M/s Vardhman Textiles Limited, Ludhiana V. DCIT, C-1, Ludhiana

ITA 1589/CHANDI/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3679 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 21-09-2021
• Assessment Year: 2010-2011
• Appeal Filed On: 20-12-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SUBHASH AGGARWAL
• Keywords: Capital asset; Business income; Rule of consistency; Earning of tax free income; Capital receipt; Revenue expenditure; Capital expenditure; Rule 8D; Set aside
• Section: 143(3); 142(1); 14A; 80IB; 10B; 80IA; 80IC; 143(2); 80IC; 13; 22

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH B, CHANDIGARH (VIRTUAL COURT) . . , . . , ! # BEFORE: SHRI. N.K. SAINI, VP & SHRI R.L. NEGI, JM ./ ITA NO. 1589/CHD/2019 / ASSESSMENT YEAR : 2010-11 M/S VARDHMAN TEXTILES LIMITED VARDHMAN PREMISES, CHANDIGARH ROAD, LUDHIANA, PUNJAB THE DCIT CIRCLE-1, LUDHIANA, PUNJAB ./ PAN NO: AABCM4692E / APPELLANT / RESPONDENT ./ ITA NO. 1615/CHD/2019 / ASSESSMENT YEAR : 2010-11 THE DCIT CIRCLE-1, LUDHIANA, PUNJAB M/S VARDHMAN TEXTILES LIMITED VARDHMAN PREMISES, CHANDIGARH ROAD, LUDHIANA, PUNJAB ./ PAN NO: AABCM4692E / APPELLANT / RESPONDENT / ASSESSEE BY : SHRI SUBHASH AGGARWAL, ADVOCATE / REVENUE BY : SHRI MANISH SAREEN, CIT # / DATE OF HEARING : 21/09/2021 # / DATE OF PRONOUNCEMENT : 24.09/2021 / ORDER PER R.L. NEGI, JUDICIAL MEMBER THESE ARE THE CROSS APPEALS FILED THE ASSESSEE AND THE REVENUE RESPECTIVELY, AGAINST THE ORDER DATED 30.10.2019 PA SSED BY THE COMMISSIONER OF INCOME TAX-1, LUDHIANA [FOR SHORT THE CIT(A)] PERTAINING TO THE ASSESSMENT YEAR 2010-11, WHEREBY THE LD. CIT(A) HAS ITA NOS.1589 & 1615-CHD-2019- VARDHMAN TEXTILES LIMITED, LUDHIANA 2 PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE AGA INST THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) ITA NO. 1589/CHD/2019: 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF YARN FABRIC, POWER AND STEEL ETC., FILED ITS RETURN FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARED TOTAL INCOME OF RS. 148,19,16,310/-. SUBSEQUENTLY, THE ASSESSEE REV ISED THE RETURN AND DECLARED THE INCOME OF RS. 150,50,27,380/-. SINCE T HE CASE WAS SELECTED FOR SCRUTINY, AO ISSUED NOTICE UNDER SECTION 143(2) AND 142(1) OF THE ACT, ALONG WITH QUESTIONNAIRE. IN RESPONSE THEREOF, THE AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE APPEARED BEFORE THE A.O. AND S UBMITTED THE DETAILS AND DOCUMENTS CALLED FOR FROM TIME TO TIME AND ALSO DISCUSSED THE CASE. ACCORDINGLY, A.O. PASSED ASSESSMENT ORDER UNDER SEC TION 143(3) OF THE ACT AND DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS. 185,02,78,680/- UNDER THE NORMAL PROVISIONS OF THE ACT, AFTER MAKIN G VARIOUS ADDITIONS. 3. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEF ORE THE LD. CIT(A). THE LD. CIT(A) AFTER HEARING THE ASSESSEE PARTLY AL LOWED ITS APPEAL AND DELETED SOME OF THE ADDITIONS. AGGRIEVED BY THE SAI D ORDER BOTH ASSESSEE AND THE REVENUE ARE IN APPEAL BEFORE THIS TRIBUNAL. 4. THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER P ASSED BY THE LD. CIT(A) BY RAISING THE FOLLOWING GROUNDS: ITA NOS.1589 & 1615-CHD-2019- VARDHMAN TEXTILES LIMITED, LUDHIANA 3 1. THAT THE ORDER PASSED BY THE LD. CIT(A) IS CONTRAR Y TO LAW AID FACTS OF THE CASE. 2. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN U PHOLDING THE APPLICABILITY OF SECTION 14A OF THE INCOME TAX ACT, 1961 READ WITH RULE 8D AND MAKING DISALLOWANCE THEREUNDER IGNORING THE CONTENTIONS/SUBMISSIONS OF THE ASSESSEE. 3. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ACTION OF AO FOR TREATING INTEREST RECEIVED AMOUNTI NG TO RS.29,81,55,625/- AS 'INCOME FROM OTHER SOURCES' IN STEAD OF 'INCOME FROM BUSINESS AND PROFESSION'. 4. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N CONFIRMING THE ACTION OF THE AO IN REDUCING RENTAL INCOME AND MISC ELLANEOUS INCOME OF RS. 65,88,216/- AND RS. 1,19,285/- RESPECTIVELY FRO M THE PROFITS OF THE UNITS ELIGIBLE FOR DEDUCTION U/S 80IB/80IC OF THE I NCOME TAX ACT, 1961. 5. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ACTION OF AO FOR TREATING LINE/BAY CHARGES AMOUNTIN G TO RS.18,70,406/- AS CAPITAL EXPENDITURE INSTEAD OF REVENUE EXPENDITU RE. 6. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N NOT ADJUDICATING ADDITIONAL GROUND REGARDING TREATMENT OF SALES TAX SUBSIDY OF RS.1,30,90,811/- UNDER MADHYA PRADESH INDUSTRIAL IN VESTMENT PROMOTION ASSISTANCE SCHEME - 2004 AS CAPITAL RECEI PT INSTEAD OF REVENUE RECEIPT. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD/ALTER/AMEND ANY GROUND OF APPEAL ON OR BEFORE THE DUE DATE OF HEARING OF APPE AL. 5. GROUND NO. 1 & 7 OF THE APPEAL ARE OF GENERAL NA TURE, THEREFORE DO NOT REQUIRE SPECIFIC ADJUDICATION. 6. VIDE GROUND NO. 2 THE ASSESSEE HAS CHALLENGED TH E ACTION OF THE LD. CIT(A) IN UPHOLDING THE APPLICABILITY OF SECTION 14 A OF THE ACT R/W RULE 8D OF THE INCOME TAX RULES (RULES) AND MAKING DISAL LOWANCE WITHOUT ITA NOS.1589 & 1615-CHD-2019- VARDHMAN TEXTILES LIMITED, LUDHIANA 4 CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE IN THE LIGHT OF THE DECISION RENDERED BY THE TRIBUNAL IN ASSESSEES APP EALS FOR THE EARLIER AND SUBSEQUENT ASSESSMENT YEARS. 7. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFOR E US THAT DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDER ATION ASSESSEE HAD EARNED EXEMPT INCOME OF RS. 12,30,83,083/- THE LD. COUNSEL FURTHER CONTENDED THAT MORE THAN 95% OF DIVIDEND INCOME WAS EARNED FROM INVESTMENTS IN ITS SUBSIDIARY AND JOINT VENTURE COM PANIES, VARDHMAN YARNS AND THREADS LTD., VMT SPINNING CO. LTD. AND M AHAVIR SHARE TRUST, WHICH HAD BEEN MADE IN THE EARLIER YEARS AND NOT IN THE YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. THE LD. COUNSE L FURTHER POINTED OUT THAT THIS ISSUE IS COVERED BY THE DECISION OF THE C HANDIGARH BENCH OF THE TRIBUNAL IN ASSESSEES APPEAL ITA NO. 1429/2010 & 3 5/2011 FOR THE A.Y. 2006-07 AND ITA NO. 270/2011 & 286/2011 FOR THE A.Y . 2007-08 AND THE TRIBUNAL HAS UPHELD THE SUO MOTU DISALLOWANCE OF RS. 2,00,000/- AND 2,50,000/- MADE BY THE ASSESSEE IN THE ASSESSMENT Y EAR 2006-07 AND 2007- 08 RESPECTIVELY. 8. THE LD. COUNSEL FURTHER POINTED OUT THAT IN ASSE SSEES CASES ITA NOS. 484/2019, 485/2019 & 486/2019 FOR THE ASSESSMENT YE ARS 2008-09, 2009-10 & 2013-14 RESPECTIVELY, THE TRIBUNAL HAS UPHELD THE DISALLOWANCE OF RS. 2,25,000/-,5,00,000/- AND 5,50,000//- RESPECTIVELY MADE BY THE ASSESSEE. ITA NOS.1589 & 1615-CHD-2019- VARDHMAN TEXTILES LIMITED, LUDHIANA 5 9. FURTHER, IN THE ASSESSMENT YEAR, 2011-12 THE TRI BUNAL HAS UPHELD THE SUO MOTU DISALLOWANCE MADE BY THE ASSESSEE AMOUNTING TO RS. 5,00,000/- AGAINST THE EXEMPT INCOME OF RS. 12.59 CRORE AND IN THE A.Y. 2012-13 THE DISALLOWANCE OF RS. 6,00,000/- AGAINST THE EXEMPT I NCOME OF RS. 14.87 CRORE. 10. THE LD. COUNSEL ACCORDINGLY SUBMITTED THAT IN T HE PRESENT CASE THE ASSESSEE HAS MADE SUO MOTU DISALLOWANCE OF RS. 1,00,000/- UNDER SECTION 14A. THE A.O. HAS NOT RECORDED ANY SATISFACTION WHI LE REJECTING THE ASSESSEES CLAIM AS PER RECORD. THE LD. COUNSEL FUR THER SUBMITTED THAT SINCE THE ISSUE HAS BEEN DEALT WITH BY THE ITAT CHA NDIGARH BENCH IN ASSESSEES OWN CASES IN THE AFORESAID ASSESSMENT YE ARS AND SINCE THERE IS NO MATERIAL CHANGE IN THE FACTS OF THE PRESENT CASE , THE SUO MOTU DISALLOWANCE MADE BY THE ASSESSEE MAY BE UPHELD. 11. ON THE OTHER HAND, THE LD. DR FAIRLY ADMITTED T HAT THE TRIBUNAL HAS DEALT WITH THE IDENTICAL ISSUE IN ASSESSEES OWN CA SES FOR THE PREVIOUS AND SUBSEQUENT ASSESSMENT YEARS. HOWEVER, THE LD. DR SU PPORTING THE ORDER PASSED BY THE LD. CIT(A) SUBMITTED THAT SINCE THE A .O. HAD MADE DISALLOWANCE AS PER THE PROVISIONS OF LAW, THE LD. CIT(A) AS RIGHTLY UPHELD THE ACTION OF THE A.O. 12. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. AS POINTED OUT BY THE LD. COUNSEL THE ITA NOS.1589 & 1615-CHD-2019- VARDHMAN TEXTILES LIMITED, LUDHIANA 6 COORDINATE BENCH HAS DEALT WITH THE IDENTICAL ISSUE IN ASSESSEES OWN CASES FOR THE ASSESSMENT YEARS DISCUSSED ABOVE. WE NOTIC E THAT IN THE ASSESSMENT YEAR 2011-12 THE ASSESSEE EARNED EXEMPT INCOME OF R S. 12.59 CRORE AND THE ASSESSEE HAD MADE SUO MOTU DISALLOWANCE OF RS. 2,00,000/- THE COORDINATE BENCH ORDERED TO MAKE DISALLOWANCE OF RS. 5,00,000/ - AND DIRECTED THE AO TO GIVE BENEFIT OF DISALLOWANCE ALREADY MADE. SIMIL ARLY, IN THE ASSESSMENT YEAR 2011-12 THE ASSESSEE EARNED EXEMPT INCOME OF R S. 14.87 CRORE AND THE ASSESSEE HAD MADE SUO MOTU DISALLOWANCE OF RS. 1,53,000/- THE COORDINATE BENCH AFTER HEARING THE ASSESSEES PLEA ORDERED TO MAKE DISALLOWANCE OF RS. 6,00,000/- AND DIRECTED THE AO TO GIVE BENEFIT OF SUO MOTU DISALLOWANCE MADE BY THE ASSESSEE. 13. IN THE ASSESSMENT YEAR UNDER CONSIDERATION THE TOTAL EXEMPT INCOME EARNED BY THE ASSESSEE IS RS. 12,33,83,083/- OUT OF WHICH RS. 11,80,24,936/- WAS EARNED FROM ITS SUBSIDIARIES AND ASSOCIATES. ADMITTEDLY, THE ISSUE OF APPLICABILITY OF RULE 8D HAS BEEN DEAL T WITH BY THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASES DISCU SSED ABOVE. HENCE, RESPECTFULLY FOLLOWING THE DECISIONS OF THE COORDIN ATE BENCH DISCUSSED ABOVE, WE HOLD THAT THE ACTION OF THE LD. CIT(A) IS NOT IN CONSONANCE WITH THE DECISIONS OF THE COORDINATE BENCH. HOWEVER, IN OUR CONSIDERED VIEW, THE SUO MOTU DISALLOWANCE MADE BY THE ASSESSEE IS ON LOWER SIDE . HENCE, WE DIRECT THE AO TO MAKE A TOTAL DISALLOWANCE OF RS . 5,00,000/- U/S 14A OF ITA NOS.1589 & 1615-CHD-2019- VARDHMAN TEXTILES LIMITED, LUDHIANA 7 THE ACT AND TO GIVE BENEFIT OF SUO MOTU DISALLOWANCE ALREADY MADE BY THE ASSESSEE. HENCE, THIS GROUND OF APPEAL IS PARTLY AL LOWED. 14. VIDE GROUND NO. 3 THE ASSESSEE HAS CHALLENGED T HE ACTION OF THE LD. CIT(A) IN UPHOLDING THE ACTION OF THE A.O. IN TREAT ING THE AMOUNT OF RS. 29,81,55,625/- OUT OF THE TOTAL INTEREST RECEIVED B Y THE ASSESSEE AMOUNTING TO RS. 33,90,17,230/- AS INCOME FROM OTHER SOURCES INSTEAD OF INCOME FROM BUSINESS & PROFESSION CLAIMED BY THE ASSESSEE. 15. THE LD. COUNSEL POINTED OUT THAT THIS ISSUE IS COVERED BY THE ORDER DATED 28.05.2020 PASSED BY THE CHANDIGARH BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASES FOR THE A.YS. 2008-09, 2009-10 , AND 2012-13, WHEREBY THE B BENCH OF THE TRIBUNAL HAS ALLOWED T HE NETTING OF INTEREST INCOME WITH INTEREST EXPENSES. THE LD. COUNSEL FURT HER POINTED OUT THAT DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR UND ER CONSIDERATION, THE ASSESSEE INCURRED INTEREST EXPENSES AMOUNTING TO RS . 115.64 CRORES, THEREFORE THIS GROUND MAY BE DECIDED IN ACCORDANCE WITH THE DECISION OF THE COORDINATE BENCH RENDERED IN ASSESSEES OWN CAS ES DISCUSSED ABOVE. 16. ON THE OTHER HAND, THE LD. DR FAIRLY ADMITTED T HAT THIS ISSUE IS COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE. HOWEVER, THE LD. DR SUPPORTED THE ORDER OF THE LD. CIT(A). ITA NOS.1589 & 1615-CHD-2019- VARDHMAN TEXTILES LIMITED, LUDHIANA 8 17. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PART IES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD INCLUDING THE COMM ON ORDER DATED 28.05.2020 PASSED BY THE COORDINATE BENCH IN ASSESE ES OWN CASES FOR THE A.Y. 2008-09, 2009-10 AND 2013-14. AS POINTED OUT B Y THE LD. COUNSEL THE COORDINATE BENCH HAS DEALT WITH THE IDENTICAL ISSUE IN ASSESSEES OWN CASES AFORESAID AND ALLOWED THE NETTING OF INTEREST EXPEN DITURE AGAINST THE SAID INCOME. THE FINDINGS OF THE COORDINATE BENCH IN ASS ESSEES CASE ARE AS UNDER: 14. GROUND NO.3 RAISED BY THE ASSESSEE RELATES TO THE ISSUE OF TREATMENT OF INTEREST EARNED BY THE ASSESSEE AMO UNTING TO RS.9,89,04,000/- AS INCOME FROM OTHER SOURCES INSTE AD OF INCOME FROM BUSINESS AND PROFESSION. THE LD. COUNSE L FOR THE ASSESSEE POINTED OUT THAT THE INTEREST EARNED BY TH E ASSESSEE FROM BANK AND OTHERS AMOUNTED IN AL L OF RS.9,89,04 ,000/- WAS TREATED BY THE AO AS TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AS AGAINST THE CLAIM OF THE ASSESSEE OF THE SAID INTEREST AS INCOME FROM BUSINESS AND PROFESSION . NO NETTING OF INTEREST EXPENSES WAS ALSO ALLOWED AGAINST THE S AME. 15. BEFORE US AT THE OUTSET ITSELF THE LD. DR POINT ED OUT THAT IDENTICAL ISSUE STOOD ADJUDICATED IN THE CASE OF TH E ITA NOS.484 TO 486/CHD/2019 ASSESSEE BY THE ITAT IN ASS ESSMENT YEAR 2006-07 IN ITA NO.270/CHD/2011 VIDE ORDER DATE D 18.12.2018 WHEREIN THE ITAT HAD DISMISSED ASSESSEE S PLEA OF TREATING IT AS INCOME FROM BUSINESS AND PROFESSION BUT CONSIDERING THE PLEA OF THE ASSESSEE THAT THE NETTI NG OF INTEREST EXPENDITURE BE ALLOWED, HAD DIRECTED THE AO TO AL L OW THE SAME WHERE A DIRECT NEXUS BETWEEN THE INTEREST INCO ME EARNED AND INTEREST EXPENDITURE INCURRED WAS THERE. OUR AT TENTION WAS DRAWN TO PARAS 4 TO 6 OF THE ORDER DEALING WITH THE SAID ISSUE IN ASSESSMENT YEAR 2006-07 AS UNDER: ITA NOS.1589 & 1615-CHD-2019- VARDHMAN TEXTILES LIMITED, LUDHIANA 9 4. GROUND NO.1 : VIDE GROUND NO.1, THE ASSESSEE HAS AGITATED THE ACTION OF THE CIT(A) IN TREATING THE INTEREST INCOME AMOUNTING TO RS. 1,65,17,422/-AS INCOME FROM OTHER SOURCES INSTEAD OF INCOME FROM BUSINESS OR PROFESSION AS WAS CLAIMED BY THE ASSES SEE. 5. THE FACTS RELATING TO THE ABOVE ISSUE ARE THAT T HE ASSESSING OFFICER HAD TREATED INTEREST FROM CUSTOME RS AND SUPPLIERS AMOUNTING TO RS. 355.28LACS AND FURTH ER INTEREST FROM BANK &OTHERS AMOUNTING TO RS. 165.17 LACS AS INCOME FROM OTHER SOURCES AS AGAINST THE CLAIM OF THE BUSINESS INCOME. THE LD. CIT(A) HELD T HAT SINCE INCOME ON THE DELAYED PAYMENT FROM CUSTOMERS AND SUPPLIERS WAS INTRINSICALLY LINKED WITH THE BUS INESS ACTIVITY OF THE ASSESSEE, HENCE, THE SAME WAS TO BE TREATED AS BUSINESS INCOME OF THE ASSESSEE, WHEREAS , THE INTEREST RECEIVED FROM BANK &OTHERS WAS DIRECTE D TO BE TREATED AS INCOME FROM OTHER SOURCES . 6. WE HAVE HEARD THE RIVAL SUBMISSIONS ON THIS ISSU E. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CI T(A) SO FAR AS THE TREATMENT OF THE INTEREST FROM CUSTOM ERS AND SUPPLIERS AS BUSINESS INCOME AND INTEREST FRO M BANK AND OTHER SOURCES AS INCOME FROM OTHER SOURCE S IS CONCERNED. HOWEVER, A CONTENTION HAS BEEN RAISED BY THE LD. COUNSEL FOR THE ASSESSEE THAT WHERE THERE I S A DIRECT NEXUS BETWEEN THE INTEREST INCOME EARNED AND THE INTEREST EXPENDITURE INCURRED IN THIS RESPECT, THE ASSESSEE SHOULD BE ALLOWED NETTING OF THE SAME BEFO RE COMPUTING THE SAME UNDER THE HEAD INCOME FROM OTHE R SOURCES. WE FIND MERIT IN THE ABOVE CONTENTION OF T HE ASSESSEE AND WE ORDER ACCORDINGLY. 16. IN VIEW OF THE ABOVE, SINCE THE ISSUE OF INTER EST INCOME TO BE TAXABLE UNDER THE HEAD OTHER SOURCES STANDS ADJUDICATED BY THE ITAT AGAINST THE ASSESSEE THE SA ID DECISION WILL SQUARELY APPLY IN THE PRESENT CASE ALSO AND FO LLOWING THE DIRECT IONS OF THE ITAT IN THE SAID YEAR, WE UPHOLD THE PLEA OF THE ASSESSEE TO NET TING OF INTEREST EXPENDITURE AG AINST THE SAID INCOME DIRECTING THE AO TO AL LOW NETTING OF S UBJECT TO THERE BEING DIRECT NEXUS BETWEEN THE INTEREST INCOM E EARNED AS ITA NOS.1589 & 1615-CHD-2019- VARDHMAN TEXTILES LIMITED, LUDHIANA 10 DIRECTED BY THE ITAT IN THE CASE OF THE ASSESSEE IN ASSESSMENT YEARS 2006-07 AND 2007- 08 ABOVE. GROUND NO.3 RAISE D BY THE ASSESSEE IS ALLOWED IN ABOVE TERMS. 18. SINCE THE COORDINATE BENCH HAS ALREADY DECIDED THE IDENTICAL ISSUE IN ASSESSEES APPEALS AFORESAID, WE HAVE NO REASON TO TAKE A DIFFERENT VIEW. HENCE, RESPECTFULLY FOLLOWING THE DECISION OF THE C OORDINATE BENCH AFORESAID WE DIRECT THE AO TO COMPUTE THE INCOME FR OM OTHER SOURCES IN TERMS OF ORDER DATED 28.05.2020 RENDERED BY THE COO RDINATE BENCH IN ASSESEES OWN CASE FOR THE A.Y. 2008-09, 2009-10 AN D 2013-14 AFORESAID. 19. VIDE GROUND NO. 4 THE ASSESSEE HAS CHALLENGED T HE ACTION OF THE LD. CIT(A) IN CONFIRMING THE RENTAL INCOME AND MISCELLA NEOUS INCOME OF RS. 65,88,216/- AND RS. 1,19,285/- RESPECTIVELY FROM TH E PROFITS OF THE UNIT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB / 80IA OF THE ACT. 20. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFO RE US THAT RENT IS RECEIVED FOR RECOVERING THE COST OF RUNNING & MAINT ENANCE OF RESIDENTIAL ACCOMMODATIONS FOR THE EMPLOYEES AND SHOULD NOT BE EXCLUDED FROM THE PROFIT AND GAINS DERIVED BY UNDERTAKING FROM THE BU SINESS FOR DEDUCTION UNDER SECTION 80IC. THE LD. COUNSEL FURTHER POINTED OUT THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF T HE JURISDICTIONAL TRIBUNAL IN ASSESSEES APPEALS ITA NO. 484/2019, 485/2019 & 486/2019 FOR THE A.Y. 2008-09,2009-10 & 2013-14 RESPECTIVELY, WHEREBY THE TRIBUNAL HAS ALLOWED NETTING OF THE RENTAL INCOME WITH EXPENSES INCURRED IF ANY IN ITA NOS.1589 & 1615-CHD-2019- VARDHMAN TEXTILES LIMITED, LUDHIANA 11 RELATION TO SUCH PROPERTY. AS REGARDS MISCELLANEOUS RECEIPT OF RS. 1,19,285/- THE LD. COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THE ITAT IN THE AFORESAID CASES HAS ALLOWED DEDUCTION U/S 80IC/IB O N LIQUIDATED DAMAGE / DAMAGE AGAINST CANCELLATION OF ORDER. 