ITO, New Delhi V. M/s. Sigma Plastic Industries, New Delhi

ITA 5209/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5884 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 03-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Assessee Lawyers: TARUN BATRA
• Keywords: Capital receipt
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G , NEW DELHI BEFORE SH. AMIT SHUKLA , JUDICIAL MEMBER DR. B. R. R. KUMAR , ACCOUNTANT MEMBER ITA NO. 5209/DEL/2016 : ASSTT. YEAR : 2012 - 13 INCOME TAX OFFICER, WARD - 41(5), NEW DELHI VS M/S SIGMA PLASTIC INDUSTRIES, F - 16, VIKAS HOUSE, 34/1, EAST PUNJABI BAGH, NEW DELHI - 110026 (APPELLANT) (RESPONDENT) PAN NO. A BIFS3708G ASSESSEE BY : SH. TARUN BATRA, CA REVENUE BY : SH. S. S. RANA, CIT DR DATE OF HEAR ING: 18 . 09 .201 9 DATE OF PRONOUNCEMENT: 18.09 .201 9 ORDER PER DR. B.R.R. KUMAR, ACCOUNTANT M EMBER : THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) - 14 , NEW DELHI DATED 22.07.2016 . 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESSEE: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) IS NOT JUSTIFIED IN ALLOWING THE DEDUCTION U/S 80IB ON EXCISE DUTY REFUND OF RS.81,04,941/ - AND INTEREST SUBSIDY OF RS.4,79,959/ - BY HOLDING THAT THESE INCOMES WERE DERIVED BY THE INDUSTRIAL UNDERTAKING, WITHOUT APPRECIATING THE FINDINGS OF THE AO. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) IS NOT JUSTIFIED IN HOLDING THAT THE EXCISE DUTY REFUND AND INTEREST SUBSIDY ARE CAPITAL RECEIPT AND DIRECTED THE AO TO REDUCE THE SAME FROM PROFIT OF THE UNDERTAKING AS WELL AS FROM THE DEDUCTION CLAIMED U/S 80IB OF THE ACT IGNORING T HE FACT THAT THE ASSESSEE HAD SHOWN THE EXCISE DUTY REFUND AND INTEREST SUBSIDY AS REVENUE RECEIPT REFLECTED IN THE PROFIT AND LOSS ACCOUNT. 3. THE ONLY ISSUE TAKEN UP BY THE REVENUE IS WHETHER EXCISE DUTY REFUND AND INTEREST SUBSIDY CAN BE TREATED AS I NCOME DERIVED BY THE INDUSTRIAL UNDERTAKING AND ELIGIBLE FOR SECTION 80IB OF THE ACT OR NOT. ITA NO .5209 /DEL /2016 SIGMA PLASTIC INDUSTRIES 2 4. FACTS OF THE ISSUE ARE THAT THE FIRM SIGMA PLASTIC INDUSTRIES IS A PARTNERSHIP CONCERN AND IS HAVING ITS HEAD OFFICE AT DELHI AND MANUFACTURING UNIT AT IGC, SIDCO INDUSTRIAL AREA, PHASE 1, SAMBA, JAMMU & KASHMIR. THE FIRM HAS BEEN MANUFACTURING PLASTIC COMPOUNDS, PVC COMPOUNDS AND VARIETIES OF TPR COMPOUNDS WHICH ARE FURTHER USED IN MANUFACTURING ACTIVITIES OF PIPE INDUSTRIES, RUBBER INDUSTRIES AND QUIRE INDUS TRIES. DURING THE YEAR UNDER CONSIDERATION, THE COMPANY RECEIVED THE E XCISE REFUND OF RS.81,04,941/ - AND INTEREST SUBSIDY OF RS.4,79,959/ - AS ARE INCENTIVE FROM GOVERNMENT OF JAMMU & KASHMIR. 5. AT THIS JUNCTURE, WE FIND THAT THIS ISSUE HAS BEEN EXAMINED BY VARIOUS COURTS IN A NUMBER OF CASES AND CAME TO A CONCLUSION THAT THE EXC ISE REFUND AND INTEREST S SUBSIDY CAN BE TREATED AS PROFITS DERIVED FROM INDUSTRIAL UNDERTAKINGS IN VIEW OF THE DIRECT NEXUS WITH THE MANUFACTURING ACTIVITIES. RELIANCE IS PLACED O N THE JUDGMENT OF HON BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS DHARMAPAL PREM CHAND 221 CTR 133 AND JUDGMENT OF HON BLE APEX COURT IN THE CASE OF MEGHALAYA STEELS LTD. 356 ITR 235. KEEPING IN VIEW, THE JUDGMENT OF THE APEX COURT, THE APPEAL OF THE REV ENUE IS HEREBY DISMISSED. 6 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . (ORDER PRON OUNC ED IN THE OPEN COURT ON 18 /0 9 /2019). SD/ - SD/ - ( AMIT SHUKLA ) ( DR. B. R. R. KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 18 /0 9 /2019 *SUBODH* COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR