ITO, WD-1(2), KOLKATA, Kolkata V. M/s Jagati Cokes (P) Ltd, Kolkata

ITA 233/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1147 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 09-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Section: 143(3)

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 233 / KOL / 2015 ASSESSMENT YEAR :2010-11 ITO WARD-1(2), P-7, CHOWRINGHEE SQUARE, AAYAKEAR BHAWAN, 4 TH FLOOR, ROOM 11, KOLKATA-69 V/S . M/S JAGATI COKES PVT. LTD., 115, COLLEGE STREET,KOLKATA-12 [ PAN NO.AABCJ 4973 B ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI G. MALLIKARJUNA, CIT-DR /BY RESPONDENT NONE /DATE OF HEARING 04-09-1017 /DATE OF PRONOUNCEMENT 31-10-2017 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS ARISING OUT OF ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-I, KOLKATA DATED 13.11.2014. ASSESSME NT WAS FRAMED BY ITO WARD-1(2), KOLKATA U/S 143(3) OF THE INCOME TAX ACT , 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 04.0 3.2013 FOR ASSESSMENT YEAR 2010-11. 2. AT THE TIME OF HEARING NONE APPEARED ON BEHALF O F ASSESSEE THOUGH NOTICE OF HEARING WAS SENT TO ASSESSEE THROUGH DEPA RTMENT. HOWEVER WE OBSERVE THAT THE HEARING IS POSSIBLE WITHOUT APPEAR ANCE OF ASSESSEE OR ITS AUTHORIZED REPRESENTATIVE, THEREFORE WE DECIDED TO HEAR THE PRESENT APPEAL WHERE. ITA NO.233/KOL/2015 A.Y. 2010-11 ITO WD-1(2), KOL. VS. M/S JAGATI COKES PVT. LTD. PAGE 2 3. GROUND NO. 1 AND 2 ARE INTER-RELATED AND THEREFO RE BEING TAKEN UP TOGETHER FOR THE SAKE OF CONVENIENCE AND BREVITY. THE ISSUE RAISED IS THAT LD. CIT(A) ERRED IN ALLOWING THE DEDUCTION FOR 3,92,31,372/- AND 6,91,08,066/- RESPECTIVELY ON ACCOUNT OF TRANSPORT CHARGES AND E XCESSIVE TRANSPORT SUBSIDY U/S 80IC OF THE ACT. 4. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS A PRIV ATE LIMITED COMPANY AND ENGAGED IN MANUFACTURING BUSINESS OF BREEZE COKE. T HE ASSESSEE HAS A SMALL SCALE MANUFACTURING UNIT SITUATED IN KAMPRUP OF ASSAM. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING GROSS TOTAL OF 23,92,22,583/- WHICH WAS CLAIMED AS DEDUCTION U/S 80IC OF THE ACT. THUS, ASS ESSEE FILED ITS RETURN OF INCOME AT NIL . THOUGH THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUN T HAS DECLARED GROSS SALES OF 36,05,71,950/- ONLY, WHICH WAS INCLUSIVE OF TRANSPO RT CHARGES RECEIVED BY IT FROM THE PARTIES AMOUNTING TO 3,92,31,372/- ONLY. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASS ESSING OFFICER OBSERVED THAT DEDUCTION U/S. 80IC OF THE ACT IS AVA ILABLE TO THE ASSESSEE FULFILLS THE CONDITIONS AS SPECIFIED BELOW : I. IF ITS BUSINESS FALLS UNDER THE CATEGORY OF ELIG IBLE BUSINESS. II. THE AMOUNT OF DEDUCTION U/S 80IC OF THE ACT IS AVAILABLE TO THE ASSESSEE ONLY IN RESPECT OF SPECIFIED ELIGIBLE BUSI NESS. III. AS PER THE PROVISIONS OF SECTION 80IC OF THE A CT, THE DEDUCTION WILL BE WORKED OUT CONSIDERING THE FACT THAT SUCH ELIGIB LE BUSINESS IS THE ONLY BUSINESS OF ASSESSEE. HOWEVER, ASSESSEE HAS SHOWN TRANSPORT CHARGES RECEI VED FROM THE PARTIES IN ITS INCOME AS IF IT HAS ARISEN FROM THE ELIGIBLE BU SINESS AND EVENTUALLY CLAIM DEDUCTION IN RESPECT OF TRANSPORT CHARGES FOR 3,92,31,372/- U/S. 80IC OF THE ACT. THUS, AO WAS OF THE VIEW THAT THE TRANSPORT CHARGES RECEIVED BY THE ASSESSEE ARE NOT ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT AND ACCORDINGLY TREATED THE SAME AS INCOME FROM OTHER SOURCE OF ASSESSEE. 6. BESIDES THE ABOVE IT WAS ALSO OBSERVED THAT ASSE SSEE HAS SHOWN TRANSPORT SUBSIDY OF 11,9147,871/- AND GROSS TOTAL INCOME OF THE ELIGIBL E ITA NO.233/KOL/2015 A.Y. 2010-11 ITO WD-1(2), KOL. VS. M/S JAGATI COKES PVT. LTD. PAGE 3 BUSINESS OF 23,92,22,583/- WAS DETERMINED BY THE ASSESSEE AFTER CONSIDERING THE TRANSPORT SUBSIDY OF THE AFORESAID AMOUNT. THUS THE ASSESSEE EVENTUALLY CLAIMED DEDUCTION U/S 80IC OF THE ACT ON SUCH TRANSPORT SUBSIDY. THE AO FURTHER OBSERVED THAT ASSESSEE HAS INCURRED FOLLOWING TRANSPORT EXPENSES:- A) TRANSPORT EXPENSE RECEIVED FROM THE ASSESSEE OF 3,92,31,372/- B) TRANSPORT CHARGES INCURRED ON THE PURCHASE OF RAW MATERIALS 1,08,08,433/- 5,00,39,805 IN VIEW OF ABOVE ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSEE HAS CLAIMED EXCESS TRANSPORT SUBSIDY OF 6,91,08,066/- (11914787 50039805). 7. ACCORDINGLY, AO CALLED UPON THE ASSESSEE FOR CL ARIFICATION. IN COMPLIANCE THERETO ASSESSEE SUBMITTED THAT THE DETAILS OF OPEN ING RAW MATERIAL AS WELL AS RAW MATERIAL PURCHASED DURING THE YEAR AS DETAILED UNDER:- SL.NO. PARTICULARS QTY. TRANSPORT CHARGES 1. OPENING RAW MATERIALS 11399 0.660 MT. 94645292 2. PURCHASES DURING THE YEAR 12009.370 MT. 10808433 3. CLOSING STOCK OF RAW MATERIAL 24783.380 MT - - THE ASSESSEE FURTHER SUBMITTED THAT THE OPENING STO CK OF RAW MATERIAL HAS BEEN DETERMINED AFTER CONSIDERING THE TRANSPORT CHA RGES PAID IN THE IMMEDIATE PRECEDING YEAR I.E. FINANCIAL YEAR 2008-09. THE ASS ESSEE, DURING THE YEAR HAS ALSO INCURRED TRANSPORT EXPENSE ON THE PURCHASE OF RAW MATERIAL FOR 1,08,08,433/- ONLY. THUS, THE TOTAL TRANSPORT CHARG ES ARE AT 10,54,53,725/- ONLY. THE TRANSPORT SUBSIDY CLAIMED BY ASSESSEE AFT ER PRODUCTION AND SALE OF FINISHED GOODS WHICH IS CALCULATED ON THE BASIS OF CONSUMPTION OF RAW MATERIAL. THE ASSESSEE DURING THE YEAR HAS CONSUMED RAW MATERIAL FOR 10116.650 MT. AND ACCORDINGLY, THE TRANSPORT SUBSID Y FOR 11,91,47,871/- WAS WORKED OUT FOR THE PURPOSE OF DEDUCTION. 8. THE TRANSPORT SUBSIDY WAS REALIZED BY THE ASSESS EE AFTER DUE VERIFICATION BY THE GOVERNMENT OF ASSAM AS WELL AS CENTRAL GOVERNMENT. ITA NO.233/KOL/2015 A.Y. 2010-11 ITO WD-1(2), KOL. VS. M/S JAGATI COKES PVT. LTD. PAGE 4 ONCE THE GOVT. OF ASSAM AND CENTRAL GOVERNMENT ARE SATISFIED ABOUT THE CALCULATION OF THE SUBSIDY THEN ONLY IT IS REALIZED TO THE ASSESSEE. THUS, THERE IS NO QUESTION OF EXCESSIVE SUBSIDY RECEIVED BY THE ASSESSEE. HOWEVER, AO OBSERVED THAT ASSESSEE FAILED TO FURNISH THE EVIDEN CE IN SUPPORT OF ITS EXPLANATION. MOREOVER ASSESSEE HAS NOT FURNISHED AN Y EVIDENCE SUGGESTING THAT THE OPENING STOCK OF RAW MATERIAL WAS INCLUSIV E OF TRANSPORT CHARGES AS DISCUSSED ABOVE. ACCORDINGLY THE AO DENIED THE CLAI M THE DEDUCTION U/S. 80IC OF THE ACT FOR 6,91,08,066/- BY TREATING THE SAME EXCESSIVE SUBSI DY AS WELL AS TRANSPORT CHARGES RECEIVED FROM THE CUSTOMERS. 9. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT THE TRANS PORT CHARGES WAS RECEIVED FROM THE PARTIES FOR AN AMOUNT OF 3,92,31,372/- WAS THE EXPENSE WHICH WERE ACTUALLY INCURRED BY IT ON THE SUPPLY OF FINISHED G OODS. THE AMOUNT OF TRANSPORT EXPENSE FOR 3,92,31,372/- WAS SHOWN IN THE FINANCIAL STATEMENTS UNDER SCHEDULE-O OF THE BALANCE-SHEET. AS SUCH, THERE WAS NO EFFECT ON THE PROFITABILITY OF THE ASSESSEE ON ACCOUNT OF TRANSPO RT CHARGES RECEIVED BY IT FROM THE PARTIES. THE TRANSPORT SUBSIDY FOR 11,91,47,871/- WAS RECEIVED AFTER DUE VERIFICATION BY GOVT. OF ASSAM AS WELL AS CENTR AL GOVERNMENT. THE TRANSPORT SUBSIDY IS CALCULATED AT THE SPECIFIED RA TE AS MENTIONED IN THE TRANSPORT SUBSIDY SCHEME. FURTHER THE TRANSPORT SUB SIDY HAS NOTHING TO DO WITH THE AMOUNT OF TRANSPORT CHARGES INCURRED BY TH E ASSESSEE IN A PARTICULAR YEAR. THE TRANSPORT SUBSIDY HAS BEEN WORKED OUT ON THE BASIS OF RAW MATERIAL CONSUMED IN THE FINISHED GOODS VIZ A VIZ SALE OF FI NISHED GOODS. THE ASSESSEE FURTHER SUBMITTED THAT IT HAS BEEN CLAIMING DEDUCTI ON ON ACCOUNT OF TRANSPORT SUBSIDY AND TRANSPORT CHARGES IN THE EARLIER YEAR. BUT THE SAME HAS NOT BEEN DISALLOWED BY THE REVENUE. THE ASSESSEE IN SUPPORT OF ITS CLAIM HAS ALSO RELIED ON THE ORDER OF THIS TRIBUNAL IN ITA NO. 667 AND 668/KOL/2006 IN THE CASE OF SKJ COKE INDUSTRIES LTD. ASSESSMENT YEARS 2003-04 & 2004-05 VIDE ORDER DATED 14.07.2006. LD. CIT(A) AFTER CONSIDERIN G THE SUBMISSION OF ASSESSEE HAS DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER:- ITA NO.233/KOL/2015 A.Y. 2010-11 ITO WD-1(2), KOL. VS. M/S JAGATI COKES PVT. LTD. PAGE 5 4.3 THE SUBMISSIONS OF THE APPELLANT HAVE BEEN CON SIDERED. IT IS SEEN THAT THE ISSUE IS COVERED BY THE DECISION OF ITAT I N THE SKJ COKE INDUSTRIES LTD. IN A.Y 2003-04 AND 2004-05 IN ITA N O.667 AND 668/KOL/2006 DATED 14.07.2006 AND IT HAS BEEN MENTI ONED IN PARA-13 AND THE ISSUE HAS BEEN DISCUSSED AND DECIDED UPON I N PARA-13 OF THE ABOVE MENTIONED ORDER. THE OPERATIVE PART OF THE OR DER IS REPRODUCED AS UNDER:- APART FROM THIS, THE HON'BLE SUPREME COURT IN ITS LANDMARK DECISION OF SAHNEY STEEL & PRESS WORKS LTD. (SUPRA) HAS ALSO HELD THAT THE SUBSIDIES WERE PRODUCTION INCENTIVE A ND THEREFORE WERE OPERATIONAL SUBSIDIES AND NOT CAPITAL SUBSIDIE S AND WERE REVENUE IN NATURE. WE THEREFORE, CONSIDERING THE AB OVE FACTS AND CIRCUMSTANCES AND RESPECTFULLY FOLLOWING THE DECISI ON OF THE HAS IN THE CASE OF SAHNEY STEEL & PRESS WORKS LTD. (SUPRA) AND PONNI SUGAR (SUPRA) DO NOT FIND ASSESSMENT YEAR INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN HOLDING THAT TRANSPORT SUBSIDY RECEIVED BY THE ASSESSEE WAS A PART AND PARCEL OF BUSINESS AND MANU FACTURING ACTIVITY OF THE ASSESSEE AND WERE RIGHTLY INCLUDED IN THE P/L ACCOUNT BY THE ASSESSEE. WE, THEREFORE, DO NOT SEE ANY REASON TO INTERFERE WITH SUCH ORDER OF LD. CIT(A) ON THE ISSU E OF TRANSPORT SUBSIDY AND ACCORDINGLY REJECT THE GROUND RAISED BY THE REVENUE IN THIS REGARD. THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE ITAT AS ABOVE AS THE FACTS ARE IDENTICAL IN THE APPELLANTS CASE, AS WEL L AS THAT OF CIT VS. MEGHALAYA STEEL LTD. & PRIDE COKE PVT. LTD. 356 ITR 235 OF THE GUWAHATI HIGH COURT AS ABOVE, IT IS HELD THAT THE T RANSPORT CHARGES WERE PART OF THE TURNOVER OF THE APPELLANT AND THER EFORE ELIGIBLE FOR DEDUCTION U//S 80IC. 4.3.1 WITH REGARD TO THE SECOND ISSUE REGARDING THE TRANSPORT SUBSIDY, IT IS SEEN THAT THE AO HAS NOT TAKEN THE CORRECT CALCU LATION OF TRANSPORT SUBSIDY. IT IS SEEN THAT THE APPELLANT HAD RECEIVED TRANSPORT CHARGES OF RS.3,92,31,372/- AGAINST TRANSPORT CHARGES PAID OR OUTWARDS OF RS.3,92,31,372/-. THE APPELLANT HAS ALSO FILED DETA ILS OF TRANSPORT SUBSIDY ACTUALLY RECEIVED BY IT OF RS.8,96,50,220/- IN FY 2012-13 AGAINST THE CLAIMED AMOUNT OF TRANSPORT SUBSIDY OF RS.11,91,47,871/- DURING THE YEAR. THE CLAIM OF APPELLANT HAS BEEN CO NSIDERED AND APPROVED BY THE APPROPRIATE AUTHORITY I.E. THE STAT E LEVEL COMMITTEE FOR TRANSPORT SUBSIDY, MINUTES OF THE MEETING OF WH ICH HAVE BEEN SUBMITTED IN APPEAL AND THE AMOUNT APPROVED WAS 8,9 6,50,221/- AND 2,94,97,650/- WAS OUTSTANDING. ACCORDINGLY THE ABOV E CLAIM OF 11,91,47,871/- HAS BEEN REFLECTED BY THE APPELLANT IN ITS ACCOUNTS. THEREFORE, CONSIDERING THE SAME, THE CALCULATION MA DE BY THE AO IS NOT CORRECT AS THE SUBSIDY WAS BEING RECEIVED AGAINST T HE TRANSPORT CHARGES PAID BY THE APPELLANT. EVEN OTHERWISE, THE JURISDICTIONAL ITAT CLEARLY HELD THAT THE TRANSPORT SUBSIDY WAS ELIGIBL E FOR DEDUCTION U/S ITA NO.233/KOL/2015 A.Y. 2010-11 ITO WD-1(2), KOL. VS. M/S JAGATI COKES PVT. LTD. PAGE 6 80IC AS ABOVE, AND THE SAME VIEW IS OF THE GAUWAHAT I HIGH COURT IN CIT VS. MEGHALAYA STEEL LTD. & PRIDE COKE (P) LTD. SUPRA, THEREFORE, THE ENTIRE TRANSPORT SUBSIDY IS EXEMPT U/S. 80IC, THERE FORE, THE NET EFFECT ON THE INCOME OF THE APPELLANT WOULD BE NIL. IN VIE W OF THE ABOVE, IT IS HELD THAT THE DISALLOWANCE MADE BY THE AO TOWARDS T RANSPORT CHARGES AND THE ALLEGED EXCESS OF RECEIVED OF TRANSPORT CHA RGES TAKEN BY THE AO AT RS.6,91,08,066/- IS HELD TO BE NOT JUSTIFIED AND THE SAME IS DELETED. THE REVENUE, BEING AGGRIEVED BY THE RELIEF GIVEN BY THE CIT(A), IS IN APPEAL BEFORE US. 10. BEFORE US LD. DR HEAVILY RELIED ON THE ORDER OF ASSESSING OFFICER AND LEFT THE ISSUE TO THE DISCRETION OF THE BENCH. 11. WE HAVE HEARD LD. DR AND PERUSED THE MATERIAL A VAILABLE ON RECORD. IN THE INSTANT CASE, THERE ARE TWO ISSUES INVOLVED AS DETAILED UNDER:- I) TRANSPORT CHARGES RECEIVED BY ASSESSEE FOR 3,92,31.372/- FROM THE CUSTOMERS WHICH WERE TREATED AS INCOME FROM OTHER S OURCES OF THE ASSESSEE. II) THE AMOUNT OF EXCESSIVE TRANSPORT SUBSIDY FOR 6,91,08,066/- RECEIVED BY ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S. 80IC OF THE ACT. 12. THE ASSESSEE HAS CREDITED ITS PROFIT AND LOSS ACCOUNT BY A SUM OF 3,92,31,372/- ON ACCOUNT OF TRANSPORT CHARGES RECEI VED FROM THE PARTIES. SUCH TRANSPORT CHARGES WAS TREATED BY THE AO AS INC OME FROM OTHER SOURCE. HOWEVER, ON PERUSAL OF THE ORDER OF LD. CIT(A) IT WAS OBSERVED THAT ASSESSEE HAS SIMULTANEOUSLY CLAIMED TRANSPORT EXPENSE FOR 3,92,31,372/- BY DEBITING ITS PROFIT AND LOSS ACCOUNT. AS SUCH, THE AMOUNT SH OWN BY ASSESSEE FROM ITS CUSTOMERS ON ACCOUNT TRANSPORT CHARGES IS REPRESEN TING THE REIMBURSEMENT OF EXPENSE. THEREFORE, SUCH TRANSPORT CHARGES RECEIVED AND INCURRED AS EXPENSES WERE HAVING A DIRECT NEXUS WITH THE BUSINE SS OF ASSESSEE. THEREFORE, IN OUR CONSIDERED VIEW, THERE REMAINS NO QUESTION OF TREATING THE SAME AS INCOME FROM OTHER SOURCE. LD. DR BEFORE US HAS ALSO NOT BROUGHT ANYTHING CONTRARY TO THE FINDING OF LD. CIT(A). ITA NO.233/KOL/2015 A.Y. 2010-11 ITO WD-1(2), KOL. VS. M/S JAGATI COKES PVT. LTD. PAGE 7 13. AS THE AMOUNT OF TRANSPORT CHARGES RECEIVED BY THE ASSESSEE REPRESENTS THE REIMBURSEMENT OF ACTUAL EXPENDITURE INCURRED BY IT IN THE AFORESAID FACTS AND CIRCUMSTANCES, THEREFORE WE CONCLUDE THAT THE A MOUNT OF TRANSPORT CHARGES RECEIVED BY THE ASSESSEE CANNOT BE TREATED AS INCOME FROM OTHER SOURCES. MOREOVER, THE TRANSPORT CHARGES RECEIVED B Y ASSESSEE ARE INTRINSICALLY LINKED WITH THE BUSINESS OF ASSESSEE. THEREFORE, SAME WILL BE CONSIDERED FOR THE PURPOSE OF DEDUCTION U/S. 80IC O F THE ACT. 14. NOW COMING TO THE ISSUE OF EXCESSIVE TRANSPORT SUBSIDY RECEIVED BY ASSESSEE FOR 6,91,08,066/-, WE FIND THAT THE SUBSIDY WAS RECEIVE D FROM THE GOVT. OF ASSAM AND CENTRAL GOVERNMENT AFTER DUE VER IFICATION. THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE HAS RECEIVED EXCES SIVE SUBSIDY FROM THE GOVERNMENTS. 14.1 THE ASSESSING OFFICER WHILE WORKING OUT THE AM OUNT OF TRANSPORT SUBSIDY HAS TAKEN INTO CONSIDERATION THE EXPENSE IN CURRED BY ASSESSEE ON TRANSPORTATION THOUGH THERE IS NO NEXUS BETWEEN THE TRANSPORT SUBSIDY AND TRANSPORT EXPENSE AS PER THE TRANSPORT SUBSIDY SCHE ME. IT IS WORKED OUT ON THE BASIS OF RAW MATERIAL CONSUMED DURING THE YEAR. THEREFORE, IN OUR CONSIDERED VIEW, THERE IS NO QUESTION OF EXCESSIVE TRANSPORT SUBSIDY RECEIVED BY ASSESSEE IN THE AFORESAID FACTS AND CIRCUMSTANCE . 14.2 NOW COMING TO THE DEDUCTION CLAIMED BY ASSESSE E IN RESPECT OF TRANSPORT SUBSIDY, WE FIND THAT THE AO HAS NOT MADE ANY DISALLOWANCE ON ACCOUNT OF TRANSPORT SUBSIDY RECEIVED BY ASSESSEE. BUT AO DENIED THE TRANSPORT SUBSIDY WHICH WAS RECEIVED IN EXCESS FROM THE ELIGIBLE AMOUNT. THUS, WE FEEL THAT ISSUE OF DEDUCTION U/S. 80IC OF THE ACT WITH RESPECT TO TRANSPORT SUBSIDY IS NOT ARISING FROM THE ORDER OF AO. HOWEVER, WE FURTHER FIND THAT ISSUE OF TRANSPORT SUBSIDY HAS BEEN SETTLED BY THE JUDGMENT OF HON'BLE GUWAHATI HIGH COURT IN THE CASE OF CIT VS. MEGHALAYA STEEL LTD. & PRIDE COKE (P) LTD. REPORTED IN 356 ITR 235 (GUA), WHEREIN IT WAS HELD AS UNDER:- THERE CAN BE NO ESCAPE FROM THE CONCLUSION THAT TRA NSPORT SUBSIDY WAS AIMED AT REDUCING THE COST OF PRODUCTION OF THE IND USTRIAL UNDERTAKINGS COVERED BY TRANSPORT SUBSIDY SCHEME. THUS, THERE WA S A FIRST DEGREE NEXUS BETWEEN THE TRANSPORT SUBSIDY, ON THE ONE HAND, AND COST OF PRODUCTION, ON THE OTHER. WHEN COST IS REDUCED, IT NATURALLY HELPS IN EARNING OF PROFIT AND, AT ITA NO.233/KOL/2015 A.Y. 2010-11 ITO WD-1(2), KOL. VS. M/S JAGATI COKES PVT. LTD. PAGE 8 TIMES, HIGHER PROFITS. SUCH PROFITS AND GAINS OUGHT TO HAVE BEEN TREATED, AND HAS RIGHTLY BEEN TREATED, BY THE TRIBUNAL, TO BE PR OFITS AND GAINS DERIVED FROM, OR DERIVED BY, THE INDUSTRIAL UNDERTAKING CONCERNED . [PARA 88] THUS, THERE IS AN EXISTENCE OF DIRECT NEXUS BETWEEN TRANSPORT SUBSIDY, ON THE ONE HAND, AND THE MANUFACTURING/PRODUCTION ACTIVITI ES OF INDUSTRIAL UNDERTAKING, ON THE OTHER. UNLESS SHOWN OTHERWISE, THE INDUSTRIAL UNDERTAKINGS, WHICH HAVE BEEN GRANTED TRANSPORT SUB SIDY, ARE ENTITLED TO CLAIM DEDUCTION IN TERMS OF THE DIRECTIONS OF THE TRIBUNA L. [PARA 94] FROM THE ABOVE, IT IS CLEAR THAT TRANSPORT SUBSIDY RECEIVED BY ASSESSEE IS PART AND PARCEL OF THE BUSINESS ELIGIBLE FOR DEDUCTION U /S 80IC OF THE ACT. IN THIS VIEW OF THE MATTER, WE DO NOT FIND ANY REASONS TO I NTERFERE IN THE ORDER OF LD. CIT(A). HENCE, THIS GROUND OF REVENUE/S APPEAL IS D ISMISSED. 10. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 3 1/10/2017 SD/- SD/- ($ &) ( &) (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP, SR.P.S (- 31 / 10 /201 7 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ITO WARD-1(2),P-7CHOWRINGHEE SQ., AAYAKA R BHAWAN, 4 TH FL. KOL-69 2. /RESPONDENT-M/S JAGATI COKES PVT. LTD. 115, COLLEGE STREET, KOLKATA-12 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 $$3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 3,