21. THE LD. DR FAIRLY ADMITTED THAT THE TRIBUNAL HA S DEALT WITH THE ISSUES RAISED IN THIS GROUND AND THE TRIBUNAL HAS ALLOWED NETTING OF RENTAL INCOME WITH EXPENSES INCURRED. SIMILARLY, THE TRIBUNAL HAS HELD THAT MISCELLANEOUS RECEIPTS ARE PART OF THE PROFITS AND GAIN DERIVED B Y THE UNDERTAKING FROM BUSINESS THEREFORE, ELIGIBLE FOR DEDUCTION U/S 80IB /80IC OF THE ACT. HOWEVER, THE LD. DR SUPPORTED THE ORDER PASSED BY T HE LD. CIT(A). 22. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PART IES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. AS POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE THE COORDINATE BENCH HAS DECIDED THE IDENT ICAL ISSUE IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE FOR THE A.Y. 20 08-09, 2009-10 & 2013- 14 THE OBSERVATIONS OF THE COORDINATE BENCH ARE AS UNDER: 23. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PAR TIES. IT IS SETTLED LAW THAT THE DEDUCTION U/S 80IB/80IC OF THE ACT IS ELIGIBLE ON THE INCOMES WHICH HAVE FIRST DEGREE NEX US WITH THE INDUSTRIAL UNDERTAKINGS OF THE ASSESSEE. THERE IS N O DISPUTE ABOUT THIS PROPOSITION AT ALL. IN THIS BACKDROP, CO NSIDERING THAT THE RENTAL INCOME HAD BEEN RECEIVED BY THE ASS ESSEE FROM LETTING OUT ACCOMMODATION TO ITS EMPLOYEES, THERE I S CLEARLY NO NEXUS OF THE SAID INCOME WITH THE INDUSTRIAL UND ERTAKING OF THE ASSESSEE AND THE CLAIM OF DEDUCTION U/S 80IB/80 IC OF THE ACT, THEREFORE, WE HOLD HAS BEEN RIGHTLY DISALLOWED BY THE LD. ITA NOS.1589 & 1615-CHD-2019- VARDHMAN TEXTILES LIMITED, LUDHIANA 12 CIT(A). BUT AT THE SAME TIME, WE ARE IN AGREEMENT W ITH THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IT IS NOT THE ENTIRE GROSS RENTAL RECEIPTS WHICH ARE TO BE DI SALLOWED OUT OF THE TOTAL PROFITS CLAIMED BY THE ASSESSEE AS DEDUCTABLE U/S 80IB/80IC OF THE ACT, BUT ON THE PROFIT ELEMENT IN THE SAID INCOME WHICH IS EMBEDDED IN THE PROFITS EARNED BY T HE ASSESSEE MEANING THEREBY THAT THE EXPENSES, IF ANY, INCURRED BY THE ASSESSEE FOR EARNING THE RENTAL INCOME OUGHT TO BE REDUCED FROM THE RENTAL INCOME AND IT IS ONLY THE B ALANCE WHICH SHOULD BE DENIED DEDUCTION U/S 80IB/80IC OF T HE ACT. ACCORDINGLY, WE DIRECT THE AO TO REDUCE EXPENSES, I F ANY, INCURRED BY THE ASSESSEE FOR THE PURPOSE OF EARNING RENTAL INCOME AND DISALLOW ONLY THE BALANCE RENTAL INCOME DEDUCTION U/S 80IB/80IC OF THE ACT. AS FOR THE MISC ELLANEOUS RECEIPTS, THE DAMAGES AGAINST CANCELLATION OF ORDER S FROM CUSTOMERS RECEIVED BY THE ASSESSEE, WE AGREE WITH T HE LD.COUNSEL FOR THE ASSESSEE, AS DIRECT NEXUS WITH T HE INDUSTRIAL UNDERTAKINGS OF THE ASSESSEE AND WE HOLD , IS ELIGIBLE FOR DEDUCTION U/S 80IB/80IC OF THE ACT. SI MILARLY, THE COMMISSION FROM SHIPPING COMPANIES, WE HAVE NOTED, HAS BEEN HELD BY THE ITAT IN THE CASE OF THE ASSESSEE I TSELF IN THE PRECEDING YEAR I.E. ASSESSMENT YEAR 2006-07 AS ELIG IBLE FOR DEDUCTION U/S 80IB/80IC OF THE ACT. ACCORDINGLY, FO LLOWING THE SAID DECISION WE HOLD THE COMMISSION FROM SHIPP ING COMPANIES TO BE ELIGIBLE FOR DEDUCTION U/S 80IB/80I C OF THE ACT. FOR OTHER RECEIPTS NO ARGUMENTS HAVE BEEN FORW ARDED BY THE ASSESSEE AND, THEREFORE, THE DISALLOWANCE OF DE DUCTION U/S 80IB/80IC OF THE ACT OF THE ACT ON THE SAME AMOUNTI NG TO RS.1,00,356/- IS UPHELD. AS FOR THE INTEREST RECEIV ED FROM BANK AND OTHER, WE DO NOT FIND ANY MERIT IN THE CLA IM OF THE ASSESSEE THAT HAVING BEEN EARNED ON SECURITY DEPOSI TS MADE WITH ELECTRICITY BOARD THEY WERE PURELY IN THE NATU RE OF BUSINESS INCOME AND HENCE ELIGIBLE FOR DEDUCTION U/S80IB/80IC OF THE ACT. THE SAID INCOME AS DESCRIB ED BY THE LD. COUNSEL FOR THE ASSESSEE DOES NOT HAVE ANY FIRS T DEGREE NEXUS WITH THE INDUSTRIAL UNDERTAKINGS OF THE ASSES SEE AND, THEREFORE, WE HOLD THAT THE SAME IS NOT ELIGIBLE FO R DEDUCTION U/S 80IB/80IC OF THE ACT. 24. IN VIEW OF THE ABOVE, WE HOLD THAT THE ASSESSEE IS ELIGIBLE TO DEDUCTION U/S 80IB/80IC OF THE ACT ON THE DAMAGE S AGAINST ITA NOS.1589 & 1615-CHD-2019- VARDHMAN TEXTILES LIMITED, LUDHIANA 13 CANCELLATION, COMMISSION FROM SHIPPING WHILE IT IS HELD NOT ELIGIBLE FOR DEDUCTION ON THE OTHER RECEIPTS, INTER EST RECEIPTS FROM BANK AND OTHERS AND RENTAL INCOME, WHICH WE DI RECT THE AO TO RESTRICT THE DISALLOWANCE TO THE NET RENTAL I NCOME EXCLUDING THE EXPENSES INCURRED FOR EARNING THE SAM E. GROUND OF APPEAL NO.5 RAISED BY THE ASSESSEE IS PAR TLY IN ABOVE TERMS. 23. THE COORDINATE BENCH HAS DEALT WITH THE IDENTIC AL ISSUES IN ASSESSEES OWN APPEALS AFORESAID AND SINCE THERE IS NO MATERIA L CHANGE IN THE FACTS OF THE PRESENT CASE, WE RESPECTFULLY FOLLOWING THE ORDER P ASSED BY THE COORDINATE BENCH, PARTLY ALLOW THIS GROUND OF APPEAL AND DIREC T THE AO TO GIVE BENEFIT TO THE ASSESSEE AS OBSERVED BY THE COORDINATE BENCH IN THE ORDER DATED 28.05.2020 RENDERED IN ASSESSEES OWN CASES DISCUSSED ABOVE. 