Sh. Rohit Gupta, Jammu V. The Income tax Officer, Jammu

ITA 620/ASR/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8664 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 22-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Question of law; Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NOS.620 & 621(ASR)/2013 ASSESSMENT YEARS:2009-10 & 2010-11 PAN :ABAPG0411A SH.ROHIT GUPTA PROP. VS. INCOME TAX OFFICER, M/S. SARSESHWAR OVERSEAS, WARD 2(2), JAMMU. C/O SURAJ HOTEL, JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.R.K.GUPTA, CA RESPONDENT BY:SMT. NEERAJ, DR DATE OF HEARING:11/02/2015 DATE OF PRONOUNCEMENT:12/02/2015 ORDER PER B.P.JAIN,AM: THESE TWO APPEALS OF THE ASSESSEE ARISE FROM TWO D IFFERENT ORDERS OF CIT(A), JAMMU, EACH DATED 20.08.2013 FOR THE ASSESS MENT YEARS 2009-10 & 2010-2011 RESPECTIVELY. 2. IN ITA NO.620(ASR)/2013 FOR THE ASSESSMENT 2009- 10, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE WORTHY CIT(A) IS NOT JUSTIFIED IN CONF IRMING THE ACTION OF THE LD. AO FOR NOT ALLOWING DEDUCTION U/S 80-IB( 4) OF THE ITA NO.620 & 621(ASR)/2013 2 INCOME-TAX ACT, 1961 IN RESPECT OF INTEREST AMOUNTI NG TO RS.3,22,913/- EARNED ON MARGIN MONEY GIVEN FOR OPEN ING LETTER OF CREDIT FOR IMPORT OF MACHINERY BY TREATING IT AS NOT DERIVED FROM THE ACTIVITY OF INDUSTRIAL UNDERTAKING. 2. THE APPELLANT CRAVES, LEAVES TO ALTER AND ADD TO SUBSTITUTE ANY GROUND OF APPEAL BEFORE OR AT THE TIME OF HEARING. 3. IN ITA NO.621(ASR)/2013 FOR THE ASSESSMENT 2010- 11, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE WORTHY CIT(A) IS NOT JUSTIFIED IN CONF IRMING THE ACTION OF THE LD. AO FOR NOT ALLOWING DEDUCTION U/S 80-IB( 4) OF THE INCOME-TAX ACT, 1961 IN RESPECT OF INTEREST AMOUNTI NG TO RS.5,27,930/- EARNED ON MARGIN MONEY GIVEN FOR OPEN ING LETTER OF CREDIT FOR IMPORT OF MACHINERY BY TREATING IT AS NOT DERIVED FROM THE ACTIVITY OF INDUSTRIAL UNDERTAKING. 2. THE APPELLANT CRAVES, LEAVES TO ALTER AND ADD TO SUBSTITUTE ANY GROUND OF APPEAL BEFORE OR AT THE TIME OF HEARING. 4. THE ASSESSEE HAS RAISED THE ADDITIONAL GROUND OF APPEAL IN BOTH THE APPEALS AS UNDER: ITA NO.620(ASR)/2013 1. THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE A ND IN LAW THE INTEREST AMOUNTING TO RS.3,22,913/- EARNED ON MARGI N MONEY DEPOSITED TO OPEN A LETTER OF CREDIT FOR THE IMPORT OF MACHINERY FROM ABROAD IS INCIDENTAL TO THE ACQUISITION OF ASS ET FOR SETTING UP THIS MACHINERY AND HENCE A CAPITAL RECEIPT NOT L IABLE TO TAX UNDER THE PROVISIONS OF THE INCOME TAX ACT, 1961. ITA NO.621(ASR)/2013 1. THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE A ND IN LAW THE INTEREST AMOUNTING TO RS.5,27,930/- EARNED ON MARGI N MONEY DEPOSITED TO OPEN A LETTER OF CREDIT FOR THE IMPORT OF MACHINERY FROM ABROAD IS INCIDENTAL TO THE ACQUISITION OF ASS ET FOR SETTING ITA NO.620 & 621(ASR)/2013 3 UP THIS MACHINERY AND HENCE A CAPITAL RECEIPT NOT L IABLE TO TAX UNDER THE PROVISIONS OF THE INCOME TAX ACT, 1961. 5. FIRST OF ALL, WE TAKE UP ADDITIONAL GROUND OF AP PEAL RAISED IN ITA NO.620(ASR)/2013 AND OUR DECISION HEREINBELOW SHAL L BE IDENTICALLY APPLICABLE TO THE ADDITIONAL GROUND IN ITA NO.621(A SR)/2013, SINCE THE FACTS IN THIS APPEAL ARE IDENTICAL TO THE FACTS IN ITA NO .621(ASR)/2013 EXCEPT THE AMOUNT OF INTEREST AT RS.5,27,930/- IN ITA NO.621(A SR)/2013 INSTEAD OF RS.3,22,913/- IN THE PRESENT APPEAL. 6. THE LD. COUNSEL FOR THE ASSESSEE, MR. R.K.GUPTA, CA ARGUED AND SUBMITTED THAT IN ORDER TO INSTALL PLANT AND MACHIN ERY, THE ASSESSEE HAS OPENED A LETTER OF CREDIT WITH THE BANK TO IMPORT M ACHINERY FROM ABROAD. THE ASSESSEE WAS UNDER OBLIGATION TO KEEP MARGIN WITH T HE BANK IN ORDER TO OPEN THIS LETTER OF CREDIT TO IMPORT THE PLANT & MACHINE RY. ON THIS MARGIN MONEY THE ASSESSEE HAS EARNED AN INTEREST INCOME OF RS.32 2913/-. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT IT IS A FAC T THAT IN THE RETURN OF INCOME, THE IMPUGNED RECEIPT WAS NOT CLAIMED AS CAPITAL REC EIPT AND WAS INCLUDED IN THE PROFITS OF THE ELIGIBLE UNDERTAKING. IT WAS STA TED THAT THE ISSUE OF TAXABILITY OF INTEREST EARNED ON MARGIN MONEY UNDER THE PROVISIONS OF THE ACT, IS PURELY A LEGAL ISSUE AND IS RAISED BY THE A SSESSEE AS APPRISED OF THE CORRECT POSITION OF LAW. THE OMISSION TO RAISE THI S ISSUE EARLIER IS NEITHER WILLFUL NOR DELIBERATE. IT WAS PRAYED THAT UNDER T HE FACTS AND CIRCUMSTANCES ITA NO.620 & 621(ASR)/2013 4 OF THE CASE AND IN LAW THIS ADDITIONAL GROUND OF AP PEAL MAY PLEASE BE ADMITTED BY PLACING RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT (1998) 229 ITR 383. THE LD. COUNSEL SUBMITTED THAT THE HONBLE SUPREME COURT, HAS HELD THAT WHERE THE TRIBUNAL IS ONLY REQUIRED TO CONSIDER THE QUESTION OF LAW, ARISING FROM THE FACTS, WHICH ARE ON RECORD, THE QUESTION SHOULD BE ALLOWED TO BE RAISED, WHEN IT IS NECESSARY, TO CORRECTLY ASSESS T HE TAX LIABILITY. THE FACTS OF THE CASE ARE SQUARELY COVERED BY THE DECISION OF TH E HONBLE SUPREME COURT, IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT (SUPRA). THE FACT THAT INTEREST AMOUNTING TO RS.322913/- HAS BEEN EAR NED IN MARGIN MONEY FOR OPENING LETTER OF CREDIT FOR IMPORT OF MACHINERY IS ALREADY AVAILABLE ON RECORD AND THE ADDITIONAL GROUND IS BEING RAISED ON BEING ADVISED OF THE CORRECT POSITION OF LAW AS HELD IN THE CASE OF CIT VS. KARNAL CO-OPERATIVE SUGAR MILLS LTD. (2000) 243 ITR 2(SC) THAT ANY INCO ME EARNED ON SUCH DEPOSIT IS INCIDENTAL TO ACQUISITION OF ASSETS AND HAS TO BE CAPITALISED AND CANNOT BE ASSESSED AS INCOME FROM OTHER SOURCES. TH E HONBLE SUPREME COURT, APPLIED CIT VS. BOKARO STEEL LTD. (1999) 236 ITR 315 (SC). IT HAS ALSO BEEN CONSISTENTLY HELD THAT THE LEGAL ISSUE CA N BE RAISED FOR THE FIRST TIME BEFORE THE TRIBUNAL, EVEN THOUGH, NOT RAISED BEFORE THE LOWER AUTHORITIES. IN VIEW OF THE ABOVE FACTS, THE LD. COUNSEL PRAYED THA T ADDITIONAL GROUND OF ITA NO.620 & 621(ASR)/2013 5 APPEAL MAY BE ADMITTED ON THE SIMILAR LINES BEING S IMILAR FACTS AS IN ITA NO.620(ASR)/2013 FOR THE ASSESSMENT YEAR 2009-10 7. THE LD. DR, ON THE OTHER HAND, OPPOSED THE ADMIS SION OF ADDITIONAL GROUND. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE ISSUE IN THE ADDITIONAL GROUND IS A LEGAL ISSUE AND GOES DEEP INTO ROOT OF THE MATTER AND THEREFORE, IS ADMITTED IN VIEW OF T HE DECISION OF THE HONBLE SUPREME COURT, IN THE CASE OF NATIONAL THERMAL POWE R CO. LTD. VS. CIT (SUPRA). 9. AS MENTIONED HEREINABOVE, THE ADDITIONAL GROUND IN ITA NO.621(ASR)/2013 FOR THE ASSESSMENT YEAR 2010-11 IS ALSO ADMITTED ON THE SIMILAR LINES BEING SIMILAR FACTS AS IN ITA NO.620( ASR)/2013 FOR THE ASSESSMENT YEAR 2009-10. 10. THE LD. COUNSEL FOR THE ASSESSEE, MR. R.K. GUPT A ARGUED THAT IN BOTH THE APPEALS, THE ISSUE IS IDENTICAL AND FURTHER AR GUED THAT THE IMPUGNED RECEIPT OF THE INTEREST INCOME WAS NOT CLAIMED AS C APITAL RECEIPT BUT WAS INCLUDED IN THE PROFITS OF THE ELIGIBLE UNDERTAKING AND THE ISSUE IS COVERED BY THE DECISION OF THE HONBLE SUPREME COURT, IN THE C ASE OF CIT VS. KARNAL CO-OPERATIVE SUGAR MILLS LTD. (SUPRA), WHERE THE HO NBLE SUPREME COURT, HAS APPLIED THE DECISION IN THE CASE OF CIT VS. BOK ARO STEEL LTD. (SUPRA). THE ITA NO.620 & 621(ASR)/2013 6 IMPUGNED RECEIPT SHOULD BE TREATED AS A CAPITAL REC EIPT IN VIEW OF THE DECISION CITED HEREINABOVE AND THE DECISION OF THE LD. CIT(A) BE REVERSED. 11. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE ASSESSEE HAS RAISED THE ADDITIONAL GROUND OF AP PEAL WHICH HAS SINCE BEEN ADMITTED BY US HEREINABOVE. IN THE ADDITIONAL GROUN D, THE ASSESSEE HAS CLAIMED THE IMPUGNED RECEIPT OF INTEREST INCOME AS A CAPITAL RECEIPT IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT, IN TH E CASE OF CIT VS. KARNAL CO-OPERATIVE SUGAR MILLS LTD.(SUPRA). SINCE THIS IS SUE WAS NEVER TAKEN UP BEFORE THE LD. CIT(A), THEREFORE, IT WILL BE IN THE INTEREST OF JUSTICE TO SEND THE MATTER BACK TO THE FILE OF THE LD. CIT(A), WHO WILL DECIDE THE ISSUE DENOVO BY TAKING INTO CONSIDERATION THE DECISION I N THE CASE OF CIT VS. KARNAL CO-OPERATIVE SUGAR MILLS LTD. (SUPRA) VIZ A VIZ THE DECISIONS RELIED UPON BY THE AO OR BY THE LD. CIT(A) OR ANY OTHER DE CISION BY AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . ACCORDINGLY, THE GROUND OF APPEAL AND THE ADDITION GROUND RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 13. SINCE THE ISSUE IN ITA NO.621(ASR)/2013 IS IDE NTICAL TO THE ISSUE IN ITA NO.620(ASR)/2013 DECIDED BY US, HEREINABOVE AND ACCORDINGLY OUR ITA NO.620 & 621(ASR)/2013 7 DECISION IN ITA NO.620(ASR)/2013 IS IDENTICALLY APP LICABLE IN ITA NO.621(ASR)/2013. ACCORDINGLY, THE APPEAL IN ITA N O.621(ASR)/2013 IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 14. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE IN ITA NO.620 & 621(ASR)/2013 ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12TH FEBRUARY, 2015. SD/- SD/- (A.D.JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12TH FEBRUARY, 2015 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH.ROHIT GUPTA, JAMMU. 2. THE ITO WARD 2(2), JAMMU. 3. THE CIT(A), JAMMU 4. THE CIT, JAMMU 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.