ACIT 6(3), MUMBAI V. UNMESH MANOHAR JOSHI, MUMBAI

ITA 4845/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75696 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 18-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 16-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Revised return
• Section: 80IB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F B ENCH, MUMBAI . ! , '#$ , !%& '()* , %+ ,- % $ BEFORE SHRI D.MANMOHAN, VP AND SHRI N.K. BILLAIY A, AM ./ I.T.A. NO.4845 & 6759/MUM/2011 ( ! . ! . ! . ! . / ASSESSMENT YEAR :2007-08 & 2008-09 THE ACIT 6(3), AAYAKAR BHAVAN, MUMBAI-400 020 ! ! ! ! / VS. MR. UNMESH MANOHAR JOSHI KOHINOOR CORPORATE OFFICE SENAPATI BAPAT MARG, DADAR (E),MUMBAI-400 028 -/ %+ ./ 01 ./ PAN/GIR NO. : ACJPJ 9493M ( /2 / APPELLANT ) .. ( 34/2 / RESPONDENT ) /2 5 % / APPELLANT BY: SHRI RAVI PRAKASH 34/2 6 5 % / RESPONDENT BY: SHRI JAYESH DADIA ! 6 7+ / DATE OF HEARING :27.02.2014 8. 6 7+ / DATE OF PRONOUNCEMENT :05 03.2014 ,%9 / O R D E R PER N.K. BILLAIYA, AM: THESE TWO APPEALS BY THE REVENUE ARE DIRECTED AGAIN ST THE TWO SEPARATE ORDERS OF THE LD. CIT(A)-12, MUMBAI PERTA INING TO A.Y. 2007- 08 AND 2008-09. AS COMMON ISSUES ARE INVOLVED IN B OTH THESE APPEALS, THEY WERE HEARD TOGETHER AND DISPOSED OF BY THIS C OMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. THE COMMON GROUND IN BOTH THE YEARS READ AS UNDE R, THOUGH QUANTUM MAY DIFFER : ITA NOS.4845 & 6759/M/2011 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO, TO A LLOW DEDUCTION U/S. 80IA(4) TO THE ASSESSEE ON SALES TAX INCENTIVE OF RS. 74,75,000/- WITHOUT APPRECIATING THE FACT TH AT SUCH A RECEIPT IS NOT IN THE FORM OF AN INCOME DERIVED FRO M THE BUSINESS ACTIVITY OF THE ASSESSEE, AND AS SUCH NOT ELIGIBLE FOR DEDUCTION U/S. 80IA(4) OF THE ACT. 3. DURING THE COURSE OF THE SCRUTINY ASSESSMENT ORD ER, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED A DED UCTION OF RS. 98,93,741/- U/S. 80IA. ON PERUSING THE AUDIT REPOR T, THE AO FOUND THAT THE PROFIT OF THE UNIT NAMED KOHINOOR POWER CO. WH ICH INCLUDED SALE OF SALES TAX BENEFIT OF RS. 74,75,000/-. THE ASSESSE E WAS ASKED TO EXPLAIN WHY THE CLAIM OF 80IA ON THE SALE OF SALES TAX BENE FIT SHOULD NOT BE DISALLOWED AS THE SAME IS NOT DERIVED FROM THE INDU STRIAL UNDERTAKING. THE ASSESSEE EXPLAINED THAT THE AMOUNT OF RS. 74,75 ,000/- HAS BEEN RECEIVED ON SALE OF SALES-TAX BENEFIT TO M/S. LIBER TY OIL MILLS. THE SAID SALES TAX BENEFIT HAS BEEN RECEIVED BY IT FOR ITS W IND POWER PROJECT UNDER THE 1998 POWER GENERATION PROMOTION POLICY OF THE S TATE GOVERNMENT AND HAS BEEN SOLD TO M/S. LIBERTY OIL MILLS AFTER O BTAINING APPROVAL FROM THE DY. COMMISSIONER OF SALES (INCENTIVE). IT WAS FURTHER EXPLAINED THAT THE SALES TAX BENEFITS RECEIVED DURING THE YEAR DEP ENDS UPON THE GENERATION ACHIEVED BY THE PLANT THEREFORE THE AMOU NT RECEIVED IS ELIGIBLE FOR DEDUCTION U/S. 80IA(4)(IV) OF THE ACT. 4. THE STATEMENT OF THE ASSESSEE DID NOT FIND ANY F AVOUR FROM THE AO WHO RELIED UPON CERTAIN JUDICIAL DECISIONS ELABORAT ELY DISCUSSED IN THE ASSESSMENT ORDER AND FINALLY CAME TO THE CONCLUSION THAT THE INCOME EARNED BY THE ASSESSEE BY WAY OF SALES TAX INCENTIV E CANNOT BE CONSIDERED AS DERIVED FROM THE INDUSTRIAL UNDERTAKING, EVEN TH OUGH IT MIGHT BE INCIDENTAL TO THE BUSINESS OF POWER GENERATION. ITA NOS.4845 & 6759/M/2011 3 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) AND REITERATED WHAT HAS BEEN SUBMITTED BEFORE THE AO. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS AND RELYING UPON THE DECI SION OF THE MUMBAI TRIBUNAL IN THE CASE OF MIRC ELECTRONICS LTD. 319 I TR 130, WAS CONVINCED THAT GAIN ARISEN FROM THE TRANSFER OF SALES TAX INC ENTIVE IS TO BE TREATED AS INCOME DERIVED FROM INDUSTRIAL UNDERTAKING CONSISTI NG OF BUSINESS OF GENERATION AND DISTRIBUTION OF ELECTRICITY AND ACCO RDINGLY TO BE CONSIDERED FOR CALCULATING THE DEDUCTION U/S. 80IA(4)(IV) OF T HE I.T. ACT AND ACCORDINGLY DIRECTED THE AO. 6. THE ASSESSEE ALSO RAISED AN ADDITIONAL GROUND BE FORE THE LD. CIT(A) STATING THAT ENTIRE RS. 74,75,000/- BEING TH E SALES TAX INCENTIVE IS TO BE CONSIDERED IN THE NATURE OF CAPITAL SUBSIDY A ND ACCORDINGLY NOT SUBJECT TO TAX AT ALL. THE LD. CIT(A) WAS OF THE V IEW THAT THE RATIO OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F GOETZE (INDIA) LTD 284 ITR 323 DOES NOT ALLOW HIM TO ENTERTAIN ANY ADD ITIONAL GROUND WHICH WAS NOT CLAIMED IN THE RETURN OF INCOME OR REVISED RETURN OF INCOME AND ACCORDINGLY DISMISSED THIS ADDITIONAL GROUND AS NOT ADMITTED. 7. THE REVENUE BEING AGGRIEVED BY THE DECISION OF T HE LD. CIT(A) IS BEFORE US IN SO FAR AS ALLOWING THE DEDUCTION U/S. 80IA. 8. AT THE VERY OUTSET, THE LD. DEPARTMENTAL REPRESE NTATIVE BROUGHT TO OUR NOTICE THAT THE DECISION OF THE TRIBUNAL IN AS SESSEES OWN CASE FOR A.Y. 2006-07 IN ITA NO. 4287/M/2010 DT. 23.12.2011 STATED THAT THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE REVENUE BY THE TRIBUNAL AND FACTS BEING IDENTICAL, THE SAME VIEW MUST BE TAKEN. 9. THE LD. COUNSEL FOR THE ASSESSEE COULD NOT BRING ANY DISTINGUISHING FACTS/DECISION BEFORE US. ITA NOS.4845 & 6759/M/2011 4 10. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOW ER AUTHORITIES AND THE ORDER OF THE TRIBUNAL FOR A.Y. 2006-07. WE FIN D FORCE IN THE CONTENTION OF THE LD. DR. ON IDENTICAL FACTS, THE TRIBUNAL HAS DECIDED THIS ISSUE AGAINST THE ASSESSEE AND IN FAVOUR OF TH E REVENUE VIDE PARA-6 ON PAGE-6 OF ITS ORDER WHICH READS AS UNDER: WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IN THE CASE OF LI BERTY INDIA (SUPRA), THE HONBLE SUPREME COURT HELD THAT SECTIO NS 80IA AND 80IB ARE A CODE BY THEMSELVES AND THEY PROVIDE FOR ALLOWING OF DEDUCTION IN RESPECT OF PROFITS AND GAINS DERIVED F ROM THE ELIGIBLE BUSINESS. IT WAS HELD THAT THE CONNOTATION OF THE W ORDS DERIVED FROM IS NARROWER AS COMPARED TO THAT OF THE WORDS ATTRIBUTABLE TO AND BY USING THE EXPRESSION DERIVED FROM THE PARLIAMENT INTENDED TO COVER THE SOURCES NOT BEYOND THE FIRST DEGREE. IT WAS HELD THAT DEPB/DUTY DRAW BACK ARE INCENTIVES WHICH FLOW FROM THE RELEVANT SCHEMES FRAMED BY THE CENTRAL GOVT. AND TH EY ARE NOT PROFITS DERIVED FROM ELIGIBLE BUSINESS BUT BELONG T O THE CATEGORY OF ANCILLARY PROFITS OF SUCH UNDERTAKING. IT WAS HELD THAT THE INCENTIVE RECEIVED AS PER THE SCHEME OF THE CENTRAL GOVT., TH EREFORE, HAD NO FIRST DEGREE CONNECTION WITH THE INDUSTRIAL UNDERTA KING OF THE ASSESSEE AND THE IMMEDIATE SOURCE OF THE SAME BEING THE RELEVANT SCHEME OF THE CENTRAL GOVT., IT COULD NOT BE CONSID ERED AS PROFIT ELIGIBLE FOR DEDUCTION U/S. 80IA/80IB. 11. THE TRIBUNAL WHILE COMING TO THIS CONCLUSION HA S RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F LIBERTY INDIA VS CIT 317 ITR 218 AND ALSO ON THE DECISION OF THE HON BLE GAUHATI HIGH COURT IN THE CASE OF MEGHALAYA STEELS LTD. 332 ITR 91. AS STATED HEREINABOVE, FACTS AND ISSUES BEING IDENTICAL, RESP ECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2006-07 IN ITA NO. 4287/M/2010, THE ORDER OF THE LD. CIT(A) IS SE T ASIDE AND THAT OF THE AO IS RESTORED. 12. THE ASSESSEE HAS RAISED AN ADDITIONAL PLEA CLAI MING THAT THE ENTIRE CONSIDERATION OF RS. 74,75,000/- BEING THE SALES TA X INCENTIVE IS TO BE ITA NOS.4845 & 6759/M/2011 5 CONSIDERED IN THE NATURE OF CAPITAL SUBSIDY AND ACC ORDINGLY NOT SUBJECT TO TAX AT ALL. THIS PLEA OF THE ASSESSEE IS TO BE CON SIDERED UNDER RULE 27 OF THE APPELLATE RULE 1963. IT IS THE SAY OF THE LD. COUNSEL THAT THIS PLEA WAS ALSO TAKEN BEFORE THE LD. CIT(A) BUT WAS NOT AD MITTED. 13. WE HAVE CAREFULLY PERUSED THE ORDER OF THE LD. CIT(A). WE FIND THAT THE LD. CIT(A) HAS NOT ADMITTED THIS ADDITIONA L GROUND ON THE PRETEXT THAT THE RATIO OF THE DECISION OF THE HONBLE SUPR EME COURT IN THE CASE OF GOETZE INDIA 284 ITR 323 PRECLUDED HIM TO DO SO. I N OUR UNDERSTANDING OF THE SAID DECISION OF THE HONBLE SUPREME COURT , THERE IS NO FETTER ON THE POWERS OF THE LD. CIT(A) TO DECIDE ADDITIONAL P LEA WHICH WAS NOT TAKEN BEFORE THE AO. THEREFORE, TO THIS LIMITED EX TENT, WE RESTORE THIS ISSUE BACK TO THE FILES OF THE LD. CIT(A). THE LD. CIT(A) IS DIRECTED TO DECIDED THE ADDITIONAL GROUND RAISED BY THE ASSESSE E IN ACCORDANCE WITH LAW. 14. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE ALLOWED AND ADDITIONAL PLEA RAISED BY THE ASSESSEE UNDER RULE 2 7 OF THE APPELLATE TRIBUNAL RULES , 1963 IS ALLOWED FOR STATISTICAL PU RPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 05.03.2014 . ,%9 6 . +% : ;,!<05.03.2014 6 D SD/- SD/- (D.MANMOHAN ) (N.K. BILLAIYA) '#$ / VICE PRESIDENT %+ ,- / ACCOUNTANT MEMBER MUMBAI; ;,! DATED 05.03.2014 . ! . ./ RJ , SR. PS ITA NOS.4845 & 6759/M/2011 6 ,%9 6 ,%9 6 ,%9 6 ,%9 6 37' E%'.7 37' E%'.7 37' E%'.7 37' E%'.7 / COPY OF THE ORDER FORWARDED TO : 1. /2 / THE APPELLANT 2. 34/2 / THE RESPONDENT. 3. F ( ) / THE CIT(A)- 4. F / CIT 5. 'GD 37! , , / DR, ITAT, MUMBAI 6. D / GUARD FILE. ,%9! ,%9! ,%9! ,%9! / BY ORDER, 4'7 37 //TRUE COPY// ' '' ' / 0 0 0 0 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI