DCIT, CIR-1(2), KOLKATA, Kolkata V. M/s SKJ Coke Industries Limited, Kolkata

ITA 297/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1760 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 25-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MD USMAN
• Assessee Lawyers: H N DUBE

Judgement Text

1 ITA NOS.297 & 298/KOL/2015 SKJ COKE INDUSTRIES LTD., AYS 2007-08 & 2010-11 , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE .., /AND . , ) [BEFORE SHRI A. T. VARKEY, JM & SHRI M. BALAGANESH , AM] I.T.A. NOS. 297&298/KOL/2015 ASSESSMENT YEARS: 2007-08 & 2010-11 DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1(2), KOLKATA. VS. M/S. SKJ COKE INDUSTRIES LIMITED (PAN: AAECS2686K) APPELLANT RESPONDENT DATE OF HEARING 27.07.2017 DATE OF PRONOUNCEMENT 11.08.2017 FOR THE APPELLANT MD. USMAN, CIT, DR FOR THE RESPONDENT SHRI H.N. DUBE, ADVOCATE ORDER PER SHRI A.T.VARKEY, JM BOTH THESE APPEALS FILED BY THE REVENUE AGAINST THE SEPARATE ORDERS OF LD. CIT(A)-I, KOLKATA DATED 13.11.2014 FOR AY 2007-08 AND 2010-11 . 2. THE ONLY ISSUE TO DECIDE IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DIRECTING THE AO TO GRANT DEDUCTION U/S. 80IC OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) TOWARDS TRANSPORT CHARGES RECEIPT OF RS.7,20,57,895/- AND RS.1,55,48,472/- AND TRANSPORT SUBSIDY RECEIPT OF RS.5,08,90,485/- AND RS.7,52,731/- FOR AYS 2007-08 AND 2010-11 RESPECTIVELY. SINCE GROUND S ARE COMMON AND FACTS ARE IDENTICAL, WE DISPOSE OF BOTH THESE APPEALS BY THIS CONSOLIDAT ED ORDER BY TAKING THE APPEAL FOR AY 2007-08 AS LEAD CASE AND THE RESULT FOR AY 2007-08 WILL ALSO APPLY FOR AY 2010-11. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A LIMITED COMPANY ENGAGED IN THE MANUFACTURE OF LAM COKE AND BREEZE COKE. IT IS NO T IN DISPUTE THAT THE ASSESSEE IS ENTITLED 2 ITA NOS.297 & 298/KOL/2015 SKJ COKE INDUSTRIES LTD., AYS 2007-08 & 2010-11 TO CLAIM DEDUCTION U/S. 80IC OF THE ACT. U/S. 80IC OF THE ACT WHERE THE GROSS INCOME OF THE ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB-SECTION (2), THERE SHAL L, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION FROM SUCH PROFI TS AND GAINS, AS IS SPECIFIED IN SUB- SECTION (3) OF SEC. 80IC OF THE ACT. THE ASSESSEE CLAIMED DEDUCTION U/S. 80IC OF THE ACT ON THE ENTIRE GROSS PROFIT OF RS.14,91,79,470/-. BUT THE AO COMPUTED THE TOTAL INCOME OF THE ASSESSEE AS UNDER: NET PROFIT AS PER P&L A/C RS.14,91,79,470/- LESS: ALLOWABLE DEDUCTION U/S. 80IC (14,91,79,470 - (7,20,57,895+5,08,90,485) RS. 2 ,62,31,090/- ASSESSED INCOME RS.12,29,48,380/- THE AO OBSERVED THAT THE ASSESSEE RECEIVED TOWARDS REIMBURSEMENT OF OUTWARD EXPENSES AMOUNTING TO RS.7,20,57,895/- AND FURTHER RECEIVED TRANSPORT SUBSIDY OF RS.10,88,21,893/-. THUS, THE TOTAL RECEIPTS OF THE ASSESSEE COMES TO R S.18,08,79,788/- (RS.10,88,21,893 + RS.7,20,57,895/-). ON THE CONTRARY, ASSESSEES EXPE NDITURE TOWARDS TRANSPORTATION IN THE FORM OF CARRIAGE INWARD AND CARRIAGE OUTWARD AMOUNT S TO RS.13,06,89,303/-. AS A RESULT, THERE WAS EXCESS RECEIPT OF RS.5,08,90,485/- (RS.18 ,08,79,788 RS.13,06,89,303). ACCORDINGLY, ASSESSEE WAS ASKED TO EXPLAIN WHY SUCH EXCESS RECEIPT WILL NOT BE TREATED AS ITS INCOME FROM OTHER SOURCES. IN COMPLIANCE, THE ASSE SSEE FILED WRITTEN SUBMISSION DATED 22.02.2013. AFTER CONSIDERING THE WRITTEN SUBMISSI ON AND ASSESSEES CONTENTION THE AO TREATED THE EXCESS RECEIPT OF RS.5,08,90,485/- AS A SSESSEES INCOME FROM OTHER SOURCES, WHICH IS NOT ELIGIBLE FOR DEDUCTION U/S. 80IC OF TH E ACT. 4. THE LD. CIT(A) BY PLACING RELIANCE ON THE DECISI ON OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE IN AY 2003-04 AND 2004-05 IN ITA NOS. 667 & 668/KOL/2006 DATED 14.07.2006, WHICH HAVING BEEN UPHELD BY THE HONBLE CALCUTTA HI GH COURT IN ITA NO. 122 OF 2007 DATED 14.05.2007 HELD THAT THE ISSUE OF TRANSPORT C HARGES WERE PART OF THE TURNOVER OF THE ASSESSEE AND, THEREFORE, ELIGIBLE FOR DEDUCTION U/S . 80IC OF THE ACT. IN VIEW OF THE ABOVE, THE LD. CIT(A) HELD THAT THE DISALLOWANCE MADE BY T HE AO TOWARDS TRANSPORT CHARGES AND 3 ITA NOS.297 & 298/KOL/2015 SKJ COKE INDUSTRIES LTD., AYS 2007-08 & 2010-11 THE ALLEGED EXCESS OF RECEIPT OF TRANSPORT CHARGES TAKEN BY THE AO AT RS.5,08,90,485/- IS HELD TO BE NOT JUSTIFIED AND THE SAME WAS DELETED. AGGRI EVED REVENUE IS IN APPEALS BEFORE US. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE GONE TH ROUGH THE CASE RECORDS CAREFULLY. WE FIND THAT SIMILAR ISSUE HAD ARISEN IN THE CASE O F ASSESSEE FOR THE AYS 2003-04 AND 2004- 05, WHICH WAS SUBSEQUENTLY UPHELD BY THE HONBLE CA LCUTTA HIGH COURT, CITED SUPRA. THE OPERATIVE PART OF THE TRIBUNALS ORDER IS REPRODUCE D AS UNDER: 'APART FROM THIS, THE HON'BLE SUPREME COURT IN IT S LANDMARK DECISION OF SAHNEY STEEL & PRESS WORKS LTD. (SUPRA) HAS ALSO HELD THAT THE SUB SIDIES WERE PRODUCTION INCENTIVE AND THEREFORE WERE OPERATIONAL SUBSIDIES AND NOT CAPITA L SUBSIDIES AND WERE REVENUE IN NATURE. WE THEREFORE, CONSIDERING THE ABOVE FACTS AND CIRCUMST ANCES AND RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN CASE OF SA HNEY STEEL & PRESS WORKS LTD.(SUPRA) AND PONNI SUGAR(SUPRA) DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN HOLDING THAT TRANSPORT SUBSIDY RECEIVED BY THE ASSESSEE WAS A PA RT AND PARCEL OF BUSINESS AND MANUFACTURING ACTIVITY OF THE ASSESSEE AND WERE RIG HTLY INCLUDED IN THE P/L ACCOUNT BY THE ASSESSEE. WE, THEREFORE, DO NOT SEE ANY REASON TO I NTERFERE WITH SUCH ORDER OF LD. CIT(A) ON THE ISSUE OF TRANSPORT SUBSIDY AND ACCORDINGLY REJE CT THE GROUND RAISED BY THE REVENUE IN THIS REGARD.' SINCE THE LD. DR COULD NOT POINT OUT ANY CHANGE IN FACTS AND LAW, WE NOTE THAT THE RATIO LAID DOWN IN ASSESSEES OWN CASE FOR AY 2003-04 AND 2004 -05, SUPRA IS SQUARELY APPLICABLE FOR THE YEAR UNDER APPEAL ALSO. WE ALSO NOTE THAT THE AFORESAID VIEW OF THE TRIBUNAL HAS BEEN ENDORSED BY THE HONBLE CALCUTTA HIGH COURT IN ITA NO. 122 OF 2007 IN ASSESSEES OWN CASE DATED 02.04.2007 WHEREIN THE HONBLE HIGH COUR T DISMISSED THE REVENUES APPEAL. RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL PRECE DENTS, WE DISMISS THE APPEALS OF THE REVENUE. 6. IN THE RESULT, APPEALS OF REVENUE ARE DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 11.08.2017 SD/- SD/- (M. BALAGANESH) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 11TH AUGUST, 2017 JD.(SR.P.S.) 4 ITA NOS.297 & 298/KOL/2015 SKJ COKE INDUSTRIES LTD., AYS 2007-08 & 2010-11 COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT DCIT, CIRCLE-1(2), KOLKATA 2 RESPONDENT M/S. SKJ COKE INDUSTRIES LIMITED, 1/1A, BIPLABI ANUKUL CHANDRA STREET, KOLKATA-700 072. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, SR. PVT. SECRETARY