Ultimate Flexipack Ltd., New Delhi V. ACIT, New Delhi

ITA 4357/DEL/2013

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8367 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 10-07-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 16-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G JOHNSON
• Keywords: Principle of natural justice; Additional evidence; Capital receipt
• Section: 115JB; 80IB; 80IA; 80IC; 80IC; 13; 68; 139

Judgement Text

1 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.3373/DEL/2011) (ASSESSMENT YEAR 2007-08) AND ITA NO.375/DEL/2012) (ASSESSMENT YEAR 2008-09) AND ITA NO.6292/DEL/2012) (ASSESSMENT YEAR 2009-10) AND ITA NO. 4357/DEL/2013 (ASSESSMENT YEAR 2010-11) ULTIMATE FLEXIPACK LTD., 305, 3 RD FLOOR, BLANOT CORNER PAMPOSH ENCLAVE, GREATER KAILESH-I NEW DELHI-110 048 (AAACU 6565 D) (APPELLANT) VS D CIT, CENTRAL CIRCLE 18, NEW DELHI (RESPONDENT) AND ITA NO.4012/DEL/2011) (ASSESSMENT YEAR 2007-08) AND ITA NO.610/DEL/2012) (ASSESSMENT YEAR 2008-09) ACIT, CENTRAL CIRCLE 18, NEW DELHI (APPELLANT) VS ULTIMATE FLEXIPACK LTD., 305, 3 RD FLOOR, BLANOT CORNER PAMPOSH ENCLAVE, GREATER KAILESH-I NEW DELHI-110 048 (AAACU 6565 D) (RESPONDENT) 2 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 AND ITA NO.471/DEL/2013) (ASSESSMENT YEAR 2009-10) AND ITA NO.4905/DEL/2013) (ASSESSMENT YEAR 2010-11) AND ITA NO.1856/DEL/2015) (ASSESSMENT YEAR 2011-12) DCIT, CENTRAL CIRCLE 18, NEW DELHI (APPELLANT) VS ULTIMATE FLEXIPACK LTD., 305, 3 RD FLOOR, BLANOT CORNER PAMPOSH ENCLAVE, GREATER KAILESH-I NEW DELHI-110 048 (AAACU 6565 D) (RESPONDENT) AND ITA NO.1327/DEL/2015) (ASSESSMENT YEAR 2011-12) ULTIMATE FLEXIPACK LTD., 305, 3 RD FLOOR, BLANOT CORNER PAMPOSH ENCLAVE, GREATER KAILESH-I NEW DELHI-110 048 (AAACU 6565 D) (APPELLANT) VS ACIT, CENTRAL CIRCLE 27, NEW DELHI (RESPONDENT) ASSESSEE BY SH. M. P. RASTOGI, ADV. REVENUE BY SH. G. JOHNSON SR. D.R. 3 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 ORDER PER SUCHITRA KAMBLE, JM THESE TEN APPEALS ARE FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDERS DATED 09.06.2016, 03.11.2011, 20.11.2012, 10.06.2013 AND 15.01.2015 PASSED BY THE COMMISSIONER OF INCOME TAX [APPEALS]-III, DELHI FOR A.YS. 2007-08, 2008-09, 2009-10, 2010-11 AND 2011-12 RESPECTIVELY. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- ITA N O.3373/DEL/2011 A.Y. 2007-08 (ASSESSEES APPEAL) 1. THE LOWER AUTHORITIES HAVE ERRED IN HOLDING THAT THE MINIMUM ROYALTY PAYMENT OF RS 3,00,00,000/- (RUPESS THREE 'CHORE ONLY) IS NOT ALLOCABLE TO THE SUB LICENSING INCOME OF RS 2.71 CRORE. 2. IT IS CONTENDED THAT THE MINIMUM ROYALTY PAYMENT OF RS 3,00,00,000/- (RUPESS THREE CRORE ONLY) IS EXPENDED / INCURRED IN CONNECTION WITH THE EARNING OF SUB LICENSING INCOME OF RS 2.71 CRORE. 3. THE LOWER AUTHORITIES HAVE ERRED IN HOLDING THAT ADVANCE RECEIVED FROM CUSTOMERS AMOUNTING TO RS 4,31,376/- AS CASH CREDIT U/S 68 OF IT ACT. 4. THE LD. CIT(A) ERRED IN HOLDING THAT REFUND OF EXCISE DUTY BEING A CAPITAL RECEIPT IS INCLUDIBLE IN DETERMINATION OF BOOK PROFIT U/S 115JB OF THE ACT. 5. THE ASSESSEE CRAVES THE RIGHT TO ADD, ALTER, AMEND, REDUCE, DELETE OR WITHDRAW ANY GROUNDS OF APPEAL ARISING OUT OF THIS ORDER. ADDITIONAL GROUND FILED BY THE ASSESSEE THAT THE ASSESSING OFFICER, WHILE COMPUTING THE DEDUCTION U/S 80-IB/80- IC OF THE INCOME-TAX ACT, 1961, OUGHT TO HAVE EXCLUDED THE INCOME FROM DATE OF HEARING 09.01.2020 DATE OF PRONOUNCEMENT 22.01.2020 4 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 LICENSING OF TECHNICAL KNOW-HOW, I.E. ROYALTY NOT ON THE GROSS BASIS BUT ON NET BASIS AFTER ADJUSTING THE ROYALTY PAID FOR THAT ALSO. ITA N O.4012/DEL/2011 A.Y. 2007-08 (REVENUES APPEAL) 1. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOCATING EXPENSES OF RS.10,00,000/- AGAINST SUB LICENSING INCOME OF RS.2,71,00,000/- WHICH IS EXCESSIVE AND UNJUSTIFIED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 51,52,216/-MADE BY THE ASSESSING OFFICER U/S 68 OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF UNVERIFIABLE AND UNCONFIRMED ADVANCES RECEIVED BY THE ASSESSEE FROM CUSTOMERS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN ADMITTING ADDITIONAL EVIDENCES WITHOUT GIVING OPPORTUNITY TO THE AO AS PROVIDED UNDER RULE 46A OF THE INCOME TAX RULES, 1962. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS. 2,34,24,510 U/S 80-IB ON ACCOUNT OF SELF CENVAT CREDIT AVAILMENT. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON TACTS IN HOLDING THAT EXCISE DUTY REFUND IS A CAPITAL RECEIPT IN NATURE AND NOT LIABLE TO TAX. 6. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 7. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. ITA N O.375/DEL/2012 A.Y. 2008-09 (ASSESSEES APPEAL) 1. THE LOWER AUTHORITIES HAVE ERRED IN HOLDING THAT OF RS.3,00,00,000/- (RUPEES THREE CRORES ONLY) BEING A PART OF TOTAL ROYALTY PAID OF RS.7,92,30,123/- IS TO BE ALLOCATED TO JAMMU AND BADDI MANUFACTURING UNITS. 5 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 2. THE LOWER AUTHORITIES HAVE ERRED IN HOLDING THAT THE MINIMUM ROYALTY PAYMENT OF RS.3,00,00,000/- (RUPEES THREE CRORES ONLY) IS NOT ALLOCABLE TO THE SUB LICENSING INCOME OF RS.2.42 CRORE. 3. IT IS CONTENDED THAT THE MINIMUM ROYALTY PAYMENT OF RS.3,00,00,000/- (RUPEES THREE CRORES ONLY) IS EXPENDED/ INCURRED IN CONNECTION WITH THE EARNING OF SUB LICENSING INCOME OF RS.2.42 CRORES. 4. IT IS CONTENDED THAT CORPORATE EXPENSES OF RS.6,21,52,616/- (OUT OF THE TOTAL CORPORATE EXPENSES OF RS.9,21,52,616/- LESS MINIMUM ROYALTY PAYMENT OF RS.3,00,00,000/- AS RAISED IN ABOVE GROUNDS OF APPEAL NO. 1 TO 3 SHOULD BE ALLOCATED TO INCOME OF BADDI UNIT, JAMMU UNIT AND SUB LICENSING INCOME. 5. THE LOWER AUTHORITIES HAVE ERRED IN HOLDING THAT REFUND OF EXCISE DUTY BEING A CAPITAL RECEIPT IS INCLUDIBLE IN DETERMINATION OF BOOK PROFIT U/S 115JB OF THE ACT. 6. THE ASSESSEE CRAVES THE RIGHT TO ADD, ALTER, AMEND, REDUCE, DELETE OR WITHDRAW ANY GROUNDS OF APPEAL ARISING OUT OF THIS ORDER. ADDITIONAL GROUND FILED BY THE ASSESSEE THAT THE ASSESSING OFFICER, WHILE COMPUTING THE DEDUCTION U/S 80-IB/80- IC OF THE INCOME-TAX ACT, 1961, OUGHT TO HAVE EXCLUDED THE INCOME FROM LICENSING OF TECHNICAL KNOW-HOW, I.E. ROYALTY NOT ON THE GROSS BASIS BUT ON NET BASIS AFTER ADJUSTING THE ROYALTY PAID FOR THAT ALSO. ITA N O.610/DEL/2012 A.Y. 2008-09 (REVENUES APPEAL) 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOCATING EXPENSES OF RS. 10,00,000/- AGAINST SUB- LICENSING INCOME OF RS. 2,42,00,000/- WHICH IS EXCESSIVE AND UNJUSTIFIED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF CLAIM FOR DEDUCTION OF RS. 4,11,74,224/- U/S 80-IB ON ACCOUNT OF SELF CENVAT CREDIT AVAILMENT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT EXCISE DUTY REFUND IS A CAPITAL RECEIPT IN NATURE AND NOT LIABLE TO TAX. 6 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 4. