A.C.I.T. CENTRAL CIRCLE. 1(4), Nagpur V. M/S ECONOMIC EXPLOSIVE LTD, Nagpur

ITA 202/NAG/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4529 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 17-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGNES P THOMAS
• Assessee Lawyers: C N RATHI
• Keywords: Revised return
• Section: 139(5)

Judgement Text

1 , INCOME TAX APPELLATE TRIBUNAL,NAGPUR BENCH . . , BEFORE S/SH. D T GARASIYA,JUDICIAL MEMBER & RAJENDRA,ACCOUNTANT MEMBER ./ ITA/ 202 TO 206/NAG/2015 , / ASSESSMENT YEARS:2005 - 06 TO 2009 - 10. ASSTT. COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE - 1(4), NAGPUR. VS. M/S ECONOMIC EXPLOSIVE LIMITED, 11, ZADE LAYOUT, BHARAT NAGAR, NAGPUR - 440032. PAN AAACE3871C. ( / APPELLANT ) ( / RESPONDENT ) REVENUE BY: SMT. AGNES P. THOMAS. . ASSESSEE BY: SHRI C.N. RATHI. . / DATE OF HEARING: 30.08.2016 / DATE OF PRONOUNCEMENT: 30.08.2016 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA A.M. - CHALLENGING THE ORDERS, DATED 12 - 3 - 2015 OF THE CIT(A) - III, NA GPUR THE ASSESSING OFFICERS (AO S ) HAVE FILED THE APPEALS FOR THE ABOVE ASSESS MENT YEAS. AS THE ISSUE INVOLVED IN THESE APPEALS ARE IDENTICAL, SO, FOR THE SAKE OF CONVENIENCE, WE ARE ADJUDICATING ALL THE APPEALS BY A SINGLE COMMON ORDE R. ASSESSEE - COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF ALL TYPES OF DETONATORS, FUSE HEADS, ALUMINIUM AND COPPER TUBES, FILED ITS RETURN OF INCOME ON 20 - 10 - 2005, DECLARING TOTAL INCOME AT RS.4.60 CRORES UNDER THE NORMAL PROVISIONS OF THE ACT AN D OF RS.7.36 CRORES UNDER THE MAT PROVISIONS. SUBSEQUENTLY, IT FILED A REVISED RETURN WHEREIN THE ASSESSEE CLAIMED RECEIPT OF RS.1.07 CRORES, BEING THE AMOUNT RECEIVED UNDER THE SALES - TAX INCENTIVE SCHEME AS CAPITAL IN NATURE. THE REVISED RETURN FILED U/S 139(5) OF THE ACT WAS ACCEPTED BY THE AO. HOWEVER, THE AO ADDED THE SAID SUM OF RS.1,07,92,553/ - RECEIVED BY ASSESSEE UNDER THE SALES - TAX INCENTIVE SCHEME BY TREATING IT A REVENUE RECEIPT. 2. AGGRIEVED BY THE ORDER OF THE AO , THE ASSESSEE PREFERRED AN APPE AL BEFORE THE FIRST APPELLATE AUTHORITY (FAA) AND MADE ELABORATE SUBMISSIONS. THE FAA REFERRED TO THE CASE OF 2 RELIANCE INDUSTRIES LTD. (88 ITD 273) AND PONNI SUGARS AND CHEMICALS LTD. (306 ITR 392) AND ALLOWED THE APPEAL FILED BY THE ASSESEE. 3. DURING THE COURSE OF HEARING BEFORE US, REPRESENTATIVES OF BOTH THE SIDES AGREED THAT THE TRIBUNAL HAD, WHILE DECIDING THE APPEAL FOR ASSESSMENT YEAR 2007 - 08, DECIDED THE IDENTICAL ISSUE AGAINST THE AO (ITA - 314/NAG/2014, DT. 24 - 11 - 2015). WE WOULD LIKE TO REPRODU CE THE RELEVANT PORTION OF THE SAID ORDER AND SAME READS AS UNDER : 6. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH AND CAREFULLY PERUSED THE MATERIALS BEFORE US IN THE LIGHT OF THE EVIDENCES FILED AND THE PRECEDENCE CITED. ALTHOUGH, THE ISSUE IN HAND IS N OW DISCUSSED AT LENGTH BY VARIOUS HONBLE COURTS AND THE LEGAL POINTS NOW STOOD SETTLED BUT, IT IS ALWAYS ADVISABLE TO COMPARE THE FACTS OF THE PRESENT CASE WITH THE FACTS OF THE PRECEDENCE CITED. IN THIS REGARD, OUR ATTENTION HAS BEEN DRAWN ON A CHART PLA CED BEFORE THE LEARNED CIT(A) COMPARING THE FACTS OF THE CITED DECISION OF RELIANCE INDUSTRIES LTD. AND THE FACTS OF THE APPELLANT. THIS COMPARISON IS AN IMPORTANT EXERCISE; HENCE, IT IS WORTH TO MAKE IT A PART OF OUR JUDGMENT. HENCE, THE SAME IS REPRODUCE D BELOW: - SR. NO. RELIANCE INDUSTRIES LIMITEDS CASE (SUPRA). APPELLANTS CASE. 1 THE SCHEME FRAMED BY THE GOVERNMENT OF MAHARASHTRA IN 1979. GOVERNMENT OF MAHARASHTRA IN 1993 AND IT IS REVISION OF THE EARLIER SCHEMES INCLUDING THE 1979 SCHEME. 2 OBJECTI ON OF THE SCHEME: THE OBJECT OF THE SCHEME WAS INDUSTRIAL DEVELOPMENT OF BACKWARD DISTRICT AS WELL AS GENRAATION OF EMPLOYMENT. THE OBJECT OF THE SCHEME WAS INDUSTRIAL DEVELOPMENT OF BACKWARD DISTRICT AS WELL AS GENERATION OF EMPLOYMENT, AS THIS AS EXTENSION OF EARLIER SCHEMES VIZ. SCHEMES INTRODUCED IN 1964, 1979 AND 1988. THE APPELLANT HAS SET UP INDUSTRIAL UNDERTGAKING IN NOTIFIED BACKWARD AREA VIZ. SAWANGA, POST SHIVA, TALUKA AND DISTRICT NAGPUR. 3. INDUSTRIAL UNDERTAKING: THE ASSESSEE IN THIS CASE HAS SET UP INDUSTRIAL UNDERTAKING IN NOTIFIED BACKWARD AREA VIZ. PATALGANGA. RAIGAD DISTRICT THE APPELLANT HAS SET UP INDUSTRIAL UNDERTAKING IN NOTIFIED BACKWARD AREA VIZ. SAWANGA, POST SHIVA, TALUKA AND DISTRICT NAGPUR. 4. NATURE OF INCENTIVE UNDER THE SCHEME: EXEMPTION FROM LIABILITY OF PAYMENT OF SALES TAX FOR A PERIOD OF FIVE YEARS. EXEMPTION FROM LIABILITY OF PAYMENT OF SALES TAX FOR A PERIOD OF TEN YEARS. 5 MODE OF QUANTIFICATION OF SUBSIDY: THE QUANTIFICATION WAS BASED ON CERTAIN PERCENTAGE OF INVESTMENT IN FIXED CAPITAL IN THE NATURE OF VARIOUS SPECIFIED ASSETS. THE QUANTIFICATION IS BASED ON CERTAIN PERCENTAGE NOF INVESTMENT IN FIXED CAPITAL IN THE NATURE OF VARIOUS SPECIFIED ASSETS. 6 MODE OF PAYMENT OF SUBSIDY: THE APPELLANT IS ENTITLED TO COLLECT THE 3 THE ASSESSEE WAS ENTITLED TO COLLECT THE SALES TAX IN THE NATURE OF SUBSIDY AND RETAIN THE SAME WITHOUT MAKING PAYMENT FOR THE SAME. SALES TAX IN THE NATURE OF SUBSIDY AND RETAIN THE SAME WITHOUT MAKING PAYMENT FOR THE SAME. 7 TIME OF RECEIPT OF SUBSIDY: THE ASSESSEE WAS ENTITLED TO RECEIVE SUBSIDY AFTER THE MANUFACTURE AND SALE OF PRODUCT I.E. SALES TAX COULD NOT BE COLLECTED BEFORE THE MONTH OF PRODUCTION AND ITS SALE. THE ASSESSEE WAS ENTITLED TO RECEIVE SUBSIDY AFTER THE MANUFACTURE AND SALE OF PRODUCT I.E. SALES TAX COULD NOT BE COLLECTED BEFORE THE MONTH OF PRODUCTION AND ITS SALE. THEREFORE, FROM THE FACTS OF THE CASE, IT IS EVIDENT THAT THE ASSESSEE HAQD SET UP A UNIT AT SAWANGA DISTRICT NAGPUR, A NOTIFIED BACKWARD AREA. AN INV ESTMENT IN THE INITIAL FIXED CAPITAL WAS MADE AT RS.283.01 LACS. AN APPLICATION WAS MADE TOP THE DISTRICT INDUSTRIES CENTRE FOR ISSUE OF ELIGIBILITY CERTIFICATE FOR EXEMPTION FROM PAYMENT OF SALES TAX UNDER 1990 SCHEME. THE APPELLANT WAS GRANTED THE ELIGIB ILITY CERTIFICATE NON 09 - 06 - 2000. AS PER THE SAID ELIGIBILITY CERTIFICATE, THE ASSESSEE WAS ENTITLED FOR EXEMPTION FROM PAYMENT OF SALE TAX UP TO RS.254.70 LACS FOR A PERIOD OF TEN YEARS FROM 15 TH JULY, 2000 TO 14 TH JULY, 2010. LATER ON, FURTHER INVESTMENT WAS ENHANCED AND ACCORDINGLY RENEWED ELIGIBILITY CERTIFICATE WAS GRANTED. WE HAVE ALSO CONSIDERED THE OBJECT OF 1993 SCHEME AND THE MAIN FEATURE WAS TO GRANT INCENTIVE TO THE INDUSTRIES ESTABLISHED IN THE BACKWARD AREAS FOR DEVELOPMENT OF UNDER - DEVELOPED REGION OF MAHARASHTRA STATE. WE HAVE ALSO EXAMINED THE LEGAL ASPEC T WHETHER THE SUBSIDY IN QUESTION IS CAPITAL IN NATURE OR REVENUE IN NATURE. AFTER GOING THROUGH THE DECISIONS CITGED BEFORE US AND FEW OF THEM ALREADY DISCUSSED BY THE LEARNED CIT(A), WE AR E OF THE CONSIDERED OPINION THAT THE ISSUE IS SQUARELY COVERED B Y THOSE DECISIONS ESPECIALLY BY THE DECISION OF RELIANCE INDUSTRIES LTD., 88 ITD 273 (SB) (MUM). KEEPING BREVITY IN MIND, WE ARE NOT DISCUSSING ALL THE DECISION DELIVERED ON THIS ISSUE ALTHOU GH DISCUSSED DURING THE COURSE OF HEARING. UNDER THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE LAW ALREADY PRONOUNCED, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE COMPANY WAS JUSTIFIED IN CLAIMING THE SALES TAX INCENTIVES AS EXEMPT AND NOT TO BE TAKEN INTO ACCOUNT IN COMPUTING THE TAXABLE INCOME. THE VIEW TAKEN BY THE LEARNED CIT(A) IS ACCORDINGLY CONFIRMED. THE GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. RESPECTF ULLY FOLLOWING THE ABOVE ORDER OF THE TRIBUNAL WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. 4 4. ITA NOS. 203 - 206 /NAG/2015 , AY 2006 - 07 2009 - 10. AS THE FACTS OF THE CASES FOR THE ABOVE MENTIONED FOUR ASSESSMENTS YEARS ARE IDENTICAL TO THE FACTS OF AY 2005 - 06, SO FOLLOWING OUR ORDER FOR THAT YEAR WE DECIDE THE EFFECTIVE GROUNDS OF APPEAL AGAINST THE AO. F OR THOSE YEARS. AS A RESULT, APPEALS FILED BY THE AO FOR THE ABOVE MENTIONED AYS STAND DISMISSED. . ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH , AUGUST, 2016. 30 , 2016 SD / - SD / - ( . . / D T GARASIYA ) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER NAGPUR ; DATED 30 . 0 8 . 2016. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR NAGPUR BENCH, ITAT, / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT,NAGPUR.