The Income-tax Officer, Jammu V. M/s. Shiva Mint Industries, Jammu

ITA 425/ASR/2011

• Counselvise Citation: 42520914 RSA 2011
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 22-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Keywords: Capital receipt
• Section: 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. 425(ASR)/2011 ASSESSMENT YEAR:2006-07 PAN: ABBSFS4825N THE INCOME-TAX OFFICER, VS. M/S. SHIVA MINT INDUST RIES, WARD-1(3), JAMMU. JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. AMRIK CHAND, DR RESPONDENT BY:WRITTEN SUBMISSIONS DATE OF HEARING :19.03.2012 DATE OF PRONOUNCEMENT:19.03.2012 ORDER PERBENCH; THIS APPEAL FILED BY THE REVENUE IS AGAINST THE IM PUGNED ORDER OF THE CIT(A), JAMMU, DATED 11.05.2011 RELATING TO ASSESS MENT YEAR 2006-07 ON THE FOLLOWING GROUNDS: 1 ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN ALLOWING RELIEF ON ACCOUNT OF DEDUCTIO N U/S 80IB ON CENTRAL EXCISE DUTY REFUND BY RELYING UPON ORDERS O F HON'BLE HIGH COURT IF J&K, JAMMU WHICH HAS BEEN DELIVERED NOT ON MERITS OF THE ISSUE BUT HOLDING THE RECEIPT TO BE A CAPITAL RECEIPT ONLY BECAUSE THE POLICY UNDER WHICH THE SAME WAS PA ID ENVISAGED TACKLING THE UNEMPLOYMENT IN THE STATE WH ICH CANNOT ITA NO.425(ASR)/2011 2 BE SAID TO BE A GOOD TEST FOR DECIDING WHETHER A RE CEIPT 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 PRES S WORKS LTD, WHEREIN THE HON'BLE SUPREME COURT HAD HELD SUC H RECEIPTS TO BE THE REVENUE RECEIPTS IN AS MUCH AS IN THAT CA SE 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 HARB OUR DOCK COMPANY WHICH LAYS DOWN TWO IMPORTANT TESTS FOR DET ERMINING WHETHER RECEIPTS 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 D OWN BY THE JUDGMENTS OF THE HON'BLE SUPREME COURT. IN THE CAS E OF ASSESSEE, THE MONEY RECEIVED BY THE ASSESSEE ON ACC OUNT OF REFUND OF CENTRAL EXCISE WAS NOT SUPPOSED TO BE SPE NT IN A PARTICULAR MANNER FOR PURPOSE OF SUBSTANTIAL EXPANS ION OF THE INDUSTRY. 5. THE APPELLANT CRAVES TO AMEND OR ADD ANY ONE OR MORE GROUNDS OF APPEAL. 2. NOTICE OF HEARING WAS ISSUED TO THE ASSESSEE BY REGISTERED AD POST ON 14.03.2012 BUT NOBODY APPEARED ON BEHALF OF THE ASS ESSEE. HOWEVER, IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS, WHICH ARE REPRODUCED HEREUNDER: 1. THE APPELLANT IN THE ABOVE NOTED CASE IS A PART NERSHIP FIRM WHICH STARTED MANUFACTURING MENTHOL AND OTHER ALLIE D PRODUCTS IN THE ITA NO.425(ASR)/2011 3 STATE OF JAMMU & KASHMIR DURING THE A.Y. 2006-07. T HIS APPEAL HAS BEEN FILED BY THE INCOME TAX DEPARTMENT AGAINST THE ORDER OF CIT(A) JAMMU WHO DELETED THE PENALTY OF RS.202,88,971/- IM POSED UNDER SECTION 271(1)(C) OF THE ACT. 2. THE A.O. WARD 1(3), JAMMU IN THIS CASE COMPLETED THE INCOME TAX ASSESSMENT ON 30.12.2009 AFTER DENYING DEDUCTIO N OF RS.602,76,211/- ON ACCOUNT OF EXCISE DUTY REFUNDS U NDER SECTION 80IB(4) OF THE ACT. THE A.O. ALSO INITIATED OF INAC CURATE PARTICULARS U/S 271(1)(C) OF THE ACT FOR FILING OF INACCURATE P ARTICULARS OF INCOME. THE ASSESSEE FILED DETAILED REPLIES TO THE PENALTY PROCEEDINGS VIDE LETTER DATED 15.02.2010 AND 08.03.2010. THE ASSESSE E HAD POINTED OUT THAT THE TAXABILITY OF EXCISE DUTY REFUNDS WAS A DE BATABLE ISSUE BECAUSE THERE WAS NO EXCISE DUTY YET THE UNITS WERE REQUIRED TO CHARGE THE DUTIES, DEPOSIT AND CLAIM REFUNDS. THE PHOTOCOP IES OF THE SAID LETTERS ARE ENCLOSED HEREWITH. HOWEVER, THE A.O. DI SREGARDED THE JUDICIAL PRONOUNCEMENTS AND WENT ON TO IMPOSED A P ENALTY OF RS.202,88,971/- U/S 271(1)(C) OF THE ACT VIDE ORDER DATED 30.08.2010 AFTER OBTAINING APPROVAL FROM THE ADDL. CIT, RANGE- 1, JAMMU VIDE LETTER NO. 570 DATED 20/30-08/2010. 