DCIT, Ludhiana V. M/s Vardhman Acrylics Limited, Ludhiana

ITA 398/CHANDI/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1568 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 15-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR AMA RVEER SINGH
• Assessee Lawyers: SUBHASH AGGARWAL
• Keywords: Question of law; Capital receipt
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 398/CHD/2015 ASSESSMENT YEAR: 2006-07 THE DCIT, VS M/S VARDHMAN ACRYLICS LTD., CIRCLE - 1, CHANDIGARH ROAD, LUDHIANA. LUDHIANA. PAN: AAACV7602E (APPELLANT) (RESPONDENT) APPELLANT BY : DR. AMAR VEER SIN GH RESPONDENT BY : SHRI SUBHASH AGGARWAL DATE OF HEARING : 27.07.2015 DATE OF PRONOUNCEMENT : 03.08.2015 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF LD. CIT(APPEALS)-I, LUDHIANA DATED 27.01.2015 FOR ASSESSMENT YEAR 2006-07, CHALLENGING THE CANCELLATI ON OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX A CT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SING OFFICER VIDE SEPARATE ORDER LEVIED THE PENALTY UNDER SECTIO N 271(1)(C) OF THE ACT ON THE ISSUE OF SALES TAX SUBS IDY BEING CLAIMED AS CAPITAL RECEIPT. THE ASSESSING OFFICER HAS BROUGHT ON RECORD THE FACT THAT THE ASSESSEE COMPAN Y HAD RECEIVED SALES TAX SUBSIDY AND TREATED THE SAME AS CAPITAL RECEIPT IN COMPUTING THE INCOME. THE CLAIM OF ASSE SSEE WAS DISALLOWED BY THE ASSESSING OFFICER FOLLOWING THE J UDGEMENT 2 OF THE HON'BLE SUPREME COURT IN THE CASE OF SAHNI S TEELS AND IN THE CASE OF M/S ABHISHEK INDUSTRIES LTD. BY THE HON'BLE PUNJAB & HARYANA HIGH COURT. 3. THE ASSESSEE BRIEFLY SUBMITTED BEFORE ASSESSING OFFICER THAT RETURN WAS FILED DECLARING NIL INCOME WHICH WAS ALSO REVISED AND ONLY NIL INCOME WAS SHOWN UNDER NORMA L PROVISION AND UNDER SECTION 115JB OF THE ACT. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT HOLDING THE SALES TAX SUBSIDY AS REVENUE RECEIPT. THE ASSESSIN G OFFICER INITIATED PENALTY PROCEEDINGS ON THE SAME. IT WAS SUBMITTED THAT ASSESSEE DID NOT FURNISH INACCURATE PARTICULAR S OF INCOME AS ASSESSEE HAS MADE ALL THE DISCLOSURES IN THE RETURN OF INCOME, NOTES, ANNEXURES AND THE AUDITOR S REPORT. THEREFORE, ASSESSEE COULD NOT BE SAID TO HAVE FURNI SHED INACCURATE PARTICULARS OF INCOME TO INVITE LEVY OF THE PENALTY. THE ASSESSEE RELIED UPON DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 AND DECISION OF DELHI HIGH COURT I N THE CASE OF CIT VS NATH EXIM INTERNATIONAL 288 ITR 670. IT WAS SUBMITTED THAT WHETHER SALES TAX SUBSIDY WAS CAPITA L RECEIPT OR REVENUE RECEIPT, IS A DEBATABLE ISSUE. IT WAS SUBMITTED THAT THE SAME ISSUE HAS BEEN ADMITTED BY HON'BLE PUNJAB & HARYANA HIGH COURT BEING SUBSTANTIAL QUEST ION OF LAW IN PRECEDING ASSESSMENT YEARS 2003-04 AND 2004- 05 VIDE ADMISSION ORDER DATED 15.12.2008. IT WAS SUBM ITTED THAT WHEN TWO VIEWS ARE POSSIBLE, PENALTY NEED NOT TO BE IMPOSED. THE ASSESSEE RELIED UPON CERTAIN DECISION S IN SUPPORT OF THE CONTENTION INCLUDING THE DECISION OF THE 3 HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF GURDASPUR COOPERATIVE SUGAR MILLS LTD. 354 ITR 27. THE ASSESSING OFFICER, HOWEVER, WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND VIDE SEPARATE ORDER , LEVIED THE PENALTY WHICH WAS CHALLENGED BEFORE LD. CIT(APP EALS). 4. THE LD. CIT(APPEALS) CONSIDERING THE EXPLANATION OF THE ASSESSEE AND FACTS OF THE CASE, CANCELLED THE PENAL TY. HIS FINDINGS IN PARA 5 AND 6 OF THE APPELLATE ORDER ARE REPRODUCED AS UNDER : 5. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE AR OF THE APPELLANT LARGELY SUBMITTED THE ARGUMENTS MA DE BEFORE THE A.O. DURING THE PENALTY PROCEEDINGS AND IT WAS CLAIMED THAT THE ASSESSEE HAD GIVEN CORRECT DET AILS IN THE RETURN OF INCOME AND NO INACCURATE PARTICULA RS OF INCOME WERE FURNISHED. THE APPELLANT ADMITTED THAT THE ISSUE HAD BEEN DECIDED AGAINST THE ASSESSEE BUT THE HON'BLE JURISDICTIONAL HIGH COURT HAD ADMITTED ASSESSEE'S APPEAL THEREBY REFLECTING THAT THE MATTE R INVOLVES A SUBSTANTIAL QUESTION OF LAW WHICH NEEDED ADJUDICATION BY THE COURT. IT HAS BEEN SUBMITTED T HAT THE HON'BLE PUNJAB &HARYANA HIGH COURT HAD ADMITTED THE APPEALS OF THE ASSESSEE IN ITA 632-633 OF 2008 FOR THE ASSESSMENT YEAR 2003-04 AND 2004-05 VI DE ADMISSION ORDER DATED 15.12.2008. IT WAS ALSO BROUG HT ON RECORD THAT THE SLP AGAINST THE JUDGMENT OF HON' BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF M/S ABHISHEK INDUSTRIES LIMITED IS PENDING BEFORE THE HON'BLE APEX COURT WHICH FURTHER MEANT THAT THE ISS UE OF SALES TAX SUBSIDY BEING CAPITAL OR REVENUE WAS A SUBSTANTIAL QUESTION OF LAW AND HAD NOT BECOME FINA L. IT MEANT THAT THE ISSUE IS HIGHLY DEBATABLE AND THE APPELLANT HAS EVERY LEGAL RIGHT TO MAKE A LEGAL CLA IM IN ITS RETURN OF INCOME AND IT CANNOT BE SAID THAT MAK ING 4 SUCH A LEGAL CLAIM AMOUNTS TO FURNISHING OF INACCUR ATE PARTICULARS OF INCOME. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. GURDASPUR CO-OPER ATIVE SUGAR MILLS LTD., IN ITA 88/2011 (P&H HIGH COURT) V IDE THEIR ORDER DATED 21.01.2014 HAVE HELD THAT NO PENA LTY WAS LEVIABLE IN THE CASE OF GRANT IN AID BEING TREA TED AS CAPITAL OR REVENUE AS THE ISSUE WAS DEBATABLE. SIMI LARLY, THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. RAJ OVERSEAS (2012) 20 TAXMAN.COM 601 (P&H) HAVE DELETED THE ISSUE OF PENALTY ON THE CLAIM OF DEDUCTION UNDER 801B ON DUTY DRAW BACK AS ISSUE WAS DEBATABLE. FURTHER, THE HON'BLE JURISDICTIONAL TRIB UNAL AT CHANDIGARH IN VS. BHUSHAN POWER & STEEL LTD., ITA N O. 371/CHD./2013 DATED 28.1.2014 HAS DISMISSED REVENUE'S APPEAL ON THE ISSUE OF SALES TAX SUBSIDY BEING CLAIMED AS REVENUE OR CAPITAL RECEIPT AS FAR AS IMP OSITION OF PENALTY U/S 271(L)(C) WAS CONCERNED. 6. IN VIEW OF THE ABOVE DETAILED FACTS AND CIRCUMSTANCES OF THE CASE AND JUDICIAL VIEW ON THE SAME, THE PENALTY IMPOSED BY THE A.O. IS DIRECTED TO BE DELETED. 5. THE LD. DR RELIED UPON ORDER OF THE ASSESSING OF FICER. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE REI TERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AND SUBMITTED THAT THE ISSUE IS NOW COVERED IN FAVOUR O F THE ASSESSEE BY THE FOLLOWING JUDGEMENTS : I) DCIT VS ABHISHEK INDUSTRIES LTD. [ITA NO. 11/2015 (CHD TRIBUNAL ) ] DATED 18.03.2015. II) DCIT VS BHUSHAN POWER & STEEL LTD. [ITA NO. 371/2013 (CHD TRIBUNAL) DATED 28.01.2014. III) CIT VS GURDASPUR CO-OPERATIVE SUGAR MILLS LTD. (2013) 354 ITR 27 (P&H) DATED 21.01.2013. 5 IV) CIT VS RELIANCE PETROPRODUCTS P. LTD. (2010) 322 ITR 158 (S.C). 6. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. IT IS ADMITTED FACT THAT ASSESSEE HAS FURNISHED COMPLETE FACTS OF RECEIPT OF SUBSIDY IN THE RETURN OF INCOME. THE AS SESSEE CLAIMED SALES TAX SUBSIDY AS CAPITAL RECEIPT, HOWEV ER THE ASSESSING OFFICER WAS OF THE VIEW THAT IT WAS REVEN UE IN NATURE. IN EARLIER YEAR ALSO, ON THE SAME ISSUE HO N'BLE JURISDICTIONAL HIGH COURT HAS ADMITTED THE ASSESSEE 'S SIMILAR CLAIM FOR HEARING FINDING IT TO BE A SUBSTA NTIAL QUESTION OF LAW. THE LD. CIT(APPEALS) WAS, THEREFO RE, JUSTIFIED IN HOLDING THAT IT BEING A DEBATABLE ISSU E, WOULD NOT INVITE LEVY OF THE PENALTY. HON'BLE PUNJAB & H ARYANA HIGH COURT IN THE CASE OF GURDASPUR COOPERATIVE SUG AR MILLS LTD. (SUPRA) HELD AS UNDER : HELD, THAT THERE WAS NO DISPUTE ABOUT THE QUANTUM OF RECEIPT OF GRANT-IN-AID FROM THE STATE GOVERNMENT. THE ASSESSEE REFLECTED THE RECEIPT AS CAPITAL RECEIPT, WHEREAS IT HAD BEEN TREATED AS A REVENUE RECEIPT. THE ISSUE, WHETHER THE AMOUNT OF GRANT-IN-AID WAS A CAP ITAL RECEIPT OR A REVENUE RECEIPT, WAS A DEBATABLE ISSUE . THERE WAS NO FURNISHING OF INACCURATE PARTICULARS. PENALTY COULD NOT BE IMPOSED. 7. IN THE SIMILAR CIRCUMSTANCES, ITAT CHANDIGARH BE NCH ALSO IN THE CASES OF ABHISHEK INDUSTRIES LTD. (SUPR A) AND BHUSHAN POWER & STEEL LTD. (SUPRA) ON IDENTICAL ISS UE CONFIRMED THE ORDER OF THE LD. CIT(APPEALS) IN CANC ELING THE 6 LEVY OF THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT, ON THE ISSUE OF SALES TAX SUBSIDY CLAIMED AS CAPITAL RECEI PT. WE, THEREFORE, DO NOT FIND ANY JUSTIFICATION TO INTERFE RE WITH THE ORDER OF THE LD. CIT(APPEALS) IN CANCELING THE PENA LTY. THE DEPARTMENTAL APPEAL HAS NO MERIT. THE SAME IS, ACCORDINGLY, DISMISSED. 8. IN THE RESULT, DEPARTMENTAL APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD AUGUST,2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 3 RD AUGUST,2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH