M/s. Khyber Cement Pvt. Ltd, Srinagar V. The Income-tax Officer,., Srinagar

ITA 343/ASR/2013

• Counselvise Citation: 34320914 RSA 2013
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 04-03-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 27-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: P K MISRA
• Keywords: Business income; Depreciation
• Section: 143(3); 80IB; 27; 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 PAN: AABCK6365J M/S KHYBER CEMENT PVT. LTD. VS. COMMISSIONER OF INCOME KHAYAM BUILDING, NOWPORA, TAX, J&K, JAMMU SRINAGAR (APPELLANT) (RESPONDENT) APPELLANT BY: SH. P.K. MISRA, CA RESPONDENT BY: SH. AMRIK CHAND, DR DATE OF HEARING: 04.03.2014 DATE OF PRONOUNCEMENT: 18.03.2014 ORDER PER BENCH 1. THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 22.03.2013 PASSED BY LEARNED COMMISSION ER OF INCOME TAX (J&K), JAMMU, FOR THE ASSESSMENT YEAR 2005-06 ON TH E FOLLOWING GROUNDS: I. THAT THE ORDER OF LEARNED COMMISSIONER OF INCOME TA X (J&K), JAMMU PASSED UNDER SECTION 263 IS BAD IN LAW AND ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE. II. THAT THE ORDER OF LEARNED COMMISSIONER OF INCOME TA X (J&K), JAMMU, HAS ERRED IN HOLDING THAT THE ORDER OF THE A SSESSING OFFICER FRAMED UNDER SECTION 271(1)(C) OF THE INCOME TAX AC T, 1961 IS 2 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE AND CONSEQUENTLY ERRED IN CANCELLING THE SAME. III. THAT THE ORDER OF LEARNED COMMISSIONER OF INCOME TA X (J&K), JAMMU, HAS ERRED IN NOT ACCEPTING THE PLEA OF THE A PPELLANT THAT THE LEARNED ASSESSING OFFICER HAD TAKEN ONE OF THE POSS IBLE VIEWS AND THUS THE PROVISIONS OF SECTION 263 OF THE INCOME TA X ACT, 1961 COULD NOT BE INVOKED. IV. THAT THE LEARNED COMMISSIONER OF INCOME TAX (J&K), JAMMU, HAS ERRED IN IGNORING THE JUDGMENT OF HON'BLE JURISDICT IONAL HIGH COURT IN THE CASE OF SHRI BALAJI ALLOYS & ORS. VS. CIT (2011 ) 51 DTR (J&K) 217 WHICH ITSELF SUPPORTED THE FACT THAT THERE WERE TWO VIEW POSSIBLE ON THE ISSUES INVOLVED IN ASSESSMENT ORDER AND THER EFORE IN RESPECT OF THE SAME PENALTY UNDER SECTION 271(1)(C) OF THE INC OME TAX ACT, 1961 WAS NOT WARRANTED AT ALL AND THEREFORE THERE I S NO ERROR IN THE PENALTY ORDER OF THE LEARNED ASSESSING OFFICER. V. THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE T O EACH OTHER. VI. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND /OR MODIFY THE ABOVE GROUNDS OF APPEAL. 2. THE FACTS RELATING TO THE ISSUE IN DISPUTED ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 29.03.2006 DECLARING NIL INCOME BY CLAIMING DEDUCTION OF RS. 3,11,47,710/- UNDER SECTION 80IB O F THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). THE ASSESSING OFFICER PR OCESSED THE SAME ON 01.05.2006. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AS PER CBDT ACTION PLAN GUIDELINES FOR 200 6-07 BY ISSUING NOTICE UNDER SECTION 143(2) OF THE ACT ON 12.07.200 6 FIXING THE CASE FOR HEARING ON 31.07.2006. IN RESPONSE TO THE SAME, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME T O TIME AND FILED ALL THE 3 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 DETAILS CALLED FOR WHICH WAS PLACED ON RECORD BY TH E ASSESSING OFFICER. THE ASSESSEE HAS ALSO PRODUCED THE BOOKS OF ACCOUNT . 2.1 THE ASSESSEE IS CARRYING ON THE BUSINESS OF MA NUFACTURING OF CEMENT. DURING THE PREVIOUS YEAR RELEVANT TO THE AS SESSMENT YEAR, THE ASSESSEE HAS DECLARED TOTAL INCOME OF RS. 10,70,31, 641/- WHICH INCLUDES EXCISE DUTY REFUND OF RS. 58,38,737/-. PROFIT OF RS . 3,40,11,008/- HAS BEEN DECLARED AND AFTER CLAIMING DEPRECIATION OF RS . 28,63,298/-, NET PROFIT OF RS. 3,11,47,710/- HAS BEEN WORKED OUT ON WHICH DEDUCTION U/S 80IB HAS BEEN CLAIMED. 2.2 DURING THE RELEVANT PREVIOUS YEAR, THE ASSESSE E HAS RECEIVED EXCISE DUTY REFUND OF RS. 58,38,737/-. IT WAS OBSER VED THAT DURING THE RELEVANT PREVIOUS YEAR, THE ASSESSEE HAS ALSO RECEI VED RS. 98,68,950/- AS EXCISE DUTY REFUND PERTAINING TO THE FINANCIAL YEAR 2002-03 AND 2003- 04, WHICH WAS REFLECTED IN ITS PROFIT & LOSS ACCOUN T UNDER THE HEAD PRIOR PERIOD ADJUSTMENTS. THE ASSESSEE HAS RECEIV ED TOTAL EXCISE DUTY REFUND OF RS. 1,52,38,446/- DURING THE RELEVANT PRE VIOUS YEAR. IN ADDITION TO THIS, THE ASSESSEE HAS ALSO RECEIVED TRANSPORT S UBSIDY OF RS. 83,05,902/- AND INTEREST ON FDRS PLEDGED WITH ELECTRICAL DEPART MENT AMOUNTING TO RS. 23,923/-. THE ASSESSEE HAS CLAIMED DEDUCTION UN DER SECTION 80IB ON 4 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 ALL THE AFORESAID RECEIPTS. THE ASSESSING OFFICER A SKED THE ASSESSEE VIDE QUESTION NO. 13 OF THE QUESTIONNAIRE DATED 26.10.20 07 AND ORDER SHEET ENTRY DATED 20.12.2007, TO STATE WHY DEDUCTION UND ER SECTION 80IB OF THE ACT ON EXCISE DUTY REFUND, TRANSPORT SUBSIDY & INTEREST ON FDRS MAY NOT BE DISALLOWED AS THESE DOES NOT QUALIFY FOR DEDUCTION U/S 80IB OF THE ACT. IN RESPONSE TO THE SAME, THE ASSESSEE FILE D ITS REPLY DATED 23.11.2007, WHICH THE ASSESSING OFFICER HAS REPRODU CED IN PARA NO. 4.1 AT PAGE NOS. 2 TO 4, AND THE FINDINGS OF THE ASSESS ING OFFICER IN PARA NO. 4.2 & 4.3 AT PAGE NOS. 4 TO 9, ARE REPRODUCED BELOW : 4.1 IN RESPONSE TO THE SAME, THE COUNSEL OF THE AS SESSEE VIDE LETTER DATED 23.11.2007 HAS STATED AS UNDER:- AS REGARDS REFUND OF EXCISE DUTY, IT IS SUBMITTED THAT MINISTRY OF COMMERCE & INDUSTRY, GOVERNMENT OF INDIA ISSUED OFFICE MEMORANDUM ON 14.06.2002 WHEREIN NEW INDUSTRIAL POL ICY WAS ANNOUNCED AND CERTAIN CONCESSIONS FOR THE STATE OF J&K WERE ANNOUNCED. THIS POLICY INCLUDED VARIOUS INCENTIVES TO THE INDUSTRIES WHICH ARE BOTH CAPITAL; SUCH AS CAPITAL INVESTMENT SUBSIDY AND REVENUE; SUCH AS INTEREST SUBSIDY ON WORKING CAPITA L LOAN, EXCISE EXEMPTION AND INSURANCE PREMIUM ON CAPITAL INVESTME NT. THESE INCENTIVES WERE ANNOUNCED FOR THE PURPOSE A S STATED IN PARA 2 OF THE OFFICE MEMORANDUM WHICH READS AS UNDE R:- KEEPING IN VIEW THE FACT THAT THE STATE OF J&K LAG S BEHIND IN INDUSTRIAL DEVELOPMENT A NEED HAS BEEN FELT FOR STR UCTURED INTERVENTIONIST STRATEGIES TO ACCELERATE THE INDUST RIAL DEVELOPMENT OF THE STATE AND BOOST INVESTOR CONFIDENCE. THE NEW IN ITIATIVES WOULD PROVIDE THE REQUIRED INCENTIVES AS WELL ARE AN ENAB LING ENVIRONMENT 5 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 FOR INDUSTRIAL DEVELOPMENT, IMPROVE AVAILABILITY OF CAPITAL AND INCREASE MARKET ACCESS TO PROVIDE A FILLIP TO THE P RIVATE INVESTMENT IN THE STATE. INCENTIVE FOR EXCISE DUTY IS MENTIONED IN PARA (I) OF THE OFFICE MEMORANDUM WHICH READS AS UNDER:- (I) NEW INDUSTRIAL UNITS AND EXISTING INDUSTRIAL UNITS ON THEIR SUBSTANTIAL EXPANSIONS AS DEFINED SET UP IN GROWTH CENTRE, INDUSTRIAL INFRASTRUCTURE DEVELOPMENT CENTRES (IDCS) AND OTHER LOCATIONS LIKE INDUSTRIAL ESTATES, PARKS, EXPORT PROCESSING ZONES, COMMERCIAL ESTATES, ETC. AS NOTIFIED BY THE CENTRAL GOVT. ARE ENTITLED TO 100% EXCISE DUTY EXEMPTION FOR A PERIOD OF 10 YEARS FROM THE DATE OF COMMENCEMENT OF COMMERCIAL PRODUCTION. TO GIVE EFFECT TO THE INCENTIVES ANNOUNCED VIDE O FFICE MEMORANDUM ISSUED BY GOVT. OF INDIAN ON 14.06.2002 NOTIFICATION UNDER CENTRAL EXCISE ACT, 1944 WAS ISSUED ON 14.11. 2002. THE RELEVANT PORTION OF THE SAID NOTIFICATION IS AS UND ER:- IN EXERCISE OF THE POWERS CONFERRED..THE CENTR AL GOVT. BEING SATISFIED THAT IT IS NECESSARY IN THE P UBLIC INTEREST SO TO DO HEREBY EXEMPT THE GOODS SPECIFIED IN SCHEDULE APPEN DED HERETO OTHER THAN GOODS SPECIFIED IN THE ANNEXURE APPENDED HERET O AND CLEARED FROM A UNIT LOCATED IN THE STATE OF J&K FROM SO MUC H OF THE DUTY OF EXCISE LEVIABLE THEREON UNDER ANY OF THE SAID ACTS AS IS EQUIVALENT TO THE AMOUNT OF DUTY PAID BY THE MANUFACTURE OF GOOD S, OTHER THAN THE AMOUNT OF DUTY PAID BY UTILIZATION OF CENVAT CREDIT UNDER THE CENVAT CREDIT RULES, 2002. THUS, THE UNITS OPERATING IN J&K WERE EXEMPT FROM E XCISE DUTY WHICH MEANS THAT WHATEVER DUTY IS RECOVERED BY THE COMPANY IS BUSINESS RECEIPTS OF THE COMPANY. IT HAS BEEN HELD IN NUMBER OF JUDICIAL PRONOUNCEMENTS THAT ANY TAX, DUTY OR CESS RECOVERED BY AN ASSESSEE IS A TRADING BUSINESS RECEIPT UNDER SECTIO N 28. TO GIVE EFFECT TO THE EXEMPT PROVIDED IN THE ABOVE NOTIFICATION, A MECHANISM WAS INCORPORATED IN THESE NOTIFICATIONS . THE 6 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 MANUFACTURER IS FIRST REQUIRED TO PAY THE EXCISE DU TY AND THEREAFTER, WHATEVER IS PAID IN CASH IS TO BE REFUNDED... THUS, THE AMOUNT OF REFUND RECEIVED FROM EXCISE DEPARTMENT IS NOTHING BUT EXCISE EXEMPTION AND NOT SOMETHING ELSE. IN PARA 3 OF THE CIRCULAR NO. 682 DATED 19.12.2002 IT HAS BEEN POINTED OUT THAT T HE REFUND ENVISAGES IN THE NOTIFICATIONS IS NOT ON ACCOUNT OF ANY EXCES S PAYMENT OF EXCISE DUTY BY THE MANUFACTURERS BUT IS BASICALLY DESIGNED TO GIVE EFFECT TO THE EXEMPTION. IN MC. DOWELL & CO. LTD. VS. CTO REPORTED AT (198 5) 47 CTR (SC) 126, IT HAS BEEN HELD THAT EXCISE DUTY RECEIPT IS A TRADING RECEIPT. IN SAHNEY STEEL & PRESS WORKS LTD. ETC. VS . CIT REPORTED AT (1997) 142 CTR (SC) 261 IT HAS BEEN HELD THAT REFUN D OF SALES TAX ETC., SUBSIDY ON POWER TARIFF, REFUND OF WATER TAX AFTER COMMENCEMENT OF COMMERCIAL PRODUCTION IS OPERATIONAL SUBSIDY AND A REVENUE RECEIPT. THE OBJECT OF THE SYSTEM IS TO ENABLE THE ASSESSEE TO RUN BUSINESS MORE PROFITABLY. IT HAS ALSO BEEN HELD IN DHARANGADARA CHEMICAL WORK S LTD. VS. CIT REPORTED AT (1997) CTR (BOM.) 180 THAT GRANT OF SUBSIDY BY STATE GOVT. TO ASSIST IN RUNNING THE BUSINESS OF THE ASSE SSEE IN A MORE PROFITABLE MANNER WOULD BE CHARGEABLE AS A BUSINESS INCOME AND CANNOT BE EXCLUDED FROM TRADING RECEIPTS. THUS, IT IS AMPLY CLEAR THAT THE AMOUNT OF REFUND O F EXCISE DUTY RECEIVED FORM EXCISE DEPARTMENT IS NOTHING BUT BUSI NESS RECEIPT AND NOT INCOME FROM OTHER SOURCES. IT MAY BE PERTINENT TO NOTE THAT INCOME FROM OTHER SOURCES IS A RESIDUAL HEAD OF INC OME WHICH ENGULFS ANY INCOME WHICH IS NOT COVERED UNDER ANY OTHER HEA D OF INCOME. INCOME FROM BUSINESS & PROFESSION IS COVERED BY SPE CIFIC PROVISION UNDER SECTION 28. IT IS BEYOND DOUBT THAT THE COMPA NY IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF CEMENT AND THE COMPA NY IS NOT DOING ANYTHING ELSE. FURTHER, THE EXEMPTION OF EXCISE IS CONDITIONAL TO THE FACT THAT THE COMPANY MANUFACTURES GOODS SPECIFIED IN THE NOTIFICATION IN A UNIT LOCATED IN A SPECIFIED AREA IN J&K AND CL EARS THE GOODS FROM THAT UNIT. THUS, EXCISE DUTY EXEMPTION IS CONDITION AL ON SALE OF GOODS, WHICH IS THE BUSINESS OF THE COMPANY. HAS TH E COMPANY NOT 7 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 MADE ANY SALES THEN NO REFUND OF EXCISE DUTY COULD HAVE BEEN DUE TO THE COMPANY. 4.2 THE CONTENTIONS OF THE ASSESSEE AS REPRODUCED ABOVE HAVE BEEN CONSIDERED WITH REFERENCE TO THE FACTS OF THE CASE, BUT SAME ARE NOT ACCEPTABLE IN VIEW OF THE FOLLOWING:- 1 (I) THE STATE OF JAMMU & KASHMIR FALLS UNDER T HE CATEGORY OF INDUSTRIALLY BACKWARD STATE, AS SUCH THAT ITS NA ME FIGURES IN THE EIGHTH SCHEDULE TO THE INCOME TAX ACT, 1961. IN ORDER TO P ROMOTE INDUSTRIALIZATION IN THE STATE OF JAMMU & KASHMIR B OTH GOVERNMENT OF JAMMU & KASHMIR AND GOVT. OF INDIA HAVE JOINTLY DES IGNED POLICY FOR INDUSTRIAL DEVELOPMENT IN THE STATE AND HAVE SANCTI ONED THE IMPLEMENTATION THE POLICY UNDER THE J&K INDUSTRIAL POLICY 2004 AND GOI NEW INDUSTRIAL POLICY AND OTHER CONCESSIONS FO R J&K STATE 2002. BOTH THE GOVERNMENTS HAVE ANNOUNCED DIFFERENT INCEN TIVES IN THIS REGARD WHICH ARE AS UNDER:- A) FROM GOVERNMENT OF INDIA: A) CAPITAL INVESTMENT SUBSIDY B) INTEREST SUBSIDY ON WORKING CAPITAL C) EXEMPTION OF UNION EXCISE DUTY D) INCOME TAX DEDUCTION E) FULL INSURANCE COVERAGE F) TRANSPORT SUBSIDY B) FROM JAMMU AND KASHMIR GOVERNMENT A) CAPITAL INVESTMENT SUBSIDY B) ALLOTMENT OF GOVERNMENT LAND IF AVAILABLE ON SU BSIDY C) SUBSIDY ON FEASIBILITY STUDY/DPR D) SUBSIDY ON DG SETS E) STUDY ON MODERNIZATION/EXPANSION OF EXISTING UN ITS F) BRAND PROMOTION INCENTIVE G) QUALITY CONTROL EQUIPMENT SUBSIDY H) POLLUTION CONTROL EQUIPMENT SUBSIDY I) INTEREST SUBSIDY 8 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 J) RESEARCH & DEVELOPMENT K) HUMAN RESOURCES DEVELOPMENT L) MARKETING SUPPORT M) TAX BENEFITS E.G. SALES TAX/VAT, TOLL TAX N) STAMP DUTY AND COURT FEE EXEMPTION O) REHABILITATION OF POTENTIAL SICK UNITS P) SUBSIDIZED POWER TARIFF. PRIMARILY, THE PURPOSE OF GRANTING OF INDUSTRIAL INCENTIVES IS TO ATTRACT INDUSTRIAL INVESTMENTS AND THAT THE UNITS A VAILING THE INCENTIVE ARE ABLE TO COMPETE WITH PRODUCERS WHO EITHER ENJOY ECO NOMIES OF SCALE OR ARE ADVANTAGEOUSLY PLACED TO BE COST EFFECTIVE. THU S, THESE ARE SO DESIGNED THAT THEY BECOME HELPFUL IN INCREASING THE COMPETITIVENESS OF THE NEW INDUSTRIAL UNIT AVAILING SUCH INCENTIVES AS REGARDS SETTING UP, RUNNING AND MARKET ACCEPTABILITY OF THE PRODUCT VIS --VIS QUALITY AND PRICE. HOWEVER, ALL THESE INCENTIVES AS DISCUSSED A BOVE HAVE INBUILT CONDITIONS AND MECHANISM. SIMILARLY, EACH INCENTIVE HAS BEEN ANNOUNCED BY THE RESPECTIVE GOVERNMENTS VIDE SEPARATE GOVERNM ENT ORDERS, NOTIFICATIONS AND LEGISLATIVE AMENDMENTS. THESE GOV ERNMENT ORDER AND NOTIFICATIONS, ETC. NOT ONLY DESCRIED THE EXTENT OF THE INCENTIVES BUT ALSO LAY DOWN THE ELIGIBILITY CRITERIA AND THE MECHANISM TO BE ADOPTED BY THE UNIT AVAILING SUCH INCENTIVES. PRIMARILY THESE INCE NTIVES ARE AVAILABLE TO NEW INDUSTRIAL UNITS AND TO THOSE EXISTING UNITS WH ICH HAVE AFTER A PARTICULAR DATE FULFILLED THE CONDITIONS LAID FOR T HE EXISTING UNITS I.E. SUBSTANTIAL EXPANSION. THE GOVERNMENT OF INDIA WHILE ANNOUNCING ITS I NCENTIVE RELATING TO UNION EXCISE DUTY HAS ISSUED TWO NOTIFI CATIONS THROUGH MINISTRY OF FINANCE & COMPANY AFFAIRS, DEPARTMENT O F REVENUE WHICH ARE NOTIFICATIONS NUMBERS 56/2002/CE AND 57/2002-CE BOTH DATED 14.11.2002. THESE NOTIFICATIONS NOT ONLY QUALIFY TH E EXTENT OF EXCISE BENEFIT BEING GIVEN TO INDUSTRIAL UNITS BUT ALSO LA Y DOWN THE CATEGORY OF BENEFICIARIES, CATEGORY OF GOODS, PERIOD FOR WHICH THE BENEFITS ARE AVAILABLE AND THE MANNER IN WHICH THE BENEFITS ARE TO BE GIVEN TO THE ELIGIBLE UNITS. (II) ALTHOUGH THE NOTIFICATIONS 56 AND 57/2002-C E DATED 14.11.2002 SPEAK OF EXEMPTION TO THE ASSESSEE FROM THE EXCISE DUTY 9 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 WHICH ASSESSEE PRESUMES AS IF COMPLETE AND DIRECT E XEMPTION HAS BEEN GIVEN FROM EXCISE DUTY TO THE INDUSTRIAL UNITS BUT IN PRACTICE AND SPIRIT THE SAME IS NOT THE CASE. THERE IS NO EXEMPTION UNTIL THE EXCISE DUTY IS PAID BY THE MANUFACTURER. THE INCIDENCE OF EXEMPTIO N ARISES AFTER THE DUTY HAS BEEN PAID. FOR BETTER UNDERSTANDING THE RELEVANT PORTION OF THE SAID NOTIFICATION IS REPRODUCED AS UNDER:- IN EXERCISE OF THE POWERS CONFERRED BY.AS IS EQUIVALENT TO THE AMOUNT OF DUTY PAID BY THE MANUF ACTURE OF GOODS, OTHER THAN THE AMOUNT OF DUTY PAID BY UTILIZATION O F CENVAT CREDIT UNDER THE CENVAT CREDIT RULES, 2002. THEREFORE, THE ABOVE UNDERLINED WORDS I.E. AS IS EQUIVALENT TO THE AMOUNT OF DUTY PAID BY THE MANUFACTURER OF GOOD S CONFIRM THAT THE AMOUNT OF EXEMPTION FROM EXCISE DUTY IS TO THE EXTE NT OF THE EXCISE DUTY ALREADY PAID BY THE ASSESSEE. THIS MEANS THAT FIRST THE MANUFACTURER WILL COLLECT THE DUTY FROM ITS BUYERS AND THEN IT WILL D EPOSIT THE SAME WITH EXCISE DEPARTMENT AND THEN THE SAME IS REFUNDED BAC K AS AN INCENTIVE. IN ORDER TO FURTHER SUBSTANTIATE THE ARGUMENT, RELI ANCE IS PLACED ON THE OPENING LINES OF PARA 2 OF THE CIRCULAR NO. 682 (SU PRA). THE ABOVE TWO NOTIFICATIONS FOR THE STATE OF J&K EXEMPT THAT PORTION OF THE EXCISE DUTY, WHICH IS PAID BY THE MA NUFACTURER IN CASH. FOR THIS PURPOSE, A SUITABLE MECHANISM HAS BEEN INC ORPORATED IN THE NOTIFICATIONS. THE MANUFACTURER IS FIRST REQUIRED TO PAY THE EXCISE DU TY AND THEREAFTER, WHATEVER IS PAID IN CASH IS TO BE R EFUNDED.. THE ABOVE REFERRED LIENS CONFIRM THE FOLLOWING:- 1. WHATEVER HAS BEEN PAID BY THE ASSESSEE IS NOTHI NG BUT EXCISE DUTY. 2. THE EXEMPTION IS AVAILABLE ONLY AFTER THE EXCIS E DUTY HAS BEEN PAID. HENCE THERE IS NO EXEMPTION FROM THE PAYMENT OF EXCISE DUTY. 3. THE MECHANISM OF EXEMPTION INCORPORATED STARTS AFTER THE PAYMENT OF EXCISE DUTY. THERE IS NO EXEMPTION BEFOR E THE PAYMENT OF EXCISE DUTY. 10 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 4. SINCE ASSESSEE IS UNDER LIABILITY TO PAY THE DU TY COLLECTED FROM CUSTOMERS ON BEHALF OF THE GOVT. ITS REFUND AN INCE NTIVE IS NOTHING BUT INCOME WHICH IS NOT DERIVED FROM THE IN DUSTRIAL UNDERTAKINGS BUT OUT OF A SCHEME ENVISAGED BY THE C ENTRAL GOVT. HAD THERE BEEN NO SUCH SCHEME THERE WOULD HAV E BEEN NO SUCH INCOME ALSO. IT CONFIRMS IN UNEQUIVOCAL TERMS THAT AMOUNT PAID BY THE ASSESSEE THE CENTRAL EXCISE DEPARTMENT IS NOTHING BUT THE PAYMENT OF EXCISE DUTY. THUS THE ASSESSEE CANNOT CLAIM THAT THE SAID PAYMENT IS NOT ON ACCOUNT OF EXCISE DUTY. (III) THE ABOVE ARGUMENTS GET MORE STRENGTH FROM T HE OPENING LINE OF PARA (4) OF CIRCULAR NO. 682 (SUPRA ) THE SAME ARE REPRODUCED AS UNDER:- THE NOTIFICATIONS PROVIDE FOR EXPEDITIOUS REFUND OF DUTY PAID IN CASH. IT IS FOR THIS REASON THAT A PROVISIONS HAS BEEN M ADE FOR ALLOWING REFUND EVEN ON PROVISIONAL BASIS BY THE 15 TH OF THE NEXT MONTH, IN CASE THERE IS LIKELY TO BE DELAY IN VERIF ICATION OF THE REFUND CLAIMS. ANY EXCESS OR SHORTFALL IN CASE OF REFUND A LLOWED ON PROVISIONS BASIS MAY BE ADJUSTED IN SUBSEQUENT REFUND CLAIMS. CONSIDERING THE FACT THAT VERIFICATION OF REFUND CLAIMS BASICALLY I NVOLVES CHECKING OF DUTY PAID IN CASH, IN MOST OF CASES, IT SHOULD BE POSSIBLE TO ALLOW REFUND BY THE 15 TH OF THE SUBSEQUENT MONTH. THEREFORE, THE ASSESSEE IS UNDER OBLIGATION AND IS LIABLE TO PAY EXCISE DUTY, WHICH HAS BEEN COLLECTED FROM OR DEEME D TO HAVE BEEN COLLECTED FROM ITS BUYERS AT A SPECIFIED RATE UNDER THE CENTRAL EXCISE ACTS. THERE IS NO EXEMPTION FROM THE PAYMENTS OF SU CH DUTY COLLECTED BY THE ASSESSEE TO THE CENTRAL EXCISE DEPARTMENT. H OWEVER, THE WHOLE MECHANISM OF EXEMPTION IS SO DESIGNED THAT WHATEVER THE AMOUNT OF EXCISE DUTY IS COLLECTED FROM THE BUYER AND DEPOSIT ED WITH THE EXCISE DEPARTMENT BY THE ASSESSEE, REACHES BACK BY WAY OF INCENTIVE FROM THE CENTRAL EXCISE DEPARTMENT IN THE SHAPE OF REFUND. W HATEVER THE ASSESSEE IS LIABLE TO PAY IS ONLY A DUTY OF EXCISE AND NOTHING ELSE . 11 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 (IV) FURTHER, A PERUSAL OF PARA 2(B) OF THE NOTIFICATION S NOS. 56 AND 57/2002-CE BOTH DATED 14.11.2002 THE PAYMENT OF THE EXCISE AND THE SUBMISSION OF THE STATEMENT IS SUBJECT TO V ERIFICATION BY THE ASSTT./DEPUTY COMMISSIONER OF EXCISE. SIMILARLY PAR A 4 OF CIRCULAR NO. 682 (SUPRA) CONFIRMS THAT THE REFUND ARE SUBJEC T OF PRE-AUDIT. THIS PROVES BEYOND DOUBT THAT HOW IMPORTANT IN THE WHOLE MECHANISM, THE PAYMENT OF EXCISE DUTY IS. (V) RULE 9(2) OF THE CENTRAL EXCISE RULES AUTHORIZES CB EC TO GRANT EXEMPTION FROM REGISTRATION IN CERTAIN CAS ES. UNDER THESE POWERS, NOTIFICATION NO. 36/2001-CE(NT) GRANTS EXEM PTION FROM REGISTRATION, IN VARIOUS CASES. ONE SUCH CONDITION IS WHEN MANUFACTURER IS COMPLETELY EXEMPT FROM PAYMENT OF D UTY. THE FACT THAT THE ASSESSEE IS NOT EXEMPTION FROM REGISTRATIO N WITH CENTRAL EXCISE DEPARTMENT PROVES THE FACT THAT THE ASSESSEE IS NOT EXEMPT FROM PAYMENT OF EXCISE DUTY AND THE WHOLE MECHANISM IS DEVISED TO GIVE INCENTIVE TO THE MANUFACTURER IN THE SHAPE OF EXCISE REFUNDS. ASSESSEE CANNOT CLAIM ANY RIGHT OVER EXCISE DUTY CO LLECTED BY IT FROM THE CUSTOMERS. IT IS ONLY COLLECTED BY IT ON B EHALF OF THE GOVT. OF INDIA AND IS UNDER AN OBLIGATION TO DEPOSIT THE SAM E WITH IN A STIPULATED TIME. THUS, THERE IS A STATUTORY OBLIGATION ON THE PART O F ASSESSEE TO PAY A DUTY WHICH IT HAD COLLECTED ON BE HALF OF THE GOVERNMENT. WHEN THE DUTY IS COLLECTED FROM THE CUSTOMER, THE ASSESSEE IS UNDER OBLIGATION TO PAY IT TO THE EXCIS E DEPARTMENT. (VI) IN LIGHT OF THE ABOVE, IT CANNOT BE ACCEPTED THAT THE AMOUNT PAID BY THE ASSESSEE TO THE EXCISE DEPARTMEN T IS NOT AN EXCISE DUTY, AS ARGUED BY THE ASSESSEE. 2(I) FURTHER, THE ARGUMENT OF THE ASSESSEE THAT TH E RECEIPT ON ACCOUNT OF REFUND IS BUSINESS RECEIPT IS NOT CORRECT AS THE PAYMENT MADE BY THE EXCISE DEPARTMENT IS ON ACCOUNT OF DISCHARGE OF STATUTORY LIABILITY AND THE REFUND OF THE SAME IS A N INCENTIVE BY THE EXCISE DEPARTMENT. SIMILAR VIEW HAS BEEN HELD AS DI SCUSSED ABOVE IN THE JUDGMENTS IN THE CASES OF:- 12 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 I) CHOWRINGHEE SALES BUREAU P. LTD. VS CIT [1973] 87 ITR 542 (SC)- SUPREME COURT. II) GUJARAT HIGH COURT CASE CIT ED AS (MOTILAL AM BAIDAS VS. CIT) [1977] 108 ITR 136 III) WOLKEM (PVT) LTD. VS. CIT 259 ITR 430- RAJAST HAN HIGH COURT IV) CHIEF COMMISSIONER OF INCOME TAX VS. KESARIA T EA CO. LTD. (2002) 254 ITR 434 (SC) V) POLYFLEX (INDIA) PVT. LTD. V/S CIT (2002) ITR 3 43 (SC) VI) SINCLAIR MURRY AND CO. PVT. LTD. V/S CIT (1974 ) 97 ITR 615 (SC) (VII) M/S MYSORE TEHRMO ELECTRIC P. LTD. VS. CIT 2 21 ITR 504 (KARNATKA) VIII) CIT VS. BHARAT IRON & STEEL INDUSTRIES (1993 ) 199 ITR 67 (GUJ) IX) CIT V/S THIRUMALASWAMY NAIDU AND SONS (1988) 2 30 ITR 534 (SC) X) CIT V/S M/S MARKANDA VANASPATI MILLS LTD. ITA N O. 51 OF 1990 DATED 30.10.2006 P&H HIGH COURT. IN VIEW OF THE ABOVE IT IS NOT POSSIBLE TO ACCE PT THAT THE RECEIPT OF REFUND IS BUSINESS RECEIPT BUT AN IN CENTIVE BY THE EXCISE DEPARTMENT. 3(I) THE NET PROFIT REFLECTED BY ASSESSEE IS INCLUSIVE O F THE PROFIT OUT OF REFUNDS FROM EXCISE DEPARTMENT, TRANS PORT SUBSIDY RECEIVED & INTEREST ON FDRS. ASSESSEE HAS CLAIMED D EDUCTION U/S 80IB ON THE NET PROFIT OF RS. 3,11,47,710/-. AS PER THE PROVISIONS OF SECTION 80IB OF THE I.T. ACT, 1961 ONLY THE PROFITS & GAINS DERIVED FROM THE INDUSTRIAL UNDERTAKING ARE ELIGIBLE FOR T HE DEDUCTION. II) FOR BETTER UNDERSTANDING THE RELEVANT PORTION OF THE NEW SECTION 80IB IS REPRODUCED AS UNDER:- 80 IB (1) WHERE THE GROSS TOTAL INCOME OF THE ASSE SSEE INCLUDES ANY PROFIT AND GAINS DERIVED FROM ANY BUSI NESS REFERRED TO IN SUB-SECTION (3) TO (11), (11A) AND (11B) (SUCH BUSI NESS BEING 13 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 HEREINAFTER REFERRED TO AS ELIGIBLE BUSINESS), THER E SHALL, IN ACCORDANCE IN THE CASE OF ASSESSEE THE ELIGIBLE BUSINESS SHAL L BE WHAT HAS BEEN GIVEN IN SUB-SECTION (4) WHICH IS REPRODUC ED IN RELEVANT PORTION AS UNDER:- THE AMOUNT OF DEDUCTION IN THE CASE OF AN INDUST RIAL UNDERTAKING IN A INDUSTRIALLY BACKWARD STATE SPECIF IED IN THE EIGHTH SCHEDULE SHALL BE HUNDRED PERCENT OF THE PROFIT AND GAINS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING AS PER THE DECISIONS OF HON'BLE APEX COURT IN THE CASES OF CIT VS. STERLING FOODS (1999) 237 ITR 579 (SC) AND CIT VS. PANDIAN CHEMICALS LTD. 262 ITR 278 (SC) WHERE IN THE SCOPE AND EXTENT OF THE WORDS DERIVED FROM HAS BEEN DISCUSSED BY THE SUPREME COURT AND IT HAS BEEN HELD THAT ONLY THE PROFIT OF ASSESSEE H AVING DIRECT NEXUS WITH THE INDUSTRIAL UNDER TAKING OF THE ASSES SEE ARE ELIGIBLE FOR DEDUCTION. THE DEDUCTION IS NOT AVAILABLE TO THOSE PROFITS AN D GAINS WHICH ARE MERELY INCIDENTAL TO BUSINESS. THUS THE MAIN REQUIREMENT FOR AN INCOME TO BE ELIGIBLE FOR THE SA ID DEDUCTION, IS THAT IT SHOULD HAVE BEEN DERIVED FROM THE INDUSTRIAL U NDERTAKING. WHETHER A PARTICULAR INCOME IS DERIVED FROM INDUSTR IAL ACTIVITY OR NOT CAN ONLY BE JUDGED FROM THE FACT THAT WHETHER I T HAS DIRECT NEXUS WITH THE INDUSTRIAL UNDERTAKING OR NOT. AN INCOME WHICH IS MERELY INCIDENTAL TO THE INDUSTRIAL UNDERTAKING CANNOT BE CONSIDERED TO HAVE A DIRECT NEXUS WITH IT. THE ABOVE PRINCIPLE HAS BEEN GIVEN BY THE SUPREME COURT IN MANY JUDGMENTS INCLUDING THAT OF C IT VS. STERLING FOODS 237 ITR 579 (SC) AND CIT VS. PANDIAN CHEMICAL S LTD. 262 ITR 278 (SC). THE TEST IS TO SAME AS TO WHAT IS THE SOURCE OF INCOME. IF THE INDUSTRIAL UNDERTAKING IS THE DIRECT SOURCE OF INCOME THEN IT CAN BE SAID THAT THE INCOME HAS BEEN DERIVED FROM THE I NDUSTRIAL UNDERTAKING. ON THE CONTRARY, IF THE INDUSTRIAL UND ERTAKING IS NOT THE DIRECT SOURCE OF THE INCOME THEN THE INCOME DOES NO T BECOME ELIGIBLE FOR THE DEDUCTION. 14 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 IT HAS BEEN HELD BY HON'BLE SUPREME COURT IN THE CASE OF CIT VS. M/S STERLING FOODS (SUPRA); THE DICTIONARI ES STATE THAT THE WORD DERIVE IS USUALLY FOLLOWED BY THE WORD FROM AND IT MEANS : GET OR TRACE FROM A SOURCE; ARISE FROM, ORIGINATE I N; SHOW THE ORIGIN OR FORMATION OF. IT IS TO BE ESTABLISHED THAT THE PROFIT AND GAINS W ERE DERIVED FROM THE INDUSTRIAL UNDERTAKING AND IT IS JUST NOT SUFFICIENT THAT A COMMERCIAL CONNECTION IS ESTABLISHED BETWEEN THE PR OFITS EARNED AND THE INDUSTRIAL UNDERTAKING. THE INDUSTRIAL UNDERTAK ING ITSELF HAD TO BE THE SOURCE OF THE PROFIT. THE INDUSTRIAL UNDERTAKIN G HAS DIRECTLY TO YIELD THE PROFIT. IT SHOULD BE THE DIRECT SOURCE AND NOT MERELY A MEAN TO EARN THE SAME. IF ANY INCOME ARISES NOT BY VIRTUE OF THE NORMAL ACTIVITY OF THE INDUSTRIAL UNDERTAKING BUT B ECAUSE OF SOME SCHEME THEN IT IS SCHEME OF THE GOVT. WHICH IS THE DIRECT SOURCE AND NOT THE INDUSTRIAL ACTIVITY ITSELF. THIS DECISION OF THE HON'BLE SUPREME COURT WAS FOLL OWED BY VARIOUS COURTS AS DETAILED HEREUNDER:- 1. M/S LIBERTY INDIAN VS. CIT, KARNAL ITA NO. 590 OF 2005 DATED 22.09.2006 2. CIT VS. RITESH INDUSTRIES (2005) 274 ITR 324 3. NAHAR EXPORTS LTD. VS. CIT(2006) 204 CTR (P&H) 464- III) FURTHER MORE, ANY INCOME WHICH IS DERIVED FR OM AN INDUSTRIAL UNDERTAKING IS NOT DEPENDENT UPON THE LO CATION OF THE INDUSTRIAL UNDERTAKING. IT IS CONSIDERED TO BE DER IVED FROM IT ANYWHERE IRRESPECTIVE OF ITS LOCATION. WHEREAS WHEN A PARTICULAR INCOME ARISES ONLY BY WAY OF A SPECIFIC LOCATION (S TATE OF J&K IN THE CASE OF ASSESSEE) AND DOES NOT ARISE TO OTHER U NITS WHICH ARE MANUFACTURING THE SAME GOODS OUTSIDE THAT SPECIFIC LOCATION, THEN IT CANNOT BE CONSIDERED THAT THE PARTICULAR INCOME HAS BEEN DERIVED FROM THAT INDUSTRIAL UNDERTAKING BUT IN T HAT CASE IT HAS BEEN DERIVED FROM THAT PARTICULAR SCHEME WHICH SP ECIFIES THE PARTICULAR LOCATION OR OTHER ELIGIBILITY CRITERIA. 15 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 4.3 THEREFORE, THE INCOME OF ASSESSEE TO THE EXTENT OF EXCISE DUTY COLLECTED FROM THE CUSTOMER AND FORMING PART O F THE TOTAL INCOME CANNOT BE CONSIDERED TO BE ELIGIBLE FOR DEDUCTION U /S 80IB BEING AN INCOME NOT DERIVED FROM THE INDUSTRIAL UNDERTAKING. HERE THE INDUSTRIAL UNDERTAKING IS MERELY A MEAN TO EARN THE INCOME BUT IS NOT THE DIRECT SOURCE. SIMILAR VIEW IS TAKEN IN RES PECT OF TRANSPORT SUBSIDY RECEIVED AND INTEREST EARNED ON FDRS AS ALL THESE INCOMES ARE NOT DERIVED FROM THE INDUSTRIAL UNDERTAKING AS LAID DOWN IN THE PROVISIONS OF SECTION 80IB OF THE INCOME TAX AC T, 1961 3. AFTER CONSIDERING THE REPLY FILED BY THE ASSESSE E, THE ASSESSING OFFICER HAS GIVEN THE AFORESAID FINDINGS AND COMPLE TED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 28 .12.2007 BY MAKING VARIOUS ADDITIONS INCLUDING THE ADDITIONS IN DISPUT E. 4. AGGRIEVED WITH THE ASSESSMENT ORDER DATED 28.12.2 007, THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED FIRST APPELLATE AUTHORITY, WHO VIDE ORDER DATED 25.02.2009 DISMISSED THE APPEAL OF THE ASSESS EE. AGGRIEVED BY THE ORDER DATED 25.02.2009 PASSED BY LEARNED CIT(A), BA THINDA, THE ASSESSEE FILED AN APPEAL I.E. ITA NO. 274(ASR)/2009 FOR A.Y. 2005-06, M/S KHYBER CEMENT PVT. LTD. VS. INCOME TAX OFFICER, BEF ORE I.T.A.T., AMRITSAR BENCH, AND THIS BENCH VIDE ORDER DATED 18 TH DECEMBER, 2009 16 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 UPHELD THE ORDER DATED 25.02.2009 PASSED BY LEARNED CIT(A), BATHINDA, AND DISMISSED THE APPEAL FILED BY THE ASSESSEE. 5. LEARNED COMMISSIONER OF INCOME TAX (J&K), JAMMU, IN THE IMPUGNED ORDER DATED 22.03.2013 MENTIONED THE BRIEF FACTS OF THE CASE THAT THE ASSESSMENT FOR THE ASSESSMENT YEAR 2005-06 WAS COMPLETED UNDER SECTION 143(3) OF THE ACT BY THE INCOME TAX OFFICER , WARD-3(1), SRINAGAR, AND SUBSEQUENTLY, AN ORDER LEVYING A PENA LTY OF RS. 9,653/- UNDER SECTION 271(1)(C) OF THE ACT WAS PASSED ON 21 .06.2010 BY OBSERVING THAT WHILE PASSING THE ORDER OF ASSESSMEN T THE MAIN ADDITIONS MADE IN THE CASE ARE EXCISE DUTY REFUND RS. 1,52,38 ,466/-; TRANSPORT SUBSIDY 83,05,902/-; INTEREST ON FDRS RS. 23,922/-, TOTAL ADDITIONS OF RS. 2,35,68,91/-. LEARNED CIT (J&K), JAMMU, HAS ALSO S TATED THAT AGAINST THE ASSESSMENT THE ASSESSEE FILED AN APPEAL BEFORE LEAR NED CIT(A), BATHINDA, WHO VIDE ORDER DATED 25.02.2009 DISMISSED THE APPEA L FILED BY THE ASSESSEE AND I.T.A.T., AMRITSAR BENCH HAS ALSO UPHE LD THE DECISIONS OF LEARNED CIT(A), BATHINDA ON 18.12.2009. THE ASSESSI NG OFFICER THEN PASSED AN ORDER LEVYING PENALTY UNDER SECTION 271(1 )(C) OF THE ACT BUT WHILE PASSING THE SAID PENALTY ORDER, THE ASSESSING OFFICER HAS TAKEN ONLY AMOUNT OF RS. 23,922/- ON ACCOUNT OF INTEREST OF FD RS LEAVING THE OTHER 17 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 ADDITIONS MENTIONED ABOVE. THUS, THE ORDER PASSED U NDER SECTION 271(1)(C) OF THE ACT DATED 21.06.2010 FOR A.Y. 2005 -06 IS PRIMA FACIE NOT ONLY ERRONEOUS BUT PREJUDICIAL TO THE INTEREST OF THE REVENUE ALSO. ACCORDINGLY, A SHOW-CAUSE NOTICE UNDER SECTION 263 OF THE ACT WAS ISSUED TO THE ASSESSEE IN RESPECT OF PENALTY ORDER UNDER SECTION 271(1)(C) OF THE ACT, DATED 21.06.2010 FOR THE A.Y. 2005-06 W HICH WAS DULY SERVED UPON THE ASSESSEE. IN RESPONSE TO THE SAME, THE ASS ESSEE FILED ITS REPLY DATED 23.01.2013, WHICH THE LEARNED CIT (J&K), JAMM U, HAS REPRODUCED IN PARA NO. 2 AT PAGE NOS. 2 & 3, AND THE FINDINGS OF LEARNED CIT (J&K), JAMMU, ON THE SAID REPLY IN PARA NOS. 3 & 4, AT PAG E NOS. 3 & 4, ARE REPRODUCED BELOW: THE ACTION OF THE ASSESSING OFFICER IS LEGALLY SUS TAINABLE AND CORRECT IN LAW IN VIEW OF NUMEROUS JUDICIAL PRONOUNCEMENTS IN THIS REGARD. SINCE THE ASSESSING OFFICER HAS ALREADY TAKEN A VIE W, WHICH IS LEGALLY CORRECT AND SUSTAINABLE, THE MATTER IS NOT OPEN FOR REVIEW UNDER SECTION 263 OF THE INCOME TAX ACT, 1961. THE RELIAN CE IN THIS CASE IS PLACED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASES OF MALABAR INDUSTRIAL CO. LIMITED VS. CIT (2000) 243 ITR 83(SC) AND COMMISSIONER OF INCOME TAX VS. MAX INDIA LIMITED RE PORTED AT (2007) 295 ITR 282 (SC). UNDER SIMILAR CIRCUMSTANCES, HON'BLE DELHI HIGH CO URT HAS DELETED PENALTY UNDER SECTION 271(1)(C) IN THE CASE OF CIT VS. DHARAMPAL PREMCHAND LIMITED REPORTED AT (2010) 329 ITR 572 ( DEL). IN THIS CASE ALSO THE ASSESSEE CLAIMED DEDUCTION UNDER SECT ION 80-IA AND 80- IB ON EXCISE REFUND AND THESE DEDUCTIONS WERE NOT A LLOWED BY THE ASSESSING OFFICER. IT HAS BEEN HELD BY THE HON'BLE HIGH COURT THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDI TURE, WHICH CLAIM 18 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVEN UE, THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY UNDER SECTION 271(1)( C). IT MAY ALSO BE PERTINENT TO NOTE THAT UNDER SIMILAR CIRCUMSTANCES HON'BLE JAMMU & KASHMIR HIGH COURT HAS HELD IN THE QUANTUM ADDITION CASE THAT EXCISE DUTY CLAIM IS A CAPITAL R ECEIPT AND NOT REVENUE RECEIPT AND HENCE NOT TAXABLE AT ALL. REFER SHREE BALAJI ALLOYS & ORES VS. CIT & ORS (2011) 51 DTR (J&K) 217. THUS, THE DISALLOWANCE OF CLAIM UNDER SECTION 80-IB IS LIABLE TO DELETED IN VIEW OF THE ABOVE DECISION, SINCE THE ASSESSEE IS IN APP EAL BEFORE HON'BLE JAMMU & KASHMIR HIGH COURT. HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIAN CE PETROPRODUCTS PRIVATE LIMITED HAS HELD AS UNDER: WE HAVE ALREADY SEEN THE MEANING OF THE WORD PART ICULARS IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNCTION, THEY MUST MEAN THE DETAIL SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERR ONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THIS CASE, THERE IS NO F INDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND T O BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271( 1)(C) OF THE ACT. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULAR S REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETU RN CANNOT TO THE INACCURATE PARTICULARS. THE ABOVE CASE IS SQUARELY APPLICABLE TO THE CASE O F THE ASSESSEE COMPANY. SIMILAR VIEW HAS BEEN TAKEN BY HON'BLE SUPREME COUR T IN THE CASE OF CEMNET MARKETING CO. OF INDIA LIMITED VS. ASSISTANT COMMISSIONER OF SALES TAX & ORS., REPORTED AT (1980) 124 ITR 15 (SC). IN THIS CASE FREIGHT WAS INCLUDED IN THE GROSS SALES FOR PAYMENT OF SALES TAX, THROUGH THE AMOUNT WAS DULY DECLARED IN THE BOOKS O F ACCOUNTS. IT WAS HELD BY THE SUPREME COURT THAT THERE IS NO CONCEALM ENT BY THE ASSESSEE NOR THERE WAS ANY FURNISHING OF INACCURATE PARTICULARS. IT HAS BEEN HELD IN T. ASHOK PAL VS. CIT REPORTED A T (2007) 210 CTR (SC) 259 THAT BEFORE HAVING RECOURSE TO EXPLANATION , THE ASSESSING OFFICER MUST ARRIVE AT A FINDING THAT EXPLANATION I S NOT ONLY NOT BONA FIDE BUT ALL THE FACTS RELATING TO THE SAME AND MAT ERIAL TO THE INCOME WERE NOT DISCLOSED BY THE ASSESSEE. 19 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 IN VIEW OF THE ABOVE, YOU ARE HERE BY KINDLY REQUES TED TO DROP THE PROCEEDINGS UNDER SECTION 263. 3. AFTER GOING THROUGH THE FACTS OF THE CASE AND THE REPLY OF THE ASSESSEE, IT HAS BEEN OBSERVED THAT THE ABOVE MENTI ONED ADDITIONS MADE HAVE BEEN DISCUSSED IN THE BODY OF ORDER AT LE NGTH AND ON COMMON LOGIC EMERGING OUT OF THE DISCUSSION IN ASSE SSMENT AND CONSEQUENT HON'BLE I.T.A.T. AMRITSARS ORDER IN THI S CASE IS THAT ALL THESE ADDITIONS ARE MADE BY THE ASSESSING OFFICER O N THE COROLLARY THAT IN VIEW OF DECISION OF THE HON'BLE SUPREME COU RT IN THE CASE OF CIT VS. STERLING FOODS (1999) 237 ITR 579 (SC), CIT VS. PANDIAN CHEMICALS LTD., 262 ITR 278(SC) HOLDING THAT THE AB OVE ITEMS OF RECEIPT DO TO CONSTITUTE PROFITS DERIVED FROM THE INDUSTRIAL UNDERTAKING PROFITS OF WHICH ARE ELIGIBLE FOR DEDU CTION U/S 80IB OF THE INCOME TAX ACT, 1961. THE ASSESSING OFFICER HAS FURTHER RELIED ON THE RECENT JUDGMENT OF THE HON'BLE APEX COURT IN TH E CASE OF M/S LIBERTY INDIA ON THE SAME ISSUE. IT IS PERTINENT TO MENTION HERE THE OBSERVATIONS AS PER PARA NO. 4.3 OF THE ASSESSMENT ORDER DATED 28.12.2007:- THEREFORE, THE INCOME OF THE ASSESSEE TO THE EXTEN T OF EXCISE DUTY REFUND COLLECTED FROM THE CUSTOMERS AND FORMING PAR T OF THE TOTAL INCOME CANNOT BE CONSIDERED TO BE ELIGIBLE FOR DEDU CTION U/S 80IB BEING AN INCOME NOT DERIVED FROM THE INDUSTRIAL UND ERTAKING. HERE INDUSTRIAL UNDERTAKING IS MERELY A MEAN TO EARN THE INCOME BUT IS NOT THE DIRECT SOURCE. SIMILAR VIEW IS TAKEN IN RESPECT OF TRANSPORT SUBSIDY RECEIVED AND INTEREST EARNED ON FDRS AS ALL THESE I NCOMES ARE NOT DERIVED FROM THE INDUSTRIAL UNDERTAKING AS LAID DOW N IN THE PROVISIONS OF SECTION 80IB OF THE INCOME TAX ACT, 1961. IT IS THEREFORE EVIDENT THAT THE ASSESSING OFFICER MADE A MISTAKE BY LEVYING PENALTY ONLY WITH REFERENCE TO THE ADDITION MADE ON ACCOUNT OF INTEREST INCOME AND OMITTING THE OTHER ADDITIONS ON WHICH ADDITIONS WERE MADE AND DULY CONFIRMED BY THE CIT(A) AS WELL AS I.T.A.T. THE ACTION OF THE ASSESSING OFFICER IS THEREFORE LEGALL Y NOT SUSTAINABLE AND ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. SINCE THE DEPARTMENT IS ALREADY CONTESTING THE DECI SION OF THE HON'BLE HIGH COURT OF J&K, JAMMU ON THIS ISSUE BEFORE THE S UPREME COURT OF 20 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 INDIAN IN SLPS FILED IN THESE CASES, THE ASSESSEE P LEA IS THEREFORE NOT ACCEPTED. 3.1 THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. ACTIVE TRADERS (P) LTD. [1995] 214 ITR 583, HAS HELD THAT CIT CAN REGARD AN (ASSESSMENT) ORDER TO BE ERRONEOUS, WHERE IN THE CI RCUMSTANCES OF THE CASE, HE FINDS THAT IT HAS MADE IN UNDUE HASTE AND WITHOUT PROPER INQUIRY. IT IS INCUMBENT ON THE ASSESSING OFFICER TO INVESTI GATE THE FACTS STATED IN THE RETURN, PARTICULARLY WHEN CIRCU MSTANCES OF THE CASE SUGGEST THAT THE INQUIRY WOULD BE NECESSARY OR PRUDENT. HENCE THE WORD ERRONEOUS WOULD ALSO INCLUDE A FAI LURE TO MAKE SUCH INQUIRY. THE ASSESSEES CONTENTION THAT THERE CANNOT BE A REVISION U/S 263 BY RELYING UPON THE JUDGMENTS MENT IONED ABOVE IS THEREFORE NOT BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 3.2 THUS IN THE LIGHT OF THE ABOVE FACTS, IT IS ES TABLISHED THAT WHILE PASSING ABOVE PENALTY ORDER THE A.O. HAS NOT ONLY G AVE A SKETCHY/PART PICTURE OF THE BACKGROUND OF THE NATURE OF ADDITION S AS PER ASSESSMENT ORDER BUT ALSO APPEAR TO BE MISLEADING IN THE SENSE THAT ISSUES BEFORE HIM WERE W.R.T. ADDITION OF RS. 2,35,44,369/- (ON ACCOUNT OF EXCISE REFUND AND TRANSPORT SUBSIDY)+ ADDITION OF RS. 23,9 22/- (ON ACCOUNT OF INTEREST ON FDRS), WHEREAS WHILE PASSING PENALTY ORDER THE A.O. HAS TAKEN ONLY AMOUNT OF RS. 23,922/ - OUT OF THESE ADDITIONS . THIS PENALTY ORDER IS PRIMA FACIE NOT ONLY ERRONE OUS BUT PREJUDICIAL TO THE INTERESTS OF THE REVENUE ALSO. 4. IN VIEW OF ABOVE, I AM OF THE CONSIDERED VIEW T HAT THE ORDER PASSED BY THE A.O. WITHOUT CARRYING OUT PRIMARY INVESTIGATIONS/EXAMINATION OF ISSUES BEFORE HIM IN BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AS THE ASSES SING OFFICER HAS NOT MADE THE REQUISITE INQUIRY IN REGARD WITH ABOVE ISS UES BEFORE HIM WHILE PASSING ORDER OF PENALTY. I THEREFORE, CANCEL THE ORDER PASSED BY ITO WARD-3(1), SRINAGAR UNDER SECTION 271(1)(C) ON 21.06.2010 WITH THE DIRECTIONS TO MADE A FRESH ORDER IN THE LI GHT OF ABOVE OBSERVATIONS. 6. LEARNED CIT (J&K), JAMMU, HAS PASSED THE IMPUGN ED ORDER UNDER SECTION 263 OF THE ACT ON 22.03.2013 DIRECTIN G THE ASSESSING OFFICER TO MAKE FRESH ORDER UNDER SECTION 271(1)(C) OF THE ACT IN THE CASE 21 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 OF ASSESSEE. AGGRIEVED WITH THE IMPUGNED ORDER DATE D 22.03.2013, PASSED BY LEARNED CIT (J&K), JAMMU, UNDER SECTION 2 63 OF THE ACT, THE ASSESSEE FILED THE PRESENT APPEAL. 7. AT THE TIME OF HEARING LEARNED COUNSEL FOR THE A SSESSEE STATED THAT AT THE TIME OF COMPLETION OF THE ASSESSMENT IN DISPUTE THE ASSESSING OFFICER WAS FULLY AWARE OF THE FACTS THAT THE ASSES SMENT WAS COMPLETED AT TOTAL INCOME OF RS. 2,35,68,290/- WHICH INCLUDED EX CISE REFUND, TRANSPORT SUBSIDY AND INTEREST INCOME. BUT THE ASSESSING OFFI CER LEVIED PENALTY ONLY WITH REFERENCE TO THE ADDITION MADE ON ACCOUNT OF INTEREST INCOME, WHEREAS NO PENALTY WAS LEVIED ON ACCOUNT OF ADDITIO NS MADE FOR EXCISE DUTY AND TRANSPORT SUBSIDY BECAUSE THE ACTION OF TH E ASSESSING OFFICER WAS TOTALLY LEGAL AND CORRECT AS PER LAW AND AS PER THE PROVISIONS OF JUDICIAL PRONOUNCEMENTS ON THE ISSUE IN DISPUTE, WH ICH INCLUDES THE DECISION OF HON'BLE SUPREME COURT OF INDIA IN THE C ASE OF MALABAR INDUSTRIAL CO. LIMITED VS. CIT (2000) 243 ITR 83 (S C) AND COMMISSIONER OF INCOME TAX VS. MAX INDIA LIMITED RE PORTED AT (2007) 295 ITR 282 (SC). THEREFORE, THE MATTER IS NOT OPEN FOR REVIEW UNDER SECTION 263 OF THE ACT. HE FURTHER STATED THAT THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ALONG WITH THE AUDITED ACCOUN TS AND AUDIT REPORT IN 22 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 TERMS OF SECTION 80-IB. THE CLAIM FOR DEDUCTION UND ER SECTION 80-IB WAS ON THE BASIS OF THE CERTIFICATE ISSUED BY CHARTERED ACCOUNTANT. SUCH DEDUCTION WAS HITHERTO ALLOWED BY THE INCOME TAX DE PARTMENT AS CLAIMED BY THE ASSESSEE. THE AMOUNT FOR EXCISE EXEMPTION, T RANSPORT SUBSIDY AND INTEREST WERE DULY RECORDED IN THE BOOKS OF ACCOUNT S AND SHOWN IN THE BALANCE SHEET FILED WITH THE RETURN OF INCOME. NO P ARTICULAR OF SUCH AMOUNTS WERE FURNISHED WHICH WAS INACCURATE AND FAL SE. HE FURTHER STATED THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EX PENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN VIEW OF DECISIONS OF HON'BLE DELHI HIGH COURT IN TH E CASE OF CIT VS. DHARAMPAL PREMCHAND LIMITED REPORTED IN (2010) 329 ITR 572 (DEL). HE FURTHER STATED THAT THE HON'BLE JAMMU & KASHMIR HIG H COURT IN THE CASE OF QUANTUM IN DISPUTE MATTER I.E. SHREE BALAJI ALLO YS & ORS. VS. CIT VS. ORS REPORTED IN (2011) 51 DTR (J&K) 217; (2011) 333 ITR 335 (J&K) HAS HELD THAT THE EXCISE DUTY CLAIM IS A CAPITAL RECEIP T AND NOT REVENUE RECEIPT AND HENCE IS NOT TAXABLE AT ALL. THEREFORE, THE DIS ALLOWANCE OF CLAIM UNDER SECTION 80IB IS LIABLE TO BE DELETED IN VIEW OF THE ABOVE DECISION RENDERED BY HON'BLE JAMMU AND KASHMIR HIGH COURT. H E FURTHER STATED 23 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 THAT THE HON'BLE SUPREME COURT IN THE CASE OF CIT V . RELIANCE PETRO PRODUCTS LTD. REPORTED IN 230 CTR (SC) 320/322 ITR 158 (SC), HELD THAT BY ANY STRETCH OF IMAGINATION, MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WIL L NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. THEREFORE, THE PENALTY IN DISPUTE IS NOT SUSTAINABLE IN THE EYE OF LAW. 8. SIMILAR VIEW HAS ALSO BEEN TAKEN BY HON'BLE SUPR EME COURT IN THE CASE OF CEMENT MARKETING CO. OF INDIA LIMITED V S. ASSTT. COMMISSIONER OF SALES TAX & ORS. REPORTED AT (1980) 124 ITR 15 (SC). IN THIS CASE FREIGHT WAS INCLUDED IN THE GROSS SALE S FOR PAYMENT OF SALES TAX, THOUGH THE AMOUNT WAS DULY DECLARED IN THE BOO KS OF ACCOUNTS. IT WAS HELD BY THE SUPREME COURT THAT THERE IS NO CONC EALMENT BY THE ASSESSEE NOR THERE WAS ANY FURNISHING OF INACCURATE PARTICULARS. IN THE INSTANT CASE, ALL THE FACTS WERE NARRATED AND DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS PRODUCED DURING ASSESSMENT PROCEE DINGS. BUT THE LEARNED CIT (J&K), JAMMU, HAS WRONGLY APPLIED THE P ROVISION OF SECTION 263 OF THE ACT IN THE UNDER PASSED UNDER SECTION 27 1(1)(C) OF THE ACT DATED 21.06.2010 FOR THE ASSESSMENT YEAR 2005-06, W HICH ARE CONTRARY TO 24 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 THE LAW AND FACTS ON THE FILE. LASTLY, HE REQUESTED THAT THE APPEAL FILED BY THE ASSESSEE MAY BE ALLOWED AND THE IMPUGNED ORDER MAY BE CANCELLED. 9. ON THE CONTRARY, LEARNED DR RELIED UPON THE ORDE R PASSED BY LEARNED CIT (J&K), JAMMU. IN ADDITION TO HIS ARGUME NT, HE STATED THAT THE ORDER OF THE ASSESSING OFFICER WAS LEGALLY NOT SUSTAINABLE, ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, SINCE T HE DEPARTMENT IS ALREADY CONTESTING THE DECISION OF THE HON'BLE HIGH COURT O F J&K, JAMMU, ON THIS ISSUE BEFORE THE HON'BLE SUPREME COURT OF INDI A IN SLPS. HE REQUESTED THAT THE APPEAL FILED BY THE ASSESSEE MAY BE DISMISSED. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE ORDERS PASSED BY THE REVENUE AUTHORITIES, AND WE ARE OF THE CONSIDERED OPINION THAT LEARNED C IT (J&K), JAMMU, HAS PASSED THE IMPUGNED ORDER BY HOLDING THAT WHILE PASSING THE PENALTY ORDER DATED 21.06.2010 UNDER SECTION 271(1)(C) OF T HE ACT, THE ASSESSING OFFICER HAS ONLY LEVIED THE PENALTY ON AMOUNT OF RS . 23,922/- ON ACCOUNT OF INTEREST ON FDRS LEAVING THE OTHER ADDITIONS I.E . EXCISE DUTY REFUND AND TRANSPORT SUBSIDY, WHICH ARE ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF THE REVENUE. LASTLY, AFTER CONSIDERING THE REPLY FI LED BY THE ASSESSEE, LEARNED CIT (J&K), JAMMU, HAS HELD THAT THE ASSESSI NG OFFICER WITHOUT 25 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 CARRYING OUT THE PRIMARY INVESTIGATION/EXAMINATION LEVIED THE PENALTY ONLY ON THE ADDITION OF INTEREST ON FDRS AMOUNTING TO RS. 23,922/- AND HE DIRECTED THE ASSESSING OFFICER TO MAKE FRESH ORD ER IN THE LIGHT OF OBSERVATION IN THE IMPUGNED ORDER. WE ARE OF THE VI EW THAT LEARNED CIT (J&K), JAMMU, HAS NOT THOROUGHLY GONE THROUGH THE O RDER OF THIS BENCH PASSED IN ITA NO. 274(ASR)/2009 FOR A.Y. 2005-06 IN THE ASSESSEES OWN CASE I.E. M/S KHYBER CEMENT PVT. LTD. VS. INCOME TA X OFFICER, SRINAGAR ON 18 TH DECEMBER, 2009. IN THIS CASE, THE BENCH HAS SETTLE D THE THREE ADDITIONS MADE BY THE ASSESSING OFFICER I.E. EXCIS E DUTY REFUND RS. 1,52,38,466/-; TRANSPORT SUBSIDY 83,05,902/-; INTER EST ON FDRS RS. 23,922/-. THIS BENCH HAS SETTLED THE ISSUE OF EXCIS E DUTY REFUND IN FAVOUR OF REVENUE BY FOLLOWING THE ORDER PASSED BY THIS BE NCH IN THE CASE OF M/S SHREE BALAJI ALLOYS, KATHUA VS. THE INCOME TAX OFFI CER, KATHUA AND ORS PASSED IN ITA NO. 255(ASR)/2009 FOR A.Y. 2005-06, D ATED 26 TH NOVEMBER, 2009. IT IS PERTINENT TO MENTION HERE THA T THIS BENCHS ORDER DATED 26 TH NOVEMBER, PASSED IN THE CASE OF M/S SHREE BALAJI A LLOYS, KATHUA VS. THE INCOME TAX OFFICER, KATHUA AND ORS I N ITA N0. 255(ASR)/2009 HAS BEEN REVERSED BY THE HON'BLE JAMM U AND KASHMIR HIGH COURT IN THE CASE OF SHREE BALAJI ALLOYS & OR S. VS. CIT VS. ORS 26 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 REPORTED IN (2011) 51 DTR (J&K) 217; (2011) 333 ITR 335 (J&K). WE ARE OF THE VIEW THAT THE ISSUE REGARDING EXCISE DUT Y REFUND HAS ALREADY BEEN SETTLED BY HON'BLE JAMMU AND KASHMIR HIGH COUR T AND THE QUESTION OF APPLICABILITY OF PROVISION OF SECTION 263 OF THE ACT DOES NOT ARISE. LEARNED CIT (J&K), JAMMU, HAS WRONGLY PASSED THE IM PUGNED ORDER ON THIS ISSUE. SECONDLY, AS REGARDS TO THE ADDITION OF TRANSPORT SUBSIDY AMOUNTING TO RS. 83,05,902/-, THIS ISSUE HAS ALSO B EEN SETTLED BY THIS BENCH BY RESPECTFULLY FOLLOWING THE ORDER OF HON'BL E HIMACHAL PRADESH HIGH COURT IN THE CASE OF CIT VS. KIRAN ENTERPRISES REPORTED IN 2009 YIOL-577-HC-HP-IT DATED 06.10.2009. THEREFORE, LEAR NED CIT (J&K), JAMMU, IS TOTALLY WRONG BY ISSUING THE NOTICE UNDER SECTION 263 OF THE ACT ON THE ISSUE OF TRANSPORT SUBSIDY, WHICH HAS BE EN SETTLED BY HON'BLE HIMACHAL PRADESH HIGH COURT IN THE AFORESAID CASE. THE THIRD ISSUE REGARDING INTEREST INCOME OF RS. 23,922/- ON WHICH THE PENALTY IN DISPUTE HAS BEEN LEVIED BY THE ASSESSING OFFICER IN THE ORD ER DATED 21.06.2010 LEAVING THE OTHER ADDITIONS MENTIONED ABOVE, WE ARE OF THE VIEW THAT THIS BENCH IN THE ASSESSEE OWN CASE I.E. ITA NO. 274(ASR )/2009 FOR A.Y. 2005-06, HAS ALSO DECIDED THE ISSUE IN FAVOUR OF TH E REVENUE BY RESPECTFULLY FOLLOWING THE ORDER OF HON'BLE SUPREME COURT OF INDIA IN THE 27 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 CASE OF PANDIAN CHEMICAL LTD. VS. CIT REPORTED IN ( 2003) 262 ITR 278 (SC); AND LIBERTY INDIA VS. CIT REPORTED IN 293 ITR 520 (P&H) , WHICH HAS RECENTLY BEEN UPHELD BY THE HONBLE SUPREME COU RT IN THE CASE OF M/S. LIBERTY INDIA VS. CIT IN CIVIL APPEAL NO. OF 2009 (ARISING OUT OF S.L.P. (C) NO.5827/07), DATED 31 ST AUGUST, 2009. 11. KEEPING IN VIEW THE AFORESAID FACTS AND CIRCUMST ANCES OF THE PRESENT CASE, WE ARE OF THE VIEW THAT THE AMOUNT OF EXCISE DUTY REFUND, TRANSPORT SUBSIDY AND INTEREST ON FDRS WERE DULY RE CORDED IN THE BOOKS OF ACCOUNT AND SHOWN IN THE BALANCE-SHEET FILED WIT H THE RETURN OF INCOME. THEREFORE, THE ASSESSEE HAS NOT CONCEALED A NY PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM W AS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF W OULD NOT ATTRACT THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ON THE ISSUE OF EXCISE DUTY REFUND, HON'BLE JAMMU AND KASHMIR HIGH COURT IN THE CASE OF SHREE BALAJI ALLOYS & ORS. VS. CIT VS. ORS REPORTED IN (2 011) 51 DTR (J&K) 217; (2011) 333 ITR 335 (J&K), HAS REVERSED THE FIN DINGS OF THIS BENCH. THEREFORE, ALL THE ISSUES IN DISPUTE ARE FULLY SETT LED AND THE LEARNED CIT 28 I.T.A. NO. 343(ASR)/2013 ASSESSMENT YEAR: 2005-06 (J&K), JAMMU HAS WRONGLY APPLIED THE PROVISIONS OF SECTION 263 OF THE ACT IN CASE OF ASSESSEE. 12. WE ARE NOT CONVINCED TO SUSTAIN THE IMPUGNED ORD ER DATED 22.03.2013 PASSED BY LEARNED CIT (J&K), JAMMU, UNDE R SECTION 263 OF THE ACT AND THUS, IN VIEW OF THE FOREGOING DISCUSSI ONS, WE CANCEL THE IMPUGNED ORDER DATED 22.03.2013 PASSED BY LEARNED C IT (J&K), JAMMU, AND ALLOW THE APPEAL FILED BY THE ASSESSEE. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH, 2014 SD/./- SD/./- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18 TH MARCH, 2014 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S KHYBER CEMENT PVT. LTD. KHAYAM B UILDING, NOWPORA, SRINAGAR 2. COMMISSIONER OF INCOME TAX, J&K, JAMMU 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.