ASSTT. CIT, CIR- 7, Nagpur V. M/S. BALLARPUR INDUSTRIES LTD., GURGAON

ITA 332/NAG/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1595 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 20-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Keywords: Business expenditure; Capital receipt
• Section: 115JB

Judgement Text

1 ITA NO. 332/NAG/2014 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 332/NAG/2014 ASSESSMENT YEAR : 2008 - 09. ASSTT. COMMISSIONER OF INCOME - TAX, M/S BALLARPUR INDUSTRIES LTD. CIRCLE - 7, NAGPUR. VS. GURGAON, HARYANA. PAN AAACB5343E APPELLANT. RESPONDENT. APPELLANT BY : SHRI NARENDRA KANE. RESPONDENT BY : SHRI K.P. DEWANI. DATE OF HEARING : 03 - 11 - 2015. DATE OF PRONOUNCEMENT : 24 TH NOV., 2015. O R D E R PER SHRI SHAMIN Y AHYA, A.M . THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - II, NAGPUR DATED 31 - 03 - 2014 FOR ASSESSMENT YEAR 200 8 - 09 . THE GROUNDS OF APPEAL READ AS UNDER : 1 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) IS RIGHT IN TREATING SALES TAX INCENTIVE RECEIVED OF RS.4,18,27,757/ - AS CAPITAL RECEIPT AND NOT CHARGEABLE TO TAX WITHOUT APPRECIATING THE FACT THAT THE SAME IS BEING REVE NUE IN NATURE AND SLP HAS BEEN FILED BEFORE THE HONBLE SUPREME COURT AGAINST THE HIGH COURT ORDER? 2 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW THE LD . CIT(A ) IS RIGHT IN DELETING DISALLOWANCE OF PREMIUM PAYABLE ON ISSUE OF ZERO COUPON CONVERTIBLE BONDS OF RS. 14,38,61,972/ - WITHOUT APPRECIATING THE FACT THAT THE SAME DOES NOT RELATE TO THE EXPENDITURE. SINCE IT IS NOT AT ALL PAYABLE BY THE ASSESSEE ON ZCCB, AFTER THE MATURITY OF THE BONDS, THE ASSESSEE IS REQUIRED TO ISSUE SHARES TO THE BOND HOLDERS AND NOT THE AMOUNT INVESTED WITH PREMIUM? 2 ITA NO. 332/NAG/2014 3 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) IS RIGHT IN DELETING DISALLOWANCE ON ACCOUNT CONTRIBUTION TO VARIOUS INSTITUTIONS AND CLUB OF RS.10 ,83,094/ - WITHOUT APPRECIATING THE FACTS THAT THE SWAME DO NOT AMOUNT TO ALLOWABLE EXPENDITURE? 4 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW THE LD . CIT(A) I S RIGHT IN DELETING DISALLOWANCE ON ACCOUNT OF DEDUCTION OF CHARITY DO NATION AND CSR EXPENSE WITHOUT APPRECIATING THE FACTS THAT THE SAME DO NOT AMOUNT TO ALLOWABLE EXPENDITURE? 5 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD . CIT(A) I S R I GHT I N DIRECTING TO DELETE SALES TAX INCENTIVE WHILE CO MPUTING BOOK PROFIT U/S 115JB OF THE I.T. ACT WITHOUT APPRECIATING THE FACTS THAT THE SALES TAX INCENTIVE BEING REVENUE RECEIPTS THE SAME IS NOT DEDUCTIBLE WITHIN THE MEANING OF SECTION 115JB OF THE I.T. ACT? 6 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD . CIT(A) IS RIGHT IN DELETING DISALLOWANCE ON ACCOUNT OF DEDUCTION OF CONTRIBUTION TO AN APPROVED BODY RECOGNIZED U/S 35(1)(II) WITHOUT APPRECIATING THE FAC T S THAT THE SAME DO NOT AMOUNT TO ALLOWABLE EXPENDITURE? 2. AT THE OUTSET IN THIS CASE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ISSUES INVOLVED IN THE APPEAL ARE ALL COVERED BY THE EARLIER DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE. LEARNED D.R. ALSO AGREED WITH THIS SUBMISSION OF THE LEARNED CO UNSEL OF THE ASSESSEE. ACCORDINGLY WE TAKE UP THE ADJUDICATION OF THE ISSUES RAISED. WE MAY GAINFULLY REFER TO THE WRITTEN SUBMISSIONS OF THE LEARNED COUNSEL OF THE ASSESSE IN THIS REGARD WHICH EXPLAINS AS TO HOW THE ISSUES INVOLVED ARE COVERED BY EARLIER DECISIONS AS UNDER : GR. NO.1 : SALES TAX INCENTIVE RS. 4,18,27,757/ - . A) SALES TAX INCENTIVE AVAILED UNDER THE PACKAGE SCHEME OF INCENTIVES, 1993 OF GOVT. OF MAHARASHTRA FOR SETTING UP OF INDUSTRIAL UNIT IS CAPITAL RECEIPT. B) ISSUE COVERED IN FAVOUR OF ASSESSEE BY FOLLOWING DECISION OF HONBLE ITAT, NAGPUR IN THE CASE OF ASSESSEE. I) ITA NO.262/NAG/2007 ORDER DATED 12 - 08 - 2009 (ASSTT. YEAR 2003 - 04) 3 ITA NO. 332/NAG/2014 GR. NO.2 : RS.14,38,61,972/ - PREMIUM PAYABLE ON REDEMPTION OF ZERO COUPON BONDS. A) ZERO COUPON BONDS I SSUED TO MEET THE WORKING CAPITAL REQUIREMENT AND WAS UTILIZED FOR REGULAR BUSINESS ACTIVITIES B) DIFFERENCE BETWEEN FACE VALUE AND REDEMPTION VALUE IS AMOUNT OF PREMIUM PAYABLE BY ASSESSEE. PREMIUM PAPABLE BY ASSESSEE IS AN AMOUNT PAYABLE FOR USE OF FUNDS RA ISED THROUGH ISSUE OF ZERO COUPON BONDS. PREMIUM AMOUNT RELATING TO USE OF MONEY FOR PREVIOUS YEAR UNDER CONSIDERATION IS RS.14,38,61,972/ - C) ISSUE COVERED IN FAVOUR OF ASSESSEE BY FOLLOWING DECISION OF HONBLE ITAT, NAGPUR BENCH, NAGPUR IN THE CASE OF ASSES SEE. I) ITA NO. 106/NAG/2011 ORDER DATED 05/06/2015 (ASSTT. YEAR 2006 - 07) . GR. NO.3 ADDITION OF RS.10,83,094/ - U/S 40A(9). CONTRIBUTION TO VARIOUS INSTITUTIONS AND STAFF/WORKMENS CLUB ETC. A) EXPENDITURE IS IN THE NATURE OF STAFF WELFARE OR MEANT FOR BUSINESS DEVELOPING AND IS IN THE NATURE OF ALLOWABLE BUSINESS EXPENDITURE. B) ISSUE COVERED IN FAVOUR OF ASSESSEE BY FOLLOWING DECISION OF HONBLE ITAT, NAGPUR BENCH, NAGPUR IN THE CASE OF ASSESSEE: I) ITA NO. 106/NAG/2011 ORDER DATED 05/06/2015 (ASSTT. YEA R 2006 - 07) GR. NO. 4: ADDITION RS.97,99,412/ - CONTRIBUTION TO SCHOOL AND INSTITUTIONS . ADDITION RS. 72,61,302/ - CSR EXPENSES 4 ITA NO. 332/NAG/2014 A) HONBLE CIT(A) DIRECTED A.O. TO CONSIDER CLAIM OF ASSESSEE AS PER DIRECTION OF HONBLE ITAT IN ITA NO. 261/NAG/2007. B) EXPENDITURE IS IN THE NATURE OF STAFF WELFARE OR MEANT FOR BUSINESS DEVELOPMENT AND IS IN THE NATURE OF ALLOWABLE BUSINESS EXPENDIT URE. C) RELIANCE ON: I) 266 ITR 170 (MAD.). CIT VS. MADRAS REFINERIES LTD. D) HONBLE CIT(A) HAS NOT GRANTED ANY RELIEF TO ASSESSEE. CIT(A) MERELY DIRECTED A.O. TO CONSIDER CLAIM AS PER DIRECTION OF HONBLE ITAT IN THE CASE OF ASSESSEE IN ITA NO. 261/NAG/2007. NO GRIEVANCE TO REVENUE. GROUND MISCONCEIVED. E) SIMILAR MATTER RESTORED F OR RE - ADJUDICATION BY THE A.O. IN THE CASE OF ASSESSEE BY HONBLE CIT(A) FOR A.YR. 2006 - 07. HONBLE ITAT IN ITA NO. 106/NAG/2011 VIDE ORDER DATED 05/06/2015 HAS CONFIRMED THE DIRECTION OF HONBLE CIT(A). (P - 19) GR. NO. 5: SALES TAX INCENTIVES OF RS.4,18 ,27,757/ - TO BE EXCLUDED FOR COMPUTING PROFIT U/S 115JB. A) ISSUE COVERED IN FAVOUR OF ASSESSEE BY FOLLOWING DECISION OF HONBLE ITAT, NAGPUR BENCH, NAGPUR IN THE CASE OF ASSESSEE. I) ITA NO. 106/NAG/2011 ORDER DATED 05/06/2015 (ASSTT. YEAR 2006 - 07) (P - 20 & 21). GR. NO. 6: RS.1,19,50,500/ - . CONTRIBUTIONS TO AN APPROVED BODY ` RECOGNIZED U/S 35(1)(II). A) RS.1,19,50,500/ - PAID TO THAPAR CENTRE FOR INDUSTRIAL RESEARCH & DEVELOPMENT. 5 ITA NO. 332/NAG/2014 I) IT IS CONTRIBUTION ON ACCOUNT OF BUSINESS EXPEDIENCY AND NOT A DONATION AS DISALLOWED BY A.O. II) IN TERMS OF PROVISIONS OF SEC. 35(1)(II) DEDUCTION IS TO BE ALLOWED AT ONE AND ONE FOURTH TIME I.E. 125% OF AMOUNT PAID. ASSESSEE PRAYS THAT DEDUCTION OF RS.1,49,37,500/ - DIRECTED TO BE ALLOWED. III) CENTRAL BOARD OF DIRECT TAXES GRANTED APPROVAL U/S 35(1)(II) OF I.T. ACT W,.E.F. 2004 - 05 VIDE NOTIFICATION DATED 04/09/2009. (PAGE - 69 - 70). IV) DEDUCTION IS ALLOWABLE U/S 35(1)(II) OF I.T. ACT, 1961. B) HONBLE CIT(A) HAS NOT GRANTED ANY RELIEF TO ASSESSEE. CIT(A) MER ELY DIRECTED A.O. TO CONSIDER CLAIM AS PER DIRECTION OF HONBLE ITAT IN THE CASE OF NEWQUEST CORPORATION LTD. FOR A.YR. 2004 - 05 IN ITA NO. 243/NAG/2008 AND AS PER LAW . NO GRIEVANCE TO REVENUE. GROUND MISCONCEIVED. . 3 . FROM THE ABOVE IT IS APPARENT AND IT IS ALSO ACCEPTABLE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT LEARNED CIT(APPEALS) HAS FOLLOWED ITATS ORDER IN ASSESSEES OWN CASE IN DELETING THE ADDITION OR SETTING ASIDE THE SAME TO THE FILE OF THE AO TO CONSIDER IN THE LIGHT OF ITAT DECISION. N O CASE HAS BEEN MADE OUT THAT JURISDICTIONAL HIGH COURT HAS REVERSED THE EARLIER ITAT DECISION OR THAT THE FACTS IN THE PRESENT CASE ARE DIFFERENT. 4. HENCE RESPECTFULLY FOLLOWING THE PRECEDENT , WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(A PPEALS). WE AFFIRM HIS ORDER DELETING THE ADDITION OR SETTING ASIDE THE ISSUE AS APPLICABLE. 6 ITA NO. 332/NAG/2014 5. IN THE RESULT, THIS APPEAL OF THE REVENUE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF NOV., 2015. SD/ - SD/ - (MUKUL K. SHRAWAT) ( SHAMIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER. NAGPUR, DATED: 24 TH NOV., 2015. COPY FORWARDED TO : 1. M/S BALLARPUR INDUSTRIES LTD. FIRST INDIA PLACE, TOWER C, MEHRAULI, GURGAON ROAD, GURGAON., HARYANA. 2. A.C.I.T., CIRCLE - 7, NAGPUR. 3. C.I.T. CONCERNED 4. C.I.T. - II, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY. BY ORDER WAKODE ASSISTANT REGISTRAR, ITAT, NAGPUR