Ultimate Flexipack Ltd., New Delhi V. ACIT, Central Circle- 27, New Delhi

ITA 427/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3361 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 16-01-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUSHMA SINGH
• Keywords: Capital receipt
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER I.T.AS. NO.427/DEL/2018 & 428/DEL/2018 ASSESSMENT YEARS 2013-14 & 2014-15 ULTIMATE FLEXIPACK LTD., 305, 3 RD FLOOR, BHANOT CORNER, PAMPOSH ENCLAVE, GREATER KAILASH-I, NEW DELHI. V. ACIT, CENTRAL CIRCLE-27, NEW DELHI. TAN/PAN: AAACU6565D (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI M.P. RASTOGI, ADV. DEPARTMENT BY: SMT. SUSHMA SINGH CIT-D.R DATE OF HEARING: 19 07 2021 DATE OF PRONOUNCEMENT: 11 10 2021 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST SEPARATE IMPUGNED ORDER OF EVEN DATE 30.12.2017 PAS SED BY LD. CIT(A)-29, NEW DELHI FOR THE QUANTUM OF ASSESSMENT PAS SED U/S.153/143(3) FOR THE ASSESSMENT YEAR 2013-14 AND U/ S.143(3) FOR ASSESSMENT YEAR 2014-15. WE WILL FIRST TAKE UP THE APPEAL FOR THE ASSESSMENT YEAR 2013-14 WHEREIN THE ASSESSEE HAS R AISED FOLLOWING GROUNDS:- 1. LOWER AUTHORITIES HAVE ERRED IN HOLDING THAT MI NIMUM ROYALTY OF RS. 3,00,00,000/- (THREE CRORE ONLY) PAID FOR AC QUIRING SUB - LICENSING RIGHTS IS ALLOCABLE TO TAX HOLIDAY UNITS ELIGIBLE FOR DEDUCTION U/S 80-IB & 80-IC OF THE INCOME TAX ACT, 1961. I.T.A. NO.427 & 428/DEL/2018 2 2. IT IS CONTENDED THAT MINIMUM ROYALTY PAYMENT OF RS. 3 CRORE IS RELATABLE TO SUB-LICENSING RIGHTS ACQUIRED AND N OT TO BE ALLOCATED TO TAX HOLIDAY UNITS. 3. IT IS CONTENDED THAT ON THE FACTS AND CIRCUMSTA NCES OF THE CASE AND IN LAW, REFUND OF EXCISE DUTY (SELF CENVAT CREDIT) AMOUNTING TO RS 1,20,95,648/- IS A CAPITAL RECEIPT NOT INCLUDIBLE IN THE DETERMINATION OF TOTAL INCOME U/S 115JB OF INCO ME TAX ACT, 1961. 4. IT IS CONTENDED THAT ON THE FACTS AND CIRCUMSTA NCES OF THE CASE AND IN LAW SUBSIDY ON DG SETS AMOUNTING TO RS 2,86,957/- BEING A CAPITAL RECEIPT IS NOT INCLUDIBLE IN THE DE TERMINATION OF TOTAL INCOME U/S 115JB OF INCOME TAX ACT, 1961. 2. AT THE OUTSET, GROUNDS NO.1 AND 2 HAVE NOT BEEN PRESS ED BY THE LD. COUNSEL; THEREFORE, SAME IS DISMISSED AS NOT P RESSED. 3. IN SO FAR AS GROUND NO.3 IS CONCERN, THE LD. COUN SEL SUBMITTED THAT SAME IS COVERED BY THE DECISION OF THIS TR IBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2005-06 AND 2006- 07 IN ITA NO.2199/DEL/2009 VIDE ORDER DATED 20.03.2 019 AND ALSO ORDER FOR THE ASSESSMENT YEARS 2007-08 TO 2011-12, ORD ER DATED 22.01.2020, WHEREIN THE TRIBUNAL HAS HELD THAT EXCISE REFUND ON ACCOUNT OF ESTABLISHMENT OF NEW INDUSTRIAL UNDERTAKING I N THE STATE OF JAMMU & KASHMIR AS AN INCENTIVE TO PROMOTE INDU STRIAL ACTIVITY IS IN THE NATURE OF CAPITAL SUBSIDY NOT LIABLE TO TAX, THEREFORE, THE EXCISE DUTY REFUND HAS TO BE EXCLUDED F ROM THE COMPUTATION U/S.115JB OF THE ACT AS IT IS A CAPITAL RECEI PT. 4. WE FIND THAT EVEN THE LD. ASSESSING OFFICER HAS NO TED THAT THIS ISSUE WHETHER CENVAT EXCISE DUTY REFUND IS A SUB SIDY IN THE NATURE OF CAPITAL RECEIPT OR NOT HAS BEEN DECIDED BY T HE LD. CIT(A) I.T.A. NO.427 & 