ACIT 1(1)(1), MUMBAI V. DEEGEE ORCHARDS P.LTD, MUMBAI

ITA 4618/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9759 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 04-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHESH O POOJARA
• Assessee Lawyers: RAJAT MITTAL
• Keywords: Capital receipt
• Section: 143(3)

Judgement Text

1 ITA 4618/MUM/2016 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.4618/MUM/2016 (ASSESSMENT YEAR: 2011-12) ACIT-1(1)(2), MUMBAI VS M/S DEEGEE ORCHARDS PVT LT D 4 TH FLOOR, CENTRAL BLDG NO.3, MASTER BOMANJI LANE, KALBADEVI, MUMBAI 400 002 PAN : AABCD3086F APPELLANT BY SHRI RAJAT MITTAL REVENUE BY SHRI MAHESH O POOJARA DATE OF HEARING 13-03-2018 DATE OF PRONOUNCEMENT -03-2018 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER OF THE CIT(A)-3, NAGPUR DATED 04-05-2016 AND IT PERTAINS T O AY 2011-12. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADIN G IN REFINED OILS AND WINDMILL ELECTRICITY GENERATION FILED ITS RETURN OF INCOME FOR AY 2011-12 ON 26-09-2011 DECLARING INCOME AT NIL. THE ASSESSM ENT HAS BEEN COMPLETED U/S 143(3) ON 26-03-2013 DETERMINING THE TOTAL INCOME AT RS. 1,34,54,815 BY MAKING DISALLOWANCE OF RS.34,95,017 TOWARDS SALES-TAX INCENTIVE RECEIVED FROM STATE GOVERNMENT. THE ASSE SSEE CARRIED THE 2 ITA 4618/MUM/2016 MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORI TY. THE CIT(A), FOR THE DETAILED REASONS, RECORDED IN HIS ORDER DATED 04-05 -2016, DELETED ADDITION MADE BY THE AO BY FOLLOWING THE DECISION O F ITAT, NAGPUR BENCH IN ASSESSEES OWN CASE FOR AY 2003-04 TO 2009 -10 AND HELD THAT SALES-TAX INCENTIVE AVAILED ARE CAPITAL RECEIPT AND IS NOT CHARGEABLE TO TAX. AGGRIEVED BY THE CIT(A)S ORDER, REVENUE IS I N APPEAL BEFORE US. 3. AT THE TIME OF HEARING, THE LD.AR FOR THE ASSESS EE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSE SSEE IN ASSESSEES OWN CASE FOR AY 2003-04 TO 2009-10, WHEREIN THE ITA T BY FOLLOWING ITS OWN ORDER IN ASSESSEES OWN GROUP CASE, M/S NARENDR A VEGETABLE PRODUCTS PVT LTD IN ITA NO.118 TO 124/NAG/2013 HAS ALLOWED THE APPEAL OF THE ASSESSEE. ON THE OTHER HAND, THE LD.DR STRO NGLY SUPPORTING THE ORDER OF THE AO SUBMITTED THAT SALES-TAX SUBSIDY RE CEIVED FROM STATE GOVERNMENT IS REVENUE IN NATURE AND WAS TAXABLE AS PROFITS. THE LD.DR RELIED UPON THE DECISION OF HONBLE DELHI HIGH COUR T IN THE CASE OF CIT VS BHUSHAN SALES & STRIPS LTD (2012) 398 ITR 260. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ITAT, BENCH IN ASSESSE ES OWN CASE FOR EARLIER YEARS HAS HELD THAT THE SALES-TAX SUBSIDY R ECEIVED FROM STATE GOVERNMENT IS CAPITAL IN NATURE AND NOT EXIGIBLE TO TAX. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED BELOW:- 3. ON IDENTICAL FACTS AND CIRCUMSTANCES WE HAVE TA KEN A VIEW 3 ITA 4618/MUM/2016 IN A GROUP OF CASES OF M/S NARENDRA VEGETABLE PRODU CTS PVT LTD BEARING ITA NOS. 118 TO 124/NAG/2013 FOR ASSESSMENT YEARS 2003-04 TO 2009-10 VIDE ORDER EVEN DATED 31 ST JULY, 2015. FOLLOWING THE REASONS ASSIGNED IN THE SAID ORDER, W E HEREBY DECIDE GROUND NOS.1,2 AND 3 IN FAVOUR OF THE ASSESS EE. GROUND NO.4 IS CONSEQUENTIAL IN NATURE PERTAINING T O CHARGE OF INTEREST NEEDS NO ADJUDICATION PRESENTLY. RESULTAN TLY, ALL THE APPEALS ARE ALLOWED. 5. IN THIS VIEW OF THE MATTER AND CONSISTENT WITH T HE VIEW TAKEN BY THE CO-ORDINATE BENCH, WE ARE OF THE CONSIDERED VIEW TH AT SALES-TAX INCENTIVE RECEIVED FROM STATE GOVERNMENT BEING A CAPITAL RECE IPT IS NOT EXIGIBLE TO TAX. THE CIT(A), AFTER CONSIDERING RELEVANT FACTS HAS RIGHTLY DELETED ADDITION MADE BY THE AO. WE DO NOT FIND ANY ERROR IN THE ORDER OF THE CIT(A) AND HENCE, WE ARE INCLINED TO UPHOLD THE FIN DINGS OF THE CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST MARCH, 2018. SD/- SD/- (MAHAVIR SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 21 ST MARCH, 2018 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER SR.PS, ITAT, MUMBAI