ACIT, C-4, Ludhiana V. Aarti International Limited, Ludhiana

ITA 382/CHANDI/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0527 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 03-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUBHASH AGGARWAL
• Keywords: Capital receipt
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH A, CHANDIGARH BEFORE: SHRI. N.K.SAINI, VP & SHRI , SANDEEP GOSAIN , JM ./ ITA NOS.382 & 383/CHD/2019 / ASSESSMENT YEAR : 2011-12 & 2012-13 THE ACIT CIRCLE-4, LUDHINA PUNJAB AARTI INTERNATIONAL LIMITED AARTI COMPLEX, G.T. ROAD MILLERGANJ, LUDHIANA PUNJAB ./ PAN NO: AABCA4454C / APPELLANT / RESPONDENT & ./ ITA NO.445/CHD/2019 / ASSESSMENT YEAR : 2013-14 THE ACIT CIRCLE-4, LUDHINA PUNJAB AARTI INTERNATIONAL LIMITED AARTI COMPLEX, G.T. ROAD MILLERGANJ, LUDHIANA PUNJAB ./ PAN NO: AABCA4454C / APPELLANT / RESPONDENT ! ' / ASSESSEE BY : SHRI SUBHASH AGGARWAL, ADVOCATE # ! ' / REVENUE BY : SHRI CHANDRAJIT SINGH, CIT(DR) $ % ! &/ DATE OF HEARING : 17/12/2019 '()* ! &/ DATE OF PRONOUNCEMENT : 17/12/2019 / ORDER PER N.K. SAINI, VICE PRESIDENT THESE THREE APPEALS BY THE DEPARTMENT ARE DIRECTED AGAI NST THE SEPARATE ORDERS OF THE LD.CIT(A)-2, LUDHIANA EACH DT. 28/01/20 19 FOR THE A.YS 2011-12 & 2012-13 AND DT. 19/02/2019 FOR THE A.Y. 2013-14. 2. SINCE THE ISSUE INVOLVED IS COMMON IN ALL THESE APP EALS WHICH WERE HEARD TOGETHER, SO THESE ARE BEING DISPOSED OFF BY THIS CONS OLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2 3. THE COMMON ISSUE RAISED IN ALL THESE APPEALS READ AS UNDER: WHETHER ON THE FACT AND CIRCUMSTANCES OF THE CASE IN LAW THE LD. CIT(A) WAS RIGHT IN DIRECTING THE ASSESSING OFFICER TO REDUCE THE ASSES SED INCOME OF ASSESSEE COMPANY TO THE EXTENT OF TUFS SUBSIDY RECEIVED WHILE TREATING IT A S A CAPITAL RECEIPT. 4. FROM THE AFORESAID GROUND IT IS CLEAR THAT ONLY ISS UE AGITATED BY THE DEPARTMENT RELATES TO THE NATURE OF TUFS SUBSIDY RECEIVED BY THE ASSESSEE I.E; AS TO WHETHER IT IS REVENUE IN NATURE OR CAPITAL IN NATURE. 5. DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THIS ISSUE IS SQUARELY COVERED VIDE ORDE R DT. 29/05/2019 BY THE ITAT CHANDIGARH BENCH B CHANDIGARH IN THE CASE OF DCIT, CIRCL -1, LUDHIANA & OTHERS VS. M/S VARDHMAN TEXTILES LTD. LUDHIANA IN ITA NO. 1479/CHD/ 2018 & OTHERS FOR THE A.Y. 2002-03 & OTHERS, COPY OF THE SAID ORDER WAS FURNISH ED WHICH IS PLACED ON RECORD. 6. IN HIS RIVAL SUBMISSIONS THE LD. DR ALTHOUGH SUPPORTE D THE ORDERS OF THE A.O. BUT COULD NOT CONTROVERT THE AFORESAID CONTENTION OF THE LD. C OUNSEL FOR THE ASSESSEE. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIE S AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS NOTICED THAT AN IDENTICAL ISSUE HAVING SIMILAR FACTS HAS ALREADY BEEN ADJUDICATED BY THE ITAT CHANDIGARH BENC H B CHANDIGARH VIDE AFORESAID REFERRED TO ORDER DT. 29/05/2019 AND THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARA 10 TO 13 WHICH READ AS UNDER: 10. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO GO NE THROUGH THE ORDER OF THE LD.CIT(A). THE ISSUE BEFORE US RELATES TO THE NATUR E OF INTEREST SUBSIDY RECEIVED UNDER THE TUF SCHEME OF THE GOVERNMENT OF INDIA. THE FACTUAL FINDINGS OF THE CIT(A) THAT THE PURPOSE OF THE INTEREST SUBSIDY WAS UPGRADATION OF PLANT & MACHINERY AND THUS THE CAPITAL APPARATUS OF THE ASSESSEE COMPANY, HAS NOT BEEN CON TROVERTED BY THE REVENUE. THE LD.CIT(A), WE FIND, HAS RELIED UPON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SHAM LAL BANSAL, ITA NO.472/201 0 (P&H) AND THE DECISION OF THE HON'BLE HIGH COURT OF CALCUTTA IN THE CASE OF CIT VS. GLOST ER JUTE MILLS LTD.(2018) 96 TAXMAN.COM 303 FOR HOLDING THE INTEREST SUBSIDY TO BE CAPITAL IN NATURE.WE HAVE GONE THROUGH THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS. SHAM LAL BANSAL(SUPRA),COPY OF WHICH ORDER WAS PLACED BEFORE US, AND WE AGREE WITH THE LD.CIT(A) THAT IN THE SAID CASE ALSO, THE ISSUE RELATED TO NA TURE OF SUBSIDY RECEIVED UNDER TUF SCHEME OF THE MINISTRY OF TEXTILES. THE HON'BLE HIG H COURT , HELD THAT FOR THE PURPOSE OF DETERMINING THE NATURE OF THE SUBSIDY ,THE PURPOSE FOR WHICH THE SUBSIDY WAS GIVEN WAS TO BE DETERMINED AND RELIED UPON THE DECISION OF THE H ON'BLE SUPREME COURT IN THE CASE OF SAHNI STEEL & PRESS WORKS LTD. VS. CIT (1997) 94 TA XMAN 368 AND CIT VS. PONNI SUGARS & CHEMICALS LTD. (2008) 174 TAXMAN 87 FOR THE AFORESA ID PROPOSITION. THEREAFTER THE HONBLE HIGH COURT NOTED THAT THE PURPOSE OF THE TUF SCHEME WAS TO INDUCE THE ENTREPRENEUR TO UNDERTAKE INVESTMENT IN MODERNIZING THE PLANT AND M ACHINERY AND WAS DEFINITELY NOT FOR 3 THE PURPOSE OF DAY TO DAY BUSINESS OF THE ASSESSEE. ACCORDINGLY THE HONBLE HIGH COURT HELD THAT THE NATURE OF THE SUBSIDY WAS CAPITAL. 11. IN THE CASE OF GLOSTER JUTE MILLS(SUPRA),COPY O F ORDER OF WHICH WAS ALSO PLACED BEFORE US, THE HON'BLE HIGH COURT EXAMINED THE FEATURES OF THE TUF SCHEME AND FOUND THE PURPOSE WAS TO INDUCE THE ENTREPRENEUR TO UNDERTAKE INVESTMENT IN MODERNIZING THE PLANT AND MACHINERY AND ASSETS AND, THEREFORE WAS CLEARLY A CAPITAL RECEIPT. 12. THE AFORESAID TWO DECISIONS RELIED UPON BY THE CIT(A), WE FIND THEREFORE, HAVE ALREADY DEALT WITH THE NATURE OF THE SUBSIDY RECEIVED UNDER TUFS SCHEME AND AFTER ANALYZING THE TERMS OF THE SCHEME AND FINDING THAT THE PURPOSE OF THE SCHEME WAS TO INDUCE MODERNIZATION OF PLANT AND MACHNIERY USED IN TEXTIL E INDUSTRY ,HELD THE SAME TO BE CAPITAL IN NATURE FOLLOWING THE PROPOSITION LAID DOWN BY TH E APEX COURT FOR DETERMINING THE NATURE OF SUBSIDY IN THE CASE OF SAWHNEY STEELS(SUPRA) AND PONNI SUGARS(SUPRA). THE LD. DR HAS BEEN UNABLE TO BRING TO OUR NOTICE ANY CONTRARY DEC ISION EITHER OF THE HON'BLE JURISDICTIONAL HIGH COURT OR THE HON'BLE APEX COURT ON THIS ISSUE NOR WAS THE DECISIONS RELIED UPON BY THE LD.CIT(A) DISTINGUISHED BEFORE US. 13. IN VIEW OF THE SAME, WE HAVE NO HESITATION IN U PHOLDING THE ORDER OF THE CIT(A) THAT CONSIDERING THE OBJECTIVE OF THE TUF SCHEME AND JUD ICIAL DECISIONS OF THE HON'BLE JURISDICTIONAL HIGH COURT AND HON'BLE HIGH COURT OF CALCUTTA , THE INTEREST RECEIVED UNDER TUF SCHEME IS CAPITAL IN NATURE. GROUNDS OF APPEAL RAISED BY THE REVENUE ARE, THEREFORE, DISMISSED. SO RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER DT. 29/05/2019 WE DO NOT SEE ANY MERIT IN THESE APPEALS OF THE DEPARTMENT. 8. IN THE RESULT, APPEALS OF THE DEPARTMENT ARE DISMISS ED. (ORDER PRONOUNCED IN THE OPEN COURT ON 17/12/2019 ) SD/- SD/- (SANDEEP GOSAIN ) ( N.K. SAINI) JUDICIAL MEMBER VICE PRESIDENT AG DATE: 17/12/2019 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. CIT 4. THE CIT(A) 5. DR, ITAT, CHANDIGARH 6. GUARD FILE