ASSTT. C.I.T, CENTRAL CIR, -1(4), Nagpur V. M/S ECONOMIC EXPLOSIVE LTD, Nagpur

ITA 473/NAG/2014

• Counselvise Citation: [2014] 117 COUNSELVISE.COM (IT) 8865 (ITAT-NAGPUR)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 23-10-2014
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 23-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 14-11-2014
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Assessee Lawyers: C N RATHI
• Keywords: Capital receipt; Revised return
• Section: 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.473/NAG./2014 (ASSESSMENT YEAR : 200809 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE1(4), AAYAKAR BHAWAN TELANGKHEDI ROAD, NAGPUR 440 001 . APPELLANT V/S ECONOMIC EXPLOSIVE LTD. 11, ZADE LAYOUT, BHARAT NAGAR NAGPUR 440 033 PAN AAACE3871C . RESPONDENT REVENUE BY : SHRI A.R. NINAWE ASSESSEE BY : SHRI C.N. RATHI DATE OF HEARING 30.03.2017 DATE OF ORDER 31.03 .2017 O R D E R PER RAM LAL NEGI, J.M. CAPTIONED APPEAL AT THE INSTANCE OF THE REVENUE IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 15 TH JULY 2014, PASSED BY THE LEARNED COMMISSIONER (APPEALS)I, NAGPUR, FOR THE A SSESSMENT YEAR 200809. 2. THE GROUND RAISED BY THE REVENUE IS REPRODUCED BELO W: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, WHETHER THE LEARNED CIT(A) WAS JUSTIFIED IN HOLDING THE DEDUCTION OF NOTIONAL TAX LIABILITY @ 12.5% & 3% FROM THE PRO FIT SIMPLY BECAUSE THE ASSESSEE IS ENTITLED FOR AVAILING OF SA LES INCENTIVE UNDER THE SCHEME. OTHERWISE IT WOULD AMOUNT TO DOUB LE DEDUCTION I.E., NO SALES TAX PAYMENT TO THE STATE G OVERNMENT 2 ECONOMIC EXPLOSIVE LTD. DURING THE SPECIFIED PERIOD AND REDUCTION OF EQUIVA LENT AMOUNT FROM THE PROFIT OFFERED FOR INCOME TAX. 3. BRIEF FACTS ARE, THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURE OF ALL TYPES OF DETONATORS, FUSE HEADS, FILLED SHELLS, ALUMINUM, COPPER TUBES, ETC. THE ASSESSEE C OMPANY IS ALSO ENGAGED IN SUPPLY OF POWER GENERATED THROUGH WIND M ILLS TO COAL INDIA LTD. AND OTHER PARTIES. THE ASSESSEE COMPANY FILED RETURN OF INCOME ON 30 TH SEPTEMBER 2008, DECLARING TOTAL INCOME OF ` 16,30,87,910. THE SAID RETURN OF INCOME WAS PROCESSED UNDER SECTI ON 143(1) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) ON 8 TH OCTOBER 2009. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SEC TION 143(2) DATED 20 TH AUGUST 2009, WAS ISSUED. SUBSEQUENTLY, THE ASSESSE E FILED A REVISED RETURN OF INCOME ON 31 ST MARCH 2010, DECLARING THE TOTAL INCOME OF ` 14,48,23,870 AFTER CLAIMING REFUND OF ` 64,87,470. THE CASE WAS TRANSFERRED TO THE ADDL. CIT, RANGEI, NAG PUR, VIDE ORDER DATED 20 TH JULY 2010, UNDER SECTION 120(2) OF THE ACT. THEREA FTER, THE ASSESSMENT WAS COMPLETED ON 8 TH OCTOBER 2010, DETERMINING TOTAL INCOME AT ` 16,30,70,950, AFTER DISALLOWING THE CLAIM MADE BY THE ASSESSEE IN RESPECT OF SALES TAX INCENTIVE OF ` 1,80,97,075 AND TREATED THE SAME AS REVENUE RECEIPT. AGGRIEVED BY THIS ORDE R, THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4. THE LEARNED COMMISSIONER (APPEALS), HOWEVER, RELYIN G UPON MUMBAI SPECIAL BENCH DECISION OF THE TRIBUNAL IN DC IT V/S RELIANCE INDUSTRIES LTD., [2004] 88 ITD 273 (MUM.) (SB), WHER EIN IT HAS BEEN HELD THAT THE SALES TAX SUBSIDY GRANTED TO THE ASSE SSEE IS IN THE NATURE OF CAPITAL RECEIPT NOT LIABLE TO TAX. A SERIES OF JUDICIAL PRONOUNCEMENTS, FEW OF WHICH ARE LISTED BELOW, HELD THAT THE CLAIM OF THE ASSESSEE FOR EXEMPTION OF SUBSIDY IS TREATED AS CAPITAL IN NATURE AND IS ALLOWABLE. 3 ECONOMIC EXPLOSIVE LTD. 5. BEFORE US, THE LEARNED COUNSEL FOR ASSESSEE SUBMITTE D THAT THE ISSUE INVOLVED IN THIS CASE IS SQUARELY COVERED BY THE DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 200910, WHEREIN THE NAGPUR BENCH OF THE TRIBUNAL, HAS DECIDED IDENTI CAL ISSUE TREATING THE CLAIM OF ASSESSEE IN RESPECT OF EXEMPTION OF SU BSIDY AS CAPITAL IN NATURE. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED T HE ORDER OF THE ASSESSING OFFICER. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSE D THE THE MATERIAL ON RECORD. WE FIND THAT THE ISSUE AS TO WH ETHER OR NOT THE SALES TAX SUBSIDY GRANTED TO THE ASSESSEE IS IN THE NATURE OF CAPITAL RECEIPT NOT LIABLE TO TAX HAS BEEN DECIDED IN FAVOU R OF THE ASSESSEE TREATING IT TO BE CAPITAL IN NATURE BY THIS TRIBUNA L IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 200910 IN ITA NO.202 TO 206/NAG./2015, DATED 30 TH AUGUST 2016. RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT THE LEARNED COMMISSIONER (APPEAL S) WAS JUSTIFIED IN TREATING SALES TAX INCENTIVE OF ` 1,80,97,075 AS REVENUE RECEIPT. CONSEQUENTLY, WE UPHOLD THE ORDER OF THE LEARNED CO MMISSIONER (APPEALS) AND DISMISS THE GROUND RAISED BY THE REVE NUE. 8. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.03.2017 SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER SD/ - RAM LAL NEGI JUDICIAL MEMBER NAGPUR, DATED: 31.03.2017 4 ECONOMIC EXPLOSIVE LTD. COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, NAGPUR