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. ITA N O.6292/DEL/2012 A.Y. 2009-10 (ASSESSEES APPEAL) 1. THE LOWER AUTHORITIES HAVE ERRED IN HOLDING THAT THE MINIMUM ROYALTY PAYMENT OF RS.3,00,00,000/- (RUPEES THREE CRORES ONLY) IS NOT ALLOCABLE TO THE SUB LICENSING INCOME OF RS. 1.06 CRORE. 2. THE LOWER AUTHORITIES HAVE ERRED IN HOLDING THAT MINIMUM ROYALTY OF RS.3,00,00,000/- (RUPEES THREE CRORES ONLY) BEING A PART OF TOTAL ROYALTY PAID OF RS.7,01,43,336/- IS TO BE ALLOCATED TO JAMMU AND BADDI MANUFACTURING UNITS. 3. IT IS CONTENDED THAT THE MINIMUM ROYALTY PAYMENT OF RS.3,00,00,000/- (RUPEES THREE CRORES ONLY) IS EXPENDED/ INCURRED IN CONNECTION WITH THE EARNING OF SUB LICENSING INCOME OF RS. 1.06 CRORES. 4. IT IS CONTENDED THAT CORPORATE EXPENSES OF RS.6,72,70,790/- (OUT OF THE TOTAL CORPORATE EXPENSES OF RS.9,72,70,790/-) LESS MINIMUM ROYALTY PAYMENT OF RS.3,00,00,000/- AS RAISED IN THE ABOVE GROUNDS OF APPEAL NO. 1 TO 3 SHOULD BE ALLOCATED TO INCOME OF BADDI UNIT, JAMMU UNIT AND SUB LICENSING INCOME AT CORPORATE OFFICE. 5. THE LOWER AUTHORITIES HAVE ERRED IN HOLDING THAT REFUND OF EXCISE DUTY IS NOT A CAPITAL RECEIPT (SHRI BALAJI ALLOYS, J & K HIGH COURT-239 CTR 70). 6. THE LOWER AUTHORITIES HAVE ERRED IN HOLDING THAT REFUND OF EXCISE DUTY BEING A CAPITAL RECEIPT IS INCLUDIBLE IN DETERMINATION OF BOOK PROFIT U/S 115JB OF THE ACT. 7. THE ASSESSEE CRAVES THE RIGHT TO ADD, ALTER, AMEND, REDUCE, DELETE OR WITHDRAW ANY GROUNDS OF APPEAL ARISING OUT OF THIS ORDER. ADDITIONAL GROUND FILED BY THE ASSESSEE THAT THE ASSESSING OFFICER, WHILE COMPUTING THE DEDUCTION U/S 80-IB/80- IC OF THE INCOME-TAX ACT, 1961, OUGHT TO HAVE EXCLUDED THE INCOME FROM 7 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 LICENSING OF TECHNICAL KNOW-HOW, I.E. ROYALTY NOT ON THE GROSS BASIS BUT ON NET BASIS AFTER ADJUSTING THE ROYALTY PAID FOR THAT ALSO. ITA N O.471/DEL/2013 A.Y. 2009-10 (REVENUES APPEAL) 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN ALLOCATING EXPENSES OF RS. 10,00,000/- AGAINST SUB- LICENSING INCOME IS EXCESSIVE AND UNJUSTIFIED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF CLAIM FOR DEDUCTION OF RS.2,45,48,735/- U/S 80IB ON ACCOUNT OF SELF CENVAT CREDIT AVAILMENT. 3. THE ORDER OF THE CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. ITA N O.4357/DEL/2013 A.Y. 2010-11 (ASSESSEES APPEAL) 1. THE LOWER AUTHORITIES HAVE ERRED IN HOLDING THAT THE MINIMUM ROYALTY PAYMENT OF RS.3,00,00,000/- (RUPEES THREE CRORES ONLY) IS NOT ALLOCABLE FOR THE SUB LICENSING RIGHTS. 2. THE LOWER AUTHORITIES HAVE ERRED IN HOLDING THAT MINIMUM ROYALTY OF RS.3,00,00,000/- (RUPEES THREE CRORES ONLY) BEING A PART OF TOTAL ROYALTY PAID OF RS.7,87,93,921/- IS TO BE ALLOCATED TO JAMMU AND BADDI MANUFACTURING UNITS. 3. IT IS CONTENDED THAT THE MINIMUM ROYALTY PAYMENT OF RS.3,00,00,000/- (RUPEES THREE CRORES ONLY) IS EXPENDED/ INCURRED IN CONNECTION WITH THE EARNING OF SUB LICENSING RIGHTS. 4. THE LOWER AUTHORITIES HAVE ERRED IN HOLDING THAT REFUND OF EXCISE DUTY OF RS 1,47,16,872/- IS NOT A CAPITAL RECEIPT (SHRI BALAJI ALLOYS, J & K HIGH COURT - 239 CTR 70). 5. THE LOWER AUTHORITIES HAVE ERRED IN HOLDING THAT REFUND OF EXCISE DUTY BEING A CAPITAL RECEIPT IS INCLUDIBLE IN DETERMINATION OF BOOK PROFIT U/S 115JB OF THE ACT. 8 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 6. IT IS CONTENDED THAT CORPORATE EXPENSES OF RS.4,87,93,921/- (OUT OF THE TOTAL CORPORATE EXPENSES OF RS 7,87,93,921/- LESS MINIMUM ROYALTY PAYMENT OF RS.3,00,00,000/- AS RAISED IN THE ABOVE GROUNDS OF APPEAL NO. 1 TO 3 SHOULD BE ALLOCATED TO INCOME OF BADDI UNIT, JAMMU UNIT , HARIDWAR UNIT. THE ASSESSEE CRAVES THE RIGHT TO ADD, ALTER, AMEND, REDUCE, DELETE OR WITHDRAW ANY GROUNDS OF APPEAL ARISING OUT OF THIS ORDER. ITA N O.4905/DEL/2013 A.Y. 2010-11 (REVENUES APPEAL) 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN ALLOCATING EXPENSES OF RS. 10,00,000/- AGAINST EARNING OF SUB-LICENCING FEE AND OTHER INCOME IS EXCESSIVE AND UNJUSTIFIED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING T SOWANCE OF CLAIM FOR DEDUCTION OF RS. 1,47,16,872/- U/S 80IB ON ACCOUNT OF SELF CENVAT CREDIT AVAILMENT. 3. THE ORDER OF THE CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. ADDITIONAL GROUND FILED BY THE ASSESSEE THAT THE ASSESSING OFFICER, WHILE COMPUTING THE DEDUCTION U/S 80-IB/80- IC OF THE INCOME-TAX ACT, 1961, OUGHT TO HAVE EXCLUDED THE INCOME FROM LICENSING OF TECHNICAL KNOW-HOW, I.E. ROYALTY NOT ON THE GROSS BASIS BUT ON NET BASIS AFTER ADJUSTING THE ROYALTY PAID FOR THAT ALSO. ITA N O.1856/DEL/2015 A.Y. 2011-12 (ASSESSEES APPEAL) 1. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOCATING RS. 10 LACS AGAINST EARNING OF SUB LICENSING FEE AND OTHER CORPORATE INCOMES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THE INCOME OF RS. 61,08,667/- ON ACCOUNT OF SELF CENVAT CREDIT AS PROFIT DERIVED FROM THE BUSINESS OF THE INDUSTRIAL UNDERTAKING ELIGIBLE FOR DEDUCTION US/ 80IB. 9 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 3. THE ORDER OF THE CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. ITA N O.1327/DEL/2015 A.Y. 2011-12 (REVENUES APPEAL) 1. THE LOWER AUTHORITIES HAVE ERRED IN HOLDING THAT THE MINIMUM ROYALTY PAYMENT OF RS.3,00,00,000/- (RUPEES THREE CRORES ONLY) IS NOT ALLOCABLE FOR THE SUB- LICENSING RIGHTS ACQUIRED AS A RESULT OF SUCH PAYMENT. 2. IT IS CONTENDED THAT THE MINIMUM ROYALTY PAYMENT OF RS.3,00,00,000/- (RUPEES THREE CRORE ONLY) WAS INCURRED IN CONNECTION WITH THE EARNING OF SUB- LICENSING RIGHTS. 3. THE LOWER AUTHORITIES HAVE ERRED IN HOLDING THAT MINIMUM ROYALTY OF RS.3,00,00,000/- (RUPEES THREE CRORE ONLY) BEING A PART OF TOTAL CORPORATE EXPENSES OF RS.8,48,64,135/- IS TO BE ALLOCATED TO JAMMU AND BADDI MANUFACTURING UNITS. 4. THE LOWER AUTHORITIES HAVE ERRED IN HOLDING THAT REFUND OF EXCISE DUTY OF RS 61,08,667/- IS NOT A CAPITAL RECEIPT (SHRI BALAJI ALLOYS, J & K HIGH COURT - 239 CTR 70). 5. THE LOWER AUTHORITIES HAVE ERRED IN HOLDING THAT REFUND OF EXCISE DUTY BEING A CAPITAL RECEIPT IS INCLUDIBLE IN DETERMINATION OF BOOK PROFIT U/S 115JB OF THE ACT. 6. THE ASSESSEE CRAVES THE RIGHT TO ADD, ALTER, AMEND, REDUCE, DELETE OR WITHDRAW ANY GROUNDS OF APPEAL ARISING OUT OF THIS ORDER. ITA NO.3373/DEL/2011(ASSESSEES APPEAL) AY-2007-08 3. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF PLASTIC FILM USED IN PACKAGING INDUSTRY, PRINTING ARTICLES IN POUCH FORM AND ZIPPER DIAPHRAGM HAVING TWO UNITS AT BADDI AND JAMMU. THE ASSESSEE FILED ITS RETURN OF INCOME U/S 139 FOR ASSESSMENT YEAR 2007-08 ON 31.10.2007 10 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 DECLARING AN INCOME OF RS. 7,57,017/- AFTER CLAIMING DEDUCTION OF 80IC AND BOOK PROFIT U/S 115JB FOR RS. 13,31,62,480/-. THE ASSESSMENT WAS COMPLETED ON 31.12.2009 AT TOTAL INCOME OF RS. 5,77,30,890/- BY MAKING VARIOUS ADDITIONS. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. THE LD. AR SUBMITTED THAT GROUNDS NO.1 & 2 AND ADDITIONAL GROUND FILED ON 12.03.2018 RELATED TO THE DEDUCTION OF RS.3 CRORE BEING MINIMUM ROYALTY PAYMENT MADE TO MR. ASHOK CHATURVEDI IN TERMS OF AGREEMENT DATED 21.7.2003 READ WITH SUPPLEMENTARY AGREEMENT DATED 25.7.2003 AGAINST THE SUB-LICENSING INCOME OF RS.2.71 CRORE WHICH WOULD ULTIMATELY AFFECT THE QUANTUM OF DEDUCTION CLAIMED U/S 80-IB/80-IC OF IT ACT AGAINST THE PROFITS OF JAMMU UNIT AND BADDI UNIT. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE INCOME FROM SUB-LICENSING FEE IS NOT INCOME DERIVED FROM THE MANUFACTURING ACTIVITY OF JAMMU AND BADDI UNITS RESPECTIVELY, HENCE REQUIRES TO BE EXCLUDED FOR THE PURPOSE OF WORKING OF THE ELIGIBLE PROFITS OF JAMMU AND BADDI UNIT, WHEREAS THE ROYALTY PAID RELATES TO THE MANUFACTURING ACTIVITY OF JAMMU AND BADDI UNITS AND HENCE REQUIRES TO BE DEDUCTED OUT OF THE PROFITS OF JAMMU AND BADDI UNITS FOR WORKING OUT THE ELIGIBLE PROFITS AVAILABLE FOR DEDUCTION U/S 80- IB/80-IC OF IT ACT. IN THE ADDITIONAL GROUND, THE ASSESSEE ADMITTED THAT THE SUB-LICENSING INCOME IS NOT INCOME DERIVED FROM THE MANUFACTURING ACTIVITY OF JAMMU AND BADDI UNIT, BUT WHILE EXCLUDING THE SAME FROM THE PROFITS OF JAMMU AND BADDI UNIT, THE SAME SHOULD NOT BE EXCLUDED ON GROSS BASIS BUT SHOULD BE EXCLUDED AFTER NETTING OF THE ROYALTY PAID BECAUSE THE SUB-LICENSING INCOME AS RECEIVED BY THE ASSESSEE ON ACCOUNT OF SHARING OF TECHNOLOGY RECEIVED FROM MR. ASHOK CHATURVEDI IS INEXTRICABLY LINKED WITH THE TECHNOLOGY RECEIVED FROM MR. ASHOK CHATURVEDI. HAD MR. ASHOK CHATURVEDI NOT AGREED TO 11 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 PROVIDE THE TECHNOLOGY, THE ASSESSEE WOULD NOT HAVE BEEN IN A POSITION TO RECEIVE THE SUB-LICENSING INCOME. HENCE WHILE EXCLUDING THE SUB-LICENSING INCOME, IT SHOULD BE DONE ON NET BASIS. THE LD. AR ALSO SUBMITTED THAT IN CASE IF ADDITIONAL GROUND IS ACCEPTED, THEN THERE IS NO NEED TO DECIDE GROUNDS NO. 1 AND 2 OF THE GROUNDS OF APPEAL. THE LD. AR SUBMITTED THAT IN AYS 2004-05, 2005-06 AND 2006-07, THE ASSESSEE ALSO RAISED SUCH AN ADDITIONAL GROUND AND THE SAME HAD BEEN ACCEPTED BY THE TRIBUNAL VIDE ORDER DATED 20.03.2019. IN AY 2005-06, THE TRIBUNAL, WHILE DISPOSING THE ASSESSEES APPEAL FOR AY 2005- 06 IN ITA NO. 901/DEL/2009, AND FOR AY 2006-07 IN ITA NO. 2199/DEL/2009 VIDE ITS ORDER DATED 20.3.2019 HAS ACCEPTED THE ADDITIONAL GROUND RAISED BY THE ASSESSEE AND THEN THEREAFTER DIRECTED THE ASSESSING OFFICER TO COMPUTE THE SUB- LICENSING FEE ON NET BASIS AFTER ADJUSTING THE ROYALTY PAID AGAINST INCOME OF SUB-LICENSING FEE FOR THE PURPOSE OF EXCLUSION. 6. THE LD. DR OBJECTED TO THE ADMISSION OF ADDITIONAL GROUNDS ON THE GROUND THAT NO SUCH ISSUE HAD BEEN RAISED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES AND AMPLE TIME HAS LAPSED TO RAISE SUCH GROUNDS BEFORE THE TRIBUNAL AND FOR THIS PURPOSE RELIED UPON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN CASE OF ULTRA TECH CEMENT LTD. ITA NO. 1060 OF 2014 ORDER DATED 18.04.2017. BUT THE LD. DR COULD NOT CONTROVERT THE ORDER DATED 20.03.2019 PASSED BY THIS TRIBUNAL. THE LD. DR ALSO RELIED UPON THE FOLLOWING DECISIONS IN RESPECT OF SECTION 80IA AND 80IB: A) OPERA CLOTHINGS VS. ITO 2017-TIOL-38-IT (SC) B) LIBERTY INDIA VS. CIT (2009) 317 ITR 218 (SC) C) CYBER PEARL INFORMATION TECHNOLOGY PARK (P.) LTD. VS. ITO (2017) 80 TAXMANN.COM 66 (MADRAS) 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ADDITIONAL GROUNDS TAKEN BY THE LD. AR IS IDENTICAL TO 12 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 THAT OF A.Y. 2005-06 WHEREIN THE TRIBUNAL ADMITTED THE SAID GROUND (ORDER DATED 20.03.2019). THE TRIBUNAL OBSERVED IN THAT YEAR THAT THE PROPOSITION OF THE LD. AR THAT THE SUB-LICENSING FEE, IF ANY, OUGHT TO HAVE BEEN EXCLUDED ON NET BASIS AFTER ADJUSTING THE ROYALTY PAID AGAINST INCOME OF SUB-LICENSING BECAUSE THE SUB-LICENSING INCOME AND ROYALTY PAYMENT BOTH HAVE DIRECT NEXUS WITH THE KNOW-HOW AGREEMENT, BUT EXCLUDING THE DIRECT NEXUS OF SUB-LICENSING TO THE MANUFACTURING ACTIVITY OF THE ASSESSEE. THUS, THE TRIBUNAL OBSERVED IN A.Y. 2005-06 THAT THE DECISION OF TRIBUNAL FOR A.Y. 2004-05 WILL NOT BE APPLICABLE AS FROM THE BEGINNING THE SUB-LICENSING FEE IS NOT DIRECTLY CONNECTED WITH THE MANUFACTURING ACTIVITY BUT IS INDEPENDENT TRANSACTION ITSELF. IN THE PRESENT ASSESSMENT YEAR AS WELL (A.Y. 2007-08) ALSO THE FACTS REMAINS THE SAME. THUS, WE DIRECT THE ASSESSING OFFICER TO COMPUTE THE SUB-LICENSING FEE BY WAY OF EXCLUDING ON NET BASIS AFTER ADJUSTING THE ROYALTY PAID AGAINST INCOME OF SUB-LICENSING. THE ASSESSEE MUST PROVIDE ALL THE INFORMATION AND THE CLAUSES TO BIFURCATE THE SAID SUB-LICENSE FEE FROM THE ORIGINAL ROYALTY PAYMENT. THUS, WE REMAND BACK THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER. NEEDLESS TO SAY, THE ASSESSEE BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLES OF NATURAL JUSTICE. THEREFORE, ADDITIONAL GROUND IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 8. AS REGARDS TO GROUND NO.3 RELATING TO ADDITION U/S 68 OF IT ACT BEING THE CUSTOMERS ADVANCE RECEIVED RS.4,31,376/-, THE LD. AR SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD RECEIVED AN AMOUNT OF RS.55,83,993/- FROM FIVE PARTIES, THE DETAILS WHEREOF HAVE BEEN GIVEN IN PARAGRAPH 17 OF THE ASSESSMENT ORDER. OUT OF THE SAID AMOUNT, THE CIT (APPEALS) HAD GIVEN A RELIEF AMOUNTING TO RS.51,52,647/- BEING THE AMOUNT OF THREE PARTIES BECAUSE IN SUBSEQUENT YEAR, SUCH ADVANCES HAVE BEEN ADJUSTED AGAINST THE SUPPLIES MADE IN SUBSEQUENT YEARS. THE LD. AR FURTHER SUBMITTED THAT HOWEVER, IN RESPECT OF THE FOLLOWING TWO PARTIES, THE CIT (APPEALS) HAD 13 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 SUSTAINED THE ADDITION BECAUSE NO SUPPLIES COULD HAVE BEEN MADE AGAINST SUCH ADVANCES: LUCKNOW TRADING CO. - RS.4,08,376/- SHIVA IMPEX - RS. 23,000/- RS.4,31,376/- THE LD. AR SUBMITTED THAT AGAINST THE AFORESAID ADDITION OF RS.4,31,376/-, THE ASSESSEE IS IN APPEAL. THE LD. AR FURTHER SUBMITTED THAT THE SAID SUM AMOUNTING TO RS.4,31,376/- HAS ALREADY BEEN OFFERED BY THE ASSESSEE IN A.Y. 2011-12 AND THE SAME HAS ALREADY BEEN ASSESSED TO TAX. HENCE IT WOULD AMOUNT TO DOUBLE ASSESSMENT NOT PERMISSIBLE UNDER LAW. HOWEVER, IN CASE THE ADDITION IS MAINTAINABLE, THEN THE ASSESSING OFFICER BE DIRECTED TO EXCLUDE AN AMOUNT OF RS.4,31,376/- FROM THE INCOME OF A.Y. 2011-12. 9. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE CIT(A) HAS GIVEN A FINDING IN PARA 6 THAT THE PARTIES MENTIONED THEREIN HAVE PAID FOR THE VALUE OF GOODS, BOUGHT BY THEM FROM THE ASSESSEE AND THE ASSESSEE AS A PART OF THE CONTRACTUAL OBLIGATION, HAS SUPPLIED THE GOODS. HOWEVER, WITH REGARD TO SUM OF RS. 4,08,376/- OF LUCKNOW TRADING CO. AND RS. 23,000/- FOR SHIVA IMPEX, A PERUSAL OF THE STATEMENT OF ACCOUNT FURNISHED BY THE ASSESSEE SHOWS THAT THESE AMOUNTS CONTINUE TO BE OUTSTANDING TILL THE END OF THE YEAR. FROM THE STATEMENT OF ACCOUNT OF THESE PARTIES OF THE EARLIER YEARS, IT WAS FOUND THAT THERE WAS REGULAR TRANSACTION OF SUPPLY OF GOODS AND ALSO RECEIVED PAYMENT FROM THE ABOVE TWO PARTIES. BUT THE CIT(A) OBSERVED THAT HOWEVER, IN THE END OF THE YEAR THERE WAS SOME DEBIT 14 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 BALANCE AGAINST WHICH THE AMOUNT RECEIVED, WHICH THE AMOUNT RECEIVED, WHICH WAS IN EXCESS OF THE AMOUNT DUE FROM THESE CUSTOMERS. EXCESS AMOUNT FROM THE SAID TWO PARTIES THEREAFTER IN THE SUBSEQUENT YEARS AND UP TILL THE CONCLUSION OF THE CIT(A)S PROCEEDINGS WERE STATED TO BE OUTSTANDING. THE CIT(A) HELD THAT THERE WAS NO TRANSACTION OF SALES AS WELL AND NEITHER THESE AMOUNTS WERE REFUNDED TO THE ABOVE PARTIES. THE CIT(A) SUBMITTED THAT THE ASSESSEE FAILED TO SUBMIT THE CONFIRMATION CERTIFICATE FROM THE SAID TWO PARTIES EITHER AT THE ASSESSMENT STAGE OR AT THE APPELLATE STAGE. THUS, THE CIT(A) CONFIRMED THE ADDITIONS TO THE EXTENT OF RS. 4,31,376/-. FROM THE PERUSAL OF THE SUBMISSIONS MADE BY THE ASSESSEE IT CAN BE FOUND THAT THE SAID SUM AMOUNTING TO RS.4,31,376/- HAS ALREADY BEEN OFFERED BY THE ASSESSEE IN A.Y. 2011-12 AND THE SAME HAS ALREADY BEEN ASSESSED TO TAX. SINCE THE ASSESSEE HAS ALREADY PAID TAX ON THE SAID AMOUNT IN SUBSEQUENT YEAR, THIS ADDITION DOES NOT SURVIVE. HENCE, GROUND NO. 3 IS ALLOWED. 11. AS REGARDS TO GROUND NO. 4 RELATING TO EXCLUSION OF REFUND OF EXCISE DUTY/CENVAT CREDIT AND BEING A CAPITAL RECEIPT NOT INCLUDIBLE WHILE COMPUTING PROFIT U/S 115-JB OF IT ACT, THE LD. AR SUBMITTED THAT THE SAID GROUND HAS ALREADY BEEN CONSIDERED AND DISPOSED OF IN EARLIER YEAR BY TRIBUNAL IN ITA NO. 901/DEL/2009 AND ITA NO. 2179/DEL/2009 VIDE ITS ORDER DATED 9.1.2019 FOR AYS 2005-06 AND 2006-07 RESPECTIVELY IN FAVOUR OF THE ASSESSEE. 12. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THE TRIBUNAL IN A.Y. 2005-06 AND 2006-07 HELD THAT SIMILAR ISSUE HAS COME UP BEFORE THE TRIBUNAL IN CASE OF MONTAGE ENTERPRISES AND THE TRIBUNAL DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE THEREIN. THE ISSUE IS IDENTICAL IN THE PRESENT CASE (I.E. A.Y. 2007-08) AS WELL. 15 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 THE ELIGIBILITY OF EXCISE DUTY REFUND WAS ON ACCOUNT OF ESTABLISHMENT OF NEW INDUSTRIAL UNDERTAKING IN THE STATE OF JAMMU & KASHMIR AS AN INCENTIVE TO PROMOTE INDUSTRIAL ACTIVITY IN THE STATE OF JAMMU & KASHMIR AND IS IN THE NATURE OF CAPITAL SUBSIDY NOT LIABLE TO TAX. THUS, THE SAID EXCISE DUTY REFUND HAS TO BE EXCLUDED FROM THE COMPUTATION OF SECTION 115JB OF THE ACT AS WELL AS IT IS A CAPITAL RECEIPT. THUS, GROUND NO. 4 IS ALLOWED. 14. IN RESULT, APPEAL OF THE ASSESSEE BEING ITA NO. 3373/DEL/2011 FOR A.Y. 2007 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ITA NO.4012/DEL/2011(DEPARTMENT APPEAL) AY-2007-08 15. AS REGARDS TO GROUND NO. 1 OF REVENUES APPEAL RELATING TO ALLOCATION OF EXPENSES OF RS. 10 LAKHS AGAINST SUB-LICENSING INCOME OF RS.2,71,00,000/-. THE LD. AR SUBMITTED THAT IT IS BASICALLY COVERED BY GROUNDS NO. 1 AND 2 AND ADDITIONAL GROUND OF ASSESSEES APPEAL AND NEED NO COMMENTS BECAUSE IF THE ADDITIONAL GROUND IS ACCEPTED, AS WAS MADE IN EARLIER YEARS, WHILE ACCEPTING THE ASSESSEES CONTENTION THAT THE SUB-LICENSING INCOME NEEDS TO BE EXCLUDED ON NET BASIS AFTER ADJUSTING THE ROYALTY PAID, THEN THIS GROUND DOES NOT SURVIVE. THE LD. DR COULD NOT CONTROVERT THIS POSITION. 16. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ADDITIONAL GROUND FILED BY THE ASSESSEE IS ADMITTED BY US, WHILE ACCEPTING THE ASSESSEES CONTENTION THAT THE SUB-LICENSING INCOME NEEDS TO BE EXCLUDED ON NET BASIS AFTER ADJUSTING THE ROYALTY PAID, THEREFORE, THIS GROUND NO. 1 OF REVENUES APPEAL DOES NOT SURVIVE, HENCE DISMISSED. 17. AS REGARDS TO GROUND NO. 2 OF REVENUES APPEAL RELATING TO TRADE ADVANCES AMOUNTING TO RS.51,52,216/- ADJUSTED AGAINST THE SUPPLIES MADE IN SUBSEQUENT YEARS. THE LD. AR SUBMITTED THAT AS SUBMITTED IN GROUND NO. 3 OF 16 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 ASSESSEES APPEAL, THE ASSESSEE HAD RECEIVED SUCH ADVANCES FROM THREE PARTIES FOR THE SUPPLIES TO BE EFFECTED IN SUBSEQUENT YEARS. THE CIT (APPEALS), AFTER VERIFICATION FROM THE ACCOUNT OF SUBSEQUENT YEARS OF SUCH PARTIES THAT SUCH PARTIES ARE REGULAR CLIENTS AND ADVANCES SO RECEIVED HAVE BEEN ADJUSTED AGAINST THE SUPPLIES MADE IN SUBSEQUENT YEARS AND THEN HAD DELETED THE ADDITION. HOWEVER, SUCH ISSUE HAS ARISEN IN THE ASSOCIATE CONCERN M/S MONTAGE ENTERPRISES PVT. LTD. IN AY 2005-06 AND AY 2006-07. THE HONBLE DELHI HIGH COURT IN THE CASE OF MONTAGE ENTERPRISES, AFTER NOTICING SUCH FACTUAL POSITION, DID NOT ADMIT THE GROUNDS OF APPEAL RELATING TO THE ISSUES IN APPEAL FILED BY THE DEPARTMENT, AND THE SLP FILED BY THE DEPARTMENT BEFORE THE HONBLE SUPREME COURT HAS ALSO BEEN DISMISSED. 18. THE LD. DR RELIED UPON THE ASSESSMENT ORDER. 19. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. FROM THE PERUSAL OF THE ORDER OF THE CIT(A), IT CAN BE SEEN THAT THE CIT(A) OBSERVED THAT THE ASSESSEE HAD RECEIVED SUCH ADVANCES FROM THREE PARTIES FOR THE SUPPLIES TO BE EFFECTED IN SUBSEQUENT YEARS. THIS FACTS IS NOT DENIED BY THE LD. DR. THE CIT (APPEALS), AFTER VERIFICATION FROM THE ACCOUNT OF SUBSEQUENT YEARS OF SUCH PARTIES THAT SUCH PARTIES ARE REGULAR CLIENTS AND ADVANCES SO RECEIVED HAVE BEEN ADJUSTED AGAINST THE SUPPLIES MADE IN SUBSEQUENT YEARS AND THEN HAD DELETED THE ADDITION. THE LD. DR COULD NOT CONTRADICT THESE FACTS FROM THE ASSESSMENT ORDER AS WELL AS FROM THE ORDER OF THE CIT(A). HENCE, THE FINDINGS OF THE CIT(A) TO THIS EXTENT IS CORRECT AND THERE IS NO NEED TO INTERFERE WITH THE SAME. HENCE, GROUND NO. 2 OF REVENUES APPEAL IS DISMISSED. 20. AS REGARDS TO GROUND NO. 3 RELATING TO FILING OF ADDITIONAL EVIDENCE UNDER RULE 46A, THE LD. AR SUBMITTED THAT THE ASSESSEE DID NOT FILE ANY ADDITIONAL 17 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 EVIDENCE. THE DEPARTMENT ALSO COULD NOT POINT OUT WHAT ADDITIONAL EVIDENCE HAD BEEN FILED BY THE ASSESSEE. 21. THE LD. DR RELIED UPON THE ASSESSMENT ORDER. 22. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS SEEN FROM THE RECORDS THAT THE EVIDENCES PRODUCED BEFORE THE CIT(A) BY THE ASSESSEE, WAS FILED BEFORE THE ASSESSING OFFICER. THERE ARE NO NEW EVIDENCE FILED BY THE ASSESSEE BEFORE THE CIT(A). BESIDES THIS THE LD. DR ALSO COULD NOT DEMONSTRATE FROM THE ORDER OF THE CIT(A) THAT THERE ARE NO EVIDENCE FILED BEFORE HIM. HENCE GROUND NO. 3 OF REVENUES APPEAL IS DISMISSED. 23. AS REGARDS TO GROUND NO. 4 RELATING TO REFUND OF EXCISE DUTY/CENVAT CREDIT AMOUNTING TO RS.2,34,24,510/- FORMING PART OF THE MANUFACTURING PROFIT ELIGIBLE FOR DEDUCTION U/S 80-IB OF THE ACT AND GROUND NO. 5 RELATING TO EXCISE DUTY REFUND/CENVAT CREDIT IS A CAPITAL RECEIPT, THE LD. AR SUBMITTED THAT THE ISSUE IS COVERED BY THE HONBLE JURISDICTIONAL DELHI HIGH COURT JUDGMENT IN THE CASE OF CIT VS. DHARAM PAL PREM CHAND IN 317 ITR 353 (DEL) IN FAVOUR OF THE ASSESSEE AGAINST WHICH THE SLP FILED WAS ALSO DISMISSED. HOWEVER, IT IS BROUGHT TO YOUR KIND NOTICE THAT BY WAY OF ALTERNATIVE GROUND, THE ASSESSEE HAD CLAIMED THAT THE EXCISE DUTY REFUND/CENVAT CREDIT IS BASICALLY A CAPITAL RECEIPT, NOT LIABLE TO TAX AND THE SAME HAS BEEN ACCEPTED BY THE CIT (APPEALS). WHILE HOLDING SO, THE CIT (APPEALS) HAS FOLLOWED THE JUDGMENT OF HONBLE J&K HIGH COURT IN THE CASE OF SHRI BALAJI ALLOYS REPORTED IN 333 ITR 353 AGAINST WHICH THE SLP FILED HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT. HOWEVER, IN AY 2006- 07, SUCH ISSUE HAS ALSO ARISEN BEFORE THE TRIBUNAL IN THE CASE OF THE ASSESSEE AND THE TRIBUNAL VIDE ITS ORDER DATED 9.1.2019 HAS HELD THAT THE EXCISE DUTY REFUND/CENVAT CREDIT IS A CAPITAL RECEIPT AND IS NOT LIABLE TO TAX AND EVEN FOR THE PURPOSE OF SECTION 115-JB OF THE ACT HAS TO BE EXCLUDED. 18 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 24. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND COULD NOT CONTROVERT THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2006-07. 25. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ELIGIBILITY OF EXCISE DUTY REFUND WAS ON ACCOUNT OF ESTABLISHMENT OF NEW INDUSTRIAL UNDERTAKING IN THE STATE OF JAMMU & KASHMIR AS AN INCENTIVE TO PROMOTE INDUSTRIAL ACTIVITY IN THE STATE OF JAMMU & KASHMIR AND IS IN THE NATURE OF CAPITAL SUBSIDY NOT LIABLE TO TAX. THUS, THE SAID EXCISE DUTY REFUND HAS TO BE EXCLUDED FROM THE COMPUTATION OF SECTION 115JB OF THE ACT AS WELL AS IT IS CAPITAL RECEIPT. THE DECISIONS RELIED BY THE LD. AR IN CASE OF SHRI BALAJI ALLOYS (SUPRA) IS APPLICABLE IN THE PRESENT CASE. BESIDES IN A.Y. 2006-07, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL AND THE FACTS ARE IDENTICAL IN THE PRESENT ASSESSMENT YEAR AS WELL. THEREFORE, GROUND NO. 4 AND 5 OF THE REVENUES APPEAL ARE DISMISSED. 26. IN RESULT, APPEAL FILED BY THE REVENUE BEING ITA NO. 4012/DEL/2011 A.Y. 2007-08 IS DISMISSED. ITA NO. 375/DEL/2012 (ASSESSEES APPEAL) AY 2008-09 27. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF PLASTIC FILM USED IN PACKAGING INDUSTRY, PRINTING ARTICLES IN POUCH FORM AND ZIPPER DIAPHRAGM HAVING TWO UNITS AT BADDI AND JAMMU. THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2008-09 ON 30.09.2008 DECLARING AN INCOME OF RS. NIL/- AFTER CLAIMING DEDUCTION OF 80IC AND BOOK PROFIT U/S 115JB FOR RS. 14,34,01,998/-. THE ASSESSMENT WAS COMPLETED ON 31.12.2010 AT TOTAL INCOME OF RS. 5,75,77,285/- BY MAKING VARIOUS ADDITIONS. 28. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 19 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 29. THE LD. AR SUBMITTED THAT AS REGARDS TO GROUNDS NO.1 TO 4 AND ADDITIONAL GROUND FILED ON 12.3.2018, THE SAME ARE IDENTICAL TO ASSESSMENT YEAR 2007-08 (ITA NO. 3373/DEL/2011). THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND ORDER OF THE CIT(A), BUT COULD NOT CONTROVERT THE IDENTICAL ISSUES TO THAT OF A.Y. 2007-08. 30. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ADDITIONAL GROUNDS TAKEN BY THE LD. AR IS IDENTICAL TO THAT OF A.Y. 2005-06 WHEREIN THE TRIBUNAL ADMITTED THE SAID GROUND (ORDER DATED 20.03.2019). THE ISSUE HEREIN IS ALSO IDENTICAL TO THAT OF A.Y. 2007-08 WHICH IS DECIDED HEREINABOVE BY US. IN THE PRESENT ASSESSMENT YEAR AS WELL (A.Y. 2008-09) ALSO THE FACTS REMAINS THE SAME. THUS, WE DIRECT THE ASSESSING OFFICER TO COMPUTE THE SUB-LICENSING FEE BY WAY OF EXCLUDING ON NET BASIS AFTER ADJUSTING THE ROYALTY PAID AGAINST INCOME OF SUB-LICENSING. THE ASSESSEE MUST PROVIDE ALL THE INFORMATION AND THE CLAUSES TO BIFURCATE THE SAID SUB-LICENSE FEE FROM THE ORIGINAL ROYALTY PAYMENT. THUS, WE REMAND BACK THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER. NEEDLESS TO SAY, THE ASSESSEE BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLES OF NATURAL JUSTICE. THEREFORE, ADDITIONAL GROUND IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 31. AS REGARDS TO GROUND NO. 5 OF THE ASSESSEES APPEAL, THE LD. AR SUBMITTED THAT AS EXPLAINED IN GROUND NO. 4 OF ASSESSMENT YEAR 2007-08 IN ITA NO. 3373/DEL/2011, THE ISSUE IS IDENTICAL IN THE PRESENT ASSESSMENT YEAR AS WELL. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND COULD NOT CONTROVERT THE FACTS OF THE PRESENT ASSESSMENT YEAR WITH THAT OF EARLIER ASSESSMENT YEAR. 32. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE MATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THE TRIBUNAL IN A.Y. 2005-06 AND 2006-07 HELD THAT SIMILAR ISSUE HAS COME UP BEFORE THE TRIBUNAL IN CASE OF MONTAGE 20 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 ENTERPRISES AND THE TRIBUNAL DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE THEREIN. THE ISSUE IS IDENTICAL TO THAT OF A.Y. 2007-08 WHICH IS DECIDED BY US HEREINABOVE. THERE ARE NO DISTINGUISHING FACTS MENTIONED BY THE LD. DR IN THE PRESENT CASE (I.E. A.Y. 2008-09). HENCE, GROUND NO. 5 OF THE ASSESSEES APPEAL IS ALLOWED. 33. IN RESULT, APPEAL OF THE ASSESSEE BEING ITA NO. 375/DEL/2012 FOR A.Y. 2008-09 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ITA NO. 610/DEL/2012 (DEPARTMENT APPEAL) AY 2008-09 34. AS REGARDS TO GROUND NO. 1 OF REVENUES APPEAL, THE LD. AR SUBMITTED THAT AS EXPLAINED IN GROUND NO. 1 OF REVENUES APPEAL IN ASSESSMENT YEAR 2007-08 (ITA NO. 4012/DEL/2011), THE ISSUE IS IDENTICAL IN THE PRESENT ASSESSMENT YEAR AS WELL. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND COULD NOT CONTROVERT THE FACTS OF THE PRESENT ASSESSMENT YEAR WITH THAT OF EARLIER ASSESSMENT YEAR. 35. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ADDITIONAL GROUND FILED BY THE ASSESSEE IS ADMITTED BY US, WHILE ACCEPTING THE ASSESSEES CONTENTION THAT THE SUB-LICENSING INCOME NEEDS TO BE EXCLUDED ON NET BASIS AFTER ADJUSTING THE ROYALTY PAID, THEREFORE, THIS GROUND NO. 1 OF REVENUES APPEAL DOES NOT SURVIVE, HENCE DISMISSED. 36. AS REGARDS TO GROUNDS NO. 2 AND 3 OF REVENUES APPEAL, THE LD. AR SUBMITTED THAT IN GROUNDS NO. 4 AND 5 OF REVENUES APPEAL ASSESSMENT YEAR 2007-08 IN ITA NO. 4012/DEL/2011 THE ISSUE IS IDENTICAL IN THE PRESENT ASSESSMENT YEAR AS WELL. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND COULD NOT CONTROVERT THE FACTS OF THE PRESENT ASSESSMENT YEAR WITH THAT OF EARLIER ASSESSMENT YEAR. 21 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 37. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ISSUE IS IDENTICAL TO THAT OF A.Y. 2007-08 WHICH IS DECIDED BY US HEREINABOVE. THERE ARE NO DISTINGUISHING FACTS MENTIONED BY THE LD. DR IN THE PRESENT CASE (I.E. A.Y. 2008-09). HENCE GROUND NO. 4 AND 5 OF REVENUES APPEAL ARE DISMISSED. 38. IN RESULT, APPEAL OF THE REVENUE BEING ITA NO. 610/DEL/2012 FOR A.Y. 2008-09 IS DISMISSED. ITA NO.6292/DEL/2012(ASSESSEES APPEAL) AY 2009-10 39. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF PLASTIC FILM USED IN PACKAGING INDUSTRY, PRINTING ARTICLES IN POUCH FORM AND ZIPPER DIAPHRAGM HAVING TWO UNITS AT BADDI AND JAMMU. THE ASSESSEE FILED ITS RETURN OF INCOME U/S 139 FOR ASSESSMENT YEAR 2007-08 ON 31.10.2009 DECLARING AN INCOME OF RS. 9,58,29,354/- AFTER CLAIMING DEDUCTION OF 80IC & 80IB UNDER NORMAL PROVISIONS OF INCOME TAX ACT, 1961 AND BOOK PROFIT U/S 115JB FOR RS. 21,23,89,607/-. THE ASSESSMENT WAS COMPLETED ON 16.12.2011 AT TOTAL INCOME OF RS. 12,02,12,976/- BY MAKING VARIOUS ADDITIONS. 40. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 41. AS REGARDS TO GROUNDS NO. 1 TO 4 AND ADDITIONAL GROUND FILED ON 12.3.2018, THE LD. AR SUBMITTED THAT THE SAME ARE IDENTICAL TO ASSESSMENT YEAR 2007-08 (ITA NO. 3373/DEL/2011). THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND ORDER OF THE CIT(A), BUT COULD NOT CONTROVERT THE IDENTICAL ISSUES TO THAT OF A.Y. 2007-08. 22 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 42. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ADDITIONAL GROUNDS TAKEN BY THE LD. AR IS IDENTICAL TO THAT OF A.Y. 2005-06 WHEREIN THE TRIBUNAL ADMITTED THE SAID GROUND (ORDER DATED 20.03.2019). THE ISSUE HEREIN IS ALSO IDENTICAL TO THAT OF A.Y. 2007-08 WHICH IS DECIDED HEREINABOVE BY US. IN THE PRESENT ASSESSMENT YEAR AS WELL (A.Y. 2009-10) ALSO THE FACTS REMAINS THE SAME. THUS, WE DIRECT THE ASSESSING OFFICER TO COMPUTE THE SUB-LICENSING FEE BY WAY OF EXCLUDING ON NET BASIS AFTER ADJUSTING THE ROYALTY PAID AGAINST INCOME OF SUB-LICENSING. THE ASSESSEE MUST PROVIDE ALL THE INFORMATION AND THE CLAUSES TO BIFURCATE THE SAID SUB-LICENSE FEE FROM THE ORIGINAL ROYALTY PAYMENT. THUS, WE REMAND BACK THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER. NEEDLESS TO SAY, THE ASSESSEE BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLES OF NATURAL JUSTICE. THEREFORE, ADDITIONAL GROUND IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 43. AS REGARDS TO GROUNDS NO. 5 AND 6 RELATING TO REFUND OF EXCISE DUTY/CENVAT CREDIT, THE LD. AR SUBMITTED THAT IN THE YEAR UNDER APPEAL, THE CIT (A) DID NOT FOLLOW HIS PREDECESSORS ORDER FOR AY 2005- 06 TO AY 2008-09 AND HELD THAT SUCH EXCISE DUTY REFUND/CENVAT CREDIT IS NOT A CAPITAL RECEIPT, BUT A REVENUE RECEIPT AND LIABLE TO TAX AND CONSEQUENTLY ALSO DID NOT EXCLUDE SUCH RECEIPTS WHILE COMPUTING THE INCOME U/S 115-JB OF IT ACT. THIS ISSUE HAS ALREADY BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN AY 2006-07 IN ITA NO. 2199/DEL/2009 VIDE ITS ORDER DATED 20 TH MARCH 2019. 44. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 45. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THE ELIGIBILITY OF EXCISE DUTY REFUND WAS ON ACCOUNT OF ESTABLISHMENT OF NEW INDUSTRIAL UNDERTAKING IN THE STATE OF JAMMU & KASHMIR AS AN INCENTIVE TO PROMOTE INDUSTRIAL ACTIVITY IN THE 23 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 STATE OF JAMMU & KASHMIR AND IS IN THE NATURE OF CAPITAL SUBSIDY NOT LIABLE TO TAX. THUS, THE SAID EXCISE DUTY REFUND HAS TO BE EXCLUDED FROM THE COMPUTATION OF SECTION 115JB OF THE ACT AS WELL AS IT IS CAPITAL RECEIPT. THE DECISIONS RELIED BY THE LD. AR IN CASE OF SHRI BALAJI ALLOYS (SUPRA) IS APPLICABLE IN THE PRESENT CASE. BESIDES IN A.Y. 2006-07 AS WELL AS IN A.Y. 2007-08 HEREINABOVE, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL AND THE FACTS ARE IDENTICAL IN THE PRESENT ASSESSMENT YEAR AS WELL. THEREFORE, GROUND NO. 5 AND 6 OF THE ASSESSEES APPEAL ARE ALLOWED. 46. IN RESULT, APPEAL OF THE ASSESSEE BEING ITA NO. 6292/DEL/2012 FOR A.Y. 2009-10 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ITA NO.471/DEL/2012( DEPARTMENT APPEAL) (AY 2009-10) 47. AS REGARDS TO GROUND NO.1 OF REVENUES APPEAL, THE LD. AR SUBMITTED THAT AS EXPLAINED IN GROUND NO. 1 OF REVENUES APPEAL IN ASSESSMENT YEAR 2007-08 (ITA NO. 4012/DEL/2011), THE ISSUE IS IDENTICAL IN THE PRESENT ASSESSMENT YEAR AS WELL. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND COULD NOT CONTROVERT THE FACTS OF THE PRESENT ASSESSMENT YEAR WITH THAT OF EARLIER ASSESSMENT YEAR. 48. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ADDITIONAL GROUND FILED BY THE ASSESSEE IS ADMITTED BY US, WHILE ACCEPTING THE ASSESSEES CONTENTION THAT THE SUB-LICENSING INCOME NEEDS TO BE EXCLUDED ON NET BASIS AFTER ADJUSTING THE ROYALTY PAID, THEREFORE, THIS GROUND NO. 1 OF REVENUES APPEAL DOES NOT SURVIVE, HENCE DISMISSED. 49. AS REGARDS TO GROUNDS NO. 2 OF REVENUES APPEAL, THE LD. AR SUBMITTED THAT IN GROUNDS NO. 4 AND 5 OF REVENUES APPEAL ASSESSMENT YEAR 2007-08 IN ITA NO. 4012/DEL/2011 THE ISSUE IS IDENTICAL IN THE PRESENT ASSESSMENT YEAR 24 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 AS WELL. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND COULD NOT CONTROVERT THE FACTS OF THE PRESENT ASSESSMENT YEAR WITH THAT OF EARLIER ASSESSMENT YEAR. 50. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ISSUE IS IDENTICAL TO THAT OF A.Y. 2007-08 WHICH IS DECIDED BY US HEREINABOVE. THERE ARE NO DISTINGUISHING FACTS MENTIONED BY THE LD. DR IN THE PRESENT CASE (I.E. A.Y. 2009-10). HENCE GROUND NO. 2 OF REVENUES APPEAL IS DISMISSED. 51. IN RESULT, APPEAL OF THE REVENUE BEING ITA NO. 471/DEL/2012 FOR A.Y. 2009-10 IS DISMISSED. ITA NO. 4357/DEL/2013 (ASSESSEES APPEAL) AY 2010-11 52. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF PLASTIC FILM USED IN PACKAGING INDUSTRY, PRINTING ARTICLES IN POUCH FORM AND ZIPPER DIAPHRAGM HAVING TWO UNITS AT BADDI AND JAMMU. THE ASSESSEE FILED ITS RETURN OF INCOME U/S 139 FOR ASSESSMENT YEAR 2007-08 ON 31.10.2007 DECLARING AN INCOME OF RS. 7,57,017/- AFTER CLAIMING DEDUCTION OF 80IC AND BOOK PROFIT U/S 115JB FOR RS. 13,31,62,480/-. THE ASSESSMENT WAS COMPLETED ON 31.12.2009 AT TOTAL INCOME OF RS. 5,77,30,890/- BY MAKING VARIOUS ADDITIONS. 53. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 54. AS REGARDS TO GROUNDS NO. 1 TO 4 AND ADDITIONAL GROUND FILED ON 28.7.2019, THE LD. AR SUBMITTED THAT THE SAME ARE IDENTICAL TO ASSESSMENT YEAR 2007-08 (ITA NO. 3373/DEL/2011). THE LD. DR RELIED UPON THE 25 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 ASSESSMENT ORDER AND ORDER OF THE CIT(A), BUT COULD NOT CONTROVERT THE IDENTICAL ISSUES TO THAT OF A.Y. 2007-08. 55. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ADDITIONAL GROUNDS TAKEN BY THE LD. AR IS IDENTICAL TO THAT OF A.Y. 2005-06 WHEREIN THE TRIBUNAL ADMITTED THE SAID GROUND (ORDER DATED 20.03.2019). THE ISSUE HEREIN IS ALSO IDENTICAL TO THAT OF A.Y. 2007-08 WHICH IS DECIDED HEREINABOVE BY US. IN THE PRESENT ASSESSMENT YEAR AS WELL (A.Y. 2009-10) ALSO THE FACTS REMAINS THE SAME. THUS, WE DIRECT THE ASSESSING OFFICER TO COMPUTE THE SUB-LICENSING FEE BY WAY OF EXCLUDING ON NET BASIS AFTER ADJUSTING THE ROYALTY PAID AGAINST INCOME OF SUB-LICENSING. THE ASSESSEE MUST PROVIDE ALL THE INFORMATION AND THE CLAUSES TO BIFURCATE THE SAID SUB-LICENSE FEE FROM THE ORIGINAL ROYALTY PAYMENT. THUS, WE REMAND BACK THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER. NEEDLESS TO SAY, THE ASSESSEE BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLES OF NATURAL JUSTICE. THEREFORE, ADDITIONAL GROUND IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 56. AS REGARDS TO GROUNDS NO. 4 AND 5 OF THE ASSESSEES APPEAL RELATING TO REFUND OF EXCISE DUTY/CENVAT CREDIT, THE LD. AR SUBMITTED THAT IN THE YEAR UNDER APPEAL, THE CIT (A) DID NOT FOLLOW HIS PREDECESSORS ORDER FOR AY 2005- 06 TO AY 2008-09 AND HELD THAT SUCH EXCISE DUTY REFUND/CENVAT CREDIT IS NOT A CAPITAL RECEIPT, BUT A REVENUE RECEIPT AND LIABLE TO TAX AND CONSEQUENTLY ALSO DID NOT EXCLUDE SUCH RECEIPTS WHILE COMPUTING THE INCOME U/S 115-JB OF IT ACT. THIS ISSUE HAS ALREADY BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN AY 2006-07 IN ITA NO. 2199/DEL/2009 VIDE ITS ORDER DATED 20 TH MARCH 2019. 57. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 26 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 58. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THE ELIGIBILITY OF EXCISE DUTY REFUND WAS ON ACCOUNT OF ESTABLISHMENT OF NEW INDUSTRIAL UNDERTAKING IN THE STATE OF JAMMU & KASHMIR AS AN INCENTIVE TO PROMOTE INDUSTRIAL ACTIVITY IN THE STATE OF JAMMU & KASHMIR AND IS IN THE NATURE OF CAPITAL SUBSIDY NOT LIABLE TO TAX. THUS, THE SAID EXCISE DUTY REFUND HAS TO BE EXCLUDED FROM THE COMPUTATION OF SECTION 115JB OF THE ACT AS WELL AS IT IS CAPITAL RECEIPT. THE DECISIONS RELIED BY THE LD. AR IN CASE OF SHRI BALAJI ALLOYS (SUPRA) IS APPLICABLE IN THE PRESENT CASE. BESIDES IN A.Y. 2006-07 AS WELL AS IN A.YS. 2007-08 AND 2009-10 HEREINABOVE, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL AND THE FACTS ARE IDENTICAL IN THE PRESENT ASSESSMENT YEAR AS WELL. THEREFORE, GROUND NO. 4 AND 5 OF THE ASSESSEES APPEAL ARE ALLOWED. 59. IN RESULT, APPEAL OF THE ASSESSEE BEING ITA NO. 4357/DEL/2013 FOR A.Y. 2010-11 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ITA NO.4905/DEL/2013(DEPARTMENT APPEAL) AY 2010-11 60. AS REGARDS TO GROUND NO.1 OF REVENUES APPEAL, THE LD. AR SUBMITTED THAT AS EXPLAINED IN GROUND NO. 1 OF REVENUES APPEAL IN ASSESSMENT YEAR 2007-08 (ITA NO. 4012/DEL/2011), THE ISSUE IS IDENTICAL IN THE PRESENT ASSESSMENT YEAR AS WELL. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND COULD NOT CONTROVERT THE FACTS OF THE PRESENT ASSESSMENT YEAR WITH THAT OF EARLIER ASSESSMENT YEAR. 61. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ADDITIONAL GROUND FILED BY THE ASSESSEE IS ADMITTED BY US, WHILE ACCEPTING THE ASSESSEES CONTENTION THAT THE SUB-LICENSING INCOME NEEDS TO BE EXCLUDED ON NET BASIS AFTER ADJUSTING THE ROYALTY PAID, THEREFORE, THIS GROUND NO. 1 OF REVENUES APPEAL DOES NOT SURVIVE, HENCE DISMISSED. 27 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 62. AS REGARDS TO GROUNDS NO. 2 OF REVENUES APPEAL, THE LD. AR SUBMITTED THAT IN GROUNDS NO. 4 AND 5 OF REVENUES APPEAL ASSESSMENT YEAR 2007-08 IN ITA NO. 4012/DEL/2011 THE ISSUE IS IDENTICAL IN THE PRESENT ASSESSMENT YEAR AS WELL. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND COULD NOT CONTROVERT THE FACTS OF THE PRESENT ASSESSMENT YEAR WITH THAT OF EARLIER ASSESSMENT YEAR. 63. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ISSUE IS IDENTICAL TO THAT OF A.Y. 2007-08 WHICH IS DECIDED BY US HEREINABOVE. THERE ARE NO DISTINGUISHING FACTS MENTIONED BY THE LD. DR IN THE PRESENT CASE (I.E. A.Y. 2010-11). HENCE GROUND NO. 2 OF REVENUES APPEAL IS DISMISSED. 64. IN RESULT, APPEAL OF THE REVENUE BEING ITA NO. 4905/DEL/2013 FOR A.Y. 2010-11 IS DISMISSED. ITA NO.1856/DEL/2015(ASSESSEES APPEAL) AY 2011-12 65. THE ASSESSEE FILED ITS RETURN OF INCOME ON 28.09.2011 DECLARING TOTAL INCOME OF RS. 17,03,01,701/- AFTER CLAIMING DEDUCTION U/S 80IC & 80IB UNDER NORMAL PROVISIONS OF THE INCOME TAX ACT, 1961 AND BOOK PROFIT U/S 115JB FOR RS. 28,77,87,696/-. THE ASSESSMENT OF THE ASSESSEE WAS COMPLETED AT TOTAL INCOME OF RS. 18,00,32,963/- VIDE ASSESSMENT ORDER DATED 10.12.2013 BY MAKING VARIOUS ADDITIONS. 66. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 67. THE LD. AR SUBMITTED THAT GROUND NO.1 TO 3 ARE IDENTICAL TO THAT OF GROUND NO. 1 TO 3 AND ADDITIONAL GROUNDS OF ASSESSEES APPEAL IN AY 2007-08. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A), BUT COULD NOT DISTINGUISH THE FACTS OF THE PRESENT CASE FROM THAT OF A.Y. 2007-08. 28 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 68. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE HERE THAT THE PROPOSITION OF THE LD. AR THAT THE SUB-LICENSING FEE, IF ANY, OUGHT TO HAVE BEEN EXCLUDED ON NET BASIS AFTER ADJUSTING THE ROYALTY PAID AGAINST INCOME OF SUB-LICENSING BECAUSE THE SUB-LICENSING INCOME AND ROYALTY PAYMENT BOTH HAVE DIRECT NEXUS WITH THE KNOW-HOW AGREEMENT, BUT EXCLUDING THE DIRECT NEXUS OF SUB-LICENSING TO THE MANUFACTURING ACTIVITY OF THE ASSESSEE. THUS, THE TRIBUNAL OBSERVED IN A.Y. 2005-06 THAT THE DECISION OF TRIBUNAL FOR A.Y. 2004-05 WILL NOT BE APPLICABLE AS FROM THE BEGINNING THE SUB-LICENSING FEE IS NOT DIRECTLY CONNECTED WITH THE MANUFACTURING ACTIVITY BUT IS INDEPENDENT TRANSACTION ITSELF. IN THE PRESENT ASSESSMENT YEAR AS WELL (A.Y. 2007-08) ALSO THE FACTS REMAINS THE SAME. THUS, WE DIRECT THE ASSESSING OFFICER TO COMPUTE THE SUB-LICENSING FEE BY WAY OF EXCLUDING ON NET BASIS AFTER ADJUSTING THE ROYALTY PAID AGAINST INCOME OF SUB- LICENSING. THE ASSESSEE MUST PROVIDE ALL THE INFORMATION AND THE CLAUSES TO BIFURCATE THE SAID SUB-LICENSE FEE FROM THE ORIGINAL ROYALTY PAYMENT. THUS, WE REMAND BACK THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER. NEEDLESS TO SAY, THE ASSESSEE BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLES OF NATURAL JUSTICE. THEREFORE, GROUND NO. 1 TO 3 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. 69. AS REGARDS TO GROUND NO. 4 AND 5 OF THE ASSESSEES APPEAL, THE LD. AR SUBMITTED THAT THE GROUNDS NO. 5 AND 6 OF ASSESSEES APPEAL IN AY 2009-10 (ITA NO. 6292/DEL/2012) ARE IDENTICAL. RELATING TO REFUND OF EXCISE DUTY/CENVAT CREDIT, THE LD. AR SUBMITTED THAT IN THE YEAR UNDER APPEAL, THE CIT (A) DID NOT FOLLOW HIS PREDECESSORS ORDER FOR AY 2005- 06 TO AY 2008-09 AND HELD THAT SUCH EXCISE DUTY REFUND/CENVAT CREDIT IS NOT A CAPITAL RECEIPT, BUT A REVENUE RECEIPT AND LIABLE TO TAX AND CONSEQUENTLY ALSO DID NOT EXCLUDE SUCH RECEIPTS WHILE COMPUTING THE INCOME U/S 115-JB OF IT ACT. THIS ISSUE HAS ALREADY BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN AY 2006-07 IN ITA NO. 2199/DEL/2009 VIDE ITS ORDER DATED 20 TH MARCH 2019. 29 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 70. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 71. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THE ELIGIBILITY OF EXCISE DUTY REFUND WAS ON ACCOUNT OF ESTABLISHMENT OF NEW INDUSTRIAL UNDERTAKING IN THE STATE OF JAMMU & KASHMIR AS AN INCENTIVE TO PROMOTE INDUSTRIAL ACTIVITY IN THE STATE OF JAMMU & KASHMIR AND IS IN THE NATURE OF CAPITAL SUBSIDY NOT LIABLE TO TAX. THUS, THE SAID EXCISE DUTY REFUND HAS TO BE EXCLUDED FROM THE COMPUTATION OF SECTION 115JB OF THE ACT AS WELL AS IT IS CAPITAL RECEIPT. THE DECISIONS RELIED BY THE LD. AR IN CASE OF SHRI BALAJI ALLOYS (SUPRA) IS APPLICABLE IN THE PRESENT CASE. BESIDES IN A.Y. 2006-07 AS WELL AS IN A.Y. 2007-08 HEREINABOVE, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL AND THE FACTS ARE IDENTICAL IN THE PRESENT ASSESSMENT YEAR AS WELL. THEREFORE, GROUND NO. 4 AND 5 OF THE ASSESSEES APPEAL ARE ALLOWED. 72. IN RESULT, APPEAL OF THE ASSESSEE BEING ITA NO. 1856/DEL/2015 FOR A.Y. 2011-12 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ITA NO.1327/DEL/2015(DEPARTMENT APPEAL) AY 2011-12 73. AS REGARDS TO GROUND NO.1 OF REVENUES APPEAL, THE LD. AR SUBMITTED THAT AS EXPLAINED IN GROUND NO. 1 OF REVENUES APPEAL IN ASSESSMENT YEAR 2007-08 (ITA NO. 4012/DEL/2011), THE ISSUE IS IDENTICAL IN THE PRESENT ASSESSMENT YEAR AS WELL. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND COULD NOT CONTROVERT THE FACTS OF THE PRESENT ASSESSMENT YEAR WITH THAT OF EARLIER ASSESSMENT YEAR. 74. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ADDITIONAL GROUND FILED BY THE ASSESSEE IS ADMITTED BY 30 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 US, WHILE ACCEPTING THE ASSESSEES CONTENTION THAT THE SUB-LICENSING INCOME NEEDS TO BE EXCLUDED ON NET BASIS AFTER ADJUSTING THE ROYALTY PAID, THEREFORE, THIS GROUND NO. 1 OF REVENUES APPEAL DOES NOT SURVIVE, HENCE DISMISSED. 75. AS REGARDS TO GROUNDS NO. 2 OF REVENUES APPEAL, THE LD. AR SUBMITTED THAT IN GROUNDS NO. 4 AND 5 OF REVENUES APPEAL ASSESSMENT YEAR 2007-08 IN ITA NO. 4012/DEL/2011 THE ISSUE IS IDENTICAL IN THE PRESENT ASSESSMENT YEAR AS WELL. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND COULD NOT CONTROVERT THE FACTS OF THE PRESENT ASSESSMENT YEAR WITH THAT OF EARLIER ASSESSMENT YEAR. 76. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ISSUE IS IDENTICAL TO THAT OF A.Y. 2007-08 WHICH IS DECIDED BY US HEREINABOVE. THERE ARE NO DISTINGUISHING FACTS MENTIONED BY THE LD. DR IN THE PRESENT CASE (I.E. A.Y. 2010-11). HENCE GROUND NO. 2 OF REVENUES APPEAL IS DISMISSED. 77. IN RESULT, APPEAL OF THE REVENUE BEING ITA NO. 4905/DEL/2013 FOR A.Y. 2010-11 IS DISMISSED. 78. IN RESULT, ALL THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE AND ALL THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JANUARY, 2020 . SD/- SD/- (PRASHANT MAHARISHI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22/01/2020 PRITI YADAV, SR. PS * COPY FORWARDED TO: 1. APPELLANT 31 ITA NOS. 4357,471, 4905/DEL/2013 ITA NOS.3373, 4012/DEL/2011 ITA NOS.375, 6292, 610/DEL/2012 ITA NOS.1856, 1327/DEL/2015 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 14 . 01 .20 20 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 14 . 01 .20 20 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 2 2 .01.2020 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 2 2 .01.2020 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 2 2 .01.2020 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 2 2 .01.2020 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 2 2 .01.2020 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 2 2 .01.2020 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK