Assistant Commissioner of Income-tax, V. M S S India Pvt. Ltd., Nashik

ITA 1909/PUN/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 8579 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-08-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 30-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Capital receipt; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI VIKAS AWASTHY, JM . / ITA NO.1909/PUN/2016 / ASSESSMENT YEAR : 2011-12 ACIT, CIRCLE-1, NASHIK /APPELLANT VS. M.S.S INDIA PVT. LTD., H-8, MIDC, AMBAD, NASHIK 422 010 PAN : AAACI5887J . /RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI SUDHENDU DAS / DATE OF HEARING : 30.10.2018 / DATE OF PRONOUNCEMENT: 02.01.2019 / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORD ER OF CIT(A)-1, NASHIK DATED 29-06-2016 FOR THE ASSESSMENT YEAR 20 11-12. 2. THE REVENUE IN APPEAL HAS ASSAILED THE ORDER OF CIT(A) BY RAISING FOLLOWING GROUNDS : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A)-1, NASHIK WAS JUSTIFIED IN TREATING THE IN CENTIVE RECEIVED BY THE ASSESSEE FROM GOVT. OF MAHARASHTRA I N THE FORM OF OCTROI REFUND OF RS.1,68,52,440/- AS CAPITAL SUBSIDY. 2. WHETHER ON THE FACT AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) WAS RIGHT IN TREATING OCTROI REFUND AS CAPITAL SUBSIDY WITHOUT APPRECIATING THE FACT THAT IT WAS GIVEN FOR AS AN ASSISTANCE FOR CARRYING ON THE BUSINESS OF THE ASSESSEE AND NO T FOR ACQUIRING A CAPITAL ASSET. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A)-1, NASHIK ERRED IN IGNORING THE FACTS THAT THE ASSESSEE COMPANY HAD NOT FILED ANY REVISED RETURN OF INCOME TO MAKE SUCH CLAIM THAT OCTROI REFUND RECEIVED FROM GOVT. OF MAHAR ASHTRA IS ITA NO.1909/PUN/2016 MSS INDIA PVT. LTD., 2 CAPITAL RECEIPT AND HAD MADE THE SAID CLAIM ONLY DURIN G ASSESSMENT PROCEEDINGS? 4. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A)-1, NASHIK MAY PLEASE BE CANCELLED AND THE ORDER OF ASSESSING OFFI CER MAY PLEASE BE RESTORED. 5. THE APPELLANT PRAYS TO ADDUCE SUCH FURTHER EVIDENCE TO SUBSTANTIATE HIS CASE. 6. THE APPELLANT PRAYS LEAVE TO ADD, ALTER, CLARIFY, AMEND AND OR WITHDRAW ANY GROUNDS OF APPEAL AS AND WHEN THE OCCA SION DEMANDS. 3. SHRI NIKHIL PATHAK APPEARING ON BEHALF OF THE ASSESSEE S UBMITTED AT THE OUTSET THAT THE ASSESSEE IS ENGAGED IN MANUFACT URING OF ELECTRICAL EQUIPMENTS AND ELECTRICAL COMPONENTS INCLUDING CABLE LUGS, CO NNECTORS, ETC. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE IMPUGN ED ASSESSMENT YEAR ON 29-11-2011 DECLARING TOTAL INCOME O F RS.13,32,82,942/-. DURING SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED A REQUEST LETTER DATED 02-02-2015 STATING THAT THE INCENTIVE RECEIVED BY THE ASSESSEE FROM MAHARASHTRA STA TE GOVERNMENT IN THE FORM OF REFUND OF OCTROI RS.1,68,52,440/- BE TREATED AS CAPITAL INCENTIVE. THE LD. AUTHORIZED REPRESENTATIVE POINTED THAT IN THE RETURN OF INCOME, THE ASSESSEE HAD NOT CLAIMED OCTROI REFUND INCEN TIVE AS CAPITAL RECEIPT. THE ASSESSING OFFICER IN ASSESSMENT PROCEE DINGS REJECTED THE CLAIM OF ASSESSEE IN THE LIGHT OF DECISION OF HO NBLE SUPREME COURT OF INDIA IN THE CASE OF GOETZ (INDIA) LTD. VS . CIT 284 ITR 323. 4. THE ASSESSEE FILED APPEAL AGAINST THE ASSESSMENT ORDE R DATED 27-02-2015. THE CIT(A) FOLLOWING THE DECISIONS OF HONBLE BOM BAY HIGH COURT IN THE CASE OF CIT VS. KIRLOSKAR OIL ENGINES VS. CIT 364 ITR 88 ITA NO.1909/PUN/2016 MSS INDIA PVT. LTD., 3 AND CIT VS. CHAPHALKAR BROTHERS 351 ITR 309 HELD OCTRO I REFUND AS CAPITAL IN NATURE. 5. THE LD. AUTHORIZED REPRESENTATIVE FURTHER SUBMITTED THAT ASS ESSEE RECEIVED OCTROI REFUND INCENTIVE UNDER MAHARASHTRA GOVE RNMENT PACKAGE SCHEME OF INCENTIVES, 2007. THE SCHEME IS SIMILAR TO PACKAGE SCHEME OF INCENTIVES, 1993. THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. M/S. UNIVERSAL CONSTRUCTION MACHINERY AND EQUIPMENTS LTD. IN ITA NO.2312/PUN/2016 FOR A.Y. 2012-13 D ECIDED ON 03-08-2018 FOLLOWING THE DECISION RENDERED IN THE CASE OF CIT VS. RELIANCE INDUSTRIES LTD. 339 ITR 632 HELD THAT SUBSIDY RE CEIVED BY THE ASSESSEE THEREIN IS CAPITAL IN NATURE. THE CASE OF THE AS SESSEE IS SQUARELY COVERED BY AFORESAID DECISION OF THE TRIBUNAL. 6. ON THE OTHER HAND SHRI SUDHENDU DAS REPRESENTING TH E DEPARTMENT VEHEMENTLY DEFENDED THE ASSESSMENT ORDER. THE LD. DR SUBMITTED THAT THE ASSESSEE CLAIMED SUBSIDY RECEIVED UN DER PACKAGE SCHEME OF INCENTIVES, 2007 AS CAPITAL IN NATURE AT THE TIM E OF ASSESSMENT PROCEEDINGS. THE ASSESSEE NEVER MADE THIS CLAIM EITHER IN THE RETURN OR INCOME OR BY FILING REVISED RETURN OF INCOME. THE ASSESSING OFFICER HAS NO POWER TO ENTERTAIN FRESH CLAIM OF T HE ASSESSEE AT THE TIME OF SCRUTINY ASSESSMENT. 7. BOTH SIDES HEARD. ORDERS OF THE AUTHORITIES BELOW PERU SED. THE SOLITARY ISSUE RAISED BY THE REVENUE IN APPEAL IS AGAINST C IT(A) ALLOWING INCENTIVE RECEIVED BY THE ASSESSEE FROM GOVT. OF MAHARASH TRA IN THE FORM OF OCTROI REFUND AS CAPITAL SUBSIDY. IT IS AN ADMITTE D FACT THAT ITA NO.1909/PUN/2016 MSS INDIA PVT. LTD., 4 THE ASSESSEE HAS RECEIVED INCENTIVE IN THE FORM OF OCTROI REFUND UNDER GOVT. OF MAHARASHTRA PACKAGE SCHEME OF INCENTIVES, 2007. WE FIND THAT THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. M/S.UNIVERSAL CONSTRUCTION MACHINERY AND EQUIPMENTS LTD. (SUPRA) IN AN IDENTICAL SET OF FACTS HAS HELD SUBSIDY RECEIVED BY THE ASSESSEE UNDER PACKAGE SCHEME OF INCENTIVES, 2007 AS CAPITAL IN NATURE. RELEVANT EXTRACT OF THE ORDER OF TRIBUNAL READS AS UNDER: 5. WE HAVE HEARD THE SUBMISSIONS MADE BY ID. DR AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD . BEFORE THE ASSESSING OFFICER THE ASSESSEE HAS SUBMITTED THAT DURING THE PE RIOD RELEVANT TO THE ASSESSMENT YEAR 2012-13 HAS RECEIVED SUBSIDY OF RS.13,37,61 , 000/- UP TO 31-03-2012 AND THE BALANCE AMOUNT OF RS.2,36 , 05 , 000 / - IS STATED TO BE RECEIVABLE AS ON 31-03-2012. THE SUBSIDY WAS SANCTIONED TO THE ASSESSEE UNDER THE PA CKAGE SCHEME OF INCENTIVES , 2007 OF THE STATE GOVERNMENT, AGAINST INVESTMENT OF RS . 26 . 77 CRORES MADE BY THE ASSESSEE IN LAND, FACTORY BUILDING, PLANT AND MACHINERY, ELECTRICAL INSTALLA TION ETC . THE COMMISSIONER OF INCOME TAX (APPEALS) GRANTED RELIE F TO THE ASSESSEE BY FOLLOWING THE ORDER OF TRIBUNAL IN THE CASE OF M/ S. JOHN DEERE EQUIPMENTS PVT . LTD . VS. DY. COMMISSIONER OF INCOME TAX (SUPRA) . WE FIND THAT THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE AFORESAID CASE HAS PLACED RELIANCE ON THE DECISIO N IN THE CASE OF COMMISSIONER OF INCOME TAX VS . RELIANCE INDUSTRIES LTD. REPORTED AS 339 ITR 632, WHEREIN SUBSIDY SANCTIONED T O THE ASSESSEE UNDER SIMILAR PACKAGE SCHEME OF INCENTIVES , 1993 WAS HELD TO BE CAPITAL IN NATURE. THE ID . DR HAS FAILED TO CONTROVERT THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) . IN THE ABSENCE OF ANY CONTRARY MATERIAL ON RECORD, WE UPHOLD THE FIND INGS OF FIRST APPELLATE AUTHORIT Y IN DELETING THE ADDITION IN RESPECT OF SUBSIDY RECEIVED BY THE ASSESSEE HOLDING IT TO BE CAPITAL IN NA TURE. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED B EING DEVOID OF ANY MERIT. 8. THE LD. DR HAS FAILED TO CONVERT THE FINDINGS GIVEN BY TH E TRIBUNAL IN THE SAID CASE. WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNE D ORDER. ACCORDINGLY, THE SAME IS CONFIRMED AND THE APPEAL OF REVE NUE IS DISMISSED. ITA NO.1909/PUN/2016 MSS INDIA PVT. LTD., 5 9. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 02 ND DAY OF JANUARY, 2019. SD/- SD/- (R.S.SYAL) (V IKAS AWASTHY) / VICE PRESIDENT /JUDICIAL MEMBER PUNE; DATED : 02 ND JANUARY, 2019 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-1, NASHIK 4. / THE PR. CIT-1, NASHIK 5. , , / DR B, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE. ITA NO.1909/PUN/2016 MSS INDIA PVT. LTD., 6 DATE 1. DRAFT DICTATED ON 01-01-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 01-01-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER.