DCIT, Ludhiana V. M/s Budhewal Co-op Sugar Mills Ltd., Ludhiana

ITA 494/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77142 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-06-2014
• Assessment Year: 1992-1993
• Appeal Filed On: 03-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR AMA RVEER SINGH
• Keywords: Capital receipt
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NOS. 494, 495 & 496/CHD/2013 (ASSESSMENT YEARS : 1992-93, 1996-97 & 1997-98) THE DY COMMISSIONER OF VS M/S BUDHEWAL COOP. SUGAR MILLS LTD. INCOME TAX, VILLAGE BUDHEWAL, CIRCLE III, LUDHIANA. LUDHIANA. PAN/GIR NO. : 28-050-AV-5018 (APPELLANT) (RESPONDENT) APPELLANT BY : DR. AMARVEER SINGH RESPONDENT BY : SHRI RAJ KUMAR RAWAT (ON BEHALF OF SHRI TEJMOHAN SINGH, ADVOCATE) DATE OF HEARING : 16.06.2014 DATE OF PRONOUNCEMENT : 26.06.2014 O R D E R PER SUSHMA CHOWLA, JM THE CAPTIONED THREE APPEALS FILED BY THE REVENUE AR E AGAINST THE CONSOLIDATED ORDER OF THE COMMISSIONER OF INCOME TA X (APPEALS)-II, LUDHIANA DATED 27.02.2013 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 ( 'THE ACT' FOR SHORT). 2. THE LD. AR FOR THE ASSESSEE MOVED AN APPLICATION FOR ADJOURNMENT. HOWEVER WE FIND THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS COVERED BY THE ORDER OF THE TRIBUNAL IN A SSESSEE'S OWN CASE AND IN VIEW THEREOF, THE ADJOURNMENT APPLICATION MO VED BY THE ASSESSEE WAS REFUSED. 3. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS) RELATING TO ASSESSMENT YEAR 1992-93, 1996-97 AND 1997-98 AND COMMON GROUND OF APPEAL HAVE BEEN R AISED. THE 2 GROUND OF APPEAL RAISED BY THE REVENUE IN ITA NO. N O. 494/CHD/2013 READ AS UNDER : THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS. 2,05,2 5,596/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BENEFIT DERIVED UNDER THE SAMPAT INCENTIVE SCHEME, 1987 WHICH WAS T REATED AS REVENUE RECEIPT BY THE ASSESSING OFFICER. 4. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS I N RESPECT OF THE BENEFIT DERIVED UNDER SAMPAT INCENTIVE SCHEME, 1987 . 5. THE FACTS OF THE CASE IN ALL THE CAPTIONED APPEA LS ARE IDENTICAL. HOWEVER THE FACTS IN ITA NO. NO. 494/CHD/2013 ARE B EING TAKEN TO ADJUDICATE THE ISSUE. ALL THE THREE APPEALS RELATI NG TO THE SAME ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THE CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 6. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSMENT IN THE CASE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT AGAINST W HICH APPEALS WERE FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEAL S), LUDHIANA. THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEED INGS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) RAISED ADDITIO NAL GROUND WITH REGARD TO THE BENEFIT EARNED UNDER THE SAMPAT INCEN TIVE SCHEME, 1987 AND CLAIMED THAT THE SAME MAY BE ALLOWED AS CAPITAL RECEIPTS. THE COMMISSIONER OF INCOME TAX (APPEALS) ADMITTED THE A DDITIONAL GROUND AS PURELY LEGAL GROUND AND ALSO HELD THAT THE AMOUN TS RECEIVED ON ACCOUNT OF THE SAID SCHEME WERE CAPITAL RECEIPTS. THE REVENUE FILED APPEAL BEFORE THE TRIBUNAL FOR ALL THE CAPTIONED YE ARS AND RAISED THE FOLLOWING ISSUES : ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFI ED IN ADMITTING THE ADDITIONAL GROUND AND DELETING THE AD DITION OF RS. 2,05,25,596/-, RS. 1,69,29,899/- AND RS.3,00,68 ,582/- BY 3 HOLDING THAT THE AMOUNT RECEIVED ON ACCOUNT OF SAMP AT INCENTIVE SCHEME, 1987 IS A CAPITAL RECEIPT. 7. THE TRIBUNAL VIDE ORDER DATED 04.06.2006 HELD T HAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAD THE POWER TO ADMIT THE ADDITIONAL GROUND OF APPEAL AND FURTHER HELD THAT T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NON SPEAKI NG AS THE TERMS OF THE SCHEME WERE NOT DISCUSSED AND THE MATTER WAS RESTORED BACK TO THE FILE OF COMMISSIONER OF INCOME TAX (APPEALS). THE RELEVANT FINDINGS OF THE TRIBUNAL ARE REPRODUCED BY THE COMM ISSIONER OF INCOME TAX (APPEALS) UNDER PARA 3 AT PAGES 2 & 3 OF THE APPELLATE ORDER WHICH ARE NOT BEING REPRODUCED FOR THE SAKE O F BREVITY. THE ASSESSEE IN THE SECOND ROUND OF PROCEEDINGS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) POINTED OUT THAT THE INCENT IVES RECEIVED WERE OF CAPITAL NATURE AND THE ISSUE IS CONCLUDED BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS PONNI SUGARS AND CHEMIC ALS LTD. (2008 306 ITR 393 (S.C). THE FACTS AS PREVAILING IN THE SAID CASE ARE ABSOLUTELY IDENTICAL IN THE CAPTIONED APPEALS AND W OULD MERIT TO BE ALLOWED, WAS THE PLEA OF THE ASSESSEE. THE COMMISSI ONER OF INCOME TAX (APPEALS) FORWARDED THE SUBMISSIONS OF THE ASSE SSEE TO THE ASSESSING OFFICER WHO IN-TURN SUBMITTED REMAND REPO RT DATED 20.02.2013 WHICH IS REPRODUCED UNDER PARA 5 AT PAGE 4 OF THE APPELLATE ORDER. THE ASSESSING OFFICER TABULATED THE UTILIZA TION OF THE BENEFIT RECEIVED UNDER THE SAMPAT INCENTIVE SCHEME, 1987 AN D POINTED OUT THAT REPAYMENT OF TERM LOANS OF RS. 1,38,30,333/- I S CONCERNED THE SAME IS AS PER THE TERMS OF THE SCHEME. HOWEVER, T HE PAYMENT OF INTEREST ON LOAN IS NOT EXPLICITLY COVERED UNDER TH E SCHEME AND IS NOT ALLOWABLE. IN ANY CASE, THE CC/WORKING CAPITAL LOA NS ARE NOT COVERED 4 UNDER THE SCHEME IN ANY MANNER AND ACCORDINGLY INTE REST PAID ON THE SAME ALSO IS NOT ALLOWABLE. 8. THE ASSESSEE IN REPLY VIDE LETTER DATED 25.02.20 13 POINTED OUT THAT THE ISSUE HAS BEEN FINALLY DECIDED BY THE HON' BLE PUNJAB & HARYANA HIGH COURT IN ASSESSEE'S OWN CASE IN ITA N O. NO. 165 OF 2003 VIDE JUDGEMENT DATED 15.03.2012 RELATING TO AS SESSMENT YEAR 1993-94. THE GRANT WAS NOT FOR THE PURPOSE OF BRIN GING INTO EXISTENCE NEW ASSET BUT WAS FOR THE PURPOSE OF MAKING PAYMENT TO THE SUGARCANE GROWERS. THEREFORE, THE SAME IS TO BE TREATED AS C APITAL RECEIPTS. THE SAID REPLY WAS FORWARDED BY THE COMMISSIONER OF INC OME TAX (APPEALS) TO THE ASSESSING OFFICER AND IN THE REMAN D REPORT HE STATED THAT AGAINST THE SAID JUDGEMENT SLP HAS BEEN RECOMM ENDED BY COMMISSIONER OF INCOME TAX-I LUDHIANA. THE COMMISSI ONER OF INCOME TAX (APPEALS) HOWEVER DECIDED THE ISSUE IN F AVOUR OF THE ASSESSEE FOLLOWING THE RATIO LAID DOWN BY THE HON'B LE PUNJAB & HARYANA HIGH COURT IN ASSESSEE'S OWN CASE (SUPRA) AND DELETED THE ADDITION. 9. THE REVENUE IS IN APPEAL AGAINST THE SAID ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). ON THE PERUS AL OF THE RECORD, WE FIND THAT ONLY ISSUE RAISED IN THE PRESENT APPEA L IS IN RELATION TO THE BENEFITS DERIVED UNDER THE SAMPAT INCENTIVE SCHEME, 1987 AND ITS TAXABILITY I.E. WHETHER THE SAME IS TO BE TREATED A S CAPITAL RECEIPT OR REVENUE RECEIPT. 10. WE FIND THAT THE ISSUE HAS BEEN DECIDED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN ASSESSEE'S OWN CASE REPORTED IN 206 TAXMAN 144 (P&H) WHEREIN IT HAS BEEN HELD AS UNDER : 7. HON'BLE APEX COURT IN THE CASE OF CIT V.PONNI SUGAR S & CHEMICALS LTD. 5 [2008] 174 TAXMAN 877 306 ITR 392 , HAS HELD THAT K EEPING IN MIND THE OBJECT BEHIND THE PAYMENT OF THE INCENTIVE SUBSIDY, THE PA YMENT RECEIVED BY THE ASSESSEE UNDER THE SCHEME WAS NOT IN THE COURSE OF A TRADE B UT WAS OF CAPITAL NATURE. IN THE PRESENT CASE ALSO, WE ARE SATISFIED THAT GRA NT WAS NOT FOR THE PURPOSE OF BRINGING INTO EXISTENCE NEW ASSETS BUT WAS FOR THE PURPOSE OF MAKING PAYMENT TO THE SUGARCANE GROWERS, THEREFORE, SAME SHALL BE TRE ATED AS CAPITAL RECEIPT. ACCORDINGLY, QUESTION NO.2 ALSO STANDS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ACCORDINGLY, APPEAL STANDS ALL OWED. 11. THE ISSUE RAISED IN THE PRESENT APPEAL IS IDENT ICAL TO THE ISSUE BEFORE THE JURISDICTIONAL HIGH COURT IN ASSESSEE'S OWN CASE AND FOLLOWING THE SAME, WE UPHOLD THE ORDER OF COMMISSI ONER OF INCOME TAX (APPEALS) IN HOLDING THAT THE INCENTIVES RECEIV ED UNDER THE SAMPAT INCENTIVE SCHEME, 1987 WERE CAPITAL IN NATUR E. THE GROUND OF APPEAL RAISED BY THE REVENUE IS THUS, DISMISSED. 12. THE FACTS AND ISSUE RAISED IN ITA NO. 495 & 496 /CHD/2013 ARE IDENTICAL TO THE FACTS AND ISSUE RAISED IN ITA NO. 494/CHD/2013 AND OUR DECISION IN ITA NO. 494/CHD/2013 SHALL APPLY MU TATIS-MUTANDIS TO ITA NO. 495 & 496/CHD/2013 ALSO. 13. IN THE RESULT, ALL THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH JUNE, 2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26 TH JUNE, 2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR. ASSISTANT REGISTRAR ITAT,CHD.