT AND THE APPELLANT WAS ONLY A DEVELOPING AGENCY AND NOT THE OWNER OF THE SCHEME. IN FACT, THE APPELLANT HAD IN AN EA RLIER YEAR CREDITED ITS PROFIT AND LOSS ACCOUNT BY THE AMOUNT OF INTEREST RECEIVED ON THE SURPLUS FUNDS OF THE SCHE ME BUT THE C&AG HAD OBJECTED TO THIS TREATMENT BY THE APPEL LANT, WHO HAD TO REVERSE SUCH ENTRIES MADE IN ITS BOOKS OF ACCOUNT. SINCE THE MATTER IS COVERED BY THE ORDERS OF MY PREDECESSOR LD. COMMISSIONER OF INCOME TAX (APPEALS) AS WELL AS OF ITAT, HIGH COURT AND SUPREME COURT IN TH E APPELLANTS OWN CASE, I DIRECT THE ASSESSING OFFICE R TO DELETE ITA NOS. 1422 & 1476/DEL/2011 3 THE ADDITION MADE TO THE INCOME OF THE APPELLANT ON ACCOUNT OF INTEREST RECEIVED FROM THE SCHEME RELATING TO RELOCATION OF INDUSTRIES. THIS GROUND OF APPEAL IS ACCORDINGLY ALLOWED. 4. FROM THE ABOVE, IT IS AMPLY EVIDENT THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE. 5. THE NEXT ISSUE RAISED IS THAT LD. COMMISSIONER O F INCOME TAX (APPEALS) ERRED IN DELETING THE ADDITION OF ` 1,23 ,84,000/- AND ` 60 LACS RELATING TO SCHEME OF DELHI GOVERNMENT FOR LOW COST HOUSING SCHEME AND INCOME FOR MEETING LIABILITIES FOR MAINTEN ANCE OF VARIOUS PROJECTS. 6. AT THE OUTSET, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THIS ISSUE IS COVERED BY THE ORDER OF THE ITAT IN ASSESS EES OWN CASE FOR EARLIER YEARS. THE RELEVANT PORTION OF DISCUSSION ON THIS TOPIC BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS AS UNDER :- I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE AUTHO RIZED REPRESENTATIVE OF THE APPELLANT COMPANY. SINCE THE ISSUE REGARDING MAINTENANCE CHARGES STANDS COVERED BY THE ORDERS OF THE ITAT IN EARLIER YEARS, WHEREIN IT HAS BEEN HELD THAT THE AMOUNT RECEIVED BY WAY OF MAINTENANCE CHARG ES WAS ACTUALLY RECEIVED IN TRUST FOR A SPECIFIC PURPO SE AND THOUGH THERE WAS SURPLUS IN ONE YEAR, THERE COULD B E DEFICIT IN OTHER YEARS, I HAVE NO HESITATION IN RESPECTFULL Y FOLLOWING THESE ORDERS ON THE ISSUE AT HAND AND DIRECT THE AS SESSING OFFICER TO DELETE THE ADDITION OF ` 0.60 LAC MADE O N THIS ACCOUNT. ` 1,23,84,000/- RELATING TO SCHEME OF DEL HI ITA NOS. 1422 & 1476/DEL/2011 4 GOVERNMENT FOR LOW COST HOUSING IS ALSO STATED TO BE IN RESPECT OF MAINTENANCE CHARGES AND IS ACCORDINGLY CO VERED BY THE ORDERS OF THE ITAT OF EARLIER YEARS AS DISCU SSED ABOVE. THE ADDITION TO INCOME MADE BY THE ASSESSING OFFICER OF THIS AMOUNT IS THEREFORE ALSO DELETED. GROUND NOS. 3 AND 4 OF THE APPEAL ARE HEREBY ALLOWED. 7. SINCE THE ISSUE IS COVERED IN FAVOUR OF THE ASS ESSEE BY THE ITAT DECISIONS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND HENCE, WE UPHOLD THE SAME. 8. THE LAST ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE ADDITION OF ` 4,10, 00,000/- MADE ON ACCOUNT OF CAPITAL GRANT. 9. ON THIS ISSUE ASSESSING OFFICER NOTED THAT AS PER THE AUDITORS REPORT, IT HAS BEEN POINTED OUT THAT CORPORATION H AS RECEIVED ` 4.10 CRORES FROM THE GOVERNMENT OF DELHI FOR THE PROMOTIO N OF EXPORTS. ASSESSING OFFICER PROCEEDED TO TREAT THE SAME AS I NCOME OF THE ASSESSEE. 10. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) IN THIS REGARD HELD AS UNDER:- I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT COMPANY . PERUSAL OF THE COPIES OF THE SANCTION BY THE MINISTRY OF COMMERCE AND INDUSTRY, GOVERNMENT OF INDIA TO THE APPELLANT COMPANY FOR THE AMOUNTS OF ` 2,65,00,000/- AND ` 1,45,00,000/- TOTALING TO ` 4,10,00,000/- SHOWS THA T IT IS ITA NOS. 1422 & 1476/DEL/2011 5 CLEARLY MENTIONED THAT THESE AMOUNTS HAVE BEEN SANCTIONED TO THE APPELLANT UNDER THE SCHEME TITLED ASSISTANCE TO STATES FOR DEVELOPMENT OF EXPORT INFRASTRUCTURE AND OTHER ALLIED ACTIVITIES. THE S ANCTION ORDERS ALSO LAY DOWN THE CONDITION THAT THE APPELL ANT WOULD NOT INCUR ANY ADMINISTRATIVE EXPENDITURE OUT OF THE FUNDS SO ALLOCATED. THE APPELLANT HAS ALSO PROVIDED COPY OF UTILIZATION CERTIFICATE FOR THE ABOVE MENTIONED TOTA L AMOUNT WHEREIN IT HAS BEEN CERTIFIED THAT THE AMOUNT HAS B EEN UTILIZED FOR THE PURPOSE OF SETTING UP ASSYING HALLMARKING CENTRE AND GEMS AND JEWELLERY TRAINING INSTITUTE FOR WHICH IT WAS SANCTIONED AND THAT THER E WAS NO OUTSTANDING BALANCE AT THE END OF THE YEAR. THE ABO VE FACTS CLEARLY PROVE THAT THE AMOUNT OF ` 4.10 CRORES RECEI VED BY THE APPELLANT WAS CAPITAL GRANT (NOT MEANT TO BE UT ILIZED FOR INCURRING OF ADMINISTRATIVE EXPENDITURE) AND HAS BE EN UTILIZED FOR THE PURPOSE FOR WHICH IT WAS SANCTION ED. ACCORDINGLY, IT CANNOT BE TREATED AS INCOME OF THE APPELLANT. THE ADDITION MADE BY THE ASSESSING OFFICE R ON THIS ISSUE IS THEREFORE, DELETED. THIS GROUND OF APPEAL IS ALLOWED. 11. AGAINST THE ABOVE ORDER, THE REVENUE IS IN APPE AL BEFORE US. 12. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HA S GIVEN A FACTUAL FINDING UPON GOING THROUGH THE RELEVANT DOCUMENTS I N THIS REGARD. THAT THESE AMOUNTS HAVE BEEN SANCTIONED TO THE ASSE SSEE UNDER THE SCHEME TITLED ASSISTANCE TO STATES FOR DEVELOPMENT O F EXPORT ITA NOS. 1422 & 1476/DEL/2011 6 INFRASTRUCTURE AND OTHER ALLIED ACTIVITIES. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ALSO FOUND THAT SANCTION O RDER LAY DOWN THE CONDITION THAT THE ASSESSEE WOULD NOT INCUR ANY ADMI NISTRATIVE EXPENDITURE OUT OF THE FUNDS SO ALLOCATED. THE ASS ESSEE HAS ALSO SUBMITTED COPY OF UTILIZATION CERTIFICATE WHEREIN IT WAS CERTIFIED THE AMOUNT HAS BEEN UTILIZED FOR THE PURPOSE OF SETTING UP TRAINING INSTITUTE FOR WHICH IT WAS SANCTIONED AND THERE WA S NO OUTSTANDING BALANCE AT THE END OF THE YEAR. 13. FROM THE ABOVE, IT IS AMPLY CLEAR THAT THE AMOUNT I N THIS REGARD IS A CAPITAL GRANT. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ON T HIS ISSUE AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 14. IN THE RESULT, THE REVENUES APPEAL STANDS DIS MISSED. ASSESSEES APPEAL 15. THE GROUNDS RAISED IN THIS REGARD READ AS UNDER :- THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING ADDITION OF ` 2,57,55,508/- BEING INTERE ST ON REFUND OF INCOME TAX IN RESPECT OF RELOCATION OF INDUSTRIES A ND CETP, BEING SCHEME OF DELHI GOVERNMENT. THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAVING A LREADY DECIDED VIDE GROUND NO. 1 TO THE EFFECT THAT THERE IS NO TAX LIABILITY IN RESPECT OF INTEREST RELATING TO RELOCA TION OF INDUSTRIES AND CETP AND AS SUCH CONSEQUENTIAL REFUND AND INTERE ST ON ITA NOS. 1422 & 1476/DEL/2011 7 SAME IS ALSO NOT CHARGEABLE TO TAX AS SAME WAS DUE TO DELHI GOVERNMENT. 16. ON THIS ISSUE, UPON FINAL COMPLETION OF ASSESSME NT PROCEEDINGS FOR THE ASSESSMENT YEARS 2001-02 TO 2005-06 REFUND OF ` 41.89 CRORES WAS RECEIVED WHICH INCLUDED INTEREST TO THE EXTENT OF ` 2,57,55,508/- ATTRIBUTABLE TO TAX PAID ON INTEREST INCOME RELATIN G TO CETP AND RELOCATION SCHEME. THE ASSESSING OFFICER HELD THA T THIS INTEREST INCOME WAS CHARGEABLE TO TAX. 17. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD AS UNDER:- I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE AUTHO RIZED REPRESENTATIVE OF THE APPELLANT COMPANY. THE INTERE ST OF ` 2,57,55,508/- HAS BEEN RECEIVED DURING THE YEAR BY THE APPELLANT ON THE REFUND OF INCOME TAX. IT HAS BE EN SUBMITTED THAT THE APPELLANT HAD PAID TAX IN RESPE CT OF SCHEME OF RELOCATION OF INDUSTRIES AND COMMON EFFLUE NT TREATMENT PLANT (CETP SCHEME) BUT SUBSEQUENTLY, AFTE R THE PASSING OF THE ORDERS BY THE APPELLATE AUTHORITIES, THE APPELLANT GOT RELIEF ON THE ISSUE AND AS A RESULT R EFUND OF INCOME TAX WAS RECEIVED WHICH WAS INCLUSIVE OF INTE REST OF ` 2,57,55,508/-. THE CONTENTION OF THE APPELLANT I S THAT SINCE THE MATTER REGARDING INTEREST EARNED ON THE SU RPLUS FUNDS OF THESE SCHEMES IS COVERED BY THE ORDERS OF VARIOUS APPELLATE AUTHORITIES, THE INTEREST OF ` 2, 57,55,508/- WOULD ALSO BE EXEMPT FROM TAX ALONG THE SAME LINES. HOWEVER, I DO NOT AGREE WITH THE APPELLANTS CONTEN TION BECAUSE THE SUM OF ` 2,57,55,508/- IN QUESTION IS N OT THE ITA NOS. 1422 & 1476/DEL/2011 8 INTEREST EARNED DIRECTLY FROM THE FUNDS OF THE RELO CATION AND CETP SCHEMES BUT IS RATHER INTEREST ON INCOME T AX REFUND, WHICH IS EXIGIBLE TO TAX. THE MATTER IS N OT COVERED BY THE ORDERS OF HIGHER APPELLATE AUTHORITIES IN TH E APPELLANTS CASE AS CONTENDED BECAUSE THE ISSUE WI TH IN THE APPELLANTS CASE IN EARLIER YEARS WAS INTEREST EARNED ON THE SURPLUS FUNDS OF THE SCHEMES OWNED BY THE DELHI ADMINISTRATION AND MERELY GOVERNED BY THE APPELLANT. HERE THE ISSUE IS INTEREST ON INCOME TAX REFUND, WHI CH IS CHARGEABLE TO TAX. THE ASSESSING OFFICER HAS RIG HTLY ADDED THIS AMOUNT TO THE INCOME OF THE APPELLANT AND I UPH OLD THIS ACTION OF THE ASSESSING OFFICER. THIS GROUND OF APP EAL IS DISMISSED. 18. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BE FORE US. 19. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. WE FIND THAT ASSESSEE HAD PAID TAXES IN RESPECT OF SC HEME RELATING TO ALLOCATION OF INDUSTRIES AND CETP SCHEME. SUBSEQUEN TLY, AS PER THE ORDERS OF THE APPELLATE AUTHORITIES, THE REFUND WA S ALLOWED TO THE ASSESSEE TO THE EXTENT OF ` 41.89 CRORES WHICH ALSO INCLUDED INTEREST TO THE EXTENT OF ` 2,57,55,508/-. THIS WAS CLAIMED BY THE ASSESSEE TO BE ATTRIBUTABLE TO THE REFUND OF TAX RELATING TO RELO CATION OF INDUSTRIES AND CETP SCHEME. IT WAS FURTHER CLAIMED THAT SINCE THE MATTER REGARDING INTEREST EARNED ON THE SURPLUS FUNDS OF THESE SC HEMES IS COVERED BY THE ORDERS OF THE VARIOUS APPELLATE AUTHORITIES, TH E INTEREST OF ` ITA NOS. 1422 & 1476/DEL/2011 9 2,57,55,508/- WOULD ALSO BE EXEMPT FROM TAX ALONG THE SAME LINES. THIS WAS NOT ACCEPTED BY THE LD. COMMISSIONER OF INC OME TAX (APPEALS) AND HE HELD THAT A SUM OF ` 2,57,55,508 /- IN QUESTION IS NOT THE INTEREST EARNED DIRECTLY FORM THE FUNDS OF THE RELOCATION AND CETP SCHEMES BUT IS RATHER INTEREST ON INCOME TAX REFUND, WHICH IS EXIGIBLE TO TAX. IN THIS REGARD, IT IS ASSESSEES PLEA THA T THE ENTIRE REFUND INCLUDING THE INTEREST BELONGS TO THE GOVERNMENT OF DELHI AND AS SUCH IT IS NOT EXIGIBLE TO TAX IN THE HANDS OF THE ASSES SEE. IT HAS FURTHER BEEN CLAIMED THAT ASSESSEE HAD PAID THE ENTIRE AMO UNT INCLUDING THE INTEREST TO THE DELHI GOVERNMENT. WE FIND CONSIDE RABLE COGENCY IN THE ASSESSEES PLEA THAT WHEN THE INTEREST ITSELF I S NOT CHARGEABLE TO TAX, THE CONSEQUENTIAL REFUND WAS ALSO NOT CHARGEA BLE TO TAX. WE FIND COGENCY IN THE CONTENTION OF THE ASSESSEE THAT WHEN LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS DECIDED TO THE EFFECT THAT THERE IS NO TAX LIABILITY IN RESPECT OF INTEREST R ELATING TO RELOCATION OF INDUSTRIES AND CETP, CONSEQUENTIAL REFUND AND INTER EST ON THE SAME, CANNOT BE CHARGEABLE TO TAX. IN THIS REGARD, HOWEV ER WE NOTE THAT NECESSARY EVIDENCE AS TO WHETHER THE ENTIRE AMOUNT HAS BEEN PAID TO THE DELHI GOVERNMENT OR NOT IS NOT AVAILABLE. HENC E, WE DIRECT THE ASSESSING OFFICER TO CERTIFY THE SAME AND ALLOW TH E ASSESSEES CLAIM ACCORDINGLY. ITA NOS. 1422 & 1476/DEL/2011 10 20. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED AND APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27/5/2011. SD/- SD/- [A.D. JAIN] [A.D. JAIN] [A.D. JAIN] [A.D. JAIN] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 27/5/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES
Mehul