DCIT, CC-VII, KOLKATA, Kolkata V. M/s Nezone Alloys Ltd., Guwahati

ITA 1769/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1496 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 09-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Assessee Lawyers: SHRI

Judgement Text

1 ITA NOS.1768-1769/KOL/2014 NEZONE INDUSTRIES LTD. & NEZONE ALLOYS LTD., AY 201 0-11 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE . , /AND . . , ) [BEFORE SHRI J. SUDHAKAR REDDY, AM & SHRI A. T. VA RKEY, JM] I.T.A. NOS. 1768 /KOL/2014 ASSESSMENT YEAR: 2010-11 DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-VIII, KOLKATA. VS. M/S. NEZONE INDUSTRIES LTD. (PAN: AABCN5479J) APPELLANT RESPONDENT & I.T.A. NOS. 1769 /KOL/2014 ASSESSMENT YEAR: 2010-11 DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-VIII, KOLKATA. VS. M/S. NEZONE ALLOYS LTD. (PAN: AABCN5478K) APPELLANT RESPONDENT DATE OF HEARING 08.06.2017 DATE OF PRONOUNCEMENT 26.07.2017 FOR THE APPELLANT SHRI G. MALLIKARJUNA, CIT, DR FOR THE RESPONDENT SHRI PANKAJ BAID, ADVOCATE ORDER PER SHRI A.T.VARKEY, JM BOTH THESE APPEALS FILED BY THE REVENUE AGAINST THE SEPARATE ORDERS OF LD. CIT(A), GUWAHATI DATED 01.05.2014 FOR AY 2010-11. SINCE GR OUNDS ARE COMMON AND FACTS ARE IDENTICAL, WE DISPOSE OF BOTH THE APPEALS OF SEPARA TE ASSESSEES BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. THE GROUNDS OF APPEAL FOR BOTH THE ASSESSEES ARE AS UNDER: GROUNDS OF APPEAL OF M/S. NEZONE INDUSTRIES LTD. 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD.CIT(A),GUWAHATI HAS ERRED IN DELETING THE ADDITION OF RS.90,03,535/- ON ACCOU NT OF TRANSPORT SUBSIDY CLAIMED BY THE ASSESSEE DURING THE FINANCIAL YEAR. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD.CIT(A),GUWAHATI HAS ERRED IN DELETING THE ADDITION OF RS. 25,79,569/- ON ACCOUNT OF INTEREST SUBSIDY CLAIMED BY THE ASSESSEE DURING THE FINANCIAL YEAR. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD.CIT(A),GUWAHATI HAS ERRED IN DELETING THE ADDITION OF RS.L,77,41,987/- ON ACCOUN T OF CENTRAL EXCISE DUTY REFUND CLAIMED BY THE ASSESSEE DURING THE FINANCIAL YEAR. 2 ITA NOS.1768-1769/KOL/2014 NEZONE INDUSTRIES LTD. & NEZONE ALLOYS LTD., AY 201 0-11 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD.CIT(A),GUWAHATI HAS ERRED IN DELETING THE ADDITION OF RS. 3,64,23,957/- ON ACCOU NT OF SALES TAX REMISSION CLAIMED BY THE ASSESSEE DURING THE FINANCIAL YEAR. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE ORDER PASSED BY THE LD.CIT (A), GUWAHATI IS NOT ONLY ERRONEOUS BUT PREJUDICIAL TO L AW. 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A), GUWAHATI HAS ERRED IN RELYING ON THE DECISION OF THE GUWAHATI HIGH COU RT IN THE CASE OF M/S. MEGHALAYA STEELS LTD. FOR A.Y.-2006-07 WHICH HAS NOT YET REACHED JUD ICIAL FINALITY. 7. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIG HT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURIN G THE HEARINGS. GROUNDS OF APPEAL OF M/S. NEZONE INDUSTRIES LTD. 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) , GUWAHATI HAS ERRED IN DELETING THE ADDITION OF RS. 98,585/- ON ACCOUNT OF INTEREST SUBSIDY CLAIMED BY THE ASSESSEE DURING THE FINANCIAL YEAR. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD.CIT(A),GUWAHATI HAS ERRED IN DELETING THE ADDITION OF RS.36,177/-ON ACCOUNT OF I NSURANCE SUBSIDY CLAIMED BY THE ASSESSEE. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A), GUWAHATI HAS ERRED IN DELETING THE ADDITION OF RS.27 ,03,860/- ON ACCO UNT OF CENTRAL EXCISE DUTY REFUND CLAIMED BY THE ASSESSEE. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A), GUWAHATI HAS ERRED IN DELETING THE ADDITION OF RS. 8,74,427/- ON ACCOU NT OF SALES TAX REMISSION . 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE ORDER PASSED BY THE LD.CIT(A), GUWAHATI IS NOT ONLY ERRONEOUS BUT PREJUDICIAL TO L AW. 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A), GUWAHATI HAS ERRED IN RELYING ON THE DECISION OF THE GUWAHATI HIGH COU RT IN THE CASE OF M/S. MEGHALAYA STEELS LTD. FOR AY 2006-07 WHICH HAS NOT YET REACHED JUDIC IAL FINALITY. 7. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIG HT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURIN G THE HEARINGS. 2. SINCE GROUNDS OF APPEAL ARE SIMILAR AND THE ASSE SSEE COMPANIES ARE ENGAGED IN THE SIMILAR BUSINESS OF MANUFACTURE OF MILD STEEL, BLAC K AND GALVANIZED TUBES/PIPES ETC., ITA NO. 1768/KOL/2014 IS TAKEN AS LEAD CASE AND THE RES ULT OF THE SAME WILL BE FOLLOWED BY THE OTHER APPEAL ALSO. IN THIS CASE, THE AO DID NOT CON SIDER CERTAIN SUBSIDIES CLAIMED BY THE ASSESSEE AS ELIGIBLE FOR DEDUCTION U/S. 80IC OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) I.E. TRANSPORT SUBSIDY, CENTRAL WO RKING CAPITAL INTEREST SUBSIDY, STATE POWER SUBSIDY, SALES TAX REMISSION. THE LD. CIT(A) ALLOWE D THE CLAIM OF THE ASSESSEE IN RESPECT TO ALL THE FOUR SUBSIDIES. NOW REVENUE IS CHALLENGING THE DECISION OF THE LD. CIT(A) AND ONE 3 ITA NOS.1768-1769/KOL/2014 NEZONE INDUSTRIES LTD. & NEZONE ALLOYS LTD., AY 201 0-11 OF THE GROUNDS IS THAT THE LD. CIT(A) HAS GIVEN THE RELIEF BY RELYING ON THE DECISION OF HONBLE GAUHATI HIGH COURT IN THE CASE OF M/S. MEGH ALAYA STEELS LTD. FOR AY 2006-07 WHICH ACCORDING TO THE REVENUE HAS NOT REACHED JUDI CIAL FINALITY. WE FIND THAT THE ISSUES AGITATED BY THE REVENUE IN RESPECT TO SUBSIDY STATE D ABOVE ARE NO LONGER RES INTEGRA. THE HONBLE SUPREME COURT IN CIVIL APPEAL NO. 7622 OF 2 014 BY JUDGMENT DATED 09.03.2016 HAS UPHELD THE ORDER OF THE HONBLE GUWAHATI HIGH C OURT IN THE CASE OF CIT VS. MEGHALAYA STEELS LTD. (2013) 34 TAXMAN.COM 34 (GAU) WHICH HAS BEEN ACKNOWLEDGED BY THE CBDT VIDE CIRCULAR NO. 39/2016 DATED 29.11.2016 WHEREBY CBDT AFTER TAKING COGNIZANCE OF THE DECISION OF THE HONBLE SUPREME COURT IN MEGHALAYA STEELS LTD. (SUPRA) INSTRUCTED THE OFFICERS OF THE DEPARTMENT THAT SUBSIDIES OF TRANSP ORT, POWER AND INTEREST GIVEN BY THE GOVERNMENT TO THE INDUSTRIAL UNDERTAKINGS ARE RECEI PTS WHICH ARE REIMBURSED FOR COST OF PRODUCTION RELATING TO MANUFACTURE OR SALE OF THE P RODUCTS AND, THEREFORE, HAVE A DIRECT NEXUS WITH THE PROFITS AND GAINS OF THE INDUSTRIAL UNDERT AKING. THE CBDT FURTHER DIRECTED THE OFFICERS IN THE FIELD TO ALLOW DEDUCTION U/S. 80IC OF THE ACT FOR SUCH RECEIPT ALSO. THE SAID CIRCULAR ALSO MENTIONS THAT APPEALS FILED BY THE DE PARTMENT ON THE ABOVE ISSUE SHOULD NOT BE PRESSED. IN THE LIGHT OF THE ABOVE, SINCE THE MATT ER IS NO LONGER RES INTEGRA AND HAS REACHED FINALITY AND THE LD. CIT(A) HAS RELIED ON THE DECIS ION IN THE CASE OF MEGHALAYA STEELS LTD., SUPRA, WE DO NOT FIND ANY REASON TO INTERFERE IN TH E ORDER OF THE LD. CIT(A) WHICH IS CONFIRMED AND BOTH THE APPEALS OF THE REVENUE ARE D ISMISSED. 3. IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE D ISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 16.07.2017 SD/- SD/- (J. SUDHAKAR REDDY) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 26TH JULY, 2017 JD.(SR.P.S.) 4 ITA NOS.1768-1769/KOL/2014 NEZONE INDUSTRIES LTD. & NEZONE ALLOYS LTD., AY 201 0-11 COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT DCIT, CENTRAL CIRCLE-VIII, KOLKATA. 2 RESPONDENT M/S. NEZONE INDUSTRIES LTD., & M/S. N EZONE ALLOYS LTD., 5 TH FLOOR, DD TOWER, CHRISTIAN BASTI, G. S. ROAD DISHP ORE, GUWAHATI- 781005. 3 . THE CIT(A), GUWAHATI 4. 5. CIT , GUWAHATI DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SR. PVT. SECRETARY