DCIT, CIRCLE - 1, THANE V. EVEREST INDUSTRIES LTD., MUMBAI

ITA 1422/MUM/2020

AI Insights

The case involves two appeals by the Revenue against M/s Everest Industries Limited concerning the classification of sales tax incentives received by the company under the New Package Scheme of Incentives, 1993. The Revenue contended that these incentives should be treated as revenue receipts, while the assessee argued they were capital receipts. The CIT(A) had ruled in favor of the assessee, a decision which the Revenue challenged in the Tribunal. The Tribunal dismissed the appeals, referencing previous cases and the ongoing litigation concerning similar issues.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123403 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 17-01-2023
• Assessment Year: 2008-2009
• Appeal Filed On: 04-03-2020
• Other Referred Cases: Reliance Industries Limited vs. DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Capital receipt; Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E” MUMBAI BEFORE SHRI ABY T VARKEY (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) ITA No. 1422/MUM/2020 Assessment Year: 2008-09 & ITA No. 1429/MUM/2020 Assessment Year: 2010-11 DCIT, Circle-1, Thane, Room No. 22, B-Wing, 6 th floor, Ashar IT Park, Wagle Industrial Estate, Thane(W)-400604. Vs. M/s Everest Industries Limited, G-1, A-32, Genesis Mohan Coop. Industries, Mathura Road, New Delhi-110044. PAN No. AAACE 7550 N Appellant Respondent Assessee by : Mr. Yogesh Thar/Shri Chaitanya Joshi, AR Revenue by : Ms. Richa Gulati, DR & Mr. Ashok Singh, CIT-DR Date of Hearing : 18/01/2023 Date of pronouncement : 20/01/2023 ORDER PER OM PRAKASH KANT, AM These two appeals by the Revenue are directed against two separate orders, both dated 03.12.2019, passed by the Ld. Commissioner of Income-tax (Appeals)-1, Thane [in short ‘the Ld. CIT(A)’] for assessment year 2008 Being identical issue involved in both these appeals, same were heard together and disposed off by way of this consolidated order for convenience and avoid repetition of facts. 2. We take up the appeal of the Revenue for assessment year 2008-09. The grounds raised by the R under: 1. Whether the CIT (A) erred on the facts and in the circumstances of the case and in law, in deleting an amount of Rs. 5,37,44,724/ of sales tax incentive. 2. Whether the CIT (A) erred on the facts circumstances of the case and in law, in holding that Sales Tax was embedded in the Sales prices charged by the assessee and the same was in the nature of capital receipt. The Ld. CIT (A) ignored the fact that the assessee was legally required t made, yet it had worked out the notional Sales Tax so collected and had claimed the same as capital receipts. 3. Whether the CIT (A) erred on the facts and in the circumstances of the case and in law, in relying on the decisio High Court (ITA No. 1299 of 2008) in the case of Reliance Industries Limited, even though subsequent to the Departmental appeal against the Order of High Court, the issue has been remitted back to the Bombay Hig M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 CIT(A)’] for assessment year 2008-09 and 2010-11 respectively. sue involved in both these appeals, same were heard together and disposed off by way of this consolidated order for convenience and avoid repetition of facts. We take up the appeal of the Revenue for assessment year 09. The grounds raised by the Revenue are reproduced as Whether the CIT (A) erred on the facts and in the circumstances of the case and in law, in deleting an amount of Rs. 5,37,44,724/- being disallowance of claim of sales tax incentive. Whether the CIT (A) erred on the facts circumstances of the case and in law, in holding that Sales Tax was embedded in the Sales prices charged by the assessee and the same was in the nature of capital receipt. The Ld. CIT (A) ignored the fact that the assessee was legally required to collect Sales Tax on the Sales made, yet it had worked out the notional Sales Tax so collected and had claimed the same as capital receipts. Whether the CIT (A) erred on the facts and in the circumstances of the case and in law, in relying on the decision of ITAT, Mumbai and the decision of Bombay High Court (ITA No. 1299 of 2008) in the case of Reliance Industries Limited, even though subsequent to the Departmental appeal against the Order of High Court, the issue has been remitted back to the Bombay Hig M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 2 11 respectively. sue involved in both these appeals, same were heard together and disposed off by way of this consolidated order We take up the appeal of the Revenue for assessment year evenue are reproduced as Whether the CIT (A) erred on the facts and in the circumstances of the case and in law, in deleting an being disallowance of claim Whether the CIT (A) erred on the facts and in the circumstances of the case and in law, in holding that Sales Tax was embedded in the Sales prices charged by the assessee and the same was in the nature of capital receipt. The Ld. CIT (A) ignored the fact that the assessee o collect Sales Tax on the Sales made, yet it had worked out the notional Sales Tax so collected and had claimed the same as capital receipts. Whether the CIT (A) erred on the facts and in the circumstances of the case and in law, in relying on the n of ITAT, Mumbai and the decision of Bombay High Court (ITA No. 1299 of 2008) in the case of Reliance Industries Limited, even though subsequent to the Departmental appeal against the Order of High Court, the issue has been remitted back to the Bombay High Court to decide afresh and the same is still pending for adjudication. 3. At the outset, the Ld. Counsel of the assessee submitted that issue-in-dispute raised by the Revenue is covered by the order of the ITAT for assessment year 2010 554 of 2020. Therefore, he submitted that order of the Ld. CIT(A) on the issue-in-dispute might be upheld. The Ld. Departmental Representative (DR) on the other hand, could not controvert the above facts. 4. We have heard rival submission of dispute and perused the relevant material on record. In the grounds raised, the Revenue is aggrieved with the action of the Ld. CIT(A) in deleting an amount of assessee as capital receipt receipt. The Ld. CIT(A) in para 6.2 to 6.5 of the impugned order has reproduced factual incentive. The relevant paragraph “6.2 I have carefully findings of the A.O., submission of the appellant and material placed on record. In the instant case, the Hon'ble ITAT in vide Order dated 15.09.2017 restored the issue to the file of the AO stating that the AO should comp of Maharashtra with that of New Package Scheme of M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 to decide afresh and the same is still pending for adjudication. At the outset, the Ld. Counsel of the assessee submitted that dispute raised by the Revenue is covered by the order of the ITAT for assessment year 2010-11 in ITA No. 7791 554 of 2020. Therefore, he submitted that order of the Ld. CIT(A) on dispute might be upheld. The Ld. Departmental Representative (DR) on the other hand, could not controvert the We have heard rival submission of the parties on the issue dispute and perused the relevant material on record. In the grounds raised, the Revenue is aggrieved with the action of the Ld. CIT(A) in deleting an amount of ₹5,37,44,724/- which was claimed by the assessee as capital receipt but held the Assessing Officer as revenue receipt. The Ld. CIT(A) in para 6.2 to 6.5 of the impugned order has reproduced factual background in respect of issue of sales tax incentive. The relevant paragraphs are reproduced as under: 6.2 I have carefully considered the facts of the case, findings of the A.O., submission of the appellant and material placed on record. In the instant case, the Hon'ble ITAT in vide Order dated 15.09.2017 restored the issue to the file of the AO stating that the AO should compare the 1979 Scheme of Government of Maharashtra with that of New Package Scheme of M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 3 to decide afresh and the same is still pending for At the outset, the Ld. Counsel of the assessee submitted that dispute raised by the Revenue is covered by the order of 11 in ITA No. 7791 of 2019 and 554 of 2020. Therefore, he submitted that order of the Ld. CIT(A) on dispute might be upheld. The Ld. Departmental Representative (DR) on the other hand, could not controvert the the parties on the issue-in- dispute and perused the relevant material on record. In the grounds raised, the Revenue is aggrieved with the action of the Ld. CIT(A) in which was claimed by the but held the Assessing Officer as revenue receipt. The Ld. CIT(A) in para 6.2 to 6.5 of the impugned order has background in respect of issue of sales tax are reproduced as under: considered the facts of the case, findings of the A.O., submission of the appellant and In the instant case, the Hon'ble ITAT in vide Order dated 15.09.2017 restored the issue to the file of the AO stating 1979 Scheme of Government of Maharashtra with that of New Package Scheme of Incentive, 1993. The AO passed order u/s 143(3) r.w.s. 254, in the A.Y. 2008 revenue in nature and held that, "In ITAT the issue of Rs.5,37,44,724/ aside to the file of the A0 for fresh adjudication with a direction 10 compare the sales tax incentive scheme of 1979 availed by Reliance Industries Limited and the New Package Sche availed by the assessee. tax incentive claimed as capital receipt, allowed by the Hon'ble ITAT in the case of Reliance Industries Limited, has been sent back to the Hon'ble Bombay High Court by the decide whether sales tax incentive is a capital receipt or not. Accordingly, the issue has not yet 113Th arrained finality. The case of the assessee for AY. 2003-04 has been clubbed with the appeal periding in the case of Reliance Industries in the Hon'ble Bombay High Court. Department has not accepted the view of the Tribunal both in case of Reliance and filed further appeals before the and these appeals are still pending with the Hon'ble High Court, the contention of the assessee to claim sales tax incentive as capital receipt is not tenable and hence disallowed, in view of the detailed discussion M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 Incentive, 1993. The AO passed order u/s 143(3) r.w.s. 254, in the A.Y. 2008-09, holding the sales tax incentives as revenue in nature and held that, "In ITAT the issue of sales tax incentive of Rs.5,37,44,724/- claimed as capital receipt was set aside to the file of the A0 for fresh adjudication with a direction 10 compare the sales tax incentive scheme of 1979 availed by Reliance Industries Limited and the New Package Scheme of Incentive 1993 which is availed by the assessee. However, the issue of sales tax incentive claimed as capital receipt, allowed by the Hon'ble ITAT in the case of Reliance Industries Limited, has been sent back to the Hon'ble Bombay High Court by the Hon'ble Supreme Court with a direction to decide whether sales tax incentive is a capital receipt or not. Accordingly, the issue has not yet 113Th arrained finality. The case of the assessee for AY. 04 has been clubbed with the appeal periding in case of Reliance Industries in the Hon'ble Bombay High Court. Accordingly, since the Income Tax Department has not accepted the view of the Tribunal both in case of Reliance Industries and the assessee and filed further appeals before the Hon'ble High Cour and these appeals are still pending with the Hon'ble High Court, the contention of the assessee to claim sales tax incentive as capital receipt is not tenable and hence disallowed, in view of the detailed discussion M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 4 Incentive, 1993. The AO passed order u/s 143(3) r.w.s. 254, 09, holding the sales tax incentives as sales tax incentive of claimed as capital receipt was set aside to the file of the A0 for fresh adjudication with a direction 10 compare the sales tax incentive scheme of 1979 availed by Reliance Industries Limited and the me of Incentive 1993 which is However, the issue of sales tax incentive claimed as capital receipt, allowed by the Hon'ble ITAT in the case of Reliance Industries Limited, has been sent back to the Hon'ble Bombay High Court Hon'ble Supreme Court with a direction to decide whether sales tax incentive is a capital receipt or not. Accordingly, the issue has not yet 113Th arrained finality. The case of the assessee for AY. 04 has been clubbed with the appeal periding in case of Reliance Industries in the Hon'ble Bombay the Income Tax Department has not accepted the view of the Tribunal Industries and the assessee Hon'ble High Court and these appeals are still pending with the Hon'ble High Court, the contention of the assessee to claim sales tax incentive as capital receipt is not tenable and hence disallowed, in view of the detailed discussion made by the A0 in the assessment order 143(3) dated 23.12.2010 " On perusal of the above paragraphs, it is clear that the AO did not compare the terms and conditions of the Sales Tax Incentive Scheme of 1979 availed by Reliance Industries Ltd. with the New Package Scheme of Incentiv was availed by the appellant company. Thus, the directions of Hon'ble Mumbai ITAT as per order dated 15.09.2017 were not followed by the AO in the right earnest. The AO thereafter proceeded to make an addition of Rs.5,37,44,724/ account of Sale Tax Incentives as revenue receipts on the ground that the decision of Hon'ble Mumbai High Court in the case of Reliance industries Ltd. had not attained finality. 6.3 Here it is pertinent to mention that in appellant's own case, the Hon'ble ITAT fo appeal on this issue holding sales tax incentive to be capital in nature. Further, the then CIT(A) has also allowed the appeals on this issue in favour of the appellant company for A. Y. 2007 2008-09 and for A.Y. 2009 and 31.03.2015 respectively. 6.4 Subsequently while disposing the appeal of the appellant company for AY order dated 30.01.2018 in ITA Nos.3804&3849/Mum/2015 again remanded the matter to was directed to compare the scheme deliberated upon by the M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 made by the A0 in the assessment order passed w/s 143(3) dated 23.12.2010 " On perusal of the above paragraphs, it is clear that the AO did not compare the terms and conditions of the Sales Tax Incentive Scheme of 1979 availed by Reliance Industries Ltd. with the New Package Scheme of Incentives, 1993 which was availed by the appellant company. Thus, the directions of Hon'ble Mumbai ITAT as per order dated 15.09.2017 were not followed by the AO in the right earnest. The AO thereafter proceeded to make an addition of Rs.5,37,44,724/ of Sale Tax Incentives as revenue receipts on the ground that the decision of Hon'ble Mumbai High Court in the case of Reliance industries Ltd. had not attained finality. 6.3 Here it is pertinent to mention that in appellant's own case, the Hon'ble ITAT for A.Y. 2003-04 has allowed the appeal on this issue holding sales tax incentive to be capital Further, the then CIT(A) has also allowed the appeals on this issue in favour of the appellant company for A. Y. 2007 09 and for A.Y. 2009-10 vide order dated 09.11.2012 and 31.03.2015 respectively. Subsequently while disposing the appeal of the appellant company for AY 2009-10, the Hon'ble Mumbai ITAT vide its order dated 30.01.2018 in ITA Nos.3804&3849/Mum/2015 again remanded the matter to the Assessing Officer and he was directed to compare the scheme deliberated upon by the M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 5 passed w/s On perusal of the above paragraphs, it is clear that the AO did not compare the terms and conditions of the Sales Tax Incentive Scheme of 1979 availed by Reliance Industries Ltd. es, 1993 which was availed by the appellant company. Thus, the directions of Hon'ble Mumbai ITAT as per order dated 15.09.2017 were not followed by the AO in the right earnest. The AO thereafter proceeded to make an addition of Rs.5,37,44,724/- on of Sale Tax Incentives as revenue receipts on the ground that the decision of Hon'ble Mumbai High Court in the case of Reliance industries Ltd. had not attained finality. 6.3 Here it is pertinent to mention that in appellant's own 04 has allowed the appeal on this issue holding sales tax incentive to be capital Further, the then CIT(A) has also allowed the appeals on this issue in favour of the appellant company for A. Y. 2007-08, vide order dated 09.11.2012 Subsequently while disposing the appeal of the appellant 10, the Hon'ble Mumbai ITAT vide its order dated 30.01.2018 in ITA Nos.3804&3849/Mum/2015 the Assessing Officer and he was directed to compare the scheme deliberated upon by the Tribunal in the case of Reliance Industries Ltd. and the scheme of 1993 applicable availed by the appellant. The set aside assessment for A.Y. 2009 by the AO on 28.12.2018 us 143(3) r.w.254 of the Act with the following findings in para 3.2 & "3.2 I submission made by the assessee. Tax Incentive of Rs.5,83,36,300/ receipt was set aside to the file of the Assessing Officer with a limited purpose for comparing the sales tax incentive scheme of 1979 availed by Reliance Industries Limited and the New package scheme of incentives 1993 which is availed by the assessee. It seen that the comparison between the two schemes has already been made by the Hon'ble ITAT in assessee's own case for AY 2003 04.12.2009 and held that both and identical. Accordingly, by placing reliance on ITAT Order for AY 2003 schemes are similar and identical. 3.3 However, the issue of sales tax incentive claimed as capital receipt, allowed by the Hon'ble ITAT in the case of Reliance Industries Limited, has been sent back t Supreme Court with a direction to decide whether sales tax incentive is a capital receipt or not. Accordingly, the issue has not yet attained finality. M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 Tribunal in the case of Reliance Industries Ltd. and the scheme of 1993 applicable availed by the appellant. The set aside assessment for A.Y. 2009-10 was completed the AO on 28.12.2018 us 143(3) r.w.254 of the Act with the following findings in para 3.2 & 3.3. have considered the facts of the case and the submission made by the assessee. The issue of Sales Tax Incentive of Rs.5,83,36,300/-claimed as capital eceipt was set aside to the file of the Assessing Officer with a limited purpose for comparing the sales tax incentive scheme of 1979 availed by Reliance Industries Limited and the New package scheme of incentives 1993 which is availed by the assessee. It seen that the comparison between the two schemes has already been made by the Hon'ble ITAT in assessee's own case for AY 2003-04 in its order dated 04.12.2009 and held that both the schemes are similar and identical. Accordingly, by placing reliance on ITAT Order for AY 2003-04,it is held that both the schemes are similar and identical. 3.3 However, the issue of sales tax incentive claimed as capital receipt, allowed by the Hon'ble ITAT in the case of Reliance Industries Limited, has been sent back to the Hon'ble Bombay High Court by the Hon'ble Supreme Court with a direction to decide whether sales tax incentive is a capital receipt or not. Accordingly, the issue has not yet attained finality. M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 6 Tribunal in the case of Reliance Industries Ltd. and the scheme of 1993 applicable availed by the appellant. 10 was completed the AO on 28.12.2018 us 143(3) r.w.254 of the Act with have considered the facts of the case and the The issue of Sales claimed as capital eceipt was set aside to the file of the Assessing Officer with a limited purpose for comparing the sales tax incentive scheme of 1979 availed by Reliance Industries Limited and the New package scheme of incentives 1993 which is availed by the assessee. It is seen that the comparison between the two schemes has already been made by the Hon'ble ITAT in 04 in its order dated the schemes are similar and identical. Accordingly, by placing reliance on the 04,it is held that both the 3.3 However, the issue of sales tax incentive claimed as capital receipt, allowed by the Hon'ble ITAT in the case of Reliance Industries Limited, has been sent o the Hon'ble Bombay High Court by the Hon'ble Supreme Court with a direction to decide whether sales tax incentive is a capital receipt or not. Accordingly, the issue has not yet attained finality. The case of the assessee for AY 2003 clubbed Industries in the Hon'ble Bombay High Court. Accordingly since the Income Tax Department has not accepted the view of the Tribunal both in case of Reliance Industries and the assessee and filed further appeals be of the assessee to claim sales tax incentive as capital receipt is not tenable and hence disallowed". 6.5 It is noted that in the case of appellant for A.Y. 2003 in ITA 814/Mum/2007, it was held by the Hon'ble that both the schemes are similar and identical and it was adjudicated by the Hon'ble ITAT that this issue is squarely covered by the decision of the Special Bench in the case of DCIT vs. Reliance Industries Ltd. (2004) 88 ITD 273 (Mum)(SB).” 4.1 The Ld. CIT(A) further referred to the finding of the Ld. CIT(A) 3, Nashik to support his finding. The Ld. CIT(A) after comparing the Maharashtra Incentive Scheme, 1979 with Mah Scheme, 1993, followed in ITA No. 814/M/2007 and his predecessor tax incentive received by the assessee under the scheme 1993” is capital in nature. The Tribunal in ITA No. 779 2019 and 534 of 2020 for assessment year 2010 mentioned the facts and scheme under consideration as follows: M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 The case of the assessee for AY 2003-04 has been clubbed with the appeal pending in case of Reliance Industries in the Hon'ble Bombay High Court. Accordingly since the Income Tax Department has not accepted the view of the Tribunal both in case of Reliance Industries and the assessee and filed further appeals before the Hon'ble High Court, the contention of the assessee to claim sales tax incentive as capital receipt is not tenable and hence disallowed". 6.5 It is noted that in the case of appellant for A.Y. 2003 814/Mum/2007, it was held by the Hon'ble that both the schemes are similar and identical and it was adjudicated by the Hon'ble ITAT that this issue is squarely covered by the decision of the Special Bench in the case of Reliance Industries Ltd. (2004) 88 ITD 273 The Ld. CIT(A) further referred to the finding of the Ld. CIT(A) 3, Nashik to support his finding. The Ld. CIT(A) after comparing the Maharashtra Incentive Scheme, 1979 with Maharashtra Incentive Scheme, 1993, followed the decision of the Tribunal for AY in ITA No. 814/M/2007 and his predecessor and held tax incentive received by the assessee under the capital in nature. The Tribunal in ITA No. 779 2019 and 534 of 2020 for assessment year 2010 mentioned the facts and scheme under consideration as follows: M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 7 04 has been with the appeal pending in case of Reliance Industries in the Hon'ble Bombay High Court. Accordingly since the Income Tax Department has not accepted the view of the Tribunal both in case of Reliance Industries and the assessee and filed further fore the Hon'ble High Court, the contention of the assessee to claim sales tax incentive as capital receipt is not tenable and hence disallowed". 6.5 It is noted that in the case of appellant for A.Y. 2003-04 814/Mum/2007, it was held by the Hon'ble Tribunal that both the schemes are similar and identical and it was adjudicated by the Hon'ble ITAT that this issue is squarely covered by the decision of the Special Bench in the case of Reliance Industries Ltd. (2004) 88 ITD 273 The Ld. CIT(A) further referred to the finding of the Ld. CIT(A)- 3, Nashik to support his finding. The Ld. CIT(A) after comparing the arashtra Incentive the decision of the Tribunal for AY 2003-04 held that the sale tax incentive received by the assessee under the “new package capital in nature. The Tribunal in ITA No. 7791 of 2019 and 534 of 2020 for assessment year 2010-11 has also mentioned the facts and scheme under consideration as follows: “9.1 On Grounds of appeal no. 1() to I(n) of the revenue ie, "Sales Tax Incentive under New Pachion Scheme of Incentives (PSI), 1993. [Rs.2,23,927341 Counsel for the Assessee with respect to the brief facts of the case are that the assessee company had set backward area of Nashik, Maharashtra. The assessee company is having. Ius manufacturing unit of Asbestos cement sheets and accessories at Lakhmapur, Nasik. The said unit at Lakhmapur was eligible for sales tax incentive as per the Government of Maharashtra resolution vie Industries, Energy and Labour Notification No. IDL/ 1088/6603/1&D further w.e.f. 1 assessee company was not required to pay (1) Sales Tax "LST" and CST, additional sales tax, purchase tax, turnover tax payable on sale of finished products or purchase of material. Based on the sai implementing agency has certified that the assessee company was eligible for incentives under the scheme and issued eligibility certificate No. EC-4498 dated 1 2016 i.e., for 169 months granting sales tax exemption of Rs. 17,30,13,750/ made at the factory at Lakhmapur. In terms of the said scheme, during the previous year i.e., for the A. Y. 2010 the assessee company avai on account of sales tax aggregating to Rs. 6,74, 12,461/ the return of income the assessee company excluded the M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 1 On Grounds of appeal no. 1() to I(n) of the revenue ie, "Sales Tax Incentive under New Pachion Scheme of Incentives (PSI), 1993. [Rs.2,23,927341-1, the Learned Counsel for the Assessee drew the attention of the Bench with respect to the brief facts of the case are that the assessee company had set-up. a manufacturing unit in backward area of Nashik, Maharashtra. The assessee company is having. Ius manufacturing unit of Asbestos heets and accessories at Lakhmapur, Nasik. The said unit at Lakhmapur was eligible for sales tax incentive as per the Government of Maharashtra resolution vie Industries, Energy and Labour Notification No. IDL/ 1088/6603/1&D-8 dated 30-9-1988 which was ext further w.e.f. 1-10-1993. Under the said scheme, the assessee company was not required to pay (1) Sales Tax "LST" and CST, additional sales tax, purchase tax, turnover tax payable on sale of finished products or purchase of material. Based on the said scheme, Sicom Ltd, the implementing agency has certified that the assessee company was eligible for incentives under the scheme and issued eligibility certificate No. FINC()/1993/EXEMPTION/ 4498 dated 1-1-2002, effective from 1-1-2002 to 31 ., for 169 months granting sales tax exemption of Rs. 17,30,13,750/- for additional investment of Rs. 18.90 crores made at the factory at Lakhmapur. In terms of the said scheme, during the previous year i.e., for the A. Y. 2010 the assessee company availed the said incentives/subsidy on account of sales tax aggregating to Rs. 6,74, 12,461/ the return of income the assessee company excluded the M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 8 1 On Grounds of appeal no. 1() to I(n) of the revenue ie, "Sales Tax Incentive under New Pachion Scheme of 1, the Learned drew the attention of the Bench with respect to the brief facts of the case are that the up. a manufacturing unit in backward area of Nashik, Maharashtra. The assessee company is having. Ius manufacturing unit of Asbestos heets and accessories at Lakhmapur, Nasik. The said unit at Lakhmapur was eligible for sales tax incentive as per the Government of Maharashtra resolution vie Industries, Energy and Labour Notification No. IDL/ 1988 which was extended 1993. Under the said scheme, the assessee company was not required to pay (1) Sales Tax "LST" and CST, additional sales tax, purchase tax, turnover tax payable on sale of finished products or purchase of d scheme, Sicom Ltd, the implementing agency has certified that the assessee company was eligible for incentives under the scheme and FINC()/1993/EXEMPTION/ 2002 to 31-1- ., for 169 months granting sales tax exemption of Rs. for additional investment of Rs. 18.90 crores made at the factory at Lakhmapur. In terms of the said scheme, during the previous year i.e., for the A. Y. 2010-11 led the said incentives/subsidy on account of sales tax aggregating to Rs. 6,74, 12,461/-. In the return of income the assessee company excluded the above subsidy on account of sales tax incentive in computing the total income under normal provisions of th assessee took this said exclusion as capital receipt, however, the Revenue treated this amount as revenue receipt and added back to the total income of the assessee company. 4.2 Thereafter, the Tribunal treating the sales tax incentive as capital receipt. The relevant finding of the Tribunal is reproduced as under: “12. We have heard the submissions of both the parties and perused the material available on record. We find that the present issue is fully co ITA.No.814/Mum/2007 for the A.Y. 2003 Tribunal allowed relief in respect of the matter in issue. Further, the Special Bench of the Tribunal in the case of DCIT vs., Reliance Industries Ltd., [2004] 88 ITD 273 that sales tax subsidy received under the Package Scheme of Incentives, 1979 is for the purpose of industrial development of the backward districts as well as generation of employment, thus, establishing a direct nexus with the investment in fix receipt. Against this Special Bench order of the Tribunal, the Department filed an appeal before the Hon’ ble Bombay which is pending for adjudication. In this connection, it is relevant to state that th Court in the case of Union of India vs., Kamlakshi Finance Corporation Ltd., [1991] 55 ELT 433 (SC) has held that ‘ mere fact that the order of the appellate authority is not M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 above subsidy on account of sales tax incentive in computing the total income under normal provisions of th assessee took this said exclusion as capital receipt, however, the Revenue treated this amount as revenue receipt and added back to the total income of the assessee company. Thereafter, the Tribunal (supra) directed to delete the addition reating the sales tax incentive as capital receipt. The relevant finding of the Tribunal is reproduced as under: 12. We have heard the submissions of both the parties and perused the material available on record. We find that the present issue is fully covered in assessee’s own case in ITA.No.814/Mum/2007 for the A.Y. 2003-04 wherein the Tribunal allowed relief in respect of the matter in issue. Further, the Special Bench of the Tribunal in the case of DCIT vs., Reliance Industries Ltd., [2004] 88 ITD 273 that sales tax subsidy received under the Package Scheme of Incentives, 1979 is for the purpose of industrial development of the backward districts as well as generation of employment, thus, establishing a direct nexus with the investment in fixed capital assets and hence, a capital receipt. Against this Special Bench order of the Tribunal, the Department filed an appeal before the Hon’ ble High Court of Bombay which is pending for adjudication. In this connection, it is relevant to state that the Hon’ ble Supreme Court in the case of Union of India vs., Kamlakshi Finance Corporation Ltd., [1991] 55 ELT 433 (SC) has held that ‘ mere fact that the order of the appellate authority is not M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 9 above subsidy on account of sales tax incentive in computing the total income under normal provisions of the Act. The assessee took this said exclusion as capital receipt, however, the Revenue treated this amount as revenue receipt and added back to the total income of the assessee company.” directed to delete the addition reating the sales tax incentive as capital receipt. The relevant 12. We have heard the submissions of both the parties and perused the material available on record. We find that the vered in assessee’s own case in 04 wherein the Tribunal allowed relief in respect of the matter in issue. Further, the Special Bench of the Tribunal in the case of DCIT vs., Reliance Industries Ltd., [2004] 88 ITD 273 (Mum) held that sales tax subsidy received under the Package Scheme of Incentives, 1979 is for the purpose of industrial development of the backward districts as well as generation of employment, thus, establishing a direct nexus with the ed capital assets and hence, a capital receipt. Against this Special Bench order of the Tribunal, the High Court of Bombay which is pending for adjudication. In this e Hon’ ble Supreme Court in the case of Union of India vs., Kamlakshi Finance Corporation Ltd., [1991] 55 ELT 433 (SC) has held that ‘ mere fact that the order of the appellate authority is not “acceptable” to the Department and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. We find that since the order of the Special Bench of the Tribunal is still holds the field and in absence of any contrary decision brought to our notice by the Ld. D.R, and the order of the Ld. CIT(A) in deleting the addition made by the A.O. is in accordance with law, we find no reason to interfere with the order of the Ld. CIT(A) on this issue and, therefore, we hold that the amount of incentiv a capital receipt and, therefore, we direct the A.O. to delete the addition. The Revenue fails in its grounds of appeal Nos.1(i) to 1(iv) and, therefore, the grounds on this issue are dismissed.” 4.3 Since, the Tribun received under the same scheme under which the assessee has received sales tax incentive in the year under consideration and therefore, issue-in-dispute being squarely covered by the order of the Tribunal (supra), dismissed. 5. Now we take up the appeal of the Revenue in ITA No. 1429/M/2020 for assessment year 2010 by the Revenue are reproduced as under: 1. Whether the CIT (A) erred on the facts and in circumstances of the case and in law, in holding the order passed u/s 143(3) r.w.s. 263 as void ab initio M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 “acceptable” to the Department and is the subject matter of appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. We find that since the order of the Special Bench of the Tribunal is still holds the field and in absence of any contrary decision ur notice by the Ld. D.R, and the order of the Ld. CIT(A) in deleting the addition made by the A.O. is in accordance with law, we find no reason to interfere with the order of the Ld. CIT(A) on this issue and, therefore, we hold that the amount of incentive is not a revenue receipt, but, it is a capital receipt and, therefore, we direct the A.O. to delete the addition. The Revenue fails in its grounds of appeal Nos.1(i) to 1(iv) and, therefore, the grounds on this issue are Since, the Tribunal (supra) has allowed the sales tax incentive received under the same scheme under which the assessee has received sales tax incentive in the year under consideration and dispute being squarely covered by the order of ra), the grounds raised by the Revenue are take up the appeal of the Revenue in ITA No. 1429/M/2020 for assessment year 2010-11wherein grounds raised by the Revenue are reproduced as under: Whether the CIT (A) erred on the facts and in circumstances of the case and in law, in holding the order passed u/s 143(3) r.w.s. 263 as void ab initio M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 10 “acceptable” to the Department and is the subject matter of appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. We find that since the order of the Special Bench of the Tribunal is still holds the field and in absence of any contrary decision ur notice by the Ld. D.R, and the order of the Ld. CIT(A) in deleting the addition made by the A.O. is in accordance with law, we find no reason to interfere with the order of the Ld. CIT(A) on this issue and, therefore, we hold e is not a revenue receipt, but, it is a capital receipt and, therefore, we direct the A.O. to delete the addition. The Revenue fails in its grounds of appeal Nos.1(i) to 1(iv) and, therefore, the grounds on this issue are al (supra) has allowed the sales tax incentive received under the same scheme under which the assessee has received sales tax incentive in the year under consideration and dispute being squarely covered by the order of he grounds raised by the Revenue are take up the appeal of the Revenue in ITA No. 11wherein grounds raised Whether the CIT (A) erred on the facts and in the circumstances of the case and in law, in holding the order passed u/s 143(3) r.w.s. 263 as void ab initio without considering the fact that the ITAT's order quashing the order passed u/s 263 by the CIT u/s.263 of the Income Tax Act, 1961 has not attai finality? 2. Whether the CIT (A) erred on the facts and in the circumstances of the case and in law, in holding the order passed u/s 143(3) r.w.s. 263 as void ab initio without deciding the specific grounds of appeal on merits? 6. The issue-in-dispute in the grounds raised is that Revenue seeks to agitate the dismissal of consequent to order u/s 263 been quashed by the ITAT. In our opinion, the foundation u/s 143(3) r.w.s. 263 was order u/s 263 of the Act, which been demolished, then The relevant finding of the Ld. CIT(A) on the issue reproduced as under: “5. DECISION During the appellate proceedings, th submission inter 2.0 Further, it is submitted that the appellant had also filed an appeal before the Hon'ble Mumbai ITAT against order us 263 dated 25 No. 532/Mum/2014. In the said appeal, appellant was of the view that since the A0 has made M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 without considering the fact that the ITAT's order quashing the order passed u/s 263 by the CIT u/s.263 of the Income Tax Act, 1961 has not attai finality? Whether the CIT (A) erred on the facts and in the circumstances of the case and in law, in holding the order passed u/s 143(3) r.w.s. 263 as void ab initio without deciding the specific grounds of appeal on merits? dispute in the grounds raised is that Revenue seeks to agitate the dismissal of assessment order u/s consequent to order u/s 263, of the Act as the order u/s 263 quashed by the ITAT. In our opinion, the foundation u/s was order u/s 263 of the Act, which , then the consequent order passed cannot survive. The relevant finding of the Ld. CIT(A) on the issue reproduced as under: “5. DECISION During the appellate proceedings, the appellant filed written submission inter-alia, stating as under: Further, it is submitted that the appellant had also filed an appeal before the Hon'ble Mumbai ITAT against order us 263 dated 25-11-2013, bearing ITA No. 532/Mum/2014. In the said appeal, appellant was of the view that since the A0 has made M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 11 without considering the fact that the ITAT's order quashing the order passed u/s 263 by the CIT u/s.263 of the Income Tax Act, 1961 has not attained Whether the CIT (A) erred on the facts and in the circumstances of the case and in law, in holding the order passed u/s 143(3) r.w.s. 263 as void ab initio without deciding the specific grounds of appeal on dispute in the grounds raised is that Revenue order u/s 143 as the order u/s 263 has quashed by the ITAT. In our opinion, the foundation u/s was order u/s 263 of the Act, which has already the consequent order passed cannot survive. The relevant finding of the Ld. CIT(A) on the issue-in-dispute is e appellant filed written Further, it is submitted that the appellant had also filed an appeal before the Hon'ble Mumbai ITAT 2013, bearing ITA No. 532/Mum/2014. In the said appeal, the appellant was of the view that since the A0 has made requisite enquires during the course of assessment proceedings and thereafter disallowed the claim, the order passed by the AO cannot be treated as erroneous and prejudicial to the interest of revenu The case was extensively presented on facts, legal principles and also judicial supports and several submissions were filed to counter each & every contention of the Hon'ble Members and the Departmental Representative. Accordingly, the Hon 'ble ITAT aft order of Commissioner us 263 of the as being without authority of law and restored the Assessment Order u/s 143(3) dated 28 not decided on merits of allowability of these subsidy since that may lead to influencing the adjudication pending before the CIT(A). 2.1 Hence, the appeal was decided in the favour of the appeal and the order ws 263 dated 25 quashed. Therefore in the light of the aforesaid ITAT order, the present appe becomes infructuous." 6.2 While passing order of the CIT u/s 263 the Hon'ble Tribunal, 'E' Bench. 21.08.2019 has held as under: "29. Since in the present case the assessing officer has already analysed one aspect of the matter which was pending before the CIT(A), the matter cannot be M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 requisite enquires during the course of assessment proceedings and thereafter disallowed the claim, the order passed by the AO cannot be treated as erroneous and prejudicial to the interest of revenu The case was extensively presented on facts, legal principles and also judicial supports and several submissions were filed to counter each & every contention of the Hon'ble Members and the Departmental Representative. Accordingly, the Hon 'ble ITAT after giving a patience hearing set aside the order of Commissioner us 263 of the as being without authority of law and restored the Assessment Order u/s 143(3) dated 28-03-2013. However, the ITAT has not decided on merits of allowability of these subsidy ce that may lead to influencing the adjudication pending before the CIT(A). 2.1 Hence, the appeal was decided in the favour of the appeal and the order ws 263 dated 25- quashed. Therefore in the light of the aforesaid ITAT order, the present appeal filed before your goodself becomes infructuous." 6.2 While passing order of the CIT u/s 263 the Hon'ble Tribunal, 'E' Bench. Mumbai in its Order dated 21.08.2019 has held as under: "29. Since in the present case the assessing officer has already analysed one aspect of the matter which was pending before the CIT(A), the matter cannot be M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 12 requisite enquires during the course of assessment proceedings and thereafter disallowed the claim, the order passed by the AO cannot be treated as erroneous and prejudicial to the interest of revenue. The case was extensively presented on facts, legal principles and also judicial supports and several submissions were filed to counter each & every contention of the Hon'ble Members and the Departmental Representative. Accordingly, the Hon er giving a patience hearing set aside the order of Commissioner us 263 of the as being without authority of law and restored the Assessment Order 2013. However, the ITAT has not decided on merits of allowability of these subsidy ce that may lead to influencing the adjudication 2.1 Hence, the appeal was decided in the favour of the -11-2013 is quashed. Therefore in the light of the aforesaid ITAT al filed before your goodself 6.2 While passing order of the CIT u/s 263 the Hon'ble Mumbai in its Order dated "29. Since in the present case the assessing officer has already analysed one aspect of the matter which was pending before the CIT(A), the matter cannot be again relooked by the Commissioner on any other aspect as the order of the assessing officer gets merged with the order of CIT(A) in view of the decision of the Hon'ble Bombay High Court as above. Thus, the Commissioner had no power to touch upon the issues of treatment of sales tax and excise duty incentives in the impugned proceedings us 263 of the Act. 30. We make it clear that since the matter on the issue of excise duty exemption and sales lax incentive is pending before the CIT(A), we are restricting ourselves to the validity of proceedings us 263 of the Act and are not discussing the merits of the doing so may lead to influencing the adjudication pending before the CIT(A). As such, we are not expressing any opinion on the merits of the case. 31. In light of our above discussion, we hold the Commissioner has wrongly assumed jurisdiction on the above issue w's 263 of the Act and we thus vacate the order of the Commissioner us 263 of the Act as being without authority of law and restore the assessment order dated 28.03.2013 (supra) qua the aforesaid issues." In view of the above order the Hon' order passed u/s 143(3) r.w.s. me, become void ab initio. As far as Appeal pending before the CIT (Appeal) on the issue of excise duty exemption and sales tax incentive is concerned the same has been adjudicated by CIT (Appeal) M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 again relooked by the Commissioner on any other aspect as the order of the assessing officer gets erged with the order of CIT(A) in view of the decision of the Hon'ble Bombay High Court as above. Thus, the Commissioner had no power to touch upon the issues of treatment of sales tax and excise duty incentives in the impugned proceedings us 263 of the 30. We make it clear that since the matter on the issue of excise duty exemption and sales lax incentive is pending before the CIT(A), we are restricting ourselves to the validity of proceedings us 263 of the Act and are not discussing the merits of the doing so may lead to influencing the adjudication pending before the CIT(A). As such, we are not expressing any opinion on the merits of the case. 31. In light of our above discussion, we hold the Commissioner has wrongly assumed jurisdiction on the above issue w's 263 of the Act and we thus vacate the order of the Commissioner us 263 of the Act as being without authority of law and restore the assessment order dated 28.03.2013 (supra) qua the aforesaid issues." In view of the above order the Hon'ble Tribunal, the order passed u/s 143(3) r.w.s. 263, challenged before me, become void ab initio. As far as Appeal pending before the CIT (Appeal) on the issue of excise duty exemption and sales tax incentive is concerned the same has been adjudicated by CIT (Appeal) M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 13 again relooked by the Commissioner on any other aspect as the order of the assessing officer gets erged with the order of CIT(A) in view of the decision of the Hon'ble Bombay High Court as above. Thus, the Commissioner had no power to touch upon the issues of treatment of sales tax and excise duty incentives in the impugned proceedings us 263 of the 30. We make it clear that since the matter on the issue of excise duty exemption and sales lax incentive is pending before the CIT(A), we are restricting ourselves to the validity of proceedings us 263 of the Act and are not discussing the merits of the issue as doing so may lead to influencing the adjudication pending before the CIT(A). As such, we are not expressing any opinion on the merits of the case. 31. In light of our above discussion, we hold the Commissioner has wrongly assumed jurisdiction on the above issue w's 263 of the Act and we thus vacate the order of the Commissioner us 263 of the Act as being without authority of law and restore the assessment order dated 28.03.2013 (supra) qua the ble Tribunal, the 263, challenged before me, become void ab initio. As far as Appeal pending before the CIT (Appeal) on the issue of excise duty exemption and sales tax incentive is concerned the same has been adjudicated by CIT (Appeal)-3, Nasik vide his Order dated 16.10. grounds of appeal are allowed 6.1 In view of above, we do not find any infirmity in the finding of the Ld. CIT(A) on the issue raised by the Revenue are dismissed. 7. In the result, both the appeal dismissed. Order pronounced the ITAT Rules, 1963 on Sd/- (ABY T VARKEY JUDICIAL MEMBER Mumbai; Dated: 20/01/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 vide his Order dated 16.10.2019. Accordingly, grounds of appeal are allowed.” In view of above, we do not find any infirmity in the finding of the Ld. CIT(A) on the issue-in-dispute. Accordingly, raised by the Revenue are dismissed. In the result, both the appeals filed by the Revenue are Order pronounced in the open Court/under Rule 34(4) of the ITAT Rules, 1963 on 20/01/2023. Sd/ ABY T VARKEY) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Sr. Private Secretary) ITAT, Mumbai M/s Everest Industries Limited ITA Nos. 1422 & 1429/M/2020 14 2019. Accordingly, In view of above, we do not find any infirmity in the finding of dispute. Accordingly, the grounds s filed by the Revenue are under Rule 34(4) of Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Sr. Private Secretary) ITAT, Mumbai