3. IN DUE COURSE OF TIME, THE QUANTUM WAS DECIDED B Y THE HONBLE JAMMU HIGH COURT IN FAVOUR OF THE ASSESSEE VIDE ITS ORDER DATED 31.01.2011. AS A RESULT, THE LD. CIT(A) JAMMU DELET ED THE PENALTY OF RS.202,88,971/- U/S 271(1)(C) IN APPEAL 124/2010/11 DATED 11.05.2011. SINCE THE VERY FOUNDATION FOR THE LEVY OF THE PENALTY CEASED TO EXIST, THE PENALTY LEVIED U/S 271(1)(C) W AS CORRECTLY DELETED BY THE CIT(A), JAMMU. 4. EVEN ON MERITS, THE ASSESSEE HAD ALSO POINTED OU T VARIOUS JUDGMENTS IN ITS FAVOUR: I) IT HAS BEEN HELD BY HONBLE ITAT MUMBAI A BENC H ACIT VS. VIP INDUSTRIES LTD. REPORTED IN 1(2009) 21 DTR 153 THAT WHERE ADDITION, CORRESPONDING TO WHICH PENALTY U/S 271(1)(C) IN QUESTION WAS IMPOSED, HAVING BEEN DELE TED BY THE TRIBUNAL IN QUANTUM APPEAL, THE VERY FOUNDATION FOR LEVY OF THE PENALTY CEASED TO EXIST. THEREFORE, THE CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY U/S 271(1)(C). ITA NO.425(ASR)/2011 4 II) THE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETRO- PRODUCTS (P) LTD. REPORTED IN (2010) 322 ITR 158 (S C) HAS HELD THAT MERELY BECAUSE THE ASSESSEE CLAIMED DEDUCTION OF INTEREST EXPENDITURE WHICH HAS NOT BEEN ACCEPTED BY THE REVE NUE, PENALTY U/S 271(1)(C) IS NOT ATTRACTED; MERE MAKING OF THE CLAIM, WHICH IS NOT MAINTAINABLE IN LAW, BY ITSELF, WILL N OT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. III) THE PUNJAB & HARYANA HIGH COURT HAS HELD IN TH E CASE OF CIT VS. M/S. RAJ OVERSEAS WITH ITA NO. 225 OF 2010 DATED 28.07.2010 THAT NO PENALTY U/S 271(1)(C) WAS LEVIAB LE IN RESPECT OF DEDUCTION WRONGLY CLAIMED BY THE ASSESSEE U/S 80 IB OF THE INCOME TAX IN RESPECT OF INCOME FROM DUTY DRAW BACK . IV) IT IS ALSO SUBMITTED THAT RECENTLY, THE HONBLE BENCHES AMRITSAR HAS DISMISSED MOST OF THE DEPARTMENTAL APP EALS FOR THE ASSESSMENT YEAR 2007-08 AND 2008-09. 5. IN VIEW OF THE ABOVE SUBMISSIONS, IT IS PRAYED THAT THE APPEAL FILED BY THE INCOME-TAX DEPARTMENT AGAINST CIT(A) P ENALTY ORDER IS WITHOUT ANY BASIS WHATSOEVER. THE PENALTY WOULD BE LEVIED ON WHAT AMOUNT WHEN THE ADDITION ON ACCOUNT OF EXCISE DUTY REFUNDS HAS ALREADY BEEN DELETED BY THE HONBLE JAMMU HIGH COUR T. NOW THE AO WILL LEVY PENALTY FOR CONCEALMENT ON WHICH AMOUNT. THE INCOME TAX DEPARTMENT THESE DAYS WANTS TO TAKE EVERY CASE TO T HE HIGHEST LEVEL DISREGARDING THE JUDICIAL PROPRIETY. THE JUDGMENTS GIVEN BY THE HIGH COURTS AND SUPREME COURT ARE IGNORED BY THE OFFICER S. THIS IS MORE SO BECAUSE THE OFFICERS DO NOT HAVE TO BEAR ANY COS T AND WHEREAS THE LITIGATION COST IS MULTIPLYING EVERY DAY. HENCE, IT IS PRAYED THAT THE APPEAL FILED BY THE INCOME TAX DEPARTMENT UNDER SEC TION 271(1)(C) OF THE ACT MAY KINDLY BE DISMISSED ON MERITS. 3. THE LD. DR, SH. AMRIK CHAND, RELIED UPON THE ORD ER PASSED BY THE ASSESSING OFFICER. 4. AFTER HEARING THE LD. DR AND THOROUGHLY GOING TH ROUGH THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE AS WELL AS THE IM PUGNED ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY, WE ARE OF THE CO NSIDERED OPINION THAT THE LD. ITA NO.425(ASR)/2011 5 FIRST APPELLATE AUTHORITY HAS RIGHTLY DELETED THE P ENALTY IN DISPUTE ON THE BASIS OF ORDER PASSED BY THE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE, ALLOWING THE BENEFIT U/S 80IB OF THE ACT, TO THE AS SESSEE. THE LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY HELD THAT SINCE THE QUANTUM ADDITION DID NOT SURVIVE, THE PENALTY HAS NO BASIS LEFT TO BE LEVIED AND HENCE DELETED. WE UPHOLD THE IMPUGNED ORDER OF THE FIRST APPELLATE AU THORITY BY DISMISSING THE APPEAL FILED BY THE REVENUE. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 19TH MARCH, 2012. SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 19TH MARCH , 2012 /SKR/ COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE:M/S. SHIVA MINT INDUSTRIES, JAMMU. 2. THE ITO WARD 1(3), JAMMU. 3. THE CIT(A), JAMMU. 4. THE CIT, JAMMU. 5. THE SR DR, ITAT, AMRITSR. TRUE COPY BY ORDER