428/DEL/2018 3 IN ASSESSMENT YEARS 2007-08 AND 2008-09 IN FAVOUR OF THE ASSESSEE FOR WHICH THE DEPARTMENT HAS FILED AN APPEAL BEFORE THE TRIBUNAL. SINCE, THIS ISSUE HAS ALREADY BEEN DECIDE D BY THE TRIBUNAL IN ASSESSEES OWN CASE THAT EXCISE DUTY REF UND WAS ON ACCOUNT OF ESTABLISHMENT OF NEW INDUSTRIAL UNDERTAKING U NDER THE INCENTIVE TO PROMOTE INDUSTRIAL ACTIVITY IN THE STATE O F J & K HAS BEEN HELD TO BE CAPITAL RECEIPT, THEREFORE, NEITHER IT C AN BE TAXABLE UNDER THE NORMAL PROVISION OF THE ACT NOR UNDER SECTION 115JB. THIS ISSUE STANDS COVERED BY THE DECISION OF HONBLE JAMMU AND KASHMIR HIGH COURT IN THE CASE SHRI BALAJI ALLOYS & ORS VS. CIT & ORS. (2011) 33 ITR 335 (J&K) , WHICH HAS ALSO BEEN CONFIRMED BY THE HONBLE SUPREME COURT. FURTHER, HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. ANKIT METAL & POWER LTD. , REPORTED IN (2019) 416 ITR 591 (CAL) HAS HELD THAT IN THE COMPUTATION OF BOOK PROFIT U/S.115JB WHEREIN SUBSIDY GRANTED AS INCE NTIVE BY THE STATE GOVERNMENT UNDER THE SCHEME FOR SETTING UP OF ALL S PECIFIED BACKWARD AREA AND STATE, IT IS CAPITAL IN NATURE NOT TO B E INCLUDED FOR THE PURPOSE OF COMPUTATION U/S.115JB, THEREFORE, TH IS APPEAL IS ALLOWED IN FAVOUR OF THE ASSESSEE. 5. IN SO FAR AS ISSUE RAISED IN GROUND NO.4, THE FA CTS ARE THAT THE ASSESSEE HAS CLAIMED CAPITAL SUBSIDY ON DG SETS A MOUNTING TO RS.2,86,957/- WHEREIN THE SAME HAS BEEN COMPUTED AS P ART OF BOOK PROFIT BY THE ASSESSING OFFICER. THIS ISSUE HAS AGAIN BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL WHE REIN IT HAS BEEN HELD TO BE CAPITAL RECEIPT NOT LIABLE FOR FORMING PART OF BOOK PROFIT. ACCORDINGLY, THIS ISSUE IS ALSO DECIDED IN FA VOUR OF THE ASSESSEE. 6. SIMILARLY, IN ASSESSMENT YEAR 2014-15, FOLLOWING GROUNDS HAVE BEEN RAISED. I.T.A. NO.427 & 428/DEL/2018 4 1. LOWER AUTHORITIES HAVE ERRED IN HOLDING THAT MINIMU M ROYALTY OF RS. 3,00,00,000/- (THREE CRORE ONLY) PAI D FOR ACQUIRING SUB-LICENSING RIGHTS IS ALLOCABLE TO TAX HOLIDAY UN ITS ELIGIBLE FOR DEDUCTION U/S 80-IB & 80-IC OF THE INCOME TAX ACT, 1961. 2. IT IS CONTENDED THAT MINIMUM ROYALTY PAYMENT OF RS . 3 CRORE IS RELATABLE TO SUB-LICENSING RIGHTS ACQUIRED AND NOT TO BE ALLOCATED TO TAX HOLIDAY UNITS. 3. IT IS CONTENDED THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, REFUND OF EXCISE DUTY (SELF CENVAT CREDIT) AMOUNTING TO RS 75,40,851/- IS A CAPITAL RECEIPT NO T INCLUDIBLE IN THE DETERMINATION OF TOTAL INCOME U / S 115JB OF IN COME TAX ACT, 1961. 4. IT IS CONTENDED THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW SUBSIDY ON DG SETS AMOUNTING TO RS 2,86,957/- BEING A CAPITAL RECEIPT IS NOT INCLUDIBLE IN THE DE TERMINATION OF TOTAL INCOME U/S 115JB OF INCOME TAX ACT, 1961. 7. HERE AGAIN, THE ASSESSEE HAS NOT PRESSED GROUNDS N O.1 AND 2 AND THE SAME IS DISMISSED AS NOT PRESSED. GROUND NO .3 AND 4 ARE SIMILAR TO GROUNDS RAISED IN ASSESSMENT YEAR 2014-15, THEREFORE, IN VIEW OF THE FINDING GIVEN ABOVE BOTH THESE GROUNDS ARE ALSO ALLOWED. 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH OCTOBER, 2021. SD/- SD/- [R.K. PANDA] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11 TH OCTOBER, 2021 PKK: