M/s. Kashmir Tubes, Jammu V. The Dy. Commissioner of Inocme-tax, Jammu

ITA 199/ASR/2014

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4549 (ITAT-AMRITSAR)
• Duration Of Justice: 4 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-03-2018
• Assessment Year: 2004-2005
• Appeal Filed On: 21-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV GUBGOTRA
• Keywords: Business income; Capital receipt
• Section: 143(3); 80IB; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A. NOS. 198 & 199/(ASR)/2014 ASSES SMENT YEARS: 2003-04 & 2004-05 KASHMIR TUBES BARI BRAHMANA, JAMMU [PAN: AAAFK 9392D] VS. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1, JAMMU (APPELLANT) (RESPONDENT) APPELLANT BY : SH. TARUN BANSAL (A DV.) RESPONDENT BY: SH. RAJEEV GUBGOTRA (D.R.) DATE OF HEARING: 20.03.2018 DATE OF PRONOUNCEMENT: 31.05.2018 ORDER PER SANJAY ARORA, AM: THIS IS A SET OF TWO APPEALS BY THE ASSESSEE RAISIN G IDENTICAL GROUNDS AND, THUS ISSUES ARISING FOR DETERMINATION, IN RESPECT O F TWO CONSECUTIVE YEARS, I.E., ASSESSMENT YEARS (AYS.) 2003-04 AND 2004-05, QUA ASSESSMENTS U/S. 143(3) OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREINAFTER), SINCE CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS), JAMMU ('CIT(A )', FOR SHORT) VIDE HIS ORDERS OF EVEN DATE, I.E., 17.01.2014. 2. THE FIRST ISSUE, AGITATED PER GROUNDS 2 AND 3; G D. 1 BEING GENERAL IN NATURE, WARRANTING NO ADJUDICATION, IS THE DENIAL CLAIM FOR DEDUCTION U/S. 80IB OF THE ACT ON GALVANISATION CHARGES EARNED BY THE ASSESSEE ON JOB-WORK BASIS. THE MATTER, IT WAS CLAIMED BY THE LD. AUTHORIZED REPRESENTATIVE (A R), THE ASSESSEES COUNSEL, ITA NOS.198&199/ASR/2014 (AYS 2003-04&2004-05) KASHMIR TUBES V. DY. CIT 2 SHRI BANSAL, IS NO LONGER RES INTEGRA AS THE SAME STANDS SINCE DECIDED BY THE HON'BLE JURISDICTIONAL HIGH COURT VIDE ITS JUDGMENT DATED 31.08.2017 IN THE ASSESSEES OWN CASE, ADDUCING A COPY THEREOF (ITA N O. 05/2008). HE WOULD THEN TAKE US THROUGH THE OPERATING PART OF THE JUDGMENT. THE HON'BLE HIGH COURT HAS, AFTER NOTING THE CASE OF EITHER SIDE, INCLUDING THE CASE LAW RELIED UPON, HELD THE PROCESS OF GALVANIZING TO CONSTITUTE MANUFACTURE AS THE ACTIVITY OF GALVANIZATION CONVERTS A RAW IRON PIPE (SAY) INTO A GALVANIZED PI PE, A DIFFERENT COMMERCIAL COMMODITY. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) COULD NOT BRING TO OUR NOTICE ANY CONTRARY DECISION BY EITHER THE LARGER B ENCH OF THE JURISDICTIONAL HIGH COURT OR BY THE APEX COURT, SO AS TO IMPACT THE BIN DING NATURE OF THE AFORE-REFERRED DECISION IN KASHMIR TUBES (SUPRA). IN FACT, AS WE OBSERVE, THE HON'BLE COURT IN THE SAID DECISION HAS ALSO CONSIDERED THE DECISION BY T HE APEX COURT IN GUJARAT STEEL TUBES LTD. V. STATE OF KERALA AIR [1990] (SC) 1779, WHEREIN ITS STANDS HELD THAT GALVANIZING AN IRON PIPE ONLY MAKES IT WEATHER-PROO F, SO AS IT STILL REMAINS A STEEL TUBE, AND THAT THEREFORE THE PROCESS DOES NOT BRING ANY NEW COMMODITY INTO EXISTENCE, SO AS TO REGARD GALVANIZING AS AN MANUFA CTURING ACTIVITY. THE SAME STANDS DISTINGUISHED BY THE HON'BLE COURT, STATING IT TO BE RENDERED UNDER THE SALES- TAX LAW AND, THEREFORE, NOT APPLICABLE, AS INDEED I T FOUND THE DECISION BY THE APEX COURT IN SIDDHARTHA TUBES LTD. V. CCCE [2005] (8) SUPREME 511, BEING RENDERED UNDER THE CENTRAL EXCISE ACT. WE DECIDE ACCORDINGLY , UPHOLDING THE ASSESSEES CLAIM FOR DEDUCTION U/S. 80IB ON GALVANIZING CHARGE S. 3. THE ONLY OTHER GROUND RAISED PER THE INSTANT APP EAL IS THE NON-ACCEPTANCE OF THE ASSESSEES ADDITIONAL GROUND IN RESPECT OF INTE REST SUBSIDY BY THE LD. CIT(A). THE ASSESSEES CLAIM FOR DEDUCTION U/S. 80IB ON INT EREST SUBSIDY STANDS DENIED BY THE REVENUE RELYING ON DECISIONS IN THE CASE OF CIT V. STERLING FOODS [1999] 237 ITR 579 (SC) AND CAMBAY ELECTRIC SUPPLY INDUSTRIAL CO. LTD. V. CIT [1978] 113 ITA NOS.198&199/ASR/2014 (AYS 2003-04&2004-05) KASHMIR TUBES V. DY. CIT 3 ITR 84 (SC). THE HON'BLE JURISDICTIONAL HIGH COURT IN SHREE BALAJI ALLOYS V. CIT [2011] 333 ITR 335 (J&K) HAS HELD INTEREST SUBSIDY TO BE A CAPITAL RECEIPT. THE ASSESSEE, ACCORDINGLY, RAISED AN ADDITIONAL GROUND IN ITS RESPECT BEFORE THE LD. CIT(A), WHO REJECTED THE SAME STATING THE SAME TO B E INCONSISTENT WITH THE ASSESSEES OWN STAND OF INTEREST SUBSIDY BEING A RE VENUE RECEIPT AND, FURTHER, ELIGIBLE FOR DEDUCTION U/S. 80IB. NO CLAIM QUA THE INTEREST SUBSIDY BEING A CAPIAL RECEIPT STANDS MADE PER THE RETURN OF INCOME. TRUE, BUT THAT WOULD NOT IN ANY MANNER DETAIN THE ASSESSEE FROM, ALTERNATIVELY, RAI SING A PLEA BEFORE THE FIRST APPELLATE AUTHORITY, AS INDEED WAS THE CASE IN THE CASE OF SHREE BALAJI ALLOYS (SUPRA). THE ASSESSEES ADDITIONAL GROUND WAS THERE FORE LIABLE TO BE ADMITTED BY THE LD. CIT(A). IN-AS-MUCH AS THE SAID GROUND COULD BE RAISED EVEN BEFORE US FOR THE FIRST TIME, WE, ACCORDINGLY, IN DEFERENCE TO THE DE CISION BY THE HON'BLE JURISDICTIONAL HIGH COURT IN SHREE BALAJI ALLOYS (SUPRA), ADMITTING THE ASSESSEES ADDITIONAL GROUND, ALSO URGED BEFORE US, DIRECT IT BEING REGARDED AS A CAPITAL RECEIPT. THE ASSESSING OFFICER SHALL COMPUTE THE ASSESSEES BUSINESS INCOME U/S. 28 ACCORDINGLY. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEALS ARE ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON MAY 31, 2018 SD/- SD/- (N. K. CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 31.05.2018. /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: KASHMIR TUBES BARI BRAHMANA, JAM MU (2) THE RESPONDENT: DEPUTY COMMISSIONER OF INCOME T AX CIRCLE-1, JAMMU (3) THE CIT(APPEALS), JAMMU (4) THE CIT CONCERNED TRUE COPY (5) THE SR. DR, I.T.A.T BY O RDER