DCIT, New Delhi V. M/s. Johnson Matthey India Pvt. Ltd., New Delhi

ITA 5912/DEL/2013

• Counselvise Citation: 591220114 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 31-07-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 04-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMEER SHARMA
• Assessee Lawyers: VARCHA BHATTACHARYA
• Keywords: Capital receipt; Revised return
• Section: 143(3)

Judgement Text

1 ITA NO. 5912/D EL/13 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER & SHRI I.C. SUDHIR, JUDICIAL MEMBER I.T.A .NO.-5912/DE L/2013 (ASSESSMENT YEAR-2006- 07) DCIT, CIRCLE 4(1), NEW DELHI. VS JOHNSON MATTHEY INDIA PVT. LTD. 103, ASHOKA ESTATE, BARAKHAMBA ROAD, NEW DELHI. AAACJ2919A APPELLANT BY SHRI SAMEER SHARMA, SR. DR RESPONDENT BY MS. VARCHA BHATTACHARYA, ADV. ORDER PER I.C.SUDHIR, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE DEPARTMENT AGAINST THE ORDER PASSED BY THE CIT(A)-VIII ORDER DATED 21/08/2013 ON THE FOLLOWING GROUNDS: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY U/S 271(1) (C) OF THE I.T. ACT, 1961, AMOUNTING TO RS. 67,53,550/-? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN GOING INTO AN ISSUE WHICH WAS NOT THE SUBJ ECT MATTER OF APPEAL AND WHICH HAD ALREADY BEEN DECIDED? 3. THAT THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND I S NOT TENABLE ON FACTS AND IN LAW. 4. THAT THE GROUND OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEN D OR FORGO ANY GROUNDS OF APPEAL RAISED ABOVE AT THE TIME OF HEARI NG. 2. THE FACTUAL MATRIX LEADING TO THE PRESENT APPEAL IS AS FOLLOWS: DATE OF HEARING 31.07.2015 DATE OF PRONOUNCEMENT 2 6 . 0 8 . 2 0 1 5 2 ITA NO. 5912/D EL/13 ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN TH E BUSINESS OF MANUFACTURING OF AUTOMOBILE EXHAUST CATALYSTS FOR D OMESTIC AND EXPORT MARKET. 2.1. THE APPELLANT FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR ON NOVEMBER 29, 2006, DECLARING A TOTAL INCOME OF RS. 11,21,71,508. SUBSEQUENTLY, THE APPELLANT HAD FILE D REVISED RETURN OF INCOME ON MARCH 28, 2008, DECLARING A TOTAL INCOME OF RS. 12,19,05,139/-. THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE ACT AND CASE OF THE APPELLANT WAS PICKED UP FOR DET AILED SCRUTINY. 2.2. THE APPELLANT WAS AWARDED AN ENTITLEMENT CERT IFICATE UNDER RULE 28- C OF THE HARYANA GENERAL SALES TAX RULES, 1975 ON 2 8 TH MARCH, 2005 BY THE OFFICE OF DEPUTY EXCISE AND TAXATION COMMISS IONER. THE SAID CERTIFICATE ENTITLED THE APPELLANT TO A SALES TAX C ONCESSION FOR A PERIOD OF TEN YEARS (I.E. FROM MARCH 28, 2005 TO MARCH 27, 2015). THE APPELLANT WAS ENTITLED TO A TAX CONCESSION AMOUNTIN G TO RS. 2,00,64,000 DURING THE A.Y. 2006-07. THE APPELLANT CLAIMED THA T THE SUBSIDY RECEIVED FROM HARYANA GOVERNMENT WAS IN THE NATURE OF CAPITAL RECEIPT AND THUS, WAS NOT CHARGEABLE TO TAX . 2.3 THE LD. AO HAS HELD THAT THE SALES TAX SUBSIDY RECEIVED BY APPELLANT IS A REVENUE RECEIPT U/S 28(IV) OF THE ACT. THE LD. AO PASSED THE ASSESSMENT ORDER DATED DECEMBER 4, 2009 U/S 143(3) OF THE ACT, WHEREIN THE SAID SALES TAX SUBSIDY WAS HELD TO BE A REVENUE RECEIPT CHARGEABLE TO TAX AND THE TOTAL INCOME OF APPELLANT WAS INCREASED BY SUCH AMOUNT. CONSEQUENTLY, THE LD. AO HAS RAISED A DEMAND OF RS. 94,01,143/- AGAINST THE APPELLANT. THE AO IMPOSED P ENALTY U/S 271(1)(C) OF RS. 67,53,550/- FOR CONCEALMENT OF INC OME OR FILING INACCURATE PARTICULARS OF INCOME. 2.4. AGGRIEVED BY THE PENALTY ORDER, ASSESSEE COMPA NY PREFERRED APPEAL BEFORE CIT(A)-VII. THE LD. CIT(A) OF AFTER GOING THROUGH THE DETAILED SUBMISSIONS AND THE JUDGMENTS RELIED UPON BY THE ASSESSEE HELD THAT THE SALES TAX SUBSIDY RECEIVED BY THE ASSESSEE AS CAPITAL RECEIPT. THE C IT(A) THUS HELD THAT THERE IS 3 ITA NO. 5912/D EL/13 NO CONCEALMENT OF INCOME OR INACCURATE PARTICULARS OF INCOME FILED BY THE ASSESSEE. THE LD. CIT(A) THUS DELETED THE PENALTY U/S 271(1)(C). HENCE THIS APPEAL. 3. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT AGAINST THE QUANTUM APPEAL, THE TRIBUNAL HAD DELEATED THE ADDIT ION AND THE DECISION OF THE TRIBUNAL HAS BEEN UPHELD BY THE JURISDICTIONAL HIGH COURT VIDE ITS ORDER DATED 13.03.2015 IN ITA NO./193/2015. THE HONBLE DELHI H IGH COURT, OBSERVES AS UNDER: THIS COURT HAS CONSIDERED THE SUBMISSIONS AND IS O F THE OPINION THAT THE ITATS IMPUGNED ORDER HAS NOTED TH E RELEVANT LAW. CRUCIALLY, PONNI SUGARS (SUPRA) IS A LATER DE CISION OF THE SUPREME COURT WHICH HAD GONE TO DEAL WITH VARIOUS AUTHORITIES, INCLUDING SAHNEY (SUPRA). THE SUPREME COURT HAS EMPHASIZED IN EACH CASE THE PURPOSE FOR WHICH SUBSI DY OR ASSISTANCE IS GIVEN BY THE STATE GOVERNMENT OR A PU BLIC AGENCY. IF THAT IS TO PROMOTE AN INDUSTRY, ESPECIA LLY WITH SPECIAL INTEREST OF DEVELOPMENT OF CAPITAL INFRASTR UCTURE, THE AMOUNTS RECEIVED ARE TO BE TREATED AS CAPITAL AND N OT REVENUE. THIS COURT TOO HAD THE OCCASION TO DEAL WITH THE IS SUES IN CIT VS. BOUGAINVILLEA MULTIPLEX ENTERTAINMENT CENTRE PV T. LTD. (ITA 586/2013, DECIDED ON 30.01.2015) WHERE THE DECISION IN PONNI SUGARS (SUPRA) AND PREVIOUS AUTHORITIES WERE DISCUS SED AND APPLIED IN GIVEN FACTS OF THE CASE. WE ARE OF THE OPINION THAT THE IMPUGNED ORDER OF TH E ITAT DOES NOT DISCLOSE ANY INFIRMITY. NO SUBSTANTIAL QUESTIO N OF LAW ARISES. IT IS ACCORDINGLY DISMISSED. 4. THE REVENUE FAIRLY CONCEDES THAT THE ISSUE ON MERIT S HAS ATTAINED FINALITY BY THE ORDER DATED 13/03/2015 PASSED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF ASSESSEE COMPANY. 4 ITA NO. 5912/D EL/13 WE HAVE PERUSED THE ORDER PASSED BY THE HONBLE HIGH COURT AS WELL AS THE TRIBUNAL FOR THE ASSESSMENT YEAR UNDER CONSIDERATIO N ARISING OUT OF THE QUANTUM APPEAL AND THE SUBMISSIONS ADVANCED BY BOTH SIDES. 5. WE FIND THAT THE VERY ISSUE IN QUANTUM APPEALS W HICH REMAINED THE SUBJECT MATTER OF THE PENALTY LEVIED UNDER SECTION 271(1)(C), HAS BEEN DECIDED BY THE HONBLE HIGH COURT IN FAVOUR OF THE ASSESSEE . THE PENAL PROVISIONS U/S 271(1)(C) OF THE ACT THUS HAS GOT NO LEG TO STAND. THE LD. CIT(A) HAS THUS RIGHTLY DELETED THE PENALTY IN QUESTION THOUGH ON DIFFERENT BASIS THAT THERE WAS NO CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULAR THEREOF ON THE PART OF THE ASSESSEE, TO WHICH WE FU LLY CONCUR WITH. THE SAME IS UPHELD. THE GROUNDS ARE ACCORDINGLY REJECTED. 6. IN THE RESULT, THE APPEAL IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 26/08/ 2015 SD/- SD/- (S.V. MEHROTRA) (I.C. SUDHIR) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26/08/2015 *KAVITA, P.S. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REG ISTRAR ITAT NEW DELHI 5 ITA NO. 5912/D EL/13 DATE 1. DRAFT DICTATED ON 04.08.2015/26.0 8.2015 2. DRAFT PLACED BEFORE AUTHOR 04.08.2015/26.0 8.2015 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 26.08.2015 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 26.08.2015 5. APPROVED DRAFT COMES TO THE SR.PS/PS 26.08.2015 6. KEPT FOR PRONOUNCEMENT ON 26.08.2015 7. FILE SENT TO THE BENCH CLERK 31.08.2015 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.