The Income-tax Officer, Jammu V. M/s. JSB Aluminium, Jammu

ITA 157/ASR/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60679 (ITAT-AMRITSAR)
• Duration Of Justice: 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 01-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Keywords: Capital receipt; Set aside
• 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.138(AS)/2012 ASSESSMENT YEAR:2009-10 PAN:AAFFN8691M INCOME TAX OFFICER, VS. M/S. NATURAL HERBAL PRODUC TS, KATHUA. INDUSTRIAL AREA, KATHUA. (APPELLANT) (RESPONDENT) I.T.A. NO.141(AS)/2012 ASSESSMENT YEAR:2005-06 PAN:AAEFG4737C INCOME TAX OFFICER, VS. M/S. GURU KIRPA PLASTIC IN DUSTRIES, KATHUA. KATHUA. (APPELLANT) (RESPONDENT) I.T.A. NO.152(AS)/2012 ASSESSMENT YEAR:2009-10 PAN:AAQFS1282C DY. COMMR. OF INCOME-TAX,, VS. M/S.SHIVA STEEL ROL LING MILLS, CIR.1, JAMMU KATHUA. (APPELLANT) (RESPONDENT) I.T.A. NO.156(AS)/2012 ASSESSMENT YEAR:2008-09 PAN:AADFH8227P INCOME TAX OFFICER, VS. M/S. HIMALAYA ARMS COMPANY , WARD 1(1), JAMMU. GANGYAL, JAMMU (APPELLANT) (RESPONDENT) ITA NO.138, 141 & 152(ASR)/2012 ETC. 2 I.T.A. NO.157(AS)/2012 ASSESSMENT YEAR:2009-10 PAN:AAFFJ4424J INCOME TAX OFFICER, VS. M/S. JSB ALUMINIUM. WARD 1(1), JAMMU. GANDHI NAGAR, JAMMU. (APPELLANT) (RESPONDENT) I.T.A. NO.158(AS)/2012 ASSESSMENT YEAR:2009-10 PAN:AAFFB9385C INCOME TAX OFFICER, VS. M/S. BALAJI ROSIN INDUSTRI ES, WARD 1(1), JAMMU. BARI BRAHMANA, JAMMU. (APPELLANT) (RESPONDENT) I.T.A. NO.164(AS)/2012 ASSESSMENT YEAR:2009-10 PAN:ABGFS8493Q INCOME TAX OFFICER, VS. M/S. SHIV SHAKTI MILLS, WARD 1(3), JAMMU. JAMMU. (APPELLANT) (RESPONDENT) I.T.A. NO.167(AS)/2012 ASSESSMENT YEAR:2009-10 PAN:AAFFV6379Q INCOME TAX OFFICER, VS. M/S.VAISHNO METAL & ALLIED INDUSTRIES, WARD 1(3), JAMMU. JAMMU. (APPELLANT) (RESPONDENT) I.T.A. NO.170(AS)/2012 ASSESSMENT YEAR:2007-08 PAN:AAMFM3368D INCOME TAX OFFICER, VS. M/S. DURGA INDUSTRIES, UDHAMPUR. UDHAMPUR. (APPELLANT) (RESPONENT) ITA NO.138, 141 & 152(ASR)/2012 ETC. 3 I.T.A. NO.175(AS)/2012 ASSESSMENT YEAR:2009-10 PAN:AAIFR8256R INCOME TAX OFFICER, VS. M/S. RAVI CROP SCIENCE,, WARD 1(1), JAMMU. SAMBA, JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. AMRIK CHAND, DR RESPONDENT BY: NONE DATE OF HEARING :25/05/2012 DATE OF PRONOUNCEMENT:01/06/2012 ORDER PER BENCH: THESE TEN APPEALS FILED BY THE REVENUE ARE AGAINST SEPARATE IMPUGNED ORDERS OF CIT(A), JAMMU, INVOLVING COMMON ISSUES W ERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE REVENUE HAS RAISED COMMON GROUNDS IN ALL THE APPEALS. HOWEVER, GROUNDS RAISED IN ITA NO.138(ASR)/2012, WHICH ARE C OMMON, IN ALL THE APPEALS, ARE REPRODUCED, AS UNDER:- 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 BY RELYING UPON ORDERS OF HON'BL E HIGH COURT IF J&K, JAMMU WHICH HAS BEEN DELIVERED NOT ON MERITS O F THE ISSUE BUT HOLDING THE RECEIPT TO BE A CAPITAL RECEIPT ONLY BE CAUSE THE POLICY UNDER WHICH THE SAME WAS PAID ENVISAGED TACKLING TH E UNEMPLOYMENT ITA NO.138, 141 & 152(ASR)/2012 ETC. 4 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. 5. THE APPELLANT CRAVES TO AMEND OR ADD ANY ONE OR MORE GROUNDS OF APPEAL. 3. THE NOTICES OF HEARING WERE SENT TO ALL THE ASSE SSEES FOR 25.05.2012 BY RPAD, INSPITE OF THE SAME, NEITHER THE ASSESSEE S NOR THEIR AUTHORIZED REPRESENTATIVES ATTENDED NOR HAVE FILED ANY APPLICA TION FOR ADJOURNMENT. WE ARE OF THE VIEW THAT NO USEFUL PURPOSE WILL BE SERV ED, IF THE NOTICES, ARE ITA NO.138, 141 & 152(ASR)/2012 ETC. 5 ISSUED AGAIN AND AGAIN TO THE ASSESSEES. THEREFORE, WE ARE PROCEEDING TO DISPOSED OF THESE APPEALS BY THIS ORDER. 4. THE FACTS OF THE CASES NARRATED BY THE REVENUE A RE NOT DISPUTED BY BOTH THE PARTIES. THEREFORE, THERE IS NO NEED TO R EPEAT THE SAME FOR THE SAKE OF CONVENIENCE. 5. WE HAVE HEARD THE LD. DR, SH. AMRIK CHAND, AT LE NGTH. WE FIND THAT THE ISSUES IN DISPUTE ARE SQUARELY COVERED IN FAVOU R OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT, IN THE CASE OF SHREE BALAJI ALLOYS V. CIT AN D ANOTHER (2011) 333 ITR 335 (J&K). THE ISSUES BEFORE THE HON'BLE JURISDICT IONAL HIGH COURT, FOR DETERMINATION WERE AS UNDER:- (1) WHETHER THE AMOUNT OF EXCISE REFUND AND INTERES T SUBSIDY RECEIVED BY THE APPELLANTS-ASSESSEES, IN PURSUANCE OF THE INCENTIVES ANNOUNCED AND SANCTIONED VIDE GOVERNMENT OF INDIA, MINISTRY OF COMMERCE AND INDUSTRY (DEPARTMENT OF INDUSTRIAL POL ICY AND PROMOTION)S OFFICE MEMORANDUM NO. 1(13)2000-NER D ATED JUNE 14,2002 AND CENTRAL EXCISE NOTIFICATION NOS. 56 AND 57, DATED NOVEMBER 14, 2002 AND OTHER NOTIFICATION ISSUED ON THE SUBJECT, PERTAINING TO THE INDUSTRIAL POLICY INTRODUCED IN T HE STATE OF JAMMU AND KASHMIR, IS A CAPITAL RECEIPT AND, THUS, NOT LI ABLE TO TAX UNDER THE PROVISIONS OF THE ACT, OR REVENUE RECEIPT, AS OPINE D BY THE AUTHORITIES UNDER THE ACT? (2) WHETHER THE APPELLANTS-ASSESSEES ARE ENTITLED T O DEDUCTION UNDER SECTION 80IB OF THE ACT ON THE EXCISE DUTY RE FUND AND INTEREST ITA NO.138, 141 & 152(ASR)/2012 ETC. 6 SUBSIDY ETC., BEING THE INCOME DERIVED FROM THE IND USTRIAL UNDERTAKING, IN CASE THE EXCISE REFUND AND INTEREST SUBSIDY WERE FOUND TO BE REVENUE RECEIPT. 