24. VIDE GROUND NO. 5 THE ASSESSEE HAS CHALLENGED T HE ACTION OF THE LD. CIT(A) IN TREATING THE LINE/BAY CHARGES AMOUNTING T O RS. 18,70,406/- AS CAPITAL EXPENDITURE INSTEAD OF REVENUE EXPENDITURE CLAIMED BY THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THIS ISSU E IS COVERED BY THE ORDER OF THE ORDER OF THE TRIBUNAL IN FAVOUR OF THE ASSES SEES OWN CASE FOR THE A.Y 2008-09, 2009-10 & 2013-14 (SUPRA) WHEREBY THE TRIBUNAL HAS HELD THAT LINE / BAY CHARGES PAID TO MADHYA PRADESH STAT E ELECTRICITY BOARD AS REVENUE IN NATURE. 25. THE LD. DR FAIRLY ADMITTED THAT THIS ISSUE IS C OVERED IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASES REFERRED ABOVE, HO WEVER, THE LD. DR RELIED ON THE DECISION OF THE LD. CIT(A). ITA NOS.1589 & 1615-CHD-2019- VARDHMAN TEXTILES LIMITED, LUDHIANA 14 26. WE HAVE GONE THROUGH THE MATERIAL ON RECORD INC LUDING THE DECISION OF THE COORDINATE BENCH RENDERED IN ASSESSEES APPE AL REFERRED ABOVE. AS POINTED OUT BY THE LD. COUNSEL THE COORDINATE BENCH OF THE TRIBUNAL HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE HOLDIN G AS UNDER: 28. GROUND OF APPEAL NO.7 RAISED BY THE ASSESSEE R ELATES TO THE TREATMENT OF LINE/BAY CHARGES AMOUNTING TO RS.4,00,72,000/- AS C APITAL EXPENDITURE; 29. BRIEFLY STATED, THE FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE HAD PAID LINE/BAY CHARGES IN ITS UNIT ANANT SPINNING MILLS A ND VARDHMAN YARNS, BOTH LOCATED IN MADHYA PRADESH ELECTRICITY BOARD AMOUNTI NG TO RS.4,00,72,000/-. THE ASSESSEE HAD CLAIMED THE SAID EXPENDITURE AS REVENU E CONTENDING BEFORE THE AO THAT THE SAID EXPENDITURE HAD BEEN INCURRED FOR AUG MENTING THE BUSINESS ACTIVITIES OF THE ASSESSEE COMPANY AND THE OWNERSHIP OF THE AS SETS SO CREATED VESTED WITH THE STATE ELECTRICITY BOARD AND THE AMOUNT WAS NOT REFUNDABLE AT ANY STAGE. THE EXPLANATION OF THE ASSESSEE DID NOT FIND FAVOUR WIT H THE AO WHO TREATED THE SAME AS CAPITAL EXPENDITURE AND ALLOWED DEPARTMENT ON TH E SAME. 30. THE LD.CIT(A) UPHELD THE ORDER OF THE AO. 31. BEFORE US THE LD.COUNSEL FOR THE ASSESSEE POINT ED OUT THAT THIS ISSUE STOOD ADJUDICATED IN FAVOUR OF THE ASSESSEE IN ITS OWN CA SE BY THE ITAT IN ASSESSMENT YEARS 2011-12 AND 2012-13 IN ITA NO.787/CHD/2015 AN D ITA NO.483/CHD/2016 DATED 14.3.2019. OUR ATTENTION WAS DRAWN TO THE REL EVANT FINDINGS OF THE ITAT IN PARAS 33 AND 34 OF THE ORDER AS UNDER: 33. GROUND NO .14 : VIDE GROUND NO.14, THE ASSESSEE HAS AGITATED THE ACTION THE CIT(A) IN TREATING THE LINE/BAY CHAR GES AS CAPITAL RECEIPT INSTEAD OF REVENUE RECEIPT. 34. THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OU R ATTENTION TO THE DECISION OF THE TRIBUNAL IN THE OWN CASE OF THE ASS ESSEE FOR ASSESSMENT YEAR 2007-08 IN ITA NO. 1430/CHD/2010 OR DER DATED 31.3.2010, WHEREIN, THE TRIBUNAL AFTER DISCUSSING T HE DETAILS UPHELD THE ORDER OF THE CIT(A) IN THAT YEAR TREATING THE A FORESAID EXPENDITURE AS REVENUE EXPENDITURE. NO CONTRARY DEC ISION HAS BEEN CITED BEFORE US. IN VIEW OF THIS, THE ISSUE IS ACCO RDINGLY DECIDED IN FAVOUR OF THE ASSESSEE AND THE ASSESSING OFFICER IS DIRECT TO TREAT THE AFORESAID EXPENDITURE AS REVENUE EXPENDITURE. THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, CONTEN DED THAT THE ISSUE STOOD COVERED IN FAVOUR OF THE ASSESSEE. ITA NOS.1589 & 1615-CHD-2019- VARDHMAN TEXTILES LIMITED, LUDHIANA 15 32. THE LD. DR THOUGH FAIRLY CONCEDED TO THE ABOVE, HOWEVER, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 33. IN VIEW OF THE ABOVE SINCE IDENTICAL ISSUE ALRE ADY STANDS DECIDED IN FAVOUR OF THE ASSESSEE BY THE ITAT IN ASSESSMENT YEAR 2011-12 AND 2012-13 AND NO DISTINGUISHING FACTS HAVE BEEN BROUGHT TO OUR NOTIC E BY THE LD. DR, THE SAID DECISION WILL APPLY IN THE PRESENT CASE ASSESSING O FFICER, FOLLOWING WHICH WE HOLD THAT THE LINE/BAY CHARGES TO BE REVENUE IN NATURE. GROUND OF APPEAL NO.7 RAISED BY THE ASSESSEE IS ACCORDINGLY, ALLOWED. 27. SINCE THE COORDINATE BENCH HAS DECIDED THE IDEN TICAL ISSUE IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE FOR THE A.Y2 008-09, 2009-10 & 2013-14 DISCUSSED ABOVE, WE DO NOT FIND ANY REASON TO TAKE A DIFFERENT VIEW IN THIS ASSESSMENT YEAR. HENCE, FOLLOWING THE PRINCIPLE OF CONSISTENCY, WE ALLOW THIS GROUND OF APPEAL AND SET ASIDE THE FINDINGS OF THE LD. CIT(A). 28. VIDE GROUND NO. 6 THE ASSESSEE HAS CHALLENGED T HE ACTION OF THE LD. CIT(A) IN NOT ADJUDICATING THE ADDITIONAL GROUND RE GARDING TREATMENT OF SALES TAX SUBSIDY OF RS. 1,30,90,811/- UNDER MADHYA PRADESH INDUSTRIAL INVESTMENT PROMOTION ASSISTANCE SCHEME 2004 AS RE VENUE RECEIPT INSTEAD OF CAPITAL RECEIPT. THE LD. COUNSEL FOR THE ASSESSE E SUBMITTED DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE RAISED THE SAID ISSUE AS ADDITIONAL GROUND OF APPEAL. HOWEVER, THE LD. CIT(A) OMITTED T O ADJUDICATE THE SAME. THE LD. COUNSEL CONTENDED THAT THE OBJECTIVE OF THI S SCHEME WAS TO INCREASE EMPLOYMENT TO ESTABLISH NEW CAPITAL INVEST MENT IN THE STATE, THEREFORE THE SAME IS REQUIRED TO BE TREATED AS CAP ITAL EXPENDITURE. THE LD. COUNSEL FOR FURTHER POINTED OUT THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ITA NOS.1589 & 1615-CHD-2019- VARDHMAN TEXTILES LIMITED, LUDHIANA 16 ASSESSEE BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y. 2013-14 IN ITA NO. 486/2019 AND ORDER FOR THE A.Y. 2011-12 & 2 012-13 IN ITA NO. 787/15 AND 483/16 RESPECTIVELY. THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE RELEVANT PORTION OF THE ORDER PASSED BY THE TRIBUNAL AND CONTENDED THAT THIS ISSUE MAY BE ADJUDICATED AC CORDINGLY. 29. THE LD. DR ON THE OTHER HAND ADMITTED THAT THI S ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE IN THE CASES AFORESAID, HOWE VER SUBMITTED THAT SINCE LD. DR HAS NOT EXAMINED THE ISSUE IN THE LIGHT OF T HE FACTS OF THE PRESENT CASE, THIS ISSUE MAY BE SENT BACK TO THE LD. CIT(A) FOR CONSIDERATION. 30. WE HAVE PERUSED THE MATERIAL ON RECORD INCLUDIN G THE DECISION OF THE COORDINATE BENCH ON RECORD IN THE LIGHT OF THE SUBM ISSIONS MADE BY THE LD. COUNSEL. AS POINTED OUT BY THE LD. COUNSEL THE COOR DINATE BENCH HAS ALREADY DEALT WITH BY THE COORDINATE BENCH OF THE T RIBUNAL AND DECIDED IN FAVOUR OF THE ASSESSEE. HOWEVER, SINCE THE LD. CIT( A) HAS NOT DEALT WITH THE ISSUE DURING APPELLATE PROCEEDINGS, WE DEEM IT APPROPRIATE TO SEND THIS ISSUE BACK TO THE LD. CIT(A) FOR ADJUDICATING THE S AME IN THE LIGHT OF THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL RE NDERED IN ASSESSEES OWN CASES REFERRED. HENCE, WE ALLOW THIS GROUND OF APPEAL FOR STATISTICAL PURPOSES. ITA NOS.1589 & 1615-CHD-2019- VARDHMAN TEXTILES LIMITED, LUDHIANA 17 ITA NO. 1615/CHD/2019: THE DEPARTMENT HAS CHALLENGED THE IMPUGNED ORDER PA SSED BY THE LD. CIT(A) ON THE FOLLOWING GROUNDS: - 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING INCOM E FROM THE PROFIT OF THE UNITS ELIGIBLE FOR THE PURPOSE OF DEDUCTION U/S 80IB/IC IN RESPECT OF INSURANCE CLAIM RECEIVED, EXCHANGE RATE FLUCTUATION(NET), MISC. RECEIPTS, COM MISSION RECEIVED AND INTEREST NETTED OFF WITH EXPENSES?' 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN TREATING SALES TAX SUBSIDY AS CAPITAL RECEIPT?' 3. THAT THE ORDER OF THE LD. CIT (A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUND OF APPEAL BEFORE IT IS FINALLY DISPOSED OF. 2. VIDE GROUND NO. 1 THE DEPARTMENT HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN ALLOWING INCOME FROM PROFIT OF THE UN ITS ELIGIBLE FOR THE PURPOSE OF THE DEDUCTION UNDER SECTION 80IB/80IC OF THE ACT IN RESPECT OF INSURANCE RECEIPT, EXCHANGE RATE FLUCTUATION (NET), MISCELLANEOUS RECEIPTS, COMMISSION RECEIVED AND INTEREST NETTED OFF WITH EX PENSES. THE LD. DR SUBMITTED BEFORE US THAT THE LD. CIT(A) HAS WRONGLY ALLOWED DEDUCTION U/S 80IC / IB IN RESPECT OF INSURANCE CLAIM RECEIPT, EX CHANGE RATE FLUCTUATION, MISC. RECEIPTS, COMMISSION RECEIVED AND INTEREST NE TTED OFF WITH EXPENSES. ITA NOS.1589 & 1615-CHD-2019- VARDHMAN TEXTILES LIMITED, LUDHIANA 18 3. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT THIS ISSUE IS COVERED BY THE DECISION OF THE CHANDI GARH BENCH OF THE ITAT IN ASSESSEES OWN CASE ITA NO. 484, 485, 486/CHD./2 019 FOR THE ASSESSMENT YEARS 2008-09, 2009-10 AND 2013-14 WHERE IN THE TRIBUNAL HAS ALLOWED THE DEDUCTION ON INTEREST RECEIVED FROM CUS TOMER / SUPPLIERS, FOREIGN EXCHANGE GAIN AND INSURANCE CLAIM. THE LD. COUNSEL FURTHER POINTED OUT THAT DEDUCTION U/S 80IB / 80IC WAS ALLO WED BY THE TRIBUNAL IN RESPECT OF FOREIGN EXCHANGE / COMMISSION / BROKERAG E FROM OCEAN FREIGHT AND INTEREST RECEIVED FROM CUSTOMER / SUPPLIERS IN ASSESSEES OWN CASE ITA NO. 1429/2010 AND 35/2011 FOR THE ASSESSMENT YEARS 2006-07 AND ITA NO. 270/2011 AND 286/2011 FOR THE ASSESSMENT YEAR 2007- 08. THE LD. COUNSEL FURTHER SUBMITTED THAT THE TRIBUNAL HAS ALLOWED DED UCTION IN RESPECT OF FOREIGN EXCHANGE GAIN, COMMISSION / BROKERAGE FROM OCEAN FREIGHT AND INSURANCE CLAIM IN ASSESSEES OWN CASES ITA NO. 787 /2015 AND 894/2015 FOR THE ASSESSMENT YEARS 2011-12 AND ITA NO. 483/20 16 AND 518/2016 FOR THE ASSESSMENT YEAR 2012-13. THE LD. COUNSEL ACCOR DINGLY SUBMITTED THAT SINCE THE ISSUE INVOLVED IS COVERED IN FAVOUR OF TH E ASSESSEE AND SINCE THE FINDINGS OF THE LD. CIT(A) ARE NOT IN ACCORDANCE WI TH THE DECISION OF THE JURISDICTIONAL TRIBUNAL, THE SAME IS LIABLE TO BE S ET ASIDE. ITA NOS.1589 & 1615-CHD-2019- VARDHMAN TEXTILES LIMITED, LUDHIANA 19 4. ON THE OTHER HAND, THE LD. DR ADMITTED THAT THE TRIBUNAL HAS DEALT WITH THE IDENTICAL ISSUES RAISED BY THE ASSESSEE IN THIS GROUND OF APPEAL, HOWEVER, THE LD. DR SUPPORTED THE FINDINGS OF THE L D. CIT(A). 5. WE HAVE GONE THROUGH THE MATERIAL ON RECORD INCL UDING THE ORDER PASSED BY THE COORDINATE BENCH OF THE TRIBUNAL IN A SSESSEES OWN CASES AFORESAID. THE COORDINATE BENCH OF THE TRIBUNAL HAS HELD IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2008-09, 2009-10 AND 2013-14 THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB/IB IN R ESPECT OF THE CLAIMS MADE BY THE ASSESSEE EXCEPT THE INSURANCE CLAIM. THE FI NDINGS OF THE COORDINATE BENCH READ AS UNDER: 38. GROUND OF APPEAL NO.2 RAISED BY THE REVENUE RE ADS AS UNDER: Q.2. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING DEDUCTION U/S 80IB AND 80IC ON INTEREST FROM CUSTOMERS & EMPLOYEE, MISC. RECEIPTS COMPRISING BRO KERAGE FROM OCEAN FREIGHTS, FOREX GAINS, INSURANCE CLAIM & REBATE DISCOUNT?' 39. THE REVENUE IN THE ABOVE GROUND HAS AGITATED TH E ACTION OF THE LD.CIT(A) IN ALLOWING DEDUCTION U/S 80IB AND 80IC ON THE INTERES T FROM CUSTOMERS AND EMPLOYEES, MISCELLANEOUS RECEIPTS COMPRISING BROKER AGE FROM OCEAN FREIGHT, FOREIGN EXCHANGE GAINS, INSURANCE CLAIM AND REBATE DISCOUNT. AT THE OUTSET ITSELF, THE LD. COUNSEL FOR THE ASSES SEE DREW OUR ATTENTION TO THE DETAILS OF INSURANCE CLAIM RECEIVED AT PAPER BOOK P AGE NO.1 AS UNDER:- ARISHT SPINNING MILLS DETAIL OF INSURANCE CLAIM RECEIVED DATE DESCRIPTION OF CLAIM LOSS SUFFERED CLAIM RECEIVED 7/25/2007 LOSS DUE TO FIRE IN CARDING 134,107 49,265 10/16/2007 LOSS DUE TO FIRE IN H. PLANT 586,706 285,612 10/16/2007 CLAIM FOR MOBILE SET 1.800 1,800 12/27/2007 MARINE CLAIM DUE TO LOSS OF YARN 105,920 105,920 828,533 442,597 ITA NOS.1589 & 1615-CHD-2019- VARDHMAN TEXTILES LIMITED, LUDHIANA 20 AURO TEXTILES DATE DESCRIPTION OF CLAIM LOSS SUFFERED CLAIM RECEIVED 9/25/2007 CLAIM FOR MOBILE SET 3,200 900 3 ,200 900 AURO SPINNING MILLS DATE DESCRIPTION OF CLAIM LOSS SUFFERED CLAIM RECEIVED 8/27/2007 FIRE CLAIM OF BLOW ROOM MPM 8 IN HALL 5 1 63,715 136,281 8/27/2007 FIRE CLAIM OF BLOW ROOM (UNIMIX) IN HALL 4 372,770 362,432 10/26/2007 LOSS OF MOBILE BILL NOKIA 5,600 5,572 11/14/2007 TRANSIT CLAIM OF RIETER CARD COVER SHEET 8,192 7,447 3/31/2008 TRANSIT CLAIM OF AMSLER ATTACHMENTS (CSY) 4,966,956 4,966,956 5,517,233 5,478,688 . 40. REFERRING TO THE SAME HE POINTED OUT THAT THE E NTIRE CLAIM RELATED TO THE LOSS IN ITS BUSINESS UNITS/ BUSINESS ACTIVITIES AND , THEREFORE, THE ENTIRE CLAIM WAS ELIGIBLE FOR DEDUCTION U/S 80IB/IC OF THE ACT. HE F URTHER POINTED OUT THAT THE ISSUE OF ALLOWANCE OF INSURANCE CLAIM ALSO HAD BEEN DEALT WITH BY THE ITAT IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2011/12 AND 2012-13 IN ITA NOS.787 & 894/CHD/2015 AND ITA NOS.483 & 518/CH D/2016 DATED 14.3.2019. AS FOR THE CLAIM OF DEDUCTION U/S 80IB/80IC ON INTE REST FROM CUSTOMERS AND MISC. RECEIPTS COMPRISING OF BROKERAGE, OCEAN FREIGHT, FO REX GAIN, LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THESE ISSUES ALSO STOOD D ECIDED BY THE ITAT IN FAVOUR OF THE ASSESSEE IN ASSESSES OWN CASE FOR A.Y 2006-07 & 2007-08 IN ITA NO.35/2011 & 286/2011 DATED 18-12-18. 41. WE HAVE GONE THROUGH THE ORDERS OF THE ITAT TO WHICH OUR ATTENTION WAS DRAWN AND HAVE NOTED THAT THE ITAT HAD ALLOWED THE ASSESSEES CLAIM OF DEDUCTION U/S 80IB/ 80IC IN CASE OF FOREIGN EXCHANG E GAIN, COMMISSION BROKERAGE FROM OCEAN FREIGHT AND INTEREST RECEIVED FROM CUSTO MERS AND SUPPLIERS AND THAT RELATING TO INSURANCE CLAIM IN PRECEDING YEARS HOLD ING AT PARA 27 OF THE ORDER IN ITA NO. 35/2011 AS UNDER: 27. GROUND NO.2: GROUND NO.2 RAISED BY THE REVENUE IS IN THREE PARTS. THE REVENUE IN THE IST. PART HAS AGITATED THE ACTION OF THE CIT(A) IN DIRECTING THE ASSESSING OFFICER TO TREAT THE INTEREST RECEIVED FR OM THE CUSTOMERS AND SUPPLIERS TO BE INCOME DERIVED FROM INDUSTRIAL UNDERTAKING AND E LIGIBLE FOR EXEMPTION U/S 10B AND DEDUCTION U/S 80IB AND 80IC OF THE ACT. SINCE W E HAVE ALREADY HELD THAT THE INTEREST INCOME RECEIVED ON DELAYED PAYMENT IS IN F ACT PART OF THE SALE CONSIDERATION / RECEIVABLE FROM THE CUSTOMERS AND W E HAVE ALSO HELD THAT THE SAME TO BE TREATED AS BUSINESS INCOME AND SINCE THE AFORESAID RECEIPTS ARE RELATING TO THE SALE RECEIPTS OF THE ASSESSEE OF TH E PRODUCED MANUFACTURED, HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CI T(A) IN THIS RESPECT. ITA NOS.1589 & 1615-CHD-2019- VARDHMAN TEXTILES LIMITED, LUDHIANA 21 IN THE SECOND PART OF GROUND NO.2, THE REVENUE HAS AGITATED THE ACTION OF THE CIT(A) IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S 80IB AND 80IC AND EXEMPTION U/S 10B ON PROFIT AFTER EXCLUDING LOS ES DEBITED IN THE ACCOUNTS IN RESPECT OF WHICH INSURANCE CLAIMS WERE RECEIVED. TH E LD. COUNSEL FOR THE ASSESSEE IN THIS RESPECT HAS INVITED OUR ATTENTION TO THE PAPER BOOK PAGE 2 WHEREIN THE DETAILS OF THE ITEMS HAVE BEEN GIVEN ON WHICH I NSURANCE CLAIM WAS RECEIVED. HOWEVER, AFTER PERUSAL OF THE SAME, IT IS NOT CLEAR AS TO WHICH OF THE ITEMS CONSTITUTED CAPITAL ASSETS AND WHICH OF THE ITEMS C ONSTITUTED TRADING ASSET OF THE ASSESSEE. WE THEREFORE, RESTORE THIS ISSUE TO THE F ILE OF THE ASSESSEE TO BIFURCATE THE ITEMS BETWEEN CAPITAL ASSETS AND TRADING ASSETS AND TO ALLOW THE CLAIM IN RESPECT OF INSURANCE CLAIM RECEIVED ON TRADING ASSETS ONLY. 28. THE THIRD PART OF GROUND NO.2 IS AGAINST THE AC TION OF THE CIT(A) IN DIRECTING THE ASSESSING OFFICER NOT TO REDUCE FOREIGN EXCHANG E FLUCTUATION GAIN FROM ELIGIBLE PROFITS OF UNITS ELIGIBLE FOR DEDUCTION U/S 80IB AN D 80IC AND EXEMPTION U/S 10B OF THE ACT. 29. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE FOREIGN EXCHANGE FLUCTUATION GAIN IS IN RESPECT OF EXPORT RECEIPTS / RECEIVABLE OF THE ASSESSEE AND ANY GAIN IN RESPECT OF RECEIVABLE ON ACCOUNT OF FOR EIGN EXCHANGE FLUCTUATION IN FACT CONTRIBUTES TO THE PROFITS OF THE ASSESSEE FRO M THE SALE/ EXPORT OF THE PRODUCTS. WE FIND FORCE IN THE AFORESAID CONTENTION. WE DO NO T FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) IN THIS RESPECT ALSO. WE HAVE ALSO GONE THROUGH THE ORDER OF THE ITAT IN ITA NO.787/2015 AT PARA 23 AS UNDER: 23. GROUND NO .9. VIDE THIS GROUND THE ASSESSEE HA S AGITATED THE ACTION OF THE LOWER AUTHORITIES IN TREATING THE INCOME FROM THE P ROFITS OF THE UNITS ELIGIBLE FOR DEDUCTION U/S 80IB / 80IC OF THE ACT. SO FAR AS THE CLAIM OF DEDUCTION IN RESPECT OF THE INSURANCE CLAIM, WHICH ADMITTEDLY WAS ON ACCOUNT OF LOSS OF TRADING ASSETS IS CONCERNED, IT HAS BEEN HELD TIME AND AGAIN THAT IF THE LOSS THEREIN IS INDEMNIF IED BY WAY OF COMPENSATION RECEIVED FROM INSURANCE COMPANY THAT CAN BE SAID TO BE NOT A SEPARATE INCOME, RATHER, THE SAME WILL HAVE EFFECT FOR REDUCING LOSS / EXPENDITURE. HENCE, IF THE ASSESSEE HAS BOOKED THE AFORESAID LOSS, IN RELATION TO WHICH INSURANCE CLAIM HAS BEEN RECEIVED, AS EXPENDITURE, THEN THE AMOUNT RECE IVED BY THE ASSESSEE FROM INSURANCE COMPANY WILL BE ELIGIBLE FOR DEDUCTION U/ S 80IB/80IC OF THE ACT. THIS ISSUE IS ACCORDINGLY RESTORED TO THE FILE OF THE AS SESSING OFFICER FOR VERIFICATION OF THE FACTS. SO FAR AS THE ISSUE RELATING TO THE GAINS ON THE FO REIGN EXCHANGE RATE FLUCTUATION IS CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE HAS SUB MITTED THAT GAIN ON FOREIGN EXCHANGE RATE FLUCTUATION HAS