Asstt. Comm. Of Income Tax Circle 2(1), Panaji V. M/s. Sri. Mahalasa Power Rentals, Mapusa

ITA 54/PAN/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1506 (ITAT-PANAJI)
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 04-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 15-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S MRITI BHARADWAJ
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 54 /PNJ/201 3 (ASST. YEAR : 200 9 - 1 0 ) ACIT, CIRCLE - 2(1), PANAJI GOA. VS. M/S. S RI M AHALASA POWER RENTALS, 503 - 504 , COSMOS CENTRE, BEHIND MUNICIPAL MARKET, MAPUSA, GOA . PAN NO. AAMFS 1748 P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANDIP BHANDARE ADV. DEPARTMENT BY : S MT. S MRITI BHARADWAJ - D R DATE OF HEARING : 04 / 0 8 /2015 . DATE OF PRONOUNCEMENT : 04 / 0 8 /201 5 . O R D E R PER N.S. SAINI , ACCOUNTANT MEMBER THIS APPEAL WAS EARLIER DISPOSED OF BY THE TRIBUNAL VIDE ITS ORDER DATED 28/03/2013 . BEING NOT SATISFIED WITH THE ORDER OF THE TRIBUNAL, ASSESSEE PREFER RED AN APPEAL BEFORE THE HONBLE BOMBAY HIGH COURT AT GOA . THE HONBLE HIGH COURT VIDE ITS ORDER DATED 28/10/2014 PASSED IN TAX APPEAL NO. 57/2014 , QUASHED THE ORDER OF THE TRIBUNAL AND RESTORED THE MATTER BACK TO THE TRIBUNAL FOR RE - EXAMINING THE ISSUE O F ALLOWABILITY OF DEDUCTION UNDER SEC. 80IB OF THE ACT ON AMOUNTS CLAIMED BY THE ASSESSEE AND AFTER EXAMINING THE I SSUE, DECIDE THE SAME ON MERITS, HENCE, THE PRESENT APPEAL. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL OF THE REVENUE IS THAT THE COMMISSIO NER OF INCOME TAX (APPEALS) ERRED IN DELETING THE 2 ITA NO. 54 /PNJ/201 3 DISALLOWANCE OF DEDUCTI O N UNDER SEC. 80IB ON INTEREST INCOME FROM BANKS AND SALE S TAX INCENTIVES. 3 . BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION , THE ASSESSEE CLAIMED DEDUCTION UN DER SEC. 80IB ON INTEREST RECEIVED FROM BANK ON FIXED DEPOSITS OF RS. 2,28,187/ - AND ON SALE S TAX INCENTIVES OF RS. 2,09,90,960/ - FROM COMMERCIAL TAX DEPARTMENT. THE ASSESSING OFFICER DISALLOWED THE CLAIM FOR DEDUCTION UNDER SEC. 80IB ON THE ABOVE TWO AMO UNTS TO THE ASSESSEE ON THE GROUND THAT THE SAME ARE NOT DERIVED FROM THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE AND ALSO PLACING RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS. CIT REPORTED IN 317 ITR 218 (SC). 4 . O N APPEAL , COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DIAMOND TOOL INDUSTRIES VS. DCIT IN I.T.A.NO. 136/MUM/2009 DATED 14/12/2011 AFTER CONSIDERING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF LIBERTY INDIA (SUPRA) HELD THAT SALES TAX INCENTIVE RETAINED BY THE ASSESSEE FROM THE SALES TAX COLLECTED WAS DERIVED FROM THE INDUSTRIAL UNDERTAKING AND CONSEQUENTLY ELIGIBLE FOR DEDUCTION UNDER SEC. 80IB OF THE ACT. HE , THEREFORE, DIRECTED THE ASSESSING OFFICER NOT TO EXCLUDE THE SALES TAX INCENTIVE FROM THE PROFIT WHILE CALCULATING DEDUCTION UNDER SEC.80IB. 5. BEING AGGRIEVED BY THE SAID ORDER, REVENUE IS IN APPEAL BEFORE US. 6 . DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 7 . AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THIS BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. M/S. CORAL CLINICAL 3 ITA NO. 54 /PNJ/201 3 SYSTEMS IN I.T.A.NOS. 322 TO 324/PNJ/2014 DATED 09/07/2015 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE R E VENUE . HE, THEREFORE, PRAYED THAT FOLLOWING THE SAME, THIS PART OF THE GROUND OF APPEAL OF THE REVENUE SHOULD BE DISMISSED. 8 . WE FIND THAT TH IS VERY B ENCH OF THE TRIBUNAL IN THE CASE OF M/S. CORAL CLINICAL SYSTEMS (SUPRA) HELD AS UNDER: - 9. BRIEF F ACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE RECEIVED INCENTIVE OF RS. 18,98,162/ - UNDER GOA VAT DEFERMENT CUM NET COMPULSORY PAYMENT SCHEME 2005. THE ASSESSEE CLAIMED 80IB BENEFIT ON THE ABOVE INCOME TREATING THEM AS INCOME DERIVED FROM INDUSTRIAL UNDERTAKING. THE ASSESSING OFFICER RELYING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF STERLING FOODS VS. CIT REPORTED IN 237 ITR 579, PANDIAN CHEMICALS LTD. VS. CIT REPORTED IN 262 ITR 278 AND LIBERTY INDIA VS. CI T REPORTED IN 317 ITR 218 HELD THAT TAX INCENTIVE IS INCENTIVE PROFIT AND THE SAME IS NOT ELIGIBLE FOR DEDUCTION U/S. 80IB OF THE ACT. 10. ON APPEAL, LD. CIT(A) FOLLOWING THE DECISION OF THE HONBLE GAUHATI HIGH COURT IN THE CASE OF CIT VS. MEGHALAYA ST EELS LTD. REPORTED IN (2011) 221 TAXMANN 79, WHO AFTER CONSIDERING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF LIBERTY INDIA (SUPRA), HELD THAT EXCISE DUTY REFUND IS INEXTRICABLY LINKED WITH MANUFACTURING ACTIVITY AND HENCE IS ELIGIBLE FOR DED UCTION U/S. 80IB, ALLOWED THE CLAIM OF DEDUCTION U/S. 80IB TO THE ASSESSEE ON GOA VAT INCENTIVE. 11. BEING AGGRIEVED BY THIS ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 12. DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND THE AR SUPPO RTED THE ORDER OF THE LD. CIT(A). 13. WE FIND THAT ON A SIMILAR ISSUE, THE BOMBAY BENCH OF THE TRIBUNAL IN THE CASE OF M/S. DIAMOND TOOL INDUSTRIES VS. JCIT IN I.T.A.NO. 136/MUM/2009 VIDE ORDER DATED 14/12/2011, HELD AS UNDER: - '6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PURSUED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT (A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND THE HON'BLE GAUHATI HIGH COURT IN THE CASE OF MEGHALAYA 4 ITA NO. 54 /PNJ/201 3 STEELS LTD. (SUPRA) AFTER CONSIDERING T HE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA (SUPRA) HAS HELD THAT CENTRAL EXCISE DUTY HAS A DIRECT NEXUS WITH THE MANUFACTURING ACTIVITY AND SIMILARLY THE REFUND OF THE CENTRAL EXCISE DUTY ALSO HAD A DIRECT NEXUS WITH THE MANUFACTURIN G ACTIVITY. THE ISSUE OF PAYMENT OF CENTRAL EXCISE DUTY WOULD NOT ARISE IN THE ABSENCE OF ANY INDUSTRIAL ACTIVITY. IT WAS, ACCORDINGLY, HELD THAT THE REFUND OF EXCISE DUTY HAS TO BE TAKEN INTO ACCOUNT FOR PURPOSES OF SECTION 80 - IB. FOLLOWING THE RATIO OF T HE SAID DECISION, WE ARE OF THE CONSIDERED OPINION THAT THERE IS AN INEXTRICABLE LINK BETWEEN THE MANUFACTURING ACTIVITY, THE PAYMENT OF SALES TAX AND THE SALES TAX INCENTIVE. THEREFORE, IN OUR OPINION, SUCH SALES TAX INCENTIVE WHICH HAS BEEN RETAINED BY T HE ASSESSEE FROM THE SALES TAX COLLECTED HAS TO BE HELD AS DERIVED FROM THE INDUSTRIAL UNDERTAKING AND CONSEQUENTLY IS ELIGIBLE FOR DEDUCTION U/S 80 - IB OF THE ACT. IN THIS VIEW OF THE MATTER, THE ORDER OF THE LD.CIT(A) IS SET ASIDE AND THE A.O. IS DIRECTED NOT TO EXCLUDE THE SALES TAX INCENTIVE OF 12,94,1097 - AND RS.84,687/ - FROM THE PROFIT OF UNIT - 1 AND UNIT - II RESPECTIVELY WHILE CALCULATING DEDUCTION U/S 80 - IB OF THE ACT. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 14. FURTHER, ON A SIMILA R ISSUE, HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. COROMANDEL INTERNATIONAL LTD. IN I.T.A.NO. 1147 & 1157/HYD/2014 & C.O.NOS. 52 & 53/HYD/2014 VIDE ORDER DATED 21/11/2014, HELD AS UNDER: - 8. HAVING CONSIDERED RIVAL SUBMISSIONS AND PERUSED TH E ORDERS OF REVENUE AUTHORITIES AS WELL AS OTHER MATERIALS ON RECORD AND AFTER HAVING APPLIED OUR MIND TO THE DECISIONS RELIED UPON BY THE PARTIES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) IN ALLOWING BENEFIT U/S 80IB TO ASSESSEE ON EXCISE D UTY REFUND FOR THE FOLLOWING REASONS. 9. IT IS CLEAR FROM THE ASSESSMENT ORDER THAT AO HAS DENIED 80IB DEDUCTION ON EXCISE DUTY REFUND FOR THE SOLE REASON THAT IT CANNOT BE TREATED AS INCOME DERIVED FROM ELIGIBLE BUSINESS OF THE UNDERTAKING. HOWEVER, AS CA N BE SEEN FROM THE FACTS BROUGHT ON RECORD, THERE IS NO DISPUTE THAT ASSESSEE HAS PAID THE EXCISE DUTY ON THE GOODS MANUFACTURED AND SOLD AND AS SUCH IT FORMS PART OF THE SALE PRICE OF ASSESSEE. THEREFORE, PAYMENT OF CENTRAL EXCISE DUTY IS INTEGRALLY CONNE CTED WITH THE MANUFACTURING AND SALE OF GOODS PRODUCED BY ASSESSEE. IT IS ALSO NOT IN DISPUTE THAT AS PER THE INDUSTRIAL POLICY RESOLUTION DECLARED FOR THE STATE OF J&K AND CONSEQUENT TO CENTRAL EXCISE DEPARTMENT NOTIFICATION, ASSESSEE BECAME ELIGIBLE FOR REFUND OF EXCISE DUTY PAID AFTER SET OFF OF CENVAT 5 ITA NO. 54 /PNJ/201 3 CREDIT. THEREFORE, IN SUM AND SUBSTANCE, IT IS ONLY A REFUND OF AN AMOUNT ALREADY PAID BY ASSESSEE AND REDUCED FROM THE SALE PRICE WHILE COMPUTING THE PROFIT. THEREFORE, WHEN ASSESSEE GETS REFUND OF AN EXP ENDITURE ALREADY INCURRED THE SAME HAS TO BE DEEMED TO BE THE PROFITS AND GAINS OF BUSINESS OR PROFESSION CARRIED ON BY ASSESSEE IN TERMS OF SECTION 41(1)(A) OF THE ACT. IN THAT VIEW OF THE AFTER, EXCISE DUTY REFUND RECEIVED BY ASSESSEE HAS TO BE TREATED A S PART OF THE BUSINESS PROFIT, HENCE, ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT. OTHERWISE ALSO, AS PAYMENT OF EXCISE DUTY IS DIRECTLY LINKED WITH THE MANUFACTURING OF GOODS, REFUND OF EXCISE DUTY HAS TO BE TREATED AS INCOME DERIVED FROM ELIGIBLE BUSINESS AS PROVIDED U/S 80IB. IN THE AFORESAID VIEW OF THE MATTER, ASSESSEE WILL BE ELIGIBLE TO CLAIM DEDUCTION U/S 80IB ON THE INCOME ACCRUING FROM REFUND OF EXCISE DUTY. SO FAR AS THE RATIO IN CASE OF LIBERTY INDIA VS. CIT (SUPRA), THE FACTS ARE CLEARLY DISTING UISHABLE AND DO NOT APPLY TO THE FACTS OF THE PRESENT CASE. IN CASE OF LIBERTY INDIA, THE H ONBLE SUPREME COURT WAS CONSIDERING THE PROFITS DERIVED FROM SALE/TRANSFER OF DEPB/DUTY DRAW BACK BENEFITS. DEPB/DUTY DRAW BACK BENEFITS, IS GIVEN UNDER A SCHEME FR AMED UNDER THE CUSTOMS ACT AND IT IS TRANSFERABLE, IN OTHER WORDS, IT IS A MARKETABLE COMMODITY. EXCISE DUTY REFUND BY ASSESSEE IN THE PRESENT CASE IS NEITHER A MARKETABLE COMMODITY NOR TRANSFERABLE. IT IS ONLY A REFUND OF EXPENDITURE ALREADY INCURRED BY A SSESSEE, HENCE THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF LIBERTY INDIA (SUPRA) WILL NOT APPLY. IN THE AFORESAID VIEW OF THE MATTER, WE UPHOLD THE ORDER OF LD. CIT(A) BY DISMISSING GROUNDS RAISED. 15. THUS, ON PERUSAL OF THE ABOVE QUOTED ORDERS OF THE TRIBUNAL, WE FIND THAT THE GOA VAT INCENTIVE RECEIVED BY THE ASSESSEE IS DIRECTLY LINKED WITH THE MANUFACTURING AND SALE OF GOODS AND THEREFORE INCOME DERIVED FROM THE INDUSTRIAL UNDERTAKING AND CONSEQUENTLY IS ELIGIBLE FOR DEDUCTION U/S. 80IB OF T HE ACT. THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE QUOTED DECISIONS OF THE TRIBUNAL, WE CONFIRM THE ORDER OF THE LD.CIT(A) AND DISMISS THE GROUND OF APPEAL OF THE REVENUE. 9. FACTS BEING IDENTICAL RESPECTFULLY FOLLOWING THE PRECEDENT, WE CONFIRM THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND DISMISS THIS PART OF THE GROUND OF APPEAL OF THE REVENUE. 6 ITA NO. 54 /PNJ/201 3 10 . REGARDING DISALLOWANCE OF DEDUCTION UNDER SEC. 80IB ON INTEREST RECEIVED ON FIXED DEPOSITS OF RS. 2,28,187/ - , THE ASSESSING OFFICER BY FOLLO WING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF LIBERTY INDIA (SUPRA) EXCLUDED THE INTEREST RECEIVED WHILE CALCULATING THE CLAIM OF DEDUCTION UNDER SEC. 80IB. ON APPEAL , COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT IN THE INSTANT CASE, INCOME BY WAY OF INTEREST IS A NEGATIVE FIGURE I.E. INTEREST RECEIVED IS LESS THAN INTEREST PAID AND, THEREFORE, NOTHING CAN BE EXCLUDED AS THERE IS NO NET INTEREST INCOME AND DIRECTED THE ASSESSING OFFICER NOT TO EXCLUDE GROSS INTEREST, BUT ONLY THE NET INTEREST , WHILE COMPUT I N G C L A I M O F DEDUCTION UNDER SEC. 80IB AND ALLOWED THE GROUND OF APPEAL OF THE ASSESSEE. 11 . NO MISTAKE IN THE ABOVE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) COULD BE POINTED OUT BY THE DEPARTMENTAL REPRESENTATIVE . NO MATERIAL WAS BRO UGHT ON RECORD TO SHOW THAT AFTER DEDUCTING INTEREST EXPENDITURE FROM INTEREST INCOME, THERE WAS ANY POSITIVE INTEREST INCOME WHICH WAS TO BE EXCLUDED WHILE COMPUTING DEDUCTION UNDER SEC. 80IB FROM THE ELIGIBLE PROFITS OF THE ASSESSEE . THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WHICH IS CONFIRMED AND THIS PART OF THE GROUND OF APPEAL OF THE REVENUE IS ALSO DISMISSED. 12 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON TUESDAY , THE 0 4 TH DAY OF AUGUST , 201 5 AT GOA . S D / - S D / - (GEORGE MATHAN) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 0 4 RD AUGUST , 201 5 . VR/ - 7 ITA NO. 54 /PNJ/201 3 COPY TO: 1 . THE ASSESSEE. 2 . THE REVENUE. 3 . THE CIT 4 . THE CIT(A) 5 . THE D.R . 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI 8 ITA NO. 54 /PNJ/201 3 DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 04 .0 8 .2015 SR.P S 2. DRAFT PLACED BEFORE AUTHOR 05 .08 .2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 05 /08 /2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 05 /0 8 /2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 05 /08 /2015 SR.PS 6. DATE O F PRONOUNCEMENT 04 /0 8 /2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 05 /08 /2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER