The Income-tax Officer, Jammu V. M/s. Jay Ambey Aromatics, Jammu

ITA 396/ASR/2011

• Counselvise Citation: 39620914 RSA 2011
• Duration Of Justice: 1 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 27-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K R JAIN
• Keywords: Capital receipt
• Section: 43B; 80IB

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.396(ASR)/2011 ASSESSMENT YEAR:2008-09 PAN :AAEF6381K THE INCOME TAX OFFICER, VS. M/S. JAY AMBAY AROMATI CS, WARD 1(1), JAMMU. SIDCO INDUSTRIAL COMPLEX, BARI BRAHMANA, JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. TARSEM LAL, DR RESPONDENT BY:SH. K.R.JAIN, ADV. DATE OF HEARING:24/09/2012 DATE OF PRONOUNCEMENT:25/09/2012 ORDER PER BENCH ; THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST T HE IMPUGNED ORDER OF CIT(A), JAMMU, DATED 26.04.2011 FOR THE ASSESSME NT YEAR 2008-09 ON THE FOLLOWING GROUNDS: A. REGARDING DISALLOWANCE OF DEDUCTION U/S 80IB ON ACCOUNT OF CENTRAL EXCISE DUTY REFUND: ITA NO.396(ASR)/2011 2 1 ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CI T(A) WAS RIGHT IN ALLOWING RELIEF ON ACCOUNT OF DEDUCTION U/ S 80IB ON CENTRAL EXCISE DUTY REFUND BY RELYING UPON ORDERS OF HON'BL E HIGH COURT IF J&K, JAMMU WHICH HAS BEEN DELIVERED NOT ON MERITS O F THE ISSUE BUT HOLDING THE RECEIPT TO BE A CAPITAL RECEIPT ONLY BE CAUSE THE POLICY UNDER WHICH THE SAME WAS PAID ENVISAGED TACKLING TH E UNEMPLOYMENT IN THE STATE WHICH CANNOT BE SAID TO BE A GOOD TEST FOR DECIDING WHETHER A RECEIPT IS A TRADING RECEIPT OR A CAPITAL RECEIPT. 2. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN FACTS AND CIRCUMSTANCES AND IN LAW IN NOT APPRECIATING THE JUDGMENTS OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF PONNI SUGAR & SAWHNEY STEEL AND PRESS WORKS LTD, WHEREIN THE HON'BLE SUPREME COURT HAD HELD SUCH RECEIPTS TO BE THE REVE NUE RECEIPTS IN AS MUCH AS IN THAT CASE PAYMENTS WERE MADE ONLY AFTER THE INDUSTRIES HAD BEEN SET UP AND PAYMENTS WERE NOT MADE FOR PURPOSE OF SETTING UP OF INDUSTRIES. 3. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN FACTS AND CIRCUMSTANCES AND IN LAW IN NOT CONSIDERING THE DECISION IN THE CASE OF SEAHAM HARBOUR DOCK COMPANY WHICH LAYS DOWN TWO IMPORTANT TESTS FOR DETERMINING WHETHER RE CEIPTS IS A TRADING RECEIPT OR A CAPITAL RECEIPT. 4. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN FACTS AND CIRCUMSTANCES AND IN LAW IN NOT APPRECIATING AND APPLIED THE PURPOSE TEST AS LAID DOWN BY THE JUDGME NTS OF THE HON'BLE SUPREME COURT. IN THE CASE OF ASSESSEE, THE MONEY RECEIVED BY THE ASSESSEE ON ACCOUNT OF REFUND OF CENTRAL EXCISE WAS NOT SUPPOSED TO BE SPENT IN A PARTICULAR MANNER FOR PURPOSE OF SUBS TANTIAL EXPANSION OF THE INDUSTRY. B. REGARDING DISALLOWANCE OF DEDUCTION U/S 40(A)( IA) ON ACCOUNT OF TDS DEFAULT AND DISALLOWANCE IN RESPECT OF LATE DEPOSIT OF EPF & ESI. 1. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT( A) WAS RIGHT IN DELETING THE ADDITION OF RS.68,436/- MADE IN RESPECT OF DISALLOWANCE OF DEDUCTION CLAIMED U/S 40(A)(IA) BY RELYING UPON THE DECISION OF HONBLE ITAT, AMRITSAR IN THE CASE OF M /S. SUN PHARMACEUTICAL INDUSTRIES IN ITA NO.184(ASR)/2009 A ND NOT ITA NO.396(ASR)/2011 3 APPRECIATED THE DECISION OF SAME BENCH IN THE CASE OF KASHMIR TUBES REPORTED IN ITA NO.145(ASR)/2005 DATED 07.12.2007 W HERE SUCH DISALLOWANCES WERE UPHELD BY THE HONBLE ITAT, AMRI TSAR 2. AT THE TIME OF HEARING BOTH THE LD. COUNSEL FOR THE ASSESSEE AND THE LD. DR CONCEDED STATED THAT THE ISSUE INVOLVED IN G ROUND NO.1 TO 4 IN THE PRESENT APPEAL HAS ALREADY BEEN DECIDED IN FAVOUR O F THE ASSESSEE BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT O F J & K IN THE CASE OF SHREE BALAJI ALLOYS V. CIT AND ANOTHER (2011) 333 I TR 335 (J&K) WHERE IT HAS BEEN HELD THAT THE EXCISE DUTY REFUND IS TO BE TREATED AS CAPITAL RECEIPT AND NOT LIABLE TO BE TAXED. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT MATERIAL AVAILABLE WITH US. WE ARE OF THE VIEW THAT AS REGA RDS THE ISSUES INVOLVED IN GROUND NO. 1 TO 4 RELATING TO DEDUCTION UNDER SECTI ON 80IB ON EXCISE DUTY REFUND, IT IS AN ADMITTED FACT THAT THE ISSUE IN DI SPUTE HAS ALREADY BEEN ADJUDICATED AND DECIDED IN FAVOUR OF THE ASSESSEE B Y THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT OF JAMMU & KASHMI R IN THE CASE OF SHREE BALAJI ALLOYS V. CIT AND ANOTHER (2011) 333 ITR 335 (J&K) BY HOLDING THAT THE EXCISE DUTY REFUND IS TO BE TREATED AS CAPITAL RECEIPT AND NOT LIABLE TO BE TAXED. THE LD. FIRST APPELLATE AUTHORITY HAS ALSO FOLLOWED THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT OF J & K, IN THE CASE OF SHREE ITA NO.396(ASR)/2011 4 BALAJI ALLOYS V. CIT AND ANOTHER (2011) 333 ITR 335 (J&K) WHILE DECIDING THIS ISSUE. THEREFORE, RESPECTFULLY FOLLOWING THE D ECISION OF THE HONBLE JURISDICTIONAL HIGH COURT OF J & K (SUPRA), WE DIS MISS GROUND NO.1 TO 4 OF THE APPEAL OF THE REVENUE. 4. AS REGARDS THE ISSUE RAISED BY THE REVENUE IN G ROUND NO.B(1), RELATING TO DISALLOWANCE OF DEDUCTION UNDER SECTION 40(A)(IA) OF THE ACT, ON ACCOUNT OF TDS DEFAULT AMOUNTING TO RS.68,436/-, TH IS ISSUE HAS ALSO BEEN DECIDED BY THIS BENCH IN THE CASE OF M/S. SUN PHA RMACEUTICALS IN ITA NO.184(ASR)/2009 FOR THE ASSESSMENT YEAR 2005-06 VI DE ORDER DATED 11.06.2010, IN FAVOUR OF THE ASSESSEE AND AGAINST T HE REVENUE, WHERE IT HAS BEEN HELD THAT DEDUCTION U/S 80IB OF THE ACT IS ALL OWABLE ON THE AMOUNT OF ENHANCED INCOME IN VIEW OF THE DISALLOWANCE MADE U/ S 40(A)(IA) OF THE ACT. THE RELEVANT AND OPERATIVE PART OF THE DECISION OF THE ITAT IN THE CASE OF M/S. SUN PHARMACEUTICALS (SUPRA) IS REPRODUCED HERE UNDER FOR THE SAKE OF CLARITY : 38 AS REGARDS TO THE ADDITIONAL GROUND NOS.1, 2 AN D 3 CLAIMING CONSEQUENTIAL THE HIGHER DEDUCTION UNDER S ECTION 80IB ON ACCOUNT OF DISALLOWANCE OF REMUNERATION UNDER SE CTION 40(B) AMOUNTING TO RS.33,20,15,856/-, DISALLOWANCE UNDER SECTION 43B AMOUNTING TO RS.18,46,427/- AND DISALLO WANCE UNDER SECTION 40(A)(IA) AMOUNTING TO RS.4,80,301/- FOR CONTRIBUTION OF DEDUCTION UNDER SECTION 80IB. THE LEARNED D.R. RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. ITA NO.396(ASR)/2011 5 39. WE HAVE CONSIDERED THE ARGUMENTS OF BOTH THE PARTIE S AND CAREFULLY EXAMINED THE RECORDS. WE FIND THAT S ECTION 80AB STATES IN CLEAR TERMS AS UNDER:- SECTION 80AB. WHERE ANY DEDUCTION IS REQUIRED TO BE MADE OR ALLOW ED UNDER ANY SECTION INCLUDED IN THIS CHAPTER UNDER THE HEAD ING C.- DEDUCTIONS IN RESPECT OF CERTAIN INCOMES IN RESPEC T OF ANY INCOME OF THE NATURE SPECIFIED IN THAT SECTION WHIC H IS INCLUDED IN THE GROSS TOTAL INCOME OF THE ASSESSEE, THEN, NO TWITHSTANDING ANYTHING CONTAINED IN THAT SECTION, FOR THE PURPOSE OF COMPUTING THE DEDUCTION UNDER THAT SECTION, THE AMO UNT OF INCOME OF THAT NATURE AS COMPUTED IN ACCORDANCE WIT H THE PROVISIONS OF THIS ACT (BEFORE MAKING ANY DEDUCTION UNDER THIS CHAPTER) SHALL ALONE BE DEEMED TO BE THE AMOUNT OF INCOME OF THAT NATURE WHICH IS DERIVED OR RECEIVED BY THE ASS ESSEE AND WHICH IS INCLUDED IN HIS GROSS TOTAL INCOME. 40. UNDER THE CIRCUMSTANCES TO THE EXTENT DISALLOWA NCE AND/OR THE ADDITIONS ARE MADE, WHICH ARE SUBJECT MA TTER OF ADDITIONAL GROUND, ORIGINAL PROFIT TO THE APPELLANT WOULD STAND ENHANCED OR EVEN ON THIS PROFIT WOULD GET DEDUCTION UNDER SECTION 80IB. ACCORDINGLY, THE ADDITIONS AMOUNTS (RS.32,20,15,856/-, RS.18,46,427/- AND RS.4,80,301/ -) ARE INCLUDED IN THE GROSS TOTAL INCOME, CONSEQUENTLY DE DUCTION UNDER SECTION 80IB IS ALLOWABLE ON SUCH HIGHER AMOU NT. HENCE, THESE ADDITIONAL GROUNDS OF APPEALS ARE ALLO WED SUBJECT TO THE PROVISIONS OF SECTION 70A(2) READ WITH SECTI ON 80AB AND 80B(5) OF THE I.T. ACT. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT MATERIAL AVAILABLE ON RECORD. IT IS AN ADMITTED FACT THAT THE ISSUE IN DISPUTE HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY T HE DECISION OF THE ITAT, AMRITSAR BENCH, IN THE CASE OF M/S. SUN PHARMACEUTI CALS ITA NO.184(ASR)2009 FOR THE ASSESSMENT YEAR 2005-06 DAT ED 11.06.2010, AS ITA NO.396(ASR)/2011 6 REPRODUCED ABOVE. THUS, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL DATED 11.06.2010 (SUPRA), THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25TH SEPTEMBER, 2012. SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 25TH SEPTEMBER, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. JAY AMBAY AROMATICS, JAMMU. 2. THE ITO WAD 1(1), JAMMU. 3. THE CIT(A), JAMMU. 4. THE CIT, JAMMU. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.