6. THE HON'BLE HIGH COURT OF JAMMU AND KASHMIR WHIL E DECIDING THE MATTER HAS DISCUSSED THE SALIENT FEATURES OF THE NE W INDUSTRIAL POLICY, AMENDMENTS INTRODUCED THERETO AND STATUTORY NOTIFIC ATION ETC. THE HON'BLE HIGH COURT FURTHER DISCUSSED THE DECISION OF HON'B LE SUPREME COURT IN THE CASE OF SAHNEY STEEL AND PRESS WORKS LTD (1997) 228 ITR 253 (S.C) AND OBSERVED AS UNDER:- 26 A PERUSAL OF THE OFFICE MEMORANDUM DATED JUNE 1 4, 2002 INDICATING NEW INDUSTRIAL POLICY AND OTHER CONCESSI ONS FOR THE STATE OF JAMMU AND KASHMIR, MAKES IT EXPLICIT THAT THE CONCE SSIONS WERE ISSUED TO ACHIEVE TWIN OBJECTS VIZ. (I) ACCELERATIO N OF INDUSTRIAL DEVELOPMENT IN THE STATE OF JAMMU AND KASHMIR, WHIC H HAD BEEN FOUND LAGGING BEHIND IN SUCH DEVELOPMENT, AND (II) GENERATION OF EMPLOYMENT IN THE STATE OF JAMMU & KASHMIR. 27 AMENDMENT INTRODUCED TO THE OFFICE MEMORANDUM VI DE NOTIFICATION OF NOVEMBER 28, 2003 OF THE GOVERNMENT OF INDIA, MINISTRY OF COMMERCE AND INDUSTRY (DEPARTMENT OF IN DUSTRIAL POLICY AND PROMOTION) ELOQUENTLY DEMONSTRATES THE CENTRAL GOVERENMENTS INTENTION IN EXTENDING THE INCENTIVES. THE GOVERNM ENTS OBJECTIVE, AS CONVEYED BY THE HONBLE PRIME MINISTER A SRINAGAR O N APRIL 19, 2003, WAS, FOR CREATION OF ONE LAKH EMPLOYMENT AND SELF-EMPLOYMENT OPPORTUNITIES IN JAMMU AND KASHMIR STATE. 28 TO ACHIEVE THE PURPOSE AND OBJECTIVE REFERRED TO HEREINABOVE, IT WAS, INTER ALIA, PROVIDED IN THE CENTRAL EXCISE NOT IFICATIONS THAT THE EXEMPTIONS CONTAINED IN THE NOTIFICATIONS WOULD BE AVAILABLE ONLY ON PRODUCTION OF CERTIFICATE FROM GENERAL MANAGER OF T HE CONCERNED DISTRICT INDUSTRIES CENTRE TO THE JURISDICTIONAL DE PUTY COMMISSIONER OF CENTRAL EXCISE OR THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE, AS THE CASE MAY BE, TO THE EFFECT THAT THE UNIT HAD CR EATED REQUIRED ADDITIONAL REGULAR EMPLOYMENT, WHICH WOULD NOT, HOW EVER, INCLUDE ITA NO.138, 141 & 152(ASR)/2012 ETC. 7 EMPLOYMENT PROVIDED BY THE INDUSTRIAL UNITS TO DAIL Y WAGERS OR CASUAL EMPLOYEES ENGAGED IN THE UNITS. 29 A CLOSE READING OF THE OFFICE MEMORANDUM AND THE AMENDMENT INTRODUCED THERETO WITH PARAGRAPH NO. 3 APPEARING I N THE CENTRAL EXCISE NOTIFICATION NOS. 56 AND 57 OF NOVEMBER 11, 2002, THUS, MAKES IT AMPLY CLEAR THAT THE ACCELERATION OF DEVEL OPMENT OF INDUSTRIES IN THE STATE WAS CONTEMPLATED WITH THE OBJECT OF GENERATION OF EMPLOYMENT IN THE STATE OF JAMMU AND KASHMIR AND THE GENERATION OF EMPLOYMENT, SO, CONTEMPLATED, WAS NOT ONLY CASUA L OR TEMPORARY; BUT WAS ON THE OTHER HAND, OF PERMANENT NATURE. 30 CONSIDERED THUS, THE PARAMOUNT CONSIDERATION OF THE CENTRAL GOVERNMENT IN PROVIDING THE INCENTIVES TO THE NEW I NDUSTRIAL UNITS AND SUBSTANTIAL EXPANSION OF THE EXISTING UNITS, WAS TH E GENERATION OF EMPLOYMENT THROUGH ACCELERATION OF INDUSTRIAL DEVEL OPMENT, TO DEAL WITH THE SOCIAL PROBLEM OF UNEMPLOYMENT IN THE STAT E, ADDITIONALLY CREATING OPPORTUNITIES FOR SELF-EMPLOYMENT, HENCE A PURPOSE IN PUBLIC INTEREST. 31 IN THIS VIEW OF THE MATTER, THE INCENTIVES PROVI DED TO THE INDUSTRIAL UNITS, IN TERMS OF THE NEW INDUSTRIAL PO LICY, FOR ACCELERATED INDUSTRIAL DEVELOPMENT IN THE STATE, FOR CREATION O F SUCH INDUSTRIAL ATMOSPHERE AND ENVIRONMENT, WHICH WOULD PROVIDE ADD ITIONAL PERMANENT SOURCE OF EMPLOYMENT TO THE UNEMPLOYED IN HE STATE OF JAMMU AND KASHMIR, WERE IN FACT, IN THE NATURE OF C REATION OF NEW ASSETS OF INDUSTRIAL ATMOSPHERE AND ENVIRONMENT, H AVING THE POTENTIAL OF EMPLOYMENT GENERATION TO ACHIEVE A SOCIAL OBJECT . SUCH INCENTIVES, DESIGNED TO ACHIEVE PUBLIC PURPOSE, CANNOT, BY ANY STRETCH OF REASONING, BE CONSTRUED AS PRODUCTION OR OPERATIONA L INCENTIVES FOR THE BENEFIT OF ASSESSES ALONE. 32 THUS, LOOKING TO THE PURPOSE, OF ERADICATION OF THE SOCIAL PROBLEM OF UNEMPLOYMENT IN THE STATE BY ACCELERATIO N OF THE INDUSTRIAL DEVELOPMENT AND REMOVING BACKWARDNESS OF THE AREA THAT LAGGED BEHIND IN INDUSTRIAL DEVELOPMENT, WHICH IS C ERTAINLY A PURPOSE IN THE PUBLIC INTEREST, THE INCENTIVES PROVIDED BY THE OFFICE MEMORANDUM AND STATUTORY NOTIFICATIONS ISSUED IN TH IS BEHALF, TO THE APPELLANTS-ASSESSEES, CANNOT BE CONSTRUED AS MERE P RODUCTION AND TRADE INCENTIVES, AS HELD BY THE TRIBUNAL. ITA NO.138, 141 & 152(ASR)/2012 ETC. 8 33. MAKING OF ADDITIONAL PROVISION IN THE SCHEME TH AT INCENTIVES WOULD BECOME AVAILABLE TO THE INDUSTRIAL UNITS, ENT ITLED THERETO, FROM THE DATE OF COMMENCEMENT OF THE COMMERCIAL PRODUCTI ON, AND THAT THESE WERE NOT REQUIRED FOR CREATION OF NEW ASSETS CANNOT BE VIEWED IN ISOLATION, TO TREAT THE INCENTIVES AS PRODUCTION IN CENTIVES, AS HELD BY THE TRIBUNAL, FOR THE MEASURE SO TAKEN, APPEARS TO HAVE BEEN INTENDED TO ENSURE THAT THE INCENTIVES WERE MADE AVAILABLE O NLY TO THE BONA FIDE INDUSTRIAL UNITS SO THAT LARGER PUBLIC INTEREST OF DEALING WITH UNEMPLOYMENT IN THE STATE, AS INTENDED, IN TERMS OF THE OFFICE MEMORANDUM, WAS ACHIEVED. 