BEEN RECEIVED ON ACCO UNT OF PROCEEDS OF EXPORTS RECEIVABLE AND THAT THE SAME WAS A PART OF THE SALE CONSIDERATION. THE LD. COUNSEL HAS FURTHER SUBMITTED THAT THIS ISSUE IS SQUARELY C OVERED IN FAVOUR OF THE ASSESSEE ITA NOS.1589 & 1615-CHD-2019- VARDHMAN TEXTILES LIMITED, LUDHIANA 22 IN THE OWN CASE OF THE ASSESSEE FOR ASSESSMENT YEAR S 2006-07 AND 2007-08 VIDE COMMON ORDER OF THE TRIBUNAL DATED 18.12.2018 (SUPR A). CONSIDERING THE ABOVE WE AGREE WITH THE LD. COUNSEL FOR THE ASSESSEE THAT THE ISSUE OF CLAIM OF DEDUCTION U/S 80IB/80IC OF THE AC T ON INTEREST INCOME RECEIVED FROM CUSTOMERS AND MISC. RECEIPTS IN THE NATURE OF OCEAN FREIGHT, FOREX GAIN ALREADY STAND DECIDED IN FAVOUR OF THE ASSESSEE BY THE ITAT IN PRECEDING YEARS IN THE CASE OF THE ASSESSEE ITSELF. WE THEREFORE SEE N O REASON TO INTERFERE IN THE ORDER OF THE LD.CIT(A) WITH RESPECT TO ALLOWANCE OF THE A FORESAID CLAIMS. AS FOR CLAIM OF DEDUCTION U/S 80IB/80IC OF THE ACT ON INSURANCE CLAIM RECEIVED, THE ISSUE IS RESTORED BACK TO THE AO WITH THE DIRECTION TO ADJUD ICATE IT IN ACCORDANCE WITH THE DIRECTION OF THE ITAT IN THE CASE OF THE ASSESSEE O N THE IDENTICAL ISSUE IN A.Y 2011-12 DEALT WITH IN ITA NO.787/CHD/2015. THIS GROUND OF APPEAL IS PARTLY ALLOWED FOR STATIST ICAL PURPOSES. 6. SINCE THE COORDINATE BENCH OF THE TRIBUNAL HAS D EALT WITH THE IDENTICAL ISSUES AND HELD THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/ S 80IB/IC OF THE ACT IN RESPECT OF THE AFORESAID CLAIMS EXCEPT CLAIM IN RESPECT OF INSURAN CE CLAIM RECEIVED. HENCE, RESPECTFULLY FOLLOWING THE DECISION DATED 28.05.2020 RENDERED BY THE COORDINATE BENCH IN ASSESSEES APPEALS CASE ITA NO. 484, 485, 486/CHD./2019 FOR TH E ASSESSMENT YEARS 2008-09, 2009-10 AND 2013-14, WE PARTLY ALLOW THIS GROUND OF APPEAL AND SEND THE ISSUE RELATING TO INSURANCE CLAIM RECEIVED, BACK TO THE AO WITH THE DIRECTION TO ADJUDICATE IT IN ACCORDANCE WITH THE DIRECTION OF THE ITAT IN THE CASE OF THE ASSESSEE ON THE IDENTICAL ISSUE IN ITA NO 787/CHD/2015 FOR THE A.Y. 2011-12. 7. VIDE GROUND NO. 2 THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN TREATING SALE TAX SUBSIDY RECEIVED BY THE ASSESSEE AS CAPITAL RECEIPT INSTEAD OF REVENUE RECEIPT. THE LD. DR SUPP ORTING THE ACTION OF THE AO SUBMITTED THAT THE LD. CIT(A) HAS WRONGLY TREATE D THE SALES TAX SUBSIDY. ITA NOS.1589 & 1615-CHD-2019- VARDHMAN TEXTILES LIMITED, LUDHIANA 23 8. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE ITA NO. 787/2015 AND 894/201 5 FOR THE ASSESSMENT YEAR 2012-13 AND ITA NO. 483/2016 AND 518/2016 FOR THE ASSESSMENT YEAR 2012-13 WHEREBY THE TRIBUNAL HAS DIRECTED THE AO TO TREAT THE SALE TAX SUBSIDY AS CAPITAL RECEIPT. THE LD. COUNSEL FURTHER SUBMITTED THAT THE TRIBUNAL VIDE COMMON ORDER DATED 28.05.2020 IN ASSE SSEES OWN CASE FOR THE ASSESSMENT YEARS 2008-09, 2009-10 AND 2013-14 H AS DIRECTED THE AO TO TREAT THE SALES TAX SUBSIDY AS CAPITAL RECEIPT. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD. AS POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE, DURING PENDENCY OF ITS APPEAL ITA NO. 787/CHD./2015 FOR THE ASSESSMENT YEAR 2011-12, THE ASSESSEE RAISED ADDITIONAL GROUND CHALLENGING THE ACTION OF THE AUTHORITIES BELOW IN TREATING THE SALES TAX SUBSIDY RECEIVED UNDER MP INDUSTRIAL PROMOTIONAL ASSISTANCE SCHEME, AS REVENU E RECEIPT INSTEAD OF CAPITAL RECEIPT. THE COORDINATE BENCH OF THE TRIBU NAL ALLOWED THIS GROUND OF APPEAL HOLDING THAT THE ISSUE RAISED BY THE ASSE SSEE IS IDENTICAL TO THE ISSUE RAISED IN GROUND NO.12 OF THE APPEAL. WE NOTI CED THAT THE ASSESSEE VIDE GROUND NO. 12 & 13 HAD AGITATED THE ACTION OF THE CIT(A) IN TREATING THE SALES TAX SUBSIDY AS REVENUE RECEIPT INSTEAD OF CAPITAL RECEIPT. THE COORDINATE BENCH FOLLOWING THE RATIO LAID DOWN BY T HE HON'BLE SUPREME ITA NOS.1589 & 1615-CHD-2019- VARDHMAN TEXTILES LIMITED, LUDHIANA 24 COURT IN THE CASE OF CIT VS M/S CHAPHALKAR BROTHERS PUNE & OTHERS IN CIVIL APPEAL NO. 6513-6514 OF 2012, HELD THAT THE SALES TAX SUBSIDY IS A GOVERNMENT INCENTIVE TO SET UP NEW INDUSTRIAL UNIT IN SPECIFIED AREA AND SAME IS TO BE TREATED AS CAPITAL RECEIPT. WE FURTH ER NOTICE THAT IN THE ASSESSEES APPEAL FOR ASSESSMENT YEAR 2008-09, 2009 -10 AND 2013-14, THE COORDINATE BENCH HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE AND DISMISSED THE IDENTICAL GROUND RAISED BY THE DE PARTMENT. 10. SINCE THE ISSUE RAISED BY THE ASSESSEE IS COVER ED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCH DI SCUSSED ABOVE, WE DO NOT FIND ANY REASON TO TAKE A DIFFERENT VIEW IN THI S YEAR. HENCE, RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINATE BENCH, WE DISMISS THIS GROUND OF THE APPEAL OF THE REVENUE. 11. GROUND NO 3 & 4 OF THE REVENUES APPEAL ARE OF GENERAL NATURE THEREFORE DO NOT REQUIRE ADJUDICATION. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH SEPT.2021. SD/- SD/- . . , . . ( N. K. SAINI) (R.L. NE GI ) / VICE PRESIDENT ! # / JUDICIAL MEMBER AG / RKK ITA NOS.1589 & 1615-CHD-2019- VARDHMAN TEXTILES LIMITED, LUDHIANA 25 DATE: *+ ,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. - / CIT 4. - ( )/ THE CIT(A) 5. + 0 , # 0 , 2 / DR, ITAT, CHANDIGARH 6. / GUARD FILE / BY ORDER, / ASSISTANT REGISTRAR 1 DRAFT DICTATED 2 DRAFT FIRST PLACED BEFORE AUTHOR 3 APPROVED DRAFT COMES TO SR. PS/PS 4 FINAL DRAFT PLACED BEFORE AUTHOR 5 ORDER SIGNED AND PRONOUNCED ON 6 FILE SENT TO THE BENCH CLERK 7 DATE ON WHICH FILE GOES TO THE AR 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER