DCIT SP RG 4, MUMBAI V. ACC LTD, MUMBAI

ITA 6356/MUM/2010

• Counselvise Citation: 635619914 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 1989-1990
• Appeal Filed On: 26-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS USHA NAIR
• Assessee Lawyers: ALPESH T DHAROD
• Keywords: Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.6356/MUM/2010 (ASSESSMENT YEAR: 1989-90) INCOME-TAX OFFICER-9(2) (2), R.NO.225, AAYAKAR BHAVAN, MAHARSHI KARVE ROAD, MUMBAI -400 020 ...... APPELLANT VS ACC LTD., CEMENT HOUSE, 121, M.K. ROAD, MUMBAI -400 005 ..... RESPONDENT PAN: AAACT 1507 C APPELLANT BY: MRS. USHA NAIR RESPONDENT BY: SHRI SOUMEN ADAK & SHRI ALPESH T. DHAROD DATE OF HEARING: 22.12.2011 DATE OF PRONOUNCEMENT: 22.12.2011 O R D E R PER R.S. PADVEKAR , JM : IN THIS APPEAL THE REVENUE HAS CHALLENGED THE ORDER OF THE LD. CIT (A)-I, MUMBAI DATED 19.04.2010 FOR THE A.Y. 198 9-90. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GROUND:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN DIRECTING A.O. TO TREAT TRANSP ORT SUBSIDY AMOUNTING TO RS.6,61,81,011/- AS CAPITAL RECEIPTS. 2. THE ISSUE IN CONTROVERSY IS IN RESPECT OF TREATM ENT OF THE TRANSPORT SUBSIDY. THE LD. COUNSEL SUBMITS THAT TH E IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE TRIBUNAL IN ASSESSEES O WN CASE IN THE PRECEDING YEARS AND THE SAME HAS BEEN DECIDED IN FA VOUR OF THE ITA 6356/M/2010 ACC LTD. 2 ASSESSEE IN ITA NOS.1105, 3961, 6901/M/1997 & ITA NO.3055/MUM/1998 FOR THE A.YS. 1991-92 TO 1993-94 V IDE ORDER DATED 22.2.2007. LD. COUNSEL HAS FILED COPY OF THE TRIBUNAL ORDER IN COMPILATION. THE TRIBUNAL HAS HELD THAT THE TRANSPO RT SUBSIDY RECEIVED BY THE ASSESSEE IS THE RECEIPT OF CAPITAL IN NATURE AND THE SAME CANNOT BE TAKEN INTO ACCOUNT FOR THE COMPUTATI ON OF THE TOTAL INCOME. THE RELEVANT OPERATIVE PART OF THE ORDER O F THE TRIBUNAL DATED 22.2.2007, WHEREIN IT IS HELD AS UNDER:- 9.8 WE HAVE PERUSED THE RELEVANT MATERIALS, ON WHI CH OUR ATTENTION WAS DRAWN, ALONG WITH THE DECISIONS RELIE D UPON. AFTER CONSIDERING ALL THE RELEVANT MATERIALS AS WELL AS T HE ORDER OF CTT (A) FOR ANT. YRS. 1990-91 AND 1991-92, WE FIND THAT THE CIT(A) WHILE RENDERING ITS DECISION ON THE ISSUE HAS NOT C ONSIDERED AS RELEVANT THE OBJECTIVE BEHIND THE GRANT OF SUBSIDY AS LAID OUT IN THE SCHEME. ON THE CONTRARY, CIT(A) HAS ONLY EMPHAS ISED ON THE MODE OF DISBURSEMENT. AFTER CONSIDERING THE RIVAL S UBMISSIONS, WE FIND THAT THE PRINCIPLES LAID DOWN BY THE SPECIA L BENCH IN RELIANCE INDUSTRIES LTD. (SUPRA) FOLLOWING THE RATI O LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF SAHNEY STE EL & PRESS WORKS LTD. SUPRA) IS SQUARELY APPLICABLE TO THE ISS UE INVOLVED IN THE PRESENT APPEAL. AS HELD IN THE CASE OF RELIANCE INDUSTRIES (SUPRA), WE HOLD THAT THE PURPOSE AND OBJECTIVE & T HE SCHEME UNDER WHICH THE SUBSIDY IS GIVEN IS OF MORE FUNDAME NTAL IMPORTANCE THAN THE FACT THAT SUBSIDY IS RECEIVED A FTER COMMENCEMENT OF PRODUCTION OR CONDITIONAL UPON IT. MERE MODE OF DISBURSEMENT CANNOT DECIDE THE NATURE OF SUBSIDY. F URTHER, IT FLAIRS NO SENSE, IF SUBSIDY GIVEN FOR THE PURPOSE O F SETTING UP OF INDUSTRIES IS TAKEN AWAY BY WAY OF TAX WITHOUT CONS IDERING THE BROAD OBJECTIVE OF THE CENTRAL GOVERNMENT BEHIND TH E INTRODUCTION OF THE SCHEME IN THE ISSUE UNDER CONSIDERATION WE F IND THAT THE SCHEME WAS INTRODUCED IN 1971 FOR ECONOMIC UPLIFTME NT OF THE INDUSTRIALLY BACKWARD AREAS OF THE COUNTRY. MAJORIT Y OF THESE AREAS ARE STILL DESCRIBED AS BACKWARD AREA. FOR THE ECONOMIC GROWTH OF THESE AREAS, THE CENTRAL GOVERNMENT, WAY BACK IN ITA 6356/M/2010 ACC LTD. 3 1971, HAD PROPOSED THE SCHEME OF INCENTIVE WHEREBY IT INVITED VARIOUS INDUSTRIES TO SET UP THEIR INDUSTRIAL UNIT IN VARIOUS SELECTED BACKWARD AREAS THEREIN TO BRING RAPID INDU STRIAL GROWTH. IN VIEW OF THE SAID OBJECTIVE, WE FEEL THAT THE CIT (A) WAS NOT JUSTIFIED IN EMPHASISING ON THE FORM OF THE SCHEME AND IGNORING THE SUBSTANCE OF THE SCHEME. 9.9 IN THE LIGHT OF OUR FINDINGS AS ABOVE, WE HOLD THAT AMOUNT IN RESPECT OF THE TRANSPORT SUBSIDY IN TERMS OF THE OF THE TRANSPORT SUBSIDY SCHEME, 1971 CONSTITUTE CAPITAL RECEIPT AND IS NOT TO BE TAKEN INTO ACCOUNT IN COMPUTATION OF TOTAL INCOME. THUS, THIS GROUND STANDS ALLOWED IN FAVOUR OF THE ASSESSEE. 3. NOTHING HAS BEEN BROUGHT TO OUR NOTICE BY THE RE VENUE THAT THE SAID DECISION OF THE TRIBUNAL IS REVERSED. WE, THE REFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH DIS MISS THE GROUND TAKEN BY THE REVENUE. 4. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 2 ND DECEMBER, 2011. SD/- SD/- ( P.M. JAGTAP ) ACCOUTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE : 22 ND DECEMBER, 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)-1, MUMBAI. 4) THE CIT-1, MUMBAI. 5) THE D.R. A BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN ITA 6356/M/2010 ACC LTD. 4 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 22.12.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 22.12.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER