Sh. Rakesh Sharma, Jammu V. The Income tax Officer, Jammu

ITA 363/ASR/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5685 (ITAT-AMRITSAR)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-07-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 17-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S K BANSAL
• Keywords: Capital receipt
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR. BEFORE SHRI H.L. KARWA, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER. I.T.A. NO.363(ASR)/2010. (ASSESSMENT YEAR: 2006-07) SHRI RAKESH SHARMA, PROP. THE INCOME TAX OFFICER, M/S.PAYAL ENTERPRISES, WARD 1(2), JAMMU. GANGYAL, JAMMU. (APPELLANT) VS. (RESPONDENT) APPELLANT BY: SHRI S.K. BANSAL, ADV. RESPONDENT BY: SHRI TARSEM LAL, D.R. ORDER PER H.L. KARWA, VICE PRESIDENT. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE CIT(A), JAMMU DATED 29-12-2009, RELATING TO THE ASS ESSMENT YEAR 2006-07. 2. IT IS OBSERVED THAT THE APPEAL FILED BY THE ASSE SSEE IS TIME BARRED BY 154 DAYS. IN THIS CASE, THE IMPUGNED ORDER WAS PAS SED BY THE CIT(A), JAMMU ON 29-12-2009. THIS ORDER WAS COMMUNICATED TO THE ASSESSEE ON 13-8-2010. AS PER INFORMATION, THE IMPUGNED ORDER WAS SERVED UPON THE ASSESSEE ON 15-1-2010. THE ASSESSEE FILED APPEAL B EFORE THE TRIBUNAL ON 17-8-2010. THUS, THE REGISTRY OF THIS TRIBUNAL HAS OBSERVED THAT THERE IS A DELAY OF 154 DAYS IN FILING THE APPEAL BECAUSE DUE DATE OF FILING THE APPEAL WAS 16-3-2010. 2 2.1 THE ASSESSEE HAS FILED AN APPLICATION FOR CONDO NATION OF DELAY ALONGWITH AFFIDAVIT OF SHRI RAKESH SHARMA (ASSESSEE ). IN THE APPLICATION FOR CONDONATION OF DELAY, THE ASSESSEE HAS SUBMITTED AS UNDER:- 5. THE FOLLOWING FACTS HAVE BEEN CONFIRMED THROUG H AFFIDAVITS:- (I) THAT THE ORDER OF CIT(A) WAS DELIVERED TO THE J UNIOR ADVOCATE MR. SURAJ S. WAZIR, ADVOCATE SOME WHERE IN THE MIDDLE OF JANUARY. THE SENIOR ADVOCATE WAS AWA Y TO DELHI. (II) THE JUNIOR ADVOCATE COULD NOT PREPARE THE APPE AL BECAUSE OF ADDITION WAS VERY HEAVY TO THE TUNE OF R S.ONE CRORE AND WAS ON LEGAL ISSUES. HE KEPT THE ORDER I N A FILE ON HIS TABLE FOR CONSULTATION WITH THE SENIIOR ADVO CATE ON HIS RETURN TO JAMMU. (III) THE JUNIOR ADVOCATE AND STAFF WAS VERY PANI CKY DUE TO THE DREADFUL FATAL DISEASE THROAT CANCER. (IV) THAT THE CLIENT CONFIRMED THE FATE OF HIS APPE AL THROUGH TELEPHONE ON 3-8-2010. THE JUNIOR ADVOCATE IMMEDIATELY REALIZED THAT THE ORDER WAS RECEIVED BY HIM AND THE SAME IS NOT TRACEABLE. HE INFORMED THE FAC T TO THE SENIOR ADVOCATE MR. DUTT WITH THE WORD VERY SORRY. (V) THE SENIOR ADVOCATE MR. DUTT JUST WITHIN FEW MI NUTES DIRECTED THE JUNIOR ADVOCATE TO GET THE ITAT FEE DEPOSITED WITH THE BANK AND PLACE THE CHALLAN ON HI S TABLE IMMEDIATELY AND TRACE OUT THE ORIGINAL ORDER WITHIN 2 DAYS UPTO 5-8-2010, THE ORDER COULD NOT BE TRACED AND THE SENIOR ADVOCATE AGAIN DIRECTED TO SEARCH ALL TH E FILES FROM A TO Z IN HIS OFFICE AND FIND OUT THE ORIGINAL ORDER. (VI) THE ORIGINAL ORDER WAS TRACED ON 13-8-2010 FROM THE OLD DISPOSED CASES. THE APPEAL WAS PREPARED IN 4 SETS AND ALL THE DOCUMENTS AS REQUIRED BY THE ITAT WERE ATTA CHED 3 AND APPEAL WAS PREPARED AND GOT SIGNED FROM THE APPELLANT. (VII) ON NEXT DAY 14-8-2010 THE APPEAL WAS DISPATCH ED FROM JAMMU BY SPEED POST AND REACHED AMRITSAR ON 17-8-2010. ALL THE FACTS HAVE BEEN CONFIRMED BY AFFIDAVITS OF SENIOR ADVOCATE AND JUNIOR ADVOCATE. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS. AFTER GOIN G THROUGH THE CONTENTS OF APPLICATION AS WELL AS CONTENTS OF AFFI DAVITS, WE FIND THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM FIL ING APPEAL BEFORE THE TRIBUNAL IN TIME. THE REASONS GIVEN BY THE ASSESSE E FOR THE DELAY IN FILING THE APPEAL ARE CONVINCING. THEREFORE, WE ARE SATIS FIED THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM FILING THE APPEA L BEFORE THE TRIBUNAL IN TIME. IT IS ALSO WELL SETTLED LAW THAT THE JURISDI CTION TO CONDONE DELAY SHOULD BE EXERCISED LIBERALLY. MATTER RELATING TO CONDONA TION OF DELAY SHOULD BE JUDGED BROADLY AND NOT IN A PEDANTIC MANNER. IN T HE CASE OF COLLECTOR, LAND ACQUISITION VS. MST. KATIJI (1987) 167 ITR 471, THE HONBLE SUPREME COURT HELD THAT ORDINARILY, A LITIGANT DOES NOT STAND TO BENEFIT BY LODGING AN APPEAL LATE. THE HONBLE SUPREME COURT ALSO HELD THAT REF USING TO CONDONE DELAY CAN RESULT IN A MERITORIOUS MATTER BEING THROWN OUT AT THE VERY THRESHOLD AND CAUSE OF JUSTICE BEING DEFEATED. AS AGAINST THIS, WHEN DELAY IS CONDONED, THE HIGHEST THAT CAN HAPPEN IS THAT A CAUSE WOULD BE DE CIDED ON MERITS AFTER HEARING THE PARTIES. IN THE SAME JUDGMENT, THE HO NBLE SUPREME COURT FURTHER HELD THAT WHEN SUBSTANTIAL JUSTICE AND TECH NICAL CONSIDERATIONS ARE PITTED AGAINST EACH OTHER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED, FOR THE OTHER SIDE, CANNOT CLAIM TO HAV E VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF A NON-DELIBERATE DELAY. THE HONBLE SUPREME COURT ALSO ALSO RULED OUT THAT A LITIGANT DOES NOT STAND TO BENEFIT BY RESORTING TO 4 DELAY. IN FACT, HE RUNS A SERIOUS RISK. CONSIDERI NG THE ENTIRE FACTS AND THE CIRCUMSTANCES OF THE PRESENT CASE AND THE SETTLED L EGAL POSITION, WE CONDONE THE DELAY IN FILING THE APPEAL AND PROCEED TO DECID E THE SAME IN SUCCEEDING PARAGRAPHS. 4 GROUND NO.1 OF APPEAL IS GENERAL IN NATURE AND H ENCE NO FINDINGS ARE BEING GIVEN. 5. GROUND NOS.2 AND 3 OF THE APPEAL READ AS UNDER:- 2. THAT THE LD. CIT(A) HAS NOT BEEN JUSTIFIED IN N OT ACCEPTING THE SUBMISSION OF THE APPELLANT THAT THE ALLEGED EXCISE DUTY REFUND OF RS.99,13,724/- IS ENTITLED TO DEDUCTION U/S.80-I B AS MADHYA PRADESH HIGH COURT 296 ITR 221 (CIT VS. SIDARATH TU BE LTD.) AND JUDGMENT OF THE DELHI HIGH COURT IN DHARAMPAL P REM CHAND DELIVERED ON 27-11-2008 HAVE HELD THAT DEDUCT ION ON EXCISE REFUND IS AVAILABLE. IN VIEW OF ABOVE PRECED ENTS THE DEDUCTION U/S.80IB HAS WRONGLY BEEN DENIED TO THE A PPELLANT. 3. THAT IN ADDITION AND RATHER IN THE ALTERNATIVE A ND WITHOUT PREJUDICE TO GROUND NO.2 ABOVE IT IS SUBMITTED THAT THE EXCISE DUTY REFUND IS CAPITAL RECEIPT AND IN VIEW OF JUDGM ENT OF SUPREME COURT IN SAWHNEY STEELS CASE THE RECEIPT IN QUESTION BEING CAPITAL RECEIPT NO TAX LEGALLY CAN BE IMPOSED ON THIS CAPITAL RECEIPT. 3. DURING THE ASSESSMENT YEAR UNDER CONSIDERATION , THE ASSESSEE RECEIVED A SUM OF RS.99,13,724/- ON ACCOUNT OF EX CISE DUTY REFUND. ON THIS AMOUNT, THE ASSESSEE CLAIMED DEDUCTION UNDER SECTIO N 80-IB OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). THE A.O. DID N OT ALLOW DEDUCTION UNDER SECTION 80-IB OF THE ACT AND TAXED THE ENTIRE AMOUN T. 5. ON APPEAL, THE CIT(A) FOLLOWING THE ORDER OF THE AMRITSAR BENCH OF THE TRIBUNAL PASSED IN THE CASE OF M/S.SHREE BALAJI ALLOYS, KATHUA DATED 26-11-2009 DISMISSED THE APPEAL OF THE ASSESSEE. 5 6. WE HAVE HEARD THE LEARNED D.R. AND HAVE ALSO PER USED THE MATERIAL AVAILABLE ON RECORD. IT IS SEEN THAT M/S.SHREE BAL AJI ALLOYS, KATHUA CHALLENGED THE ORDER OF THE TRIBUNAL BEFORE THE HON BLE J & K HIGH COURT. THE ISSUE BEFORE THE HONBLE HIGH COURT WAS AS UND ER:- WHETHER THE AMOUNT OF EXCISE REFUND AND INTERES T SUBSIDY RECEIVED BY THE APPELLANTS-ASSESSES, IN PURSUANCE OF THE IN CENTIVES ANNOUNCED AND SANCTIONED VIDE GOVERNMENT OF INDIA, MINISTRY O F COMMERCE AND INDUSTRY (DEPARTMENT OF INDUSTRIAL POLICY AND PROMO TION)S OFFICE MEMORANDUM NO.1(13)2000-NER DATED JUNE 4, 2002 AND CENTRAL EXCISE NOTIFICATION NOS.56 AND 57, DATED NOVEMBER 1 4,2002 AND OTHER NOTIFICATIONS ISSUED ON THE SUBJECT, PERTAINI NG TO THE INDUSTRIAL POLICY INTRODUCED IN THE STATE OF JAMMU & KASHMIR, IS A CAPITAL RECEIPT AND, THUS, NOT LIABLE TO TAX UNDER THE PROV ISIONS OF THE ACT, OR REVENUE RECEIPT, AS OPINED BY THE AUTHORITIES UNDER THE ACT? 7. THE HONBLE HIGH COURT VIDE JUDGMENT DATED 31-1- 2011 IN THE CASE OF M/S.SHREE BALAJI ALLOYS, KATHUA, REPORTED IN (2011) 333 ITR 335 (J&K) DECIDED THE ISSUE, OBSERVING AS UNDER:- IN THIS VIEW OF THE MATTER, THE INCENTIVES PROV IDED TO THE INDUSTRIAL UNITS, IN TERMS OF THE NEW INDUSTRIAL PO LICY, FOR ACCELERATED INDUSTRIAL DEVELOPMENT IN THE STATE, FO R CREATION OF SUCH INDUSTRIAL ATMOSPHERE AND ENVIRONMENT, WHICH W OULD PROVIDE ADDITIONAL PERMANENT SOURCE OF EMPLOYMENT T O THE UNEMPLOYED IN THE STATE OF JAMMU AND KASHMIR, WERE IN FACT, IN THE NATURE OF CREATION OF NEW ASSETS OF INDUSTRI AL ATMOSPHERE AND ENVIRONMENT, HAVING THE POTENTIAL OF EMPLOYMENT GENERATION TO ACHIEVE A SOCIAL OBJECT. SUCH INCENT IVES, DESIGNED TO ACHIEVE PUBLIC PURPOSE, CANNOT, BY ANY STRETCH O F REASONING, BE CONSTRUED AS PRODUCTION OR OPERATIONAL INCENTIVE S FOR THE BENEFIT OF ASSESSEES ALONE. THUS, LOOKING TO THE PURPOSE, OF ERADICATION OF THE SOCIAL PROBLEM OF UNEMPLOYMENT IN THE STATE BY ACCELERATIO N OF THE INDUSTRIAL DEVELOPMENT AND REMOVING BACKWARDNESS OF THE AREA THAT LAGGED BEHIND IN INDUSTRIAL DEVELOPMENT, WHICH IS CERTAINLY A PURPOSE IN THE PUBLIC INTEREST, THE INCENTIVES PR OVIDED BY THE 6 OFFICE MEMORANDUM AND STATUTORY NOTIFICATIONS ISSUE D IN THIS PRODUCTION AND TRADE INCENTIVES, AS HELD BY THE TRI BUNAL. MAKING OF ADDITIONAL PROVISION IN THE SCHEME THAT INCENTIVES WOULD BECOME AVAILABLE TO THE INDUSTRIAL UNITS, ENTITLED THERETO, FROM THE DATE OF COMMENCEMENT OF THE COMMERCIAL PRODUCTION, AND THAT THESE WERE NOT REQU IRED FOR CREATION OF NEW ASSETS CANNOT BE VIEWED IN ISOLATIO N, TO TREAT THE INCENTIVES AS PRODUCTION INCENTIVES, AS HELD BY THE TRIBUNAL, FOR THE MEASURE SO TAKEN, APPEARS TO HAVE BEEN INTENDED TO ENSURE THAT THE INCENTIVES WERE MADE AVAILABLE ONLY TO THE BONA FIDE INDUSTRIAL UNITS SO THAT LARGER PUBLIC INTEREST OF DEALING WITH UNEMPLOYMENT IN THE STATE, AS INTENDED, IN TERMS OF THE OFFICE MEMORANDUM, WAS ACHIEVED. THE OTHER FACTORS, WHICH HAD WEIGHED WITH THE TRIBU NAL IN DETERMINING THE INCENTIVES AS PRODUCTION INCENTI VES MAY NOT BE DECISIVE TO DETERMINE THE CHARACTER OF THE INCEN TIVE SUBSIDIES, WHEN IT IS FOUND, AS DEMONSTRATE IN THE OFFICE MEMORANDUM, AMENDMENT INTRODUCED THERETO AND THE ST ATUTORY NOTIFICATION TOO THAT THE INCENTIVES WERE PROVIDED WITH THE OBJECT OF CREATING AVENUES FOR PERPETUAL EMPLOYMENT , TO ERADICATE THE SOCIAL PROBLEM OF UNEMPLOYMENT IN THE STATE BY ACCELERATED INDUSTRIAL DEVELOPMENT. FOR ALL WHAT HA BEEN SAID ABOVE, THE FINDING OF THE TRIBUNAL ON THE FIRST ISSUE THAT THE EXCISE DUTY RE FUND, INTEREST SUBSIDY AND INSURANCE SUBSIDY WERE PRODUCTION INCEN TIVES, HENCE REVENUE RECEIPT, CANNOT BE SUSTAINED, BEING A GAINST THE LAW LAID DOWN BY THE HONBLE SUPREME COURT OF INDIA IN SAHNEY STEEL CASE [1997] 228 ITR 253 AND PONNI SUGARS CASE [2008] 306 ITR 391. THE FINDING OF THE TRIBUNAL THAT THE INCENTIVES WER E REVENUE RECEIPT IS, ACCORDINGLY, SET-ASIDE HOLDING THE INCENTIVES TO BE CAPITAL RECEIPTS IN THE HANDS OF THE ASSESSE E. IN VIEW OF OUR ABOVE FINDING ON THE FIRST ISSUE, TH ERE IS NO NEED TO OPINE ON THE SECOND ISSUE, WHICH WAS RAISED IN THE ALTERNATIVE. 7 8. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HONB LE J & K HIGH COURT IN THE CASE OF M/S.SHREE BALAJI ALLOYS (SUPRA), WE HOLD THAT THE AMOUNT OF EXCISE DUTY REFUND AMOUNTING TO RS.99,13,724/- RECE IVED BY THE ASSESSEE DURING THE ASSESSMENT YEAR UNDER CONSIDERATION IS A CAPITAL RECEIPT AND THUS NOT LIABLE TO TAX UNDER THE PROVISIONS OF THE INCOM E TAX ACT, 1961. GROUND NOS.2 AND 3 STAND ALLOWED. 9. GROUND NOS.4 AND 5 OF THE APPEAL RELATE TO CHARG ING OF INTEREST UNDER SECTION 234B OF THE ACT. THESE GROUNDS OF APPEAL A RE CONSEQUENTIAL IN NATURE AND WE HOLD ACCORDINGLY. 10. AS REGARDS THE QUESTION OF DEDUCTION UNDER SECT ION 80-IB OF THE ACT ON THE AMOUNT OF EXCISE DUTY REFUND IS CONCERNED, W E DO NOT THINK IT NECESSARY TO ADJUDICATE THIS ISSUE, PARTICULARLY WH EN WE HAVE ALLOWED GROUND NOS.2 AND 3 OF APPEAL. 11. IN THE RESULT, THE APPEAL IS ALLOWED IN THE TER MS, AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JUNE, 2011. SD/- SD/- (MEHAR SINGH) (H.L. KARWA) ACCOUNTANT MEMBER. VICE PRESIDENT. DATED: 22 ND JUNE, 2011. KC/- COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: SHRI RAKESH SHARMA, PROP. M/S.PAYAL ENTERPRISES, GANGYAL, JAMMU. (2) THE DCIT, RANGE I, JAMMU.(3)THE CIT, JAMMU. (4) THE CIT(A), JAMMU.(5) THE SR.D.R., ITAT, ASR. TRUE COPY BY ORDER ASSTT. REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, 8