Asstt.commissioner of Income -tax -1(2), V. M/s Alu Bond Enterprises, New Delhi

ITA 17/BIL/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2412 (ITAT-RAIPUR)
• Duration Of Justice: 4 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 20-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MISHRA
• Keywords: Business income; Tax effect; Capital receipt
• Section: 143(3); 80IB

Judgement Text

1 ITA NO. 17/BLPR/2012 C.O. NO. 132/RPR/2015 IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR . BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 17 / BLPR /2012 ASSESSMENT YEAR : 200 8 - 09 . ASSTT. COMMISSIONER OF INCOME - TAX, M/S ALU BOND ENTERPRISES, CIRCLE - 1(2), RAIPUR. VS. NEW DELHI. APPELLANT RESPONDENT C.O. NO . 132/RPR/2015. (IN ITA NO. 17/BLPR/2012). ASSESSMENT YEAR : 200 8 - 09. M/S ALU BOND ENTERPRISES, ASSTT. COMMISSIONER OF INCOME - TAX, NEW DELHI. VS. CIRCLE - 1(2), RAIPUR. CROSS OBJECTOR RESPONDENT. DEPARTMENT BY : SHRI P.K. MISHRA. A SSESSEE BY : SHRI SUNIL AGRAWAL. DATE OF HEARING : 0 9 - 02 - 2016 DATE OF PRONOUNCEMENT : 31 ST MARCH, 2016. O R D E R PER MUKUL K. SHRAWAT, J.M. REVENUE HAS FILED THIS APPEAL, HOWEVER, THE RESPONDENT - ASSESSEE IS IN CROSS OBJECTION BOTH ARISING FROM THE ORDER OF LEARNED CIT(APPEALS), RAIPUR DATED 18 - 11 - 2011. 2. WE SHALL FIRST TAKE UP THE APPEAL FILED BY THE REVENUE DEPARTMENT. A. ITA NO. 17/BLPR/2012 (RE VENUES APPEAL). GROUND NO. 1 RAISED BY THE REVENUE IS AS UNDER : 2 ITA NO. 17/BLPR/2012 C.O. NO. 132/RPR/2015 WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN GRANTING RELIEF OF RS.3,70,36,571/ - OUT OF TOTAL ADDITION OF RS.374,61,419/ - MADE BY THE AO BY WAY OF REJ ECTION OF DEDUCTION CLAIMED U/S 80IB OF THE I.T. ACT, 1961. 3. AT THE OUTSET IT IS WORTH TO MENTION THAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2004 - 05 TO 2007 - 08, ITAT, RAIPUR BENCH IN ITA NOS. 56 TO 59/BLPR/2010 ORDER DATED 17 TH JULY, 2015 HAS DISC USSED THIS ISSUE OF ELIGIBILITY OF EXCISE DUTY REFUND FOR THE PURPOSE OF CLAIM OF DEDUCTION U/S 80IB OF I.T. ACT. FOR THE YEAR UNDER CONSIDERATION THE FACTS ARE IDENTICAL AS EMERGED FROM THE CORRESPOND ING ASSESSMENT ORDER PASSED U/S 143(3) DATED 28 - 12 - 2010. THE ASSESSEE FIRM IS IN THE BUSINESS OF MANUFACTURING ALUMINIUM, COMPOSITE PANEL AND SHEETS. IT WAS NOTICED BY THE AO THAT THE ASSESSEE HAD RECEIVED EXCISE DUTY REFUND OF RS.3,70,36,571D/ - . THE SAID REF UND WAS INCLUDED IN THE CLAIM OF DEDUCTION U/S 80IB OF I.T. ACT. THE AO , IN SHORT , HAS HELD THAT IN THE PRECEDING YEARS THE SAME WAS DISALLOWED. HE HAS ALSO MENTIONED THAT IN THE PRECEDING YEARS THE MATTER WAS PENDING BEFORE THE HONBLE TRIBUNAL. FOR THIS YEAR AS WELL AN APPEAL WAS FILED AND LEARNED CIT(APPEALS) HAS GRANTED RELIEF IN THE FOLLOWING MANNER : 7. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AND SUBMISSIONS OF THE APPELLANT . I FIND THAT THE A . O HAS MERELY FOLLOWED THE ACTION OF HIS PREDE CESSOR. I F IND THAT MY LD . PREDE P ESSOR HAS ALREADY ANSWERED THE ISSUE IN FAVOUR OF THE APPEL1ANT IN THE APPEL1ANT'S OWN CASE IN APPEAL NO . 501108 - 09 . WHILE ANSWERING THE ISSUE OF REFUND OF EXCISE DUTY, MY LD. PREDECESSOR HAS FOLLOWED THE RATIO LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS . DHARAM PAL PREM CHAND LTD . (2009) 317 ITR 353 WHEREIN IT WAS HELD THAT THE ASSESSEE BEING ENTITLED TO EXEMPTION OF EXCISE DUTY, EXCISE DUTY PAID FROM CURRENT ACCOUNT AND REFUNDED IN THE NEXT MONTH WOULD NOT MAKE IT ANY THE LESS INCOME DERIVED FROM INDUSTRIAL UNDERTAKING ELIGIBLE FOR RELIEF U/S 80ID . THE APPELLANT HAS PLACED BEFORE ME THE COPY OF DECISION OF THE HON'BLE DELHI TRIBUNAL IN ITA NO . 3303IDEV201O DATED 29 . 4.2011 WHEREIN THE QUESTION WAS ANSWERED IN FAVOUR OF THE APPELLANT . I FIND THAT THE HON'BLE GAUHATI HIGH COURT HAS ALSO ANSWERED THE QUESTION IN FAVOUR OF THE APPELLANT IN THE CASE OF C IT VS. MEGHALAYA STEELS LTD. (2011) 332 ITR 91 (GAU). THE SAID DECISION WAS RENDERED BY THE HON'BLE GAUHATI C OURT ON 16 . 9.2010 I.E. AFTER THE DECISION OF THE HON ' BLE SUPREME COURT IN LIBERTY INDIA VS . C I T ( 2009) 317 ITR 218 RENDER E D ON 31 - 8 - 2009. IT IS SEEN THAT THE HON ' BLE GAUHATI HIGH COURT HAS DULY CONSIDERED THE DECISION OF THE HON ' BLE SUPREME COURT WHILE DECIDING THE ISSUE IN FAVOUR OF THE APPELLANT . IT IS ALSO SEEN THAT THE HON ' BLE HIGH COURT OF JAMRNU & KASHMIR IN THE CASE OF SHREE BALAJI ALLOYS & OTHERS VS. CRT (2011) 333 ITR 335 (J&K) VIDEORDERDATED31 ST JANUARY , 2011 HAS HELD THAT THE INCENTIVES RECEIVE D BY WAY OF EXCISE DUTY REFUND AND INTEREST SUBS I DY ARE CAPITAL RECEIPTS IN THE HANDS OF THE ASSES SEES . IT IS NOW 3 ITA NO. 17/BLPR/2012 C.O. NO. 132/RPR/2015 SETTLED THAT THE EXCISE DUTY REFUND IS AN INCO M E DERIVED FROM THE INDUSTRIAL UNDERTAKING AND THEREFORE, RESPECTFULLY FOLLOWING THE DECISIONS CITED SUPRA , I ANSWER THE QUESTION IN FAVOUR OF THE APPELLANT . IN ANY CASE, THE DECISION OF DHARAMPAL PREM CHAND LTD. OF HON'BLE DELHI HIGH COURT HAS BEEN AFFIRMED BY THE HON'BLE SUPREME COURT WHICH FACT ITSELF CANNOT BE IGNORED. ACCORDINGLY, THE DEDUCTIO N ULS 8018 CLAIMED BY THE APPELLANT IN RESPECT OF REFUND OF EXCISE DUTY IS HELD TO BE CORRECT. IT IS SEEN THAT THE DISALLOWANCE OF DEDUCTION WAS MADE BY THE AO IN RESPECT OF INTEREST INCOME ALSO TO THE TUNE OF RS . 4,24,848/ - . THE APPELLANT HAS, NEITHER IN IT S WRITTEN SUBMISSION NOR DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE ME, MADE ANY SUBMISSION IN SUPPORT OF ITS CLAIM OF DEDUCTION IN RESPECT OF INTEREST INCOME . THECASE OF THE APPELLANT IS SQUARELY COVERED BY THE DECISION OF THE HON'BLE DELHI HIGH COU RT IN CIT VS. SHRI RAM HONDA POWER EQUIP. & ORS (2007) 289 ITR 475 (DEL) WHEREIN IT WAS HELD THAT INTEREST EARNED ON FIX E D DEPOSITS FOR THE PURPOSE OF AVAILING CREDIT FACILITIES FROM THE BANK DOES NO HAVE AN IMMEDIATE NEXUS WITH THE EXPORT BUSINESS AND THEREFORE HAS TO BE NECESSARILY TREATED AS INCOME FROM OTHER SOURCES AND NOT BUSINESS INCOME. I FIND NO REASON TO INTERFERE WITH THE CONCLUSION DRAWN B Y THE AO IN THIS REGARD . ACCORDINGLY, THE ACTION OF THE AO IN RESPECT OF INTEREST INCOME IS CONFIRMED . ADDITION OF RS. 4,24,848/ - IS CONFIRMED AND RELIEF OF RS. 3,70,36,5711 - IS ALLOWED. 4. IN THE LIGHT OF THE ABOVE PAST HISTORY WE HAVE HEARD BOTH THE SIDES. AS REFERRED ABOVE, THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ORDER DATED 17 TH JULY, 2015 HAS HELD AS UNDER : 7. HOWEVER, THE ASSESSEE HAD RAISED AN ALTERNATE PLEA BEFORE THE REVENUE AUTHORITIES THAT CONSIDERING THE NATURE OF THE INCENTIVE SCHEME THE AMOUNT IN QUESTION WAS A CAPITAL RECEIPT IN NATURE HENCE NOT BE TAXED IN THE HANDS OF THE ASSESSEE. THE ASSESSEE HAD QUOTED TWO NOTIFICATIONS NOS. 56/2002 & 57/2002 DATED 14/11/2002. THE SCHEME, IN SHORT, WAS TO PROMOTE THE INDUSTRIAL DEVELOPMENT, TO CREATE NEW EMPLOYMENT ETC IN JAMMU & KASHMIR STATE. IT WAS DECIDED TO FORMULATE AN INDUSTRIAL POLICY FOR THE GROWTH OF INDUSTRIES AND FOR THAT A FISCAL INCENTIVE WAS PROVIDED EITHER TO NEW INDUSTRIAL UNITS OR TO THE UNITS HAVING SUBSTANTIAL EXPANSION OF EXISTING UNIT. ACCORDING TO THE SCHEME NOTIFIED BY THE CENTRAL GOVT. SUCH INDUSTRIAL UNITS WERE ENTITLED TO 100% EXCISE DUTY EXEMPTION FOR A PERIOD OF 10 YEARS, FROM THE DATE OF COMMERCIAL PRODUCTION. TO IMPLEMENT THE SAID NEW INDUSTRIAL POLICY A REQUISITE NOTIFICATION FOR EXEMPTION OF EXCISE DUTY WAS ALSO REQUIRED TO BE ISSUED U/S 5A OF CENTRAL EXCISE ACT 1944. 7.1 IN SUPPORT OF THIS LEGAL PROPOSITION THAT CONSIDERING THE SCHEME THE RECEIPT IN QUESTION WAS CAPITAL IN NATURE THE ASSESSEE HAS CITED A DECISION OF SHREE BALAJI ALLOYS 333 ITR 335 ( J & K ) . THE HONBLE COURT HAS REFERRED SAHNEY STEEL & PRESS WORKS 228 ITR 253 ( SC) AND PONNI SUGARS & CHEMICALS 306 ITR 392 (SC). BY THE HONBLE COURTS THE EMPHASIS WAS GIVEN ON THE BASIC TEST TO BE APPLIED I.E . THE CHARACTER OF THE RECEIPT AND THE PUR POSE FOR WHICH THE SUBSIDY IS GIVEN. THE ASSESSEE HAS PLACED A VEHEMENT RELIANCE ON A DECISION OF SHREE BALAJI ALLOYS 198 TAXMAN 122 ( J&K) FOR THE PURPOSE THAT THE EXCISE REFUND RECEIVED BY AN INDUSTRIAL 4 ITA NO. 17/BLPR/2012 C.O. NO. 132/RPR/2015 UNIT IN PURSUANCE OF INCENTIVE ANNOUNCED TO ACCE LERATE INDUSTRIAL DEVELOPMENT IN STATE OF J & K WOULD BE TREATED AS CAPITAL RECEIPT IN THE HANDS SUCH UNIT. VIDE PARAGRAPH 18 OF THE JUDGMENT IT WAS OPINED THAT THE INTENT AND THE PURPOSE OF THE INCENTIVE IS REQUIRED TO BE EXAMINED . OUR ATTENTION WAS DRA WN ON ONE OF THE FINDINGS IN PARA 24OF THE JUDGMENT , REPRODUCED FOR READY REFERENCE : 24. A CLOSE READING THE OFFICE MEMORANDUM AND THE AMENDMENT INTRODUCED THERETO WITH PARA NO.3 APPEARING IN THE CENTRAL EXCISE NOTIFICATION NOS. 56 AND 57 OF 11 - 11 - 20 02, THUS, MAKES IT AMPLY CLEAR THAT THE ACCELERATION OF DEVELOPMENT 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 ONL Y CASUAL OR TEMPORARY , BUT WAS ON THE OTHER HAND, OF PERMANENT NATURE. 7.2 THEREFORE THE ARGUMENT BEFORE US IS THAT THE SCHEME WHICH WAS CONSIDERED BY THE HONBLE COURT WAS THAT VERY SCHEME UNDER WHICH THE ASSESSEE GOT THE INCENTIVE AND SINCE THE H IGH COURT HAS HELD THAT INCENTIVE TO BE TREATED AS CAPITAL RECEIPT , THEREFORE ON THE SAME LINES THE ASSESSEE SHOULD ALSO BE GIVEN RELIEF. HOWEVER, ACCORDING TO US , ALTHOUGH IT WOULD BE CORRECT THAT A VIEW HAS BEEN EXPRESSED BY THE HONBLE COURT IN RESP ECT OF THAT VERY SCHEME UNDER WHICH THIS ASSESSEE GOT THE INCENTIVE BUT UNDER THE CIRCUMSTANCES WHEN THE RECEIPT IN QUESTION HAS ALREADY BEEN HELD AS QUALIFIED FOR DEDUCTION U/S 80IB (4) OF THE ACT, THEN THIS ALTERNATE ARGUMENT HAVE BECOME ACADEMIC IN NAT URE. 5. SINCE A VIEW HAS ALREADY BEEN TAKEN BY THE RESPECTED COORDINATE BENCH IN ASSESSEES OWN CASE ON IDENTICAL FACTS, THEREFORE, ON THE SAME LINES WE FIND NO FORCE IN THIS GROUND OF THE REVENUE. HENCE THE SAME IS DISMISSED. 6. GROUND NO. 2 RAISED BY THE REVENUE IS AS UNDER : WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1,62,04,374/ - MADE BY THE A.O. BY WAY OF DISALLOWANCE OF INTEREST EXPENSES. THE OBSERVATION OF THE AO WAS THAT THE ASSESSEE HAD GIVEN INTEREST FREE ADVANCES TO THE FOLLOWING PERSONS: (A) ACP MARKETING (P) LTD. RS. 5,00,000/ - (B) ALL STRONG ENTERPRISES. RS.11,19,53,335/ - (C) SHRI PIYUSH GOYAL RS. 8,46,85,498/ - (D) MS RENU GOYAL RS. 1,39,56,000/ - THE OBJECTION OF THE AO WAS THAT WHY INTEREST WAS NOT CHARGED FROM THOSE PARTIES. THE EXPLANATION OF THE ASSESSEE WAS THAT THE PARTNERS HAD SUBSTANTIAL NET WORTH, THEREFORE, GRANTED INTEREST FREE LOAN. AS AGAINST THAT THE AO HAD MADE AN 5 ITA NO. 17/BLPR/2012 C.O. NO. 132/RPR/2015 OBSERVATION THAT THE E NTIRE CAPITAL OF THE PARTNERS WAS BLOCKED IN FIXED ASSETS AND CURRENT ASSETS . AS PER THE AO THE BORROWED FUNDS WERE DIVERTED. BY APPLYING 12% RATE OF INTEREST ON THE INTEREST FREE ADVANCES, A DISALLOWANCE OF RS.1,62,04,374/ - WAS MADE. THE ADDITION WAS CHAL LENGED. 6.1 LEARNED CIT(APPEALS) HAS EXAMINED THE FACTS AND THEREAFTER GRANTED RELIEF IN THE LIGHT OF FEW CASE LAWS AS UNDER : THE APPELLANT HAS SUBMITTED THAT THE TOTAL CAPITAL OF THE PARTN E RS IN TH E FIRM IS RS . 37 , 79,61,915/ - ; THAT THE APPELLANT HAS AD V ANCED INTEREST FREE ADVANCES OFRS . 21 , 10 , 94 , 833/ - ; THAT THE INTEREST FREE LOAN WAS GIVEN OUT OF THE INTEREST FREE CAPITAL . THE APPELLANT REL I ED UPON FOLLOWING DECISIONS IN SUPPORT OF ITS SUBMISSIONS : CIT VS. ALOK PAPER INDUSTRIES (1982) 138 ITR 729 (MP) . ACIT VS . DR . KAMLA TIWARI ITA NO . 625 TO 627/N/94 . A . RAMAN & CO. 67 ITR 11 ERR VS . RELIANCE UTILITIES & POWER LTD . (2009) 313 ITR 340 (BORN) 10 . I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AND SUBMISSIONS OF THE APPELLANT . I AM CONVINCED WITH THE SUBMISSIONS OF THE APPELLANT THAT THE A . O HAS NOT ESTABLISHED ANY NEXUS BETWEEN THE BORROWED FUNDS AND AMOUNTS ADVANCED. I DO FIND FORCE IN THE SUBMISSIONS OF THE APPELLANT THAT THE CAPITAL OF THE APPELLANT AMOUNTING TO RS. 37 , 79,61 , 915/ - WAS MUCH MORE THAN THE AMOUNT ADVANCED AMOUNTING TO RS. 21,10,94,833/ - . FURTHER MORE , ACCORDING TO THE A.O, THE AMOUNT OF INTEREST FREE ADVANCES GIVEN BY THE APPELLANT WAS ONLY RS . 1,39,56,0001 - , WHEREAS , THE AMOUNT OF INTEREST DISALLOWED BY THE A . O IS RS . 1,62,04 , 374/ - . IT IS PRACTICALLY NOT POSSIBLE TO INCUR IN T EREST COST IN A YEAR MORE THAN THE AMOUNT OF PRINCIPAL SUM. IT WAS INCUMBENT UPON THE A . O TO ESTABL I SH A REASONABLE NEXUS BETWEEN THE BORROWED FUNDS AND INTEREST FREE ADVANCES , HOWEVER , THE A . O FA I LED TO DO SO . 11. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE , AS ALSO DECISIONS R E LIED UPON BY THE APPELLANT , THE DISALLOWANCE MADE BY THE A . O CANNOT BE SUSTAINED. HENCE , THE DISALLOWANCE IS DELETED. THE APPELLANT GETS RELIEF OF RS. 1,62,04,374/ - . 7. FROM THE SIDE OF THE REVENUE, LEARNED D.R. HAS SUPPORTED THE ACTION OF THE AO AND PLEADED THAT THE ASSESSEE HAS NOT ESTABLISHED THAT THE INTEREST FREE FUNDS AVAILABLE AS PARTNERS CAPITAL WERE ADVANCED AS INTEREST FREE LOANS. RATHER T HE AO HAS POINTED OUT THAT THE CAPITAL OF THE PARTNER WAS UTILIZED TOWARDS FIXED 6 ITA NO. 17/BLPR/2012 C.O. NO. 132/RPR/2015 ASSETS AND CURRENT ASSETS. 8. FROM THE SIDE OF THE RESPONDENT - ASSESSEE, LEARNED A.R. HAS PLEADED THAT THERE WERE 2,44,49,535/ - INTEREST FREE UNSECURED LOANS. INTEREST BEARING FUNDS WERE ONLY RS.11,21,51,276/ - . THEREFORE, AS PER THE ACCOUNTS, THE TOTAL BORROWED FUNDS WERE RS.13,66,00811/ - . MOREOVER PARTNERS INTEREST FREE CAPITAL WAS RS.37,79,61,915/ - . HENCE THE ARGUMENT OF LEARNED A.R. WAS THAT THERE WERE SUFFICIENT INTEREST F REE FUNDS AVAILABLE. PLACING RELIANCE ON AMOD STAMPING 223 TAXMAN 256 (GUJ.), RELIANCE UTILITIES AND POWER LTD. 221 CTR 435 (BOM.) AND GUJARAT STATE FERTILIZER AND CHEMICALS 358 ITR 323 (GUJ.) LEARNED A.R. HAS ARGUED THAT THE PRESUMPTION WOULD BE THAT TH E INTEREST FREE FUNDS WERE ADVANCED BY THE ASSESSEE. 9. AFTER HEARING THE SUBMISSIONS OF BOTH THE SIDES AS WELL AS CONSIDERING THE POSITION OF THE ACCOUNTS AS DEMONSTRATED BEFORE US, WE ARE OF THE CONSIDERED OPINION THAT IN A SITUATION WHEN LEARNED CIT(APPEALS) HAS GIVEN A FINDING THAT THERE WERE SUFFICIENT INT EREST FREE CAPITAL AVAILABLE OF THE PARTNERS, WE HEREBY HOLD THAT THE CONTROVERSY STOOD COVERED BY THE SEVERAL DECISIONS AS CITED BEFORE US. THE HONBLE COURTS HAVE OPINED THAT A REASONABLE CONCLUSION CAN BE DRAWN THAT THE INTEREST FREE FUNDS WOULD HAVE BE EN UTILISED TO GIVE INTEREST FREE LOANS SPECIALLY IF THE INTEREST FREE FUNDS ARE SUFFICIENT. PRIMA FACIE LEARNED A.R. HAS DEMONSTRATED THAT THERE WERE SUFFICIENT INTEREST FREE FUNDS TO MEET THE ADVANCE GIVEN WITHOUT INTEREST. PLACING RELIANCE ON THE PRECED ENTS CITED, WE HEREBY AFFIRM THE FINDING OF LEARNED CIT(APPEALS). AS A RESULT, THIS GROUND OF THE REVENUE IS DISMISSED. 9.1 REVENUES APPEAL IS DISMISSED. 7 ITA NO. 17/BLPR/2012 C.O. NO. 132/RPR/2015 10. B. C.O. NO. 132/RPR/2015: GROUND NO. 1 IS AS UNDER : ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE & IN LAW, THE EXCISE DUTY REFUND RECEIVED AT RS.3,70,36,571 BY THE ASSESSEE - FIRM, ON COUNT OF EXCISE DUTY EXEMPTION AS NOTIFIED BY THE CENTRAL GOVERNMENT, DUE TO NEW INDUSTRIAL UNIT ESTABLISHED IN THE BACKWARD AREA (I.E. IN THE STATE OF JAMM U), AS NOTIFIED BY THE CENTRAL GOVERNMENT, IS IN THE NATURE OF CAPITAL RECEIPT AND NOT LIABLE FOR TAX UNDER ANY HEAD OF INCOME UNDER THE IT ACT, 1961. IN THE CROSS OBJECTION THE RESPONDENT - ASSESSEE HAS PLEADED THAT THE EXCISE DUTY REFUND SHOULD BE HELD AS CAPITAL RECEIPT. THIS VERY ISSUE WAS ALSO RAISED IN THE PAST AND THE SAME WAS DECIDED BY THE TRIBUNAL AS PER THE ORDER CITED SUPRA DATED 17 TH JULY, 2015 AS UNDER : WE HAVE CAREFULLY CONSIDERED BOTH THE ARGUMENTS, HOWEVER, AT THE OUTSET CONSIDER NIT PROPER NOT TO ADJUDICATE THE LEGAL ISSUE AT THIS JUNCTURE OF APPEAL BECAUSE THESE LEGAL ISSUES HAVE BEEN RAISED ALMOST AT THE CLOSE OF THE HEARING. IN THE END WHEN THE REVENUES APPEALS HAVE BEEN HEARD, THE ASSESSEE HAS ARGUED IN SUPPORT OF THE CROSS OBJEC TIONS CHALLENGING THE VALIDITY OF THE ASSESSMENTS. THIS LEGAL GROUND THROUGH WHICH THE VALIDITY OF THE ASSESSMENT WAS TO BE CHALLENGED THEN IT SHOULD HAVE BEEN INDICATED AT THE BEGINNING ITSELF. NEVERTHELESS, THE CASE FOR ALL THE YEARS WAS DISCUSSED AT LEN GTH ON MERITS. BE THAT AS IT WAS, SINCE ON MERITS A VIEW HAS ALREADY BEEN TAKEN IN THE ABOVE PARAGRAPHS IN FAVOUR OF THE ASSESSEE, THEREFORE, AS FAR AS THE PREJUDICE OF ANY NATURE TO THE ASSESSEE SHALL NOT BE CAUSED WHEN A FAVOURABLE VIEW WAS TAKEN. IN THE ABOVE PARAGRAPHS WHILE DECIDING THE APPEAL OF THE REVENUE THE DECISION OF IMPUGNED QUANTUM ADDITION BY THE LEARNED CIT(APPEALS) IS ALREADY CONFIRMED. HENCE THERE WAS NO ADVERSE TAX EFFECT ON THE ASSESSEE. THESE GROUNDS, THEREFORE, ARE HAVING ONLY ACADEMIC IMPORTANCE. THEREFORE, WE ARE NOT INCLINED TO ADJUDICATE THE SAME. THUS WE HEREBY HOLD THAT THE CROSS OBJECTIONS AS ALSO THE ADDITIONAL GROUNDS FOR ALL THE YEARS HAVE BECOME INFRUCTUOUS. WE HOLD ACCORDINGLY. 8 ITA NO. 17/BLPR/2012 C.O. NO. 132/RPR/2015 ALTHOUGH THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL (SUPRA) BUT STILL LEARNED A.R. HAS PLEADED THAT THE ISSUE OF EXCISE DUTY REFUND WAS HELD AS CAPITAL RECEIPT BY AN ORDER OF AMRITSAR BENCH PRONOUNCED IN THE CASE OF VINOD KUMAR JAIN VS . ITO 28 T AXMANN.COM 87 (ASR.) (SB), ORDER DATE D 26 TH OCT. 2012. LEARNED A.R. HAS ALSO PLEADED THAT IN THE CASE OF JA Y AMBE Y CORPORATION 40 TAXMANN.COM 536, HONBLE JAMMU & KASHMIR HIGH COURT HAS DISCUSSED THE INDUSTRIAL POLICY IN THE STATE OF JAMMU & KASHMIR AND TREATED THE REFUND AS CAPITAL RECEIPT. HOWEVER, ON THE SAME BREATH LEARNED A.R. HAS ALSO PLACED RELIANCE ON TH E DECISION OF DHARAM P AL PREM C HAND LTD. 317 ITR 353 (DEL.) FOR THE PROPOSITION THAT THE EXCISE DUTY WAS PAID DURING THE COURSE OF MANUFACTURING ACTIVITY, THEREFORE, THE REFUND ARISING THEREFROM HAD A DIRECT NEXUS WITH THE BUSINESS ACTIVITY OF THE ASSESSEE. SINCE IT WAS CONSIDERED AS A PART OF THE REVENUE RECEIPT EMANATING FROM THE BUSINESS ACTIVITY OF THE ASSESSEE , THEREFORE, ELIGIBLE FOR DEDUCTION U/S 80IB(4) OF I.T. ACT. LEARNED A.R. HAS ALSO PLACED RELIANCE ON THE DECISION OF MEGHALAYA STEEL LTD. 332 ITR 91 (GAUHATI) FOR THE SAME LEGAL PROPOSITION THAT THE EXCISE DUTY REFUND WAS DIRECTLY DERIVED BY THE ASSESSEE OUT OF THE INDUSTRIAL ACTIVITY, HENCE HAD A DIRECT NEXUS WITH THE MANUFAC TURING ACTIVITY. BECAUSE OF THE REASON THAT ON ONE HAND THE ASSESSEE IS CLAIMING THE EXCISE DUTY REFUND AS PART OF THE BUSINESS RECEIPTS FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 80IB AND SIDE BY SIDE ALSO TAKING AN ALTERNATE PLEA THAT IT WAS A CAPITAL REC EIPT, WE HEREBY HOLD THAT ONCE THE MAIN PLEA OF THE ASSESSEE PERTAINING TO THE ELIGIBILITY OF DEDUCTION U/S 80IB HAS CONSISTENTLY BE EN HELD IN FAVOUR OF THE ASSESSEE SINCE PAST SO MANY YEARS AS REFERRED SUPRA, THEREFORE, THERE IS NO LEGAL REQUIREMENT TO PRONOUNCE A JUDGMENT ON THE ALTERNATE PLEA OF THE ASSESSEE. IF THE MAIN CLAIM OF THE DEDUCTION WHICH WAS RAISED BEFORE THE REVENUE AUTHO RITIES WOULD HAVE NOT GONE IN FAVOUR OF THE ASSESSEE THEN NATURALLY SUCH VIEW WOULD HAVE CAUSED A PREJUDICE AGAINST THE ASSESSEE BUT IF A VIEW HAS ALREADY BEEN TAKEN IN ASSESSEES FAVOUR THEN NATURALLY THE ASSESSEE HAS NO PREJUDICE AT ALL. WE HAVE ALREADY HELD IN OUR DECISION AS CITED SUPRA THAT IN A 9 ITA NO. 17/BLPR/2012 C.O. NO. 132/RPR/2015 SITUATION WHEN THERE WAS NO ADVERSE EFFECT, HENCE THE ALTERNATE PLEA WAS NOTHING BUT AN ACADEMIC EXERCISE. THIS GROUND OF CROSS OBJECTION HAS, THEREFORE, BECOME REDUNDANT. 11. GROUND NO. 2 IS AS UNDER : ON TH E FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT(A) HAS ERRED IN HAVING SAME VIEW/CONCLUSION AS THE LD. AO HAD AS PER THE ASSESSMENT ORDER, IN NOT ALLOWING THE INTEREST INCOME EARNED AT RS.4,24,848 ON FIXED DEPOSIT KEPT AS MARGIN MONEY FOR ISS UE OF LETTER OF CREDIT ETC., BY TREATING IT AS INCOME FROM NON - ELIGIBLE BUSINESS AND THE LD AO WAS OF THE OPINION THAT IT WAS NOT FLOWING DIRECTLY FROM INDUSTRIAL UNDERTAKING. ADMITTEDLY FACTUAL POSITION WAS THAT THE ASSESSEE HAD MAINTAINED FIXED DEPOSI TS AS MARGIN MONEY FOR THE ISSUE OF LETTER OF CREDIT. HOWEVER, LEARNED CIT(APPEALS) HAS PLACED RELIANCE ON A DECISION OF PARAS OIL EXTRACTION 230 ITR 266 (MP ) AND DECIDED THE ISSUE IN FAVOUR OF THE REVENUE. ON ACCOUNT OF DIVERSIFIED DECISIONS OF HONBLE C OURTS IT IS PLEADED BEFORE US THAT A NETTING MAY BE DIRECTED TO BE ALLOWED. PLACING RELIANCE ON THE DECISION OF ACG ASSOCIATES CAPSUL E S 343 ITR 89 (SC), WE HEREBY HOLD THAT THE AO CAN VERIFY THE CREDIT AS WELL AS DEBIT SIDE OF THE INTEREST AND ACCORDINGLY RECOMPUTE THE ELIGIBILITY OF THE DEDUCTION U/S 80IB OF I.T. ACT. SINCE THE ISSUE HAS BEEN RESTORED FOR RECOMPUTATION, HENCE MAY BE TREATED AS ALLOWED FOR STATISTICAL PURPOSES ONLY. 12. GROUND NO. 3 IS AS UNDER : ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE & IN LAW, THE LD CIT(A) HAS CORRECTLY ALLOWED THE INTEREST EXPENSES OF RS.1,62,04,374/ - BY STATING THAT THE PARTNERS CAPITAL AT RS.37,79,61,915 WAS MUCH MORE THAN THE AMOUNT ADVANCED AS INTEREST - FREE LOANS & ADVAN C ES AT RS.21,10,94,833. WHILE DECIDING GROUND NO. 2 SUPRA, IN REVENUES APPEAL, WE HAVE ALREADY U PHELD THE RELIEF GIVEN BY LEARNED CIT(APPEALS). AS A RESULT, THIS GROUND OF THE CROSS OBJECTION 10 ITA NO. 17/BLPR/2012 C.O. NO. 132/RPR/2015 DO NOT SURVIVE BEING SIMPLY IN SUP PO RT OF THE VIEW ALREADY TAKEN BY LEARNED CIT(APPEAL S). 13. TO CONCLUDE, REVENUES APPEAL IS HEREBY DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF MARCH, 2016. SD/ - SD/ - (SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31 ST MARCH, 2016. COPY FORW ARDED TO : 1. M/S AL U BOND ENTERPRISES, 95A, KHIRKI VILLAGE, MALVIYA NAGAR, NEW DELHI. 2. A.C.I.T., CIRCLE - 1(2), RAIPUR. 3. COMMISSIONER OF INCOME - TAX - , RAIPUR. 4. CIT(APPEALS) , RAIPUR. 5. D.R., ITAT, RAIPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT R EGISTRAR, ITAT, NAGPUR WAKODE.