ASST CIT CIR 4(3)(2), MUMBAI V. SVG FASHIONS LTD, MUMBAI

ITA 704/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5390 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 11-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Competent authority; Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI RAM LAL NEGI, JM I.T.A. NO. 704/MUM/2016 ( ASSESSMENT YEAR: 2012 - 13 ) ASST. CIT, CIRCLE - 4(3)(2), ROOM NO. 649, 6 TH FLOOR, AAYAKAR BHAVAN, MUMBAI - 400 002 VS. M/S. SVG FASHIONS LTD. 235, VENKATESHWAR BHAVAN, 3 RD FLOOR, KALBADEVI ROAD, MUMBAI - 400 002 PAN/GIR NO. AAACD 1621 K ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI V. JUSTIN RESPONDENT BY : NONE DATE OF HEARING : 02.05.2018 DATE OF PRONOUNCEMENT : 30.07 .2018 O R D E R PER S HAMIM YAHYA, A. M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 03.11.2015 AND PERTAINS TO THE ASSESSMENT YEAR 2012 - 13. 2. THE GROUNDS OF APPEAL READ AS UN DER: 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE INTEREST SUBSIDY OF RS.1,19,11,327/ - RECEIVED BY THE ASSESSEE UNDER TECHNOLOGY UPGRADATION FUND SCHEME OF THE GOVERNMENT OF INDIA IS CAPITAL REC EIPT AND NOT A REVENUE RECEIPT.' 2. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS.1,22,706/ - MADE BY THE AO U/S 2(24)(X) R.W.S. 36(L)(VA) EVEN THOUGH THE ASSESSEE HAS NOT PAID THE EMPLOYEES' CONTRIBUTION TO THE PROVIDENT FUND WITHIN THE TIME ALLOWED UNDER THE P.F. ACT.' 3. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. NONE APPEARED ON BEHALF OF THE ASSESSEE. HOWEVER , IN OUR CONSIDERED OPINION, THE ISSUE CAN BE ADJUDICATED BY HEARING THE LD. DEPARTMENTAL REPRESENTATIVE AND PERUSING THE RECORDS. 2 ITA NO. 704/MUM/2016 M/S. SVG FASHIONS LTD. APROPOS GROUND NO.1 : 4. IN THIS ISSUE, THE ASSESSING OFFICER HAS HELD THAT THE INTEREST SUBSIDY OF RS.1,19,11,327/ - RECEIVED BY THE ASSESSEE UNDER TECHNOLOGY UPGRADATION FUND SCHEME (TUF SCHEM E) OF THE GOVERNMENT OF INDIA WAS REVENUE RECEIPT AND NOT CAPITAL RECEIPT AS CANVASSED BY THE ASSESSEE. 5. UPON THE ASSESSEES APPEAL, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ELABORATELY DEALT WITH THE ISSUE. HE ALSO REFERRED TO THE OBJECTIVES MENTI ONED IN THE SAID TUF SCHEME. HE ALSO REFERRED TO SEVERAL DECISIONS ON THE SAME SUBJECT AND THEREAFTER DELETED THE ADDITION. THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) READS AS UNDER: I HAVE CONSIDERED THE STAND OF THE AO AS WELL AS SUBMISSI ONS OF THE AO. I HAVE ALSO CONSIDERED TECHNOLOGY UPGRADATION FUND SCHEME OF THE GOVERNMENT (TUFS). IT IS FOUND THAT TUFS SUBSIDY IS TO ENHANCE THE TECHNOLOGY APPARATUS OF THE COMPANIES IN THE TEXTILE INDUSTRY OPERATING IN INDIA. AS THE ASSESSEE HAS MADE CE RTAIN UP - GRADATION TO ITS MACHINERY BY PROCUREMENT OF NEW MACHINERY, THE TUFS SUBSIDY WAS MADE AVAILABLE TO IT BY THE COMPETENT AUTHORITY. THIS FACT IS NOWHERE DISPUTED BY THE ASSESSING OFFICER. I HAVE ALSO GONE THROUGH THE FOLLOWING DECISIONS : - I. D CIT VS. GLOSTER JUTE MILLS LTD. 40 CCH 433 (2014). II. CIT VS. SHAM LAL BANSAL 200 TAXMAN 14 [2011](P&H). III. SAHNEY STEEL & PRESS WORKS LTD. (228 ITR 253) IV. PONNI SUGARS AND CHEMICALS LTD. (306 ITR 392) V. M/S. SHREE BALAJI ALLOYS & ORS. VS. CIT (20 11) 333 ITR 335 (J&K) VI. CIT VS. CHAPHALKAR BROTHERS [2013] 351 ITR 309 (BOMBAY HIGH COURT) VII. CIT VS. RELIANCE INDUSTRIES LTD [2011] 339 ITR 632 (BOMBAY HIGH COURT) AFTER GOING THROUGH THE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, I FIN D THAT THE RATIO OF ISSUE IN THE PRESENT CASE IS SIMILAR TO THAT OF CHAPHALKAR BROTHERS WHEREIN THE HON'BLE JURISDICTIONAL HIGH COURT OF BOMBAY, HAS PRONOUNCED THAT THE SUBSIDY PROVIDED BY THE GOVERNMENT TO THE ASSESSEE WAS IN THE NATURE OF CAPITAL RECEIPT FURTHER, I FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE APPELLANT BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. SHAM LAL BANSAL 200 TAXMAN 14 [2011] AND HON'BLE TRIBUNAL (KOLKATA BENCH) IN DCIT VS. 3 ITA NO. 704/MUM/2016 M/S. SVG FASHIONS LTD. GLOSTER JUTE MILLS LTD. 40 CCH 433 (2 014) WHEREIN IDENTICAL QUESTIONS OF FACTS AND LAW AROSE. THE APPELLANT HAS ALSO FILED A COPY OF APPELLATE ORDERS OF MY CO - ORDINATED CIT(A) - 16, MUMBAI IN THE CASE OF M/S DICITEX FURNISHING LTD. FOR A.Y. 2012 - 13 IN APPEAL NO. CIT(A) - :S/ ACIT(OSD) - 8(1)/IT - 220 /2014 - 15 DATED 23.4.2015 AND APPEAL NO.CIT(A) - 16/ACIT(OSD) - $(1)/IT - 221/2014 - 15 DATED 23.4.2015 WHEREIN SIMILAR FACTS AROSE AND THE ISSUE WAS DECIDED IN FA VO U R OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE RULING OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. SHAM LAL BANSAL (SUPRA) AND OTHER JUDICIAL PRONOUNCEMENTS REFERRED ABOVE, IT IS HELD THAT THE TUFS SUBSIDY RECEIVED BY THE APPELLANT IS CAPITAL IN NATURE. ACCORDINGLY, THE ADDITION MADE BY THE AO AMOUNTING TO RS.1,19,11,327/ - , WHICH WAS ADDED BY TH E AO AS REVENUE RECEIPT, IS DELETED SINCE THE SAME HAS BEEN HELD AS CAPITAL IN NATURE . 6. UPON HEARING THE LD. DEPARTMENTAL REPRESENTATIVE AND PERUSING THE RECORDS, WE FIND THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS)S OBSERVATION IS CORRECT THAT TH E TUFS SUBSIDY IS TO ENHANCE THE TECHNOLOGY APPARATUS OF THE COMPANIES IN THE TEXTILE INDUSTRY OPERATING IN INDIA. AS RIGHTLY HELD BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS), IDENTICAL ISSUES HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE HONBLE PUNJAB AND HARYANA HIGH COURT. ACCORDINGLY, RESPECTFULLY FOLLOWING THE PRECEDENT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). ACCORDINGLY, WE UPHOLD THE SAME. APROPOS GROUND NO. 2 : 7. ON THIS ISSUE, THE ASS ESSING OFFICER HAS MADE DISALLOWANCE , AS HE NOTED THAT THE EMPLOYEES CONTRIBUTION TO PROVIDENT FUND WAS PAID AFTER THE PERIOD AS SPECIFIED UNDER THE PROVISIONS OF THE PROVIDENT FUND ACT . 8. UPON THE ASSESSEES APPEAL, THE LD. COMMISSIONER OF INCOME TAX ( APPEALS) NOTED THAT THE EMPLOYEES CONTRIBUTION TO THE PROVIDENT FUND THOUGH PAID AFTER THE DUE DATE AS SPECIFIED IN P.F. ACT BUT WAS PAID BEFORE THE DUE DATE, I.E., THE DUE DATE PRESCRIBED UNDER 4 ITA NO. 704/MUM/2016 M/S. SVG FASHIONS LTD. SECTION 139(1) OF THE INCOME TAX ACT, 1961. IN THIS REGARD, H E REFERRED TO THE DECISION OF THE HONBLE KARANATAKA HIGH COURT IN THE CASE OF ESSAE TERAOKA (P.) LTD. VS. DCIT [2014] 266 CTR 246. ACCORDINGLY , THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 9. UPON HEARING BOT H THE COUNSEL AND PERUSING THE RECORDS, WE FIND THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. NO CONTRARY DECISION FROM THE HON'BLE JURISDICTIONAL HIGH COURT WAS BROUGHT TO OUR NOTICE. ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEALS). 10. IN THE RESULT, TH IS APPEAL BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.07.2018 SD/ - SD/ - ( RAM LAL NEGI ) (S HAMIM YAHYA) J UDICIAL MEMBER A CCOUNTANT MEMBER MUMBAI ; DATED : 30.07.2018 ROSHANI , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD F ILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI