Khyber Cements Pvt. Ltd, Srinagar V. The Income Tax Officer, Srinagar

ITA 698/ASR/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5613 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-04-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 24-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P K MISHRA
• Keywords: Condonation of delay
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. T. S. KAPOOR, ACCOUNTANT MEMBER AND SH. N.K. CHOUDHRY, JUDICIAL MEMBER ITA NO. 698/(ASR)/2014 ASSESSMENT YEAR: 2006-07 PAN: AABCK6365J KHYBER CEMENTS PVT. LTD. KHAYAM BUILDING; NOWPORA, SRINAGAR. VS. INCOME TAX OFFICER WARD-3(1), SRINAGAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. P. K MISHRA (C.A.) RESPONDENT BY: SH. RAHUL DHAWAN (D.R.) DATE OF HEARING: 27.04.2017 DATE OF PRONOUNCEMENT: 05.05.2017 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORD ER OF LD. CIT (A), JAMMU, DATED NIL IN RESPECT OF APPEAL NO. 298 FOR A SST. YEAR 2006-07. 2. THE SOLITARY GROUND TAKEN BY ASSESSEE IS THE SUS TAINANCE OF PENALTY WHICH THE ASSESSING OFFICER HAD IMPOSED U/S 271(1) (C) OF THE ACT. 3. AT THE OUTSET, THE LD. AR INVITED OUT ATTENTION TO THE FACT THAT THERE WAS OF 43 DAYS IN FILING THE APPEAL AND WHICH HAD OCCURRED DUE TO FLOODS IN SRINAGAR. THE LD. AR, IN THIS RESPECT INVITED OU R ATTENTION TO COPY OF APPLICATION FOR CONDONATION OF DELAY AND ALSO SUBMI TTED THAT THE ASSESSEE HAD ALSO FURNISHED DULY SIGNED AND NOTARIZED AFFIDA VIT, EXPLAINING THEREIN THAT THE OFFICE OF ASSESSEE-COMPANY WAS COMPLETELY INUNDATED IN WATER ITA NO. 698 (ASR)/2014 ASST. YEAR: 2006-07 2 DUE TO FLOODS AND THEREFORE, THE APPEAL COULD NOT B E FILED WITHIN THE PRESCRIBED TIME. 4. THE LD. DR HAD NO OBJECTION TO THE CONDONATION O F DELAY AND FINDING THE REASON FOR DELAY IN FILING OF APPEAL AN D THE FINDING THE EXPLANATION OF THE ASSESSEE TO BE PLAUSIBLE, WE CON DONED THE DELAY AND LD. AR WAS DIRECTED TO PROCEED WITH HIS ARGUMENTS. THE LD. AR SUBMITTED THAT THE ASSESSEE HAD CLAIMED THE AMOUNT OF EXCISE DUTY REFUND, TRANSPORT, SUBSIDY ETC. AS INCOME ELIGIBLE U/S 80IB OF THE ACT AND WHICH THE AUTHORITIES BELOW HAD REJECTED. HOWEVER, THE HON'BLE ITAT HAD DELETED THE ADDITION IN RESPECT OF EXCISE DUTY REFU ND BUT HAD SUSTAINED THE ADDITION IN RESPECT OF TRANSPORT SUBSIDY AND MI SCELLANEOUS INCOME AND THEREFORE, THE ASSESSING OFFICER HAD IMPOSED A PENALTY OF RS. 8,79,189/- FOR CONCEALMENT OF INCOME. THE LD. AR SU BMITTED THAT LD. CIT(A) SUSTAINED THE PENALTY RELYING ON THE JUDGMEN T OF HON'BLE SUPREME COURT IN THE CASE OF M/S LIBERTY INDIA VS. CIT HOLD ING THAT TRANSPORT SUBSIDY AND MISC. INCOME WERE NOWHERE CONNECTED WIT H THE INDUSTRIAL UNDERTAKING AND DID NOT HAVE FIRST DEGREE NEXUS WIT H THE INDUSTRIAL UNDERTAKING. THE LD. AR, SUBMITTED THAT ASSESSEE HA D CLAIMED DEDUCTION U/S 80IB ON THESE AMOUNTS RELYING ON JUDGMENT OF HO N'BLE ITAT CHANDIGARH BENCH IN THE CASE OF KIRAN ENTERPRISES ( 2005) 92 TTJ (CHANDIGARH 104) WHICH WAS AVAILABLE AT THE TIME OF FILING OF RETURN OF INCOME. IT WAS SUBMITTED THAT AMOUNTS OF TRANSPORT SUBSIDY AND INTEREST WERE DULY RECORDED AND DISCLOSED IN THE BOOKS OF AC COUNT AND HAVE NOT ITA NO. 698 (ASR)/2014 ASST. YEAR: 2006-07 3 BEEN FOUND TO BE INCORRECT AND HENCE THE ASSESSEE H AD NOT CONCEALED ANY PARTICULARS OF INCOME. IT WAS FURTHER SUBMITTED THA T HON'BLE SUPREME COURT IN THE CASE OF MEGHALAYA STEELS (2016) 67 TAX MANN.COM 158 AFTER CONSIDERING THE JUDGMENT IN THE CASE OF LIBERTY IND IA HAS HELD THAT DEDUCTION U/S 80IB/80IC IS ADMISSIBLE ON SUBSIDIES OF TRANSPORT, POWER AND INTEREST GIVEN BY THE GOVERNMENT AND THE CBDT H AS ALSO ACCEPTED THE SAME JUDGMENT VIDE CIRCULAR NO. 39/2016 DATED 2 9.11.2016 WHEREIN IT HAS DIRECTED THE OFFICERS THAT THE SUBSIDY OF TR ANSPORT, POWER, AND INTEREST GIVEN BY GOVERNMENT TO INDUSTRIAL UNDERTAK ING ARE PART OF PROFIT OF GAINS AND BUSINESS APPROVED FROM INDUSTRIAL UNDE RTAKING AND IT IS ADMISSIBLE DEDUCTION UNDER CHAPTER VI-A OF THE ACT, AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO COPY OF CIRCULAR NO. 3 9/2016 PLACED AT PAPER BOOK PAGE OF 28. WITHOUT PREJUDICE THE LD. AR ARGUED THAT MERE REJECTION OF CLAIM DOES NOT AMOUNT TO CONCEALMENT O R FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THIS RESPECT R ELIANCE WAS PLACED ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE O F CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158 (SC). TH E LD. AR FURTHER SUBMITTED THAT SIMILAR PENALTY HAS BEEN DELETED BY HON'BLE ITAT AMRITSAR BENCH IN THE CASE OF ASSESSEE ITSELF, AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO PAPER BOOK PAGE OF 14 TO 2 7 WHERE A COPY OF THE ORDER OF HON'BLE. ITAT DATED 18 TH MARCH, 2014 WAS PLACED. 5. THE LD. DR ON THE OTHER HAND, HEAVILY PLACED HIS RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. ITA NO. 698 (ASR)/2014 ASST. YEAR: 2006-07 4 6. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GON E THROUGH THE MATERIAL PLACED ON RECORD. WE FIND THE HON'BLE SUPREME COURT IN THE CASE OF MEGHALAYA STEELS (2016) 67 TAXMANN.COM 158 (SC) AFT ER CONSIDERING THE JUDGMENT IN THE CASE OF LIBERTY INDIA HAS HELD THAT DEDUCTION U/S 80IB/80IC IS ADMISSIBLE ON SUBSIDIES OF TRANSPORT, POWER AND INTEREST GIVEN BY THE GOVERNMENT AND WE FURTHER FIND THAT CB DT HAS ALSO ACCEPTED THE SAME JUDGMENT IN CIRCULAR NO. 39/2016 AND HAS DECIDED NOT TO FILE APPEALS ON THESE ISSUES. COPY OF CIRCULAR NO. 39/2016, DATED NOVEMBER 29, 20 16 HAS BEEN MADE APART OF THIS ORDER WHICH IS REPRODUCED BELOW: SUBJECT: TRANSPORT, POWER AND INTEREST SUBSIDIES R ECEIVED BY AN INDUSTRIAL UNDERTAKING ELIGIBILITY FOR DEDUCTION UN DER SECTIONS 80- IB, 80-IC ETC. OF THE INCOME TAX ACT, 1961-REG. THE ISSUE WHETHER REVENUE RECEIPTS SUCH AS TRANSPOR T, POWER AND INTEREST SUBSIDIES RECEIVED BY AN INDUSTRIAL UNDERT AKING/ELIGIBLE BUSINESS ARE PART OF PROFITS AND GAINS OF BUSINESS DERIVED FROM ITS BUSINESS ACTIVITIES WITHIN THE MEANING OF SECTIONS 80-IB/80-IC OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) AND THUS ELIGIBLE FOR CLAIM OF CORRESPONDING DEDUCTION UNDER CHAPTER VI- A OF THE ACT HAS BEEN A CONTENTIONS ONE. SUCH RECEI PTS ARE OFTEN TREATED AS INCOME FROM OTHER SOURCES BY THE ASSES SING OFFICERS. 2. THE HON'BLE SUPREME COURT IN ITS JUDGMENT DATED 9.03.2016 IN THE CASE OF MEGHALAYA STEELS LTD. IN CA NO. 7622 OF 2014 [2016] 67 TAXMANN.COM 158(SC) AND OTHER CASES HAS HELD THAT T HE SUBSIDIES OF TRANSPORT POWER AND INTEREST GIVEN BY THE GOVERN MENT TO THE INDUSTRIAL UNDERTAKING ARE RECEIPTS WHICH HAVE BEEN REIMBURSED FOR ELEMENTS OF COST RELATING TO MANUFACTURE/SALE OF TH E PRODUCTS. THUS, THERE IS A DIRECT NEXUS BETWEEN PROFIT AND GAINS OF THE INDUSTRIAL UNDERTAKING/BUSINESS AND REIMBURSEMENT OF SUCH BUSI NESS SUBSIDIES. ACCORDINGLY, SUCH SUBSIDIES ARE PART OF PROFITS AND GAINS OF BUSINESS DERIVED FROM THE INDUSTRIAL UNDERTAKING AND ARE NOT TO BE INCLUDED UNDER THE HEAD INCOME FROM OTHER SOURC ES. THEREFORE, DEDUCTION IS ADMISSIBLE UNDER SECTION 80-IB/80-IC O F THE ACT ON SUCH REVENUE RECEIPTS DERIVED FROM THE INDUSTRIAL U NDERTAKING. ITA NO. 698 (ASR)/2014 ASST. YEAR: 2006-07 5 3. IN VIEW OF THE ABOVE, IT IS A SETTLED POSITION T HAT REVENUE SUBSIDIES RECEIVED FROM THE GOVERNMENT TOWARDS REIM BURSEMENT OF COST OF PRODUCTION/MANUFACTURE OR FOR SALE OF THE M ANUFACTURED GOODS ARE PART OF PROFITS AND GAINS OF BUSINESS DER IVED FROM THE INDUSTRIAL UNDERTAKING/ELIGIBLE BUSINESS, AND ARE T HUS, ADMISSIBLE FOR APPLICABLE DEDUCTION UNDER CHAPTER VI-A OF THE ACT. 4. ACCORDINGLY, HENCEFORTH, APPEALS MAY NOT BE FILE D BY THE DEPARTMENT ON THE ABOVE SETTLED ISSUE, AND THOSE AL READY FILED MAY BE WITHDRAWN/NOT PRESSED UPON. 5. THE ABOVE MAY BE BROUGHT TO THE NOTICE OF ALL CONCE RNED. WE FURTHER FIND THAT MERE REJECTION OF CLAIM DOES N OT AMOUNT TO CONCEALMENT OR FURNISHING OF INACCURATE PARTICUL ARS OF INCOME AS HAS BEEN HELD BY HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. IN THE PRESENT CA SE, THE ASSESSEE DULY DECLARED THE AMOUNT OF SUBSIDY IN RESPECT OF T RANSPORT SUBSIDY AND MISC. INCOME IN THE RETURN OF INCOME AN D THUS THERE WAS NO CONCEALMENT OF INCOME. WE FURTHER FIND THAT HON'BLE ITAT IN THE CASE OF ASSESSEE ITSELF VIDE ORDER DATED 18 TH MARCH, 2014 IN ITA NO. 343/ASR/2013 HAS DECIDED THE ISSUE OF PENAL TY ON TRANSPORT, SUBSIDY ETC. IN FAVOUR OF ASSESSEE. FOR THE SAKE OF COMPLETENESS PARA 11 OF THE ORDER IS REPRODUCED BEL OW. WE ARE OF THE VIEW THAT THE AMOUNT OF EXCISE DUTY REFUND, TRANSPORT SUBSIDY AND INTEREST ON FDRS WERE DULY RE CORDED IN THE BOOKS OF ACCOUNT AND SHOWN IN THE BALANCE SH EET FILED WITH RETURN OF INCOME. THEREFORE THE ASSESSEE HAS N OT CONCEALED ANY PARTICULARS OF INCOME OR FURNISHED IN ACCURATE PARTICULARS OF INCOME. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPT ED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF W OULD NOT ATTRACT THE PENALTY UNDER SECTION 271(1) (C ) OF TH E ACT. ITA NO. 698 (ASR)/2014 ASST. YEAR: 2006-07 6 7. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, AN D IN VIEW OF THE JUDICIAL PRECEDENTS, WE DELETE THE PENALTY SUSTAINE D BY LD. CIT(A). 8. IN NUTSHELL, THE APPEAL FILED BY ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05. 05.2017. SD/- SD/- (N.K. CHOUDHRY) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTA NT MEMBER DATED: 05/05/2017 GP/SR.PS/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: 2. THE 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER