M/s Trident Limited, Ludhiana V. ACIT, Ludhiana

ITA 653/CHANDI/2011

• Counselvise Citation: 65321514 RSA 2011
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 08-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Assessee Lawyers: ADITYA KUMAR
• Keywords: Capital receipt
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 653/CHD/2011 ASSESSMENT YEAR: 2006-07 M/S TRIDENT LIMITED, V ASSTT.CIT, CIRCLE-I (FORMERLY ABHISHEK IND.LTD.), LUDHIANA. E-212, KITCHLUA NAGAR, LUDHIANA. PAN: AABCA-4139J (APPELLANT) (RESPONDENT) APPELLANT BY : ADITYA KUMAR RESPONDENT BY: SHRI N.K.SAINI DATE OF HEARING : 26.12.2011 DATE OF PRONOUNCEMENT : 27.12.2011 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER DATED 15.04.2011 PASSED BY THE LD . CIT-I LUDHIANA U/S 263 OF THE INCOME-TAX ACT,1961 (IN SHO RT 'THE ACT'). 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL: 1. THAT THE ORDER PASSED U/S 263 OF THE INCOME- TAX ACT,1961 BY THE LD. CIT-I LUDHIANA IS AGAINST L AW AND FACTS ON THE FILE IN AS MUCH AS THE PENALTY ORD ER PASSED BY THE LD. AO CAN NEITHER BE SAID TO BE ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENU E. 2. THAT THE ISSUE WITH RESPECT TO THE LEVIABILITY O F PENALTY U/S 271(1)(C) ON THE AMOUNT OF SALES TAX SUBSIDY HAD MERGED WITH THE ORDER OF LD. CIT(A) WHO 2 HAD ADJUDICATED THE ISSUE VIDE ORDER DATED 10.12.2010. 3. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS A GAINST THE ORDER DATED 15.4.2011 PASSED BY THE CIT U/S 263 OF THE ACT, IT WAS CONTENDED BY THE LD. 'DR' THAT THE ISSU E OF SALES TAX SUBSIDY FOR THE PURPOSE OF LEVY OF PENALTY U/S 271(1)(C) HAS BEEN DULY CONSIDERED AND ADJUDICATED BY THE CIT (A) VIDE ORDER DATED 10.12.2010. THEREFORE, THE SAME ISSUE CANNOT BE THE SUBJECT MATTER OF THE PROVISIONS OF SECTION 263, AS IS EVIDENT FROM SUB-CLAUSE C OF THE EXPLANATION TO S ECTION 263(1) OF THE ACT. LD. 'DR' PLACED RELIANCE ON THE ORDER OF THE CIT. 4. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS, FACTS OF THE CASE AND THE RELEVANT RECORD AND FOUND THAT THE CIT(A) VIDE ORDER DATED 10.12.2010 HAS ADJUDICATED THE ISSUE OF LEVY OF PENALTY IN RESPECT OF SALES TAX SU BSIDY, AS IS EVIDENT FROM THE FOLLOWING TEXT OF THE SAID ORDER, REPRODUCED HEREUNDER : THE AO HAS LEVIED PENALTY U/S 271(1)(C) ON ASSESSEE'S CLAIM THAT SALES TAX SUBSIDY SHOULD BE TREATED AS CAPITAL RECEIPT. IN THIS REGARD THE ASSE SSEE HAS SUBMITTED THAT THOUGH THE ISSUE HAS BEEN DECIDE D AGAINST THE ASSESSEE BY THE HON'BLE PUNJAB & HARYANA HIGH COURT BUT THE FACT OF THE MATTER IS TH AT THE SLP AGAINST THE ABOVE ORDER STANDS ADMITTED BEFORE THEIR LORDSHIPS OF SUPREME COURT. OTHERWISE ALSO THE FACT THAT ASSESSEE COMPANY HAD AVAILED SAL ES TAX SUBSIDY OF RS.7,84,56,517/- DURING THE YEAR UND ER CONSIDERATION HAS BEEN GIVEN IN THE NOTE TO THE COMPUTATION TO THE TOTAL INCOME WHICH IS AS UNDER : 1. THE COMPANY HAS AVAILED SALES TAX SUBSIDY OF RS.7,84,56,517/- DURING THE YEAR 3 UNDER CONSIDERATION. IN VIEW OF THE DECISION OF PB. AND HARYANA HIGH COURT IN THE CASE OF ASSESSEE COMPANY THE SAME HAVE BEEN TRATED AS REVENUE RECEIPT, HOWEVER THE COMPANY HAS FILED AN APPEAL BEFORE THE HON'BLE SUPREME COURT OF INDIA TO CONSIDER THE SAME AS CAPITAL RECEIPT. THUS THE SALES TAX SUBSIDY MAY PLEASE BE TREATED AS CAPITAL RECEIPT AT THE TIME OF FRAMING OF ASSESSMENT. REFER TO POINT NO.22(B) OF FORM 