34. THE OTHER FACTORS, WHICH HAD WEIGHED WITH THE T RIBUNAL IN DETERMINE THE INCENTIVES AS PRODUCTION INCENTIVES M AY NOT BE DECISIVE TO DETERMINING THE CHARACTER OF THE INCENTIVE SUBSI DIES, WHEN IT IS FOUND, AS DEMONSTRATED IN THE OFFICE MEMORANDUM, AM ENDMENT INTRODUCED THERETO AND THE STATUTORY NOTIFICATION T OO THAT THE INCENTIVES WERE PROVIDED WITH THE OBJECT OF CREATING AVENUES F OR PERPETUAL EMPLOYMENT, TO ERADICATE THE SOCIAL PROBLEM OF UNEM PLOYMENT IN THE STATE BY ACCELERATED INDUSTRIAL DEVELOPMENT. 7. THE HON'BLE JURISDICTIONAL HIGH COURT CONCLUDED AS UNDER:- 35 FOR ALL WHAT HAS BEEN SAID ABOVE, THE FINDING O F THE TRIBUNAL ON THE FIRST ISSUE THAT THE EXCISE DUTY REFUND, INTERE ST SUBSIDY AND INSURANCE SUBSIDY WERE PRODUCTION INCENTIVES, HENCE REVENUE RECEIPT, CANNOT BE SUSTAINED, BEING AGAINST THE LAW LAID DOW N BY THE HON'BLE SUPREME COURT OF INDIA IN SAHNEY STEEL CASE (1997) 228 ITR 253 AND PONNI SUGARS CASE (2008) 306 ITR 392. 36 THE FINDING OF THE TRIBUNAL THAT THE INCENTIVES WERE REVENUE RECEIPT IS, ACCORDINGLY, SET ASIDE HOLDING THE INCE NTIVES TO THE CAPITAL RECEIPT IN THE HANDS OF THE ASSESSES. 37 IN VIEW OF OUR ABOVE FINDING ON THE FIRST ISSUE, THERE IS NO NEED TO OPINE ON THE SECOND ISSUE, WHICH WAS RAISED IN T HE ALTERNATIVE. ITA NO.138, 141 & 152(ASR)/2012 ETC. 9 8. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON'B LE JURISDICTIONAL HIGH COURT OF JAMMU & KASHMIR, IN THE CASE OF SHRE E BALAJI ALLOYS V. CIT AND ANOTHER (SUPRA), WE CONFIRM THE ORDERS OF THE LD. CIT(A) IN HOLDING THAT THE EXCISE DUTY REFUND IS TO BE TREATED AS CA PITAL RECEIPT IN THE HANDS OF THE ASSESSEE AND NOT LIABLE TO BE TAXED. 9. IN THE RESULT, ALL THE TEN APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1ST JUNE, 2012. SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1ST JUNE, 2012 /SKR/ COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEES: 2. THE DCIT CIR.1, JAMMU/ITO WARD1(1)/1(3), KATHUA & UDHAMPUR. 3. THE CIT(A), JAMMU. 4. THE CIT, JAMMU. 5. THE SR DR, ITAT, AMRITSAR TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH : AMRITSAR. ITA NO.138, 141 & 152(ASR)/2012 ETC. 10