The Income-tax Officer, Kathua V. M/s. Shree Balaji Alloys, Kathua

ITA 143/ASR/2012

• Counselvise Citation: 14320914 RSA 2012
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 10-07-2012
• Assessment Year: 2009-2010
• Appeal Filed On: 01-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R L CHHANALIA
• Assessee Lawyers: P N ARORA
• Keywords: Capital receipt
• Section: 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.143(ASR)/2012 ASSESSMENT YEAR:2009-10 PAN :AAXFS8056R INCOME TAX OFFICER, VS. M/S. SHREE BALAJI ALLOYS, KATHUA. 36-B, INDUSTRIAL EXTN. AREA, KATHUA. (APPELLANT) (RESPONDENT) C.O. NO.20(ASR)/2012 (ARISING OUT OF ITA NO.143(ASR)/2010) ASSESSMENT YEAR : 2009-10 M/S. SHREE BALAJI ALLOYS, VS. INCOME TAX OFFICER, KATHUA. KATHUA. (APPELLANT) (RESPONDENT) DEPARTMENT BY:SH. R.L. CHHANALIA, DR ASSESSEE BY:SH. P.N. ARORA, ADVOCATE DATE OF HEARING:10/07/2012 DATE OF PRONOUNCEMENT:11/07/2012 ORDER PER BENCH ; THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER OF THE CIT(A), JAMMU, DATED 27.02.2012 FOR THE ASSESSMENT YEAR 2009-10 ON THE FOLLOWING GROUNDS: ITA NO.143(ASR)2012 & CO NO.20(ASR)/2012 2 1 ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN ALLOWING RELIEF ON ACCOUNT OF DEDUCTION U/ S 80IB ON CENTRAL EXCISE DUTY REFUND & INTEREST SUBSIDY BY RELYING UP ON ORDERS OF HON'BLE HIGH COURT IF J&K, JAMMU WHICH HAS BEEN DE LIVERED NOT ON MERITS OF THE ISSUE BUT HOLDING THE RECEIPT TO BE A CAPITAL RECEIPT ONLY BECAUSE THE POLICY UNDER WHICH THE SAME WAS PAID EN VISAGED TACKLING THE UNEMPLOYMENT IN THE STATE WHICH CANNOT BE SAID TO BE A GOOD TEST FOR DECIDING WHETHER A RECEIPT IS A TRADING RECEIPT OR A CAPITAL RECEIPT. 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 INADMISSIBLE ITEMS ON ACCOUNT OF HIGHER DEDUCTION. 1. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN ALLOWING RELIEF ON ACCOUNT OF DEDUCTION U/ S 80IB ON ADDITION MADE ON ACCOUNT OF INADMISSIBLE ITEMS ON ACCOUNT OF HIGHER DEDUCTION AS THE ASSESSEE HAS CONTRAVENED THE PROVISIONS OF T HE ACT, IN VIEW OF THE DECISION OF JURISDICTIONAL BENCH IN THE CASE OF M/S. KASHMIR TUBES ITA NO.143(ASR)2012 & CO NO.20(ASR)/2012 3 REPORTED IN ITA NO.145(ASR)/2005 DATED 07.12.2007 W HERE SUCH DISALLOWANCES WERE UPHELD BY THE HONBLE ITAT, AMRI TSAR. 2. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT MATERIAL AVAILABLE WITH US. WE ARE OF THE VIEW THAT AS REGA RDS THE ISSUE INVOLVED IN GROUND NOS. 1 TO 4 RELATING TO DEDUCTION UNDER SEC TION 80IB ON EXCISE DUTY REFUND & INTEREST SUBSIDY, IT IS AN ADMITTED FACT THAT THE ISSUE IN DISPUTE HAS ALREADY BEEN ADJUDICATED AND DECIDED IN FAVOUR OF T HE 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 REPORTED IN (2011) 333 ITR 335 (J&K) BY HOLDING THAT THE EXCISE DUTY REFUN D AND INTEREST SUBSIDY IS TO BE TREATED AS CAPITAL RECEIPT AND NOT LIABL E TO BE TAXED. 2.1. THE LD. FIRST APPELLATE AUTHORITY HAS ALSO DE CIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE BY RELYING UPON THE DECISION OF TH E HON'BLE JURISDICTIONAL HIGH COURT OF J & K, IN THE CASE OF SHREE BALAJI A LLOYS V. CIT AND ANOTHER (2011) 333 ITR 335 (J&K). THEREFORE, RESPECTFULLY F OLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT (SURPA), WE D ISMISS GROUND NOS. 1 TO 4 OF THE REVENUE RELATING TO EXCISE DUTY REFUND AN D INTEREST SUBSIDY. 3. THE REVENUE HAS RAISED ANOTHER GROUND RELATING ADDITION ON ACCOUNT OF INADMISSIBLE ITEMS ON ACCOUNT OF HIGHER DEDUCTIO N. ITA NO.143(ASR)2012 & CO NO.20(ASR)/2012 4 4. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE VI EW THAT THE LD. FIRST APPELLATE AUTHORITY HAS DECIDED THIS GROUND IN FAV OUR OF THE ASSESSEE BY PASSING A WELL REASONED ORDER BY HOLDING THAT THESE ITEMS ARE CLEARLY INADMISSIBLE AND ON ADDING THE SAME BACK WOULD ENH ANCE THE INCOME OF THE ASSESSEE TO THAT EXTENT AND PROFIT TO ITS NATURE WOULD NOT ALTER. KEEPING IN VIEW THE FINDINGS GIVEN BY THE LD. FIRST APPELLATE AUTHORITY, WE ARE OF THE VIEW THAT DEDUCTION U/S 80IB OF THE ACT, IS CLEARLY ALLOWABLE ON ACCOUNT OF INADMISSIBLE ITEMS ON ACCOUNT OF HIGHER DEDUCTION AND NO PREJUDICE IS CAUSED TO THE ASSESSEE AND THE LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST TH E REVENUE. THIS GROUND OF THE REVENUE IS ALSO DISMISSED. 5. IN C.O. 20(ASR)/2012, THE ASSESSEE HAS RAISED FO LLOWING GROUNDS: 1. THAT THE LD. CIT(A) WAS CORRECT ON THE FACTS AN D LAW IN ALLOWING RELIEF ON ACCOUNT OF DEDUCTION U/S 80IB OF THE INCOME-TAX ACT, 1961, ON EXCISE DUTY REFUND AND INTEREST SUBSI DY BY RELYING UPON THE ORDER OF THE HONBLE HIGH COURT OF JAMMU & KASHMIR. THE DEPARTMENT HAS GOT NO LOCUS STAND AND REASON FOR CO MING IN APPEAL BEFORE THE TRIBUNAL AND THE APPEAL OF THE DEPARTMEN T MAY BE DISMISSED. 2. AGAIN, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMI NG THE ORDER OF THE ASSESSING OFFICER WHEREIN A DISALLOWANCE OF RS.351417/- HAS BEEN MADE U/S 36(1)(III) OF THE INCOME-TAX ACT, 196 1. THE AUTHORITIES BELOW DID NOT APPRECIATE THAT NO DISALLOWANCE WAS C ALLED FOR AND THE DISALLOWANCE MADE IS UNJUSTIFIED, UNCALLED FOR AND ADDITION OF RS.351417/- MAY BE DELETED. ITA NO.143(ASR)2012 & CO NO.20(ASR)/2012 5 6. THE FIRST GROUND RELATES TO DEDUCTION UNDER SECT ION 80IB OF THE ACT ON ACCOUNT OF EXCISE DUTY REFUND AND INTEREST SUBSIDY, WHICH THE LD. CIT(A) HAS DECIDED BY RELYING UPON THE DECISION OF THE HON BLE HIGH COURT OF JAMMU & KASHMIR IN THE CASE OF M/S. SHREE BALAJI AL LOYS VS. CIT AND ANOTHER (2011) 333 ITR 335 (J&K) IN FAVOUR OF THE A SSESSEE. WE HAVE ALREADY DISMISSED THE APPEAL OF THE REVENUE BY UPHO LDING THE IMPUGNED ORDER OF THE LD. CIT(A) ON THIS ISSUE. THIS GROUND IS SUPPORTIVE TO THE ORDER OF THE LD. CIT(A). HENCE, THE SAME IS DISMISSED. 7. IN THE 2 ND GROUND OF THE C.O., THE ASSESSEE HAS CHALLENGED TH E DISALLOWANCE OF RS.351417/- MADE UNDER SECTION 36(1 )(III) OF THE ACT. 8. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RELEVANT MATERIAL AVAILABLE WITH US, ESPECIALLY THE CITATIONS CITED B Y THE REVENUE AUTHORITY AS WELL AS THE LD. COUNSEL FOR THE ASSESSEE IN THE CAS E OF S.A. BUILDERS LTD. VS. C.I.T.(APPEALS) AND ANOTHER REPORTED IN (2007) 288 ITR 1(SC), WE ARE OF THE VIEW THAT THE ASSESSEE HAS FAILED TO ESTABLISH BEFORE THE REVENUE AUTHORITIES AS WELL AS BEFORE US THAT THE ASSESSEE HAS ADVANCED THE FUNDS FOR ANY BUSINESS PURPOSE. THE LD. CIT(A) HAS ALSO HELD THAT THE ASSESSEE HAS NOT MADE ANY ARGUMENT TO THIS PROPOSITION BEFORE HI M. THEREFORE, THE LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY UPHELD THE ISSUE I N DISPUTE BY RELYING UPON THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH C OURT IN THE CASE OF ITA NO.143(ASR)2012 & CO NO.20(ASR)/2012 6 M/S. ABHISHEK INDUSTRIES 156 TAXMAN 257. THE CASE LAW RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE IN THE CASE OF S.A. BU ILDERS VS. CIT (APPEAL) REPORTED IN (2007) 288 ITR 1 (SC) IS NOT APPLICAB LE IN THIS CASE BECAUSE THE ASSESSEE HAS FAILED TO ESTABLISH THAT THE ASSESSEE HAS ADVANCED FUNDS IN DISPUTE TO THE SISTER CONCERN M/S. N/S. BALAJI PIGM ENTS (P) LTD; FOR ANY BUSINESS PURPOSE. 8.1. KEEPING IN VIEW THE ABOVE DISCUSSIONS, WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE WELL REASONED ORD ER PASSED BY THE LD. FIRST APPELLATE AUTHORITY. HENCE, THIS GROUND OF THE C.O. IS DISMISSED. 9. IN THE RESULT, BOTH THE APPEAL OF THE REVENUE A ND C.O. OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11TH JULY, 2012. SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11TH JULY, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. SHREE BALAJI ALLOYS, KATHUA. 2. THE ITO, KATHUA. 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER ITA NO.143(ASR)2012 & CO NO.20(ASR)/2012 7 (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.