3CD OF TAX AUDIT RE PORT DATED FROM THE AFORESAID DISCUSSION AND ALSO DISCUSSION M ADE IN THE ASSESSMENT ORDER IT IS SEEN THAT THE ASSESSE E COMPANY ITSELF HAS SHOWN THE AFORESAID SALES TAX SUBSIDY AS REVENUE RECEIPT AND CLAIM TO TREAT THE S ALES TAX SUBSIDY AS CAPITAL RECEIPT WAS MADE ONLY BY WAY OF A NOTE TO COMPUTATION OF TOTAL INCOME AS REPRODUCED ABOVE. HOWEVER, CLAIM OF THE SALES TAX SUBSIDY TO BE TREATED AS CAPITAL RECEIPT HAS BEEN DISALLOWED BY T HE AO. IN VIEW OF THE ABOVE DISCUSSION, I AM OF THE OP INION THAT THE ASSESSEE CANNOT BE SAID TO HAVE CONCEALED ITS INCOME AND FURNISHED INACCURATE PARTICULARS OF ITS INCOME IN RESPECT OF SALES TAX SUBSIDY. AS DISCUSSE D ABOVE, PENALTY LEVIED UNDER SECTION 271(1)(C) IN RE SPECT OF SALES TAX SUBSIDY, IS THEREFORE CANCELLED. 5. THE LD. CIT VIDE ORDER DATED 15.4.2011 U/S 263 O F THE ACT HELD THAT THE AO ERRED IN NOT QUANTIFYING THE P ENALTY U/S 271(1)(C) OF THE ACT ON THE ISSUE OF DISALLOWAN CE OF SALES TAX SUBSIDY AMOUNTING TO RS.7,84,56,517/- WHICH IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE F INDINGS OF THE CIT ARE CONTAINED IN PARA 7 OF HIS ORDER, PASSE D ON 15.4.2011 U/S 263 OF THE ACT. A PERUSAL OF THE PEN ALTY ORDER DATED 31.3.2010 PASSED U/S 271(1)(C) BY THE A O REVEALS THAT THE AO LEVIED PENALTY IN RESPECT OF SA LES TAX 4 SUBSIDY UNDER REFERENCE, AS IS EVIDENT FROM THE FOL LOWING PART OF THE ORDER, REPRODUCED HEREUNDER : 1. SALES TAX SUBSIDY AMOUNTING TO RS.7,84,56,517/- TREATED AS REVENUE RECEIPT BEING TAXED AS INCOME FR OM OTHER SOURCES : THE ASSESSEE HAS CLAIMED SALES TAX SUBSIDY TO BE A CAPITAL RECEIPT. THE AO HAS HELD THE SALES TA X SUBSIDY TO BE A REVENUE RECEIPT ON ACCOUNT OF THE JUDGMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 1993- 94. SINCE THE LEGAL POSITION ON THIS ISSUE IS CLEAR , THE ASSESSEE HAS RESORTED TO FURNISHING INACCURATE PARTICULARS OF INCOME. I, THEREFORE, HOLD IT A FIT CASE FOR IMPOSITION OF PENALTY U/S 271(1)(C).' 6. HOWEVER, IT IS EVIDENT THAT THE AO OMITTED TO CO MPUTE THE SAID PENALTY IN THE CONCLUDING PART OF THE SAID ORDER WHICH LED TO INVOCATION OF THE PROVISIONS OF SECTIO N 263 BY THE CIT. HAVING REGARD TO THE ABOVE LEGAL AND FACT UAL DISCUSSION, WE ARE OF THE CONSIDERED OPINION THAT T HE ISSUES WHICH WERE CONSIDERED AND DECIDED BY THE CIT(A), CA NNOT BE MADE SUBJECT TO THE PROVISIONS OF SECTION 263 OF TH E ACT BY THE CIT, AS IS EVIDENT FROM THE REPRODUCTION OF SUB -CLAUSE C OF EXPLANATION TO SECTION 263(1) OF THE ACT: (C) WHERE ANY ORDER REFERRED TO IN THIS SUB-SECTIO N AND PASSED BY THE AO HAD BEEN THE SUBJECT MATTER OF ANY APPEAL FILED ON OR BEFORE OR AFTER THE IST DAY OF JUNE,1988, THE POWERS OF THE COMMISSIONER UNDER THIS SUB-SECTION SHALL EXTEND AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED TO SUCH MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPEAL. 5 7. IN VIEW OF THE ABOVE CLEAR STATUTORY PROVISIONS, WHICH PROHIBIT INVOCATION OF PROVISIONS OF SECTION 263 OF THE ACT, IN RESPECT TO SUCH MATTER, WHICH HAD BEEN CONSIDERE D AND DECIDED IN APPEAL, THE ORDER PASSED BY THE CIT U/S 263 CANNOT BE SUSTAINED AND HENCE, THE SAME IS QUASHED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH DEC.,2011. SD/- SD/- (H.L.KARWA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27 TH DEC.,2011. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH