SHERA ENERGY PRIVATE LIMITED, JAIPUR V. PR. COMMISSIONER OF INCOME TAX-II, JAIPUR

ITA 729/JPR/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2087 (ITAT-JAIPUR)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 21-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BK GUPTA
• Keywords: Depreciation; Principle of natural justice; Capital receipt; Reassessment proceedings; Set aside
• Section: 143(3); 142(1); 201; 13; 263; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HES B JAIPUR BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKR AM SINGH YADAV, AM ITA NO. 729/JP/2019 ASSESSMENT YEAR : 2014-15 M/S SHERA ENERGY PVT. LIMITED F-269-B, ROAD NO. 13, V.K.I. AREA, JAIPUR VS. PR. CIT-II, JAIPUR PAN/GIR NO.: AANCS6187Q APPELLANT RESPONDENT ASSESSEE BY : SH. P C PARWAL (CA) REVENUE BY : SH. B K GUPTA (CIT DR) DATE OF HEARING : 16/01/2020 DATE OF PRONOUNCEMENT: 15/04/2020 ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. PR. CIT- 2, JAIPUR DATED 29.03.2019 WHEREIN THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED PR. COMMISSIONER OF INCOME TAX II, JAIPUR ERRED IN INVOKING THE PROVISION OF SECTION 263 OF THE INCOME TAX ACT WITHOUT APPRECIATING THE FACT THAT THE ASSESSMENT AND ENQUIRY REGARDING THE INVESTMENT AND EMPLOYMENT SUBSIDY RECEIVED BY THE ASSESSEE. 2. THE LEARNED PR. COMMISSIONER OF INCOME TAX II, JAIPUR ALSO ERRED IN THE APPLYING THE PROVISIONS OF EXPLANATIO N 10 TO SECTION 43(1) OF INCOME TAX ACT FOR THE SUBSIDY WHICH WAS NOT AT ALL MEANT FOR PURCHASING DEPRECIABLE BUSINESS ASSETS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED PR. COMMISSIONER OF INCOME TAX-II, JAIPUR WAS NOT J USTIFIED IN SETTING ASIDE THE ORDER OF THE ASSESSING OFFICER. ITA NO. 729/JP/2019 SHERA ENERGY PRIVATE LTD., VS. PR. CIT-II, JAIPUR 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF WINDING WIRES, COPPER & ALUMINIUM PRODUCTS, TRANSFORMERS AND PARTS THEREOF. THE ASSESSMENT WAS COMPLETED U/S 143(3) VIDE ORDER DATED 16.12.2016 AT ASSESSED INCOME OF RS. 4,69,05,210/-. SUBSEQUENTLY, ON PERUSAL OF THE RECORDS, THE LD. PR. CIT NOTED THAT THE CASE OF THE ASSESSEE WAS SELECTED FO R COMPLETE SCRUTINY FOR VARIOUS REASONS INCLUDING LARGE AMOUNT NOT CREDITE D TO P & L A/C AS PER SCHEDULE A-01. IT WAS FURTHER OBSERVED BY THE LD. PR. CIT THAT DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER CON SIDERATION, AN AMOUNT OF RS. 66,86,280/-WAS RECEIVED BY THE ASSESSEE UNDER T HE SCHEME OF RAJASTHAN INVESTMENT PROMOTION SCHEME, 2010 AS INVESTMENT AND EMPLOYMENT SUBSIDY AND THE SAID AMOUNT WAS CREDITED IN CAPITAL RESERVE ACCOUNT INSTEAD OF BEING CREDITED IN THE PROFIT/LOSS ACCOUNT. IT WA S FURTHER OBSERVED BY THE LD. PR. CIT THAT WHERE THE SUBSIDY IS IN NATURE OF A CA PITAL RECEIPT, AS PER THE LAW, THE SUBSIDY HAS TO BE CONSIDERED UNDER EXPLANA TION-10 TO SECTION 43(1) OF THE ACT. IT WAS FURTHER OBSERVED BY LD. PR. CIT THAT THE ASSESSING OFFICER DID NOT EXAMINE THIS ISSUE AND HAS FAILED TO APPLY THE LAW ON THIS ISSUE. NO ENQUIRIES WERE MADE TO SEE HOW THE SUBSIDY WAS UTIL IZED OR WHAT TAX TREATMENT IS REQUIRED TO BE GIVEN TO THE SUBSIDY GR ANTED BY THE STATE GOVERNMENT TO THE ASSESSEE. ACCORDINGLY, A SHOW CAU SE NOTICE U/S 263 WAS ISSUED TO THE ASSESSEE VIDE LETTER DATED 24.01.2019 . IN RESPONSE, THE ASSESSEE FILED ITS SUBMISSION AND THE SUBMISSIONS S O FILED BY THE ASSESSEE WERE CONSIDERED BUT NOT FOUND ACCEPTABLE TO THE LD. PR. CIT AND THEREAFTER, SHE HAS RECORDED HER FINDING SETTING ASIDE THE MATT ER TO THE AO FOR DENOVO EXAMINATION OF THIS PARTICULAR ISSUE RELATING TO RE CEIPT OF THE SUBSIDY FROM THE STATE GOVERNMENT AND THE RELEVANT FINDINGS OF THE L D. PR. CIT READS AS UNDER:- ITA NO. 729/JP/2019 SHERA ENERGY PRIVATE LTD., VS. PR. CIT-II, JAIPUR 3 6. FROM THE ABOVE FACTS AND CIRCUMSTANCES OF THE C ASE AND HAVING REGARD TO THE MATERIAL AVAILABLE ON RECORD, THE ASS ESSING OFFICER FAILED TO CONSIDER/APPLY HIS MIND TO THE INFORMATION AVAIL ABLE ON RECORD WITH REGARD TO THE SUBSIDY CREDITED TO THE CAPITAL RESER VE A/C. THUS, THE ORDER PASSED ON 16.12.2016 IS WITHOUT MAKING NECESS ARY VERIFICATION AS WAS REQUIRED UNDER EXPLANATION 10 TO SECTION 43( 1) AND WITHOUT EXAMINATION OF THE NATURE AND USE OF SUBSIDY AND AS SUCH THE ASSESSMENT WAS MADE WITHOUT APPLICATION OF MIND ON THE GIVEN FACTS ON RECORD. THIS IN TURN HAS RESULTED IN PASSING OF AN ERRONEOUS ORDER BY THE ASSESSING OFFICER IN THE CASE DUE TO NON APP LICATION OF MIND TO RELEVANT MATERIAL, AN INCORRECT ASSUMPTION OF FACTS AND AN INCORRECT APPLICATION OF MIND TO LAW WHICH IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THUS, THE ORDER PASSED U/S 143(3) ON 16.12 .2016 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE IN TERMS OF JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE O F MALABAR INDUSTRIAL LIMITED VS CIT 243 ITR WHEREIN IT HAS HE LD AS UNDER:- AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT A PPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYI NG THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATIO N OF MIND. 7. ACCORDINGLY, BY THE VIRTUE OF POWERS CONFERRED O N THE UNDERSIGNED UNDER THE PROVISIONS OF SECTION 263 OF THE INCOME TAX ACT 1961. I HOLD THAT THE ORDER UNDER SECTION 143(3) OF THE IT ACT DATED 16.12.2016 FOR A.Y 2014-15 PASSED BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT PREJUDICIAL TO THE INTERE ST OF REVENUE AS THE SAID ORDER HAS BEEN PASSED BY THE ASSESSING OFFICER IN A ROUTINE AND PERFUNCTORY MANNER WITHOUT VERIFICATION OF THE NATU RE AND USE OF THE SUBSIDY RECEIVED FROM RAJASTHAN GOVERNMENT AND WITH OUT EXAMINING, THE APPLICATION OF EXPLANATION 10 TO SECTION 43(1) IN THE CASE OF THE ITA NO. 729/JP/2019 SHERA ENERGY PRIVATE LTD., VS. PR. CIT-II, JAIPUR 4 ASSESSEE. THE ORDER OF THE ASSESSING OFFICER IS THE REFORE LIABLE TO REVISION UNDER CLAUSE (B) AND CLAUSE (A) OF SECTION 263 OF THE INCOME TAX ACT. HENCE, THE ASSESSMENT ORDER IS SET ASIDE O N THE ISSUE OF SUBSIDY RECEIVED FROM THE STATE GOVERNMENT AND AS P ER LAW TO BE REDONE AFRESH DO NOVO IN THE LIGHT OF THE OBSERVATI ON MADE IN THIS ORDER AND WITH DIRECTION TO THE ASSESSING OFFICER T O VERIFY AND EXAMINE THE CLAIM MADE BY THE ASSESSEE REGARDING THE RECEIP T OF THE SUBSIDY FROM THE STATE GOVERNMENT AND ITS USE AND FINALIZED THE ASSESSMENT IN ACCORDANCE WITH THE PREVAILING LAW TO QUANTIFY THE CORRECT INCOME OF THE ASSESSEE LIABLE TO TAX FOR AY 2014-15 AFTER ACC ORDING OPPORTUNITY TO THE ASSESSEE. THE ORDER OF THE AO IS, ACCORDINGLY, SET ASIDE ON THE ISSUES AS DISCUSSED ABOVE. 3. AGAINST THE AFORESAID FINDINGS OF LD PR. CIT, TH E ASSESSEE IS IN APPEAL BEFORE US. 4. DURING THE COURSE OF HEARING, THE LD. AR TAKEN U S THROUGH THE RAJASTHAN INVESTMENT PROMOTION SCHEME 2010 WHICH IS TO PROMOTE INVESTMENT IN THE STATE OF RAJASTHAN AND TO FURTHER GENERATE EMPLOYMENT OPPORTUNITIES THROUGH SUCH INVESTMENT. IT WAS SUBMI TTED BY THE LD AR THAT THE OBJECT OF THE SCHEME IS TO PROMOTE INVESTMENT A ND GENERATE EMPLOYMENT AND IS NOT INVESTMENT SPECIFIC. IT WAS F URTHER SUBMITTED THAT THE INVESTMENT SUBSIDY SHALL BE ALLOWED TO ALL ELIGIBLE ENTERPRISES TO THE EXTENT OF 30% OF TAXES WHICH HAVE BECOME DUE AND HAVE BEEN DE POSITED BY THE ENTERPRISES AND THE EMPLOYMENT GENERATION SUBSIDY S HALL BE ALLOWED TO THE EXTENT OF 20% OF TAXES WHICH HAVE BECOME DUE AND HA VE BEEN DEPOSITED BY THE ENTERPRISES. FURTHER, OUR REFERENCE WAS DRAWN T O THE ENTITLEMENT CERTIFICATE FOR SUBSIDY ISSUED BY THE DISTRICT LEVE L SCREENING COMMITTEE DATED ITA NO. 729/JP/2019 SHERA ENERGY PRIVATE LTD., VS. PR. CIT-II, JAIPUR 5 30.03.2011 WHEREIN IT HAS BEEN PROVIDED THAT THE AS SESSEE COMPANY SHALL BE ENTITLED FOR 30% INVESTMENT SUBSIDY AND 20% EMPLOYM ENT SUBSIDY FOR PERIOD OF 7 YEARS FROM THE DATE OF ISSUANCE OF THE CERTIFI CATE. IT WAS FURTHER SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROC EEDINGS FOR A.Y 2012- 13, THE MATTER WAS DULY EXAMINED BY THE AO AND SPEC IFIC QUERY WAS RAISED TO THE ASSESSEE VIDE ORDER SHEET ENTRY DATED 01.01. 2015 TO SHOW CAUSE WHY THE EXPENSES DEBITED SHOULD NOT BE REDUCED BY THE S UBSIDY RECEIPT OF RS. 79,94,970/-. FURTHER, THE ASSESSEE COMPANY HAD REC EIVED CLCSS SUBSIDY OF RS. 15 LAKH IN RESPECT OF WHICH THE ASSESSEE WAS AL SO SHOW CAUSED AS TO WHY THE SAID AMOUNT SHOULD NOT BE REDUCED FROM THE RESP ECTIVE EXPENSES DEBITED IN THE P & L A/C. IN RESPONSE, THE ASSESSEE REFERRE D TO THE RIPS, 2010 AND SUBMITTED THAT THE PURPOSE AND OBJECTIVE OF THE SCH EME IS FOR ENCOURAGEMENT OF INVESTMENT AND EMPLOYMENT GENERATI ON IN THE STATE OF RAJASTHAN AND THEREFORE, IT IS A CAPITAL RECEIPT. F URTHER IN RESPECT OF CLCSS SUBSIDY, IT WAS SUBMITTED THAT IT IS AGAIN A CAPITA L RECEIPT AS IT IS RECEIVED AGAINST THE SPECIFIC PLANT AND MACHINERY AS NOTIFIE D BY THE GOVERNMENT. FURTHER, RELIANCE WAS PLACED ON THE HONBLE RAJASTH AN HIGH COURT DECISION IN CASE OF SHREE CEMENT LTD. VS. INCOME TAX OFFICER DA TED 09.09.2011. IT WAS FURTHER SUBMITTED BY THE LD. AR THAT TAKING INTO CO NSIDERATION THE SUBMISSION OF THE ASSESSEE, THE INVESTMENT AND THE EMPLOYMENT SUBSIDY WAS NOT BROUGHT TO TAX BY THE AO. HOWEVER, AS REGARD CLCSS SUBSIDY, THE SAME WAS REDUCED FROM THE COST OF PLANT AND MACHINERY AND ON REDUCED COST, DEPRECIATION WAS ALLOWED. IT WAS FURTHER SUBMITTED BY THE LD. AR THAT SIMILARLY FOR A.Y 2013-14, NO ADDITION WAS MADE BY THE AO TOWARDS SUCH SUBSIDY RECEIVED UNDER RIPS 2010 WHICH WAS RECEIVED BY THE ASSESSEE AMOUNTING TO RS. 6,03,521/-. FURTHER, IT WAS SUBMIT TED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS RECEIVED SUBS IDY AMOUNTING TO RS. 66,86,280/- AND DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, IT WAS SUBMITTED BEFORE THE AO VIDE SUBMISSION DATED 22.11 .2016 THAT IT WAS ITA NO. 729/JP/2019 SHERA ENERGY PRIVATE LTD., VS. PR. CIT-II, JAIPUR 6 CAPITAL SUBSIDY WHICH WAS RECEIVED BY THE ASSESSEE UNDER THE RAJASTHAN INVESTMENT PROMOTION SCHEME, 2010 AND WHICH WAS CRE DITED IN THE CAPITAL RESERVE ACCOUNT AND NOT CREDITED IN THE PROFIT/LOSS ACCOUNT AND FURTHER RELIANCE WAS PLACED ON THE DECISION OF HONBLE RAJA STHAN HIGH COURT IN CASE OF SHREE CEMENT LIMITED (SUPRA). IT WAS SUBMITTED THAT BASIS THE SUBMISSION OF THE ASSESSEE AND POSITION WHICH HAS BEEN ACCEPTE D IN THE PREVIOUS ASSESSMENT YEARS, AND TAKING INTO CONSIDERATION THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT, THE ASSESSING OFFICER EXAMINE D THE MATTER AND DIDNT MAKE ANY ADDITION/ADJUSTMENT IN THE HANDS OF THE AS SESSEE. IT WAS ACCORDINGLY SUBMITTED BY THE LD AR THAT THE MATTER WAS DULY EXAMINED BY THE AO IN THE PREVIOUS ASSESSMENT YEARS AS WELL AS IN T HE YEAR UNDER CONSIDERATION AND GIVEN THAT THERE WAS NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE WHERE THE AO HAS FOLLOWED THE VIEW TAKEN AND ACCEPTED IN THE EARLIER ASSESSMENT YEARS, THE ORDER SO PASSED BY THE AO CANNOT BE HELD TO BE ERRONEOUS SO FAR AS PREJUDICIA L TO THE INTEREST OF THE REVENUE. FURTHER, RELIANCE WAS PLACED ON THE DECISI ON OF HONBLE SUPREME COURT IN CASE OF CIT VS. G. M. MITTAL STAINLESS STE EL (P) LTD. REPORTED IN (2003) 263 ITR 255 (SC) AND CIT VS. SH. MANJUNATHES WARE PACKING PRODUCTS & CAMPHOR WORKS REPORTED IN (1998) 231 ITR 53 (SC). 5. PER CONTRA, THE LD. CIT DR SUBMITTED THAT IT IS A CLEAR CASE OF LACK OF ENQUIRY ON THE PART OF THE AO. IT WAS SUBMITTED THA T THE CASE WAS SELECTED FOR COMPLETE SCRUTINY AND ESPECIALLY ONE OF THE REA SONS FOR WHICH THE MATTER WAS SELECTED FOR SCRUTINY WAS HUGE AMOUNT NOT CREDI TED IN THE P & L A/C WHICH IS NOTHING BUT AMOUNT OF SUBSIDY CREDITED IN THE CAPITAL RESERVE ACCOUNT. IT WAS SUBMITTED THAT WHERE THE MATTER WAS NOT EXAMINED BY THE AO WHERE THE VERY REASON FOR SELECTING THE CASE WAS EXAMINATION OF SUCH MATTER, THE LD. PR. CIT WAS WELL WITHIN HER JURISDI CTION TO SET ASIDE THE ASSESSMENT ORDER BY EXERCISING HER POWERS U/S 263 O F THE ACT. REFERRING TO ITA NO. 729/JP/2019 SHERA ENERGY PRIVATE LTD., VS. PR. CIT-II, JAIPUR 7 THE CONTENTION OF THE LD. AR, THE MATTER WAS EXAMIN ED IN THE EARLIER ASSESSMENT YEAR, DRAWING OUR REFERENCE TO THE ASSES SEES PAPER BOOK WHEREIN THE DETAIL OF THE SUBSIDY HAS BEEN GIVEN IN THE CONTEXT OF F.Y 2011- 12, IT WAS SUBMITTED THAT IN THAT YEAR, THOUGH THE ASSESSEE HAS CREDITED THE CAPITAL RESERVE ACCOUNT BY AMOUNT OF THE INVESTMENT AND EMPLOYMENT SUBSIDY AMOUNTING TO RS. 79,94,970/-, HOWEVER, THE SAID SUBSIDY WAS ACTUALLY RECEIVED IN F.Y 2013-14 AND NOT IN F.Y 201 1-12, THE AO MAY NOT HAVE EXAMINED THIS ISSUE AT FIRST PLACE. HOWEVER, A S FAR AS THE OF CLCSS SUBSIDY OF RS. 15 LACS WAS CONCERNED, THE SAID AMOU NT WAS RECEIVED DURING THE F.Y 2011-12 AND THE AO HAS REDUCED THE COST OF THE PLANT AND MACHINERY AND HAS DISALLOWED THE EXCESS DEPRECIATION WHILE PA SSING THE ORDER U/S 143(3) DATED 20.02.2015. IT WAS FURTHER SUBMITTED T HAT GIVEN THAT IN THE SUBSEQUENT ASSESSMENT YEAR, THERE IS NO FINDING REC ORDED BY THE AO WHILE PASSING THE ASSESSMENT ORDER DATED 12.02.2016 FOR A .Y 2013-14, THERE IS NO BASIS IN THE CONTENTION SO ADVANCED BY THE LD. AR T HAT THE MATTER WAS EXAMINED EARLIER BY THE AO. THE LD CIT DR FURTHER SUBMITTED THAT EACH YEAR HAS TO BE EXAMINED INDEPENDENTLY AND PRINCIPLE OF R ES JUDICATA DOES NOT APPLY AS FAR AS INCOME TAX PROCEEDINGS ARE CONCERN ED. FURTHER, THE RELIANCE WAS PLACED ON THE CO-ORDINATE BENCH DECISION IN CAS E OF AASHIYANA JAIPUR DEVELOPERS (P) LTD VS. PR. CIT-III, JAIPUR IN ITA N O. 713/JP/2019 DATED 25.11.2019, SH. HARI RAM YADAV VS. PR. CIT, ALWAR I N ITA NO. 215/JP/2018 DATED 31.12.2018 AND DECISION OF HONBLE SUPREME CO URT IN CASE OF DENIAL MERCHANTS P. LTD. VS. ITO DATED 29.11.2017 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE COMP ANY HAS BEEN HELD ENTITLED TO THE SUBSIDY UNDER RAJASTHAN INVESTMENT PROMOTION SCHEME, 2010 (RIPS 2010) BY THE DISTRICT LEVEL SCREENING COMMITT EE. AS PER THE ENTITLEMENT CERTIFICATE DATED 30.03.2011 ISSUED BY THE DISTRICT LEVEL ITA NO. 729/JP/2019 SHERA ENERGY PRIVATE LTD., VS. PR. CIT-II, JAIPUR 8 SCREENING COMMITTEE, THE ASSESSEE COMPANY SHALL BE ENTITLED FOR 30% INVESTMENT SUBSIDY AND 20% EMPLOYMENT SUBSIDY FOR P ERIOD OF 7 YEARS FROM THE DATE OF ISSUANCE OF THE CERTIFICATE. BESIDES, T HE ASSESSEE COMPANY IS ALSO HELD ENTITLED TO RECEIVE CLCSS SUBSIDY OF RS 15,00, 000/-. FOR THE FIRST TIME, THE ASSESSEE COMPANY RECEIVED SUBSIDY OF RS 79,94,9 70/- UNDER RIPS 2010 AND RS 15,00,000 UNDER CLCSS DURING THE FINANCIAL Y EAR RELEVANT TO ASSESSMENT YEAR 2012-13 WHICH WAS NOTICED BY THE AS SESSING OFFICER (ACIT CIRCLE 4, JAIPUR), AS REFLECTED IN THE ASSESSEES F INANCIAL STATEMENT AND A SPECIFIC SHOW-CAUSE VIDE ORDER SHEET ENTRY DATED 1. 01.2015 WAS ISSUED TO THE ASSESSEE COMPANY. THE ASSESSEE COMPANY REPLIED TO THE SAID SHOW- CAUSE AND SUBMITTED THAT IT HAS RECEIVED THE SUBSID Y UNDER THE RIPS, 2010 AND REFERRING TO THE OBJECTS OF THE SCHEME, IT WAS SUBMITTED THAT THE PURPOSE AND OBJECTIVE OF THE SCHEME IS FOR ENCOURAGEMENT OF INVESTMENT AND EMPLOYMENT GENERATION IN THE STATE OF RAJASTHAN AND THEREFORE, IT IS A CAPITAL RECEIPT AND SPEECH OF THE HONBLE CHIEF MINISTER OF RAJASTHAN WAS ALSO QUOTED IN SUPPORT. FURTHER, IT WAS SUBMITTED THAT SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE RAJASTHAN HIGH COURT IN CASE O F SHREE CEMENT LTD (SUPRA). SIMILAR CONTENTION WAS RAISED IN RESPECT OF CLCSS SUBSIDY. IN THE ASSESSMENT ORDER SO PASSED BY THE ACIT, CIRCLE 4, J AIPUR U/S 143(3) DATED 20.02.2015, WE FIND THAT THE INVESTMENT AND THE EMP LOYMENT SUBSIDY WAS NOT BROUGHT TO TAX BY THE AO AND THEREBY TREATED AS CAPITAL SUBSIDY NOT EXIGIBLE TO TAX. HOWEVER, AS REGARD CLCSS SUBSIDY, IT WAS HELD THAT THE SAME WAS RECEIVED AGAINST SPECIFIC PLANT AND MACHINERY A ND WAS REDUCED FROM THE COST OF PLANT AND MACHINERY AND ON REDUCED COST, DE PRECIATION WAS ALLOWED. WE THEREFORE FIND THAT ON EXAMINATION OF ASSESSEE C OMPANYS FINANCIAL STATEMENTS WHERE THE TRANSACTION OF SUBSIDY BEING R ECEIVED BY THE ASSESSEE COMPANY WAS NOTICED BY THE ASSESSING OFFICER, A SPE CIFIC SHOW-CAUSE NOTICE WAS THEREAFTER ISSUED BY HIM AND SUBMISSION SO FILE D BY THE ASSESSEE COMPANY WAS CONSIDERED AND THE SAME WERE ACCEPTED T O THE EXTENT OF ITA NO. 729/JP/2019 SHERA ENERGY PRIVATE LTD., VS. PR. CIT-II, JAIPUR 9 SUBSIDY RECEIVED BY THE ASSESSEE UNDER RIPS 2010 AN D NOT ACCEPTED TO THE EXTENT OF CLCSS SUBSIDY, THE MATTER RELATING TO SUB SIDY WAS CLEARLY EXAMINED BY THE ASSESSING OFFICER AND A VIEW HAS BEEN FORMED NOT TO BRING THE SUBSIDY UNDER RIPS 2010 TO TAX. THE FACT THAT THE ASSESSME NT ORDER WAS SILENT OR CARRIES NO DISCUSSION IN THIS REGARD IS THEREFORE N OT REFLECTIVE OF THE FACT THAT THE MATTER WAS NOT EXAMINED BY THE ASSESSING OFFICE R. IN SUBSEQUENT ASSESSMENT YEAR 2013-14, THE ASSESSEE COMPANY AGAIN RECEIVED SUBSIDY OF RS. 6,03,521/- UNDER RIPS 2010 AND THE ASSESSMENT O RDER WAS PASSED U/S 143(3) DATED 19.02.2016 BY THE SAME ASSESSING OFFIC ER (ACIT CIRCLE 4, JAIPUR) WHEREIN THE SAME WAS NOT BROUGHT TO TAX. I N THE IMPUGNED ASSESSMENT YEAR 2014-15, THE ASSESSEE COMPANY HAS F URTHER RECEIVED SUBSIDY OF RS 66,86,280/- UNDER RIPS 2010 AND THE C ASE WAS SELECTED FOR SCRUTINY AND ONE OF THE REASONS FOR SELECTION WAS T HE AMOUNT OF SUBSIDY NOT CREDITED TO THE PROFIT/LOSS ACCOUNT. NOTICE U/S 14 3(2) WAS ISSUED ON 28.08.2015 AND THEREAFTER, NOTICE U/S 142(1) ALONG WITH QUESTIONNAIRE WAS ISSUED ON 5.7.2016 AND IN RESPONSE THEREOF, THE ASS ESSEE FILED WRITTEN SUBMISSION AND BOOKS OF ACCOUNTS WERE PRODUCED WHIC H WERE EXAMINED BY THE AO ON TEST CHECK BASIS AND MATTER WAS DISCUSSED WITH THE AR OF THE ASSESSEE AND THE ASSESSMENT WAS COMPLETED U/S 143(3 ) VIDE ORDER DATED 16.12.2016 WHEREIN NO ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER (ACIT CIRCLE 4, JAIPUR). AT THE SAME TIME, WE FIND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE MATTER RELATING TO SUBS IDY WAS TAKEN UP FOR CONSIDERATION BY THE ASSESSING OFFICER AND THE ASSE SSEE WAS ASKED TO FILE ITS SUBMISSIONS/EXPLANATION WHICH WAS RESPONDED BY THE LATTER VIDE ITS SUBMISSION DATED 23.11.2016 WHEREIN THE ASSESSEE HA S STATED THAT IT WAS IN THE NATURE OF CAPITAL SUBSIDY CREDITED IN CAPITAL R ESERVE ACCOUNT AND IN SUPPORT OF ITS POSITION, IT HAS AGAIN RELIED ON THE DECISION OF HONBLE RAJASTHAN HIGH IN CASE OF SHREE CEMENT LTD (SUPRA). ITA NO. 729/JP/2019 SHERA ENERGY PRIVATE LTD., VS. PR. CIT-II, JAIPUR 10 7. IN LIGHT OF AFORESAID FACTUAL MATRIX OF THE CASE , WE FIND THAT WHERE THE MATTER RELATING TO TREATMENT OF SUBSIDY UNDER RIPS 2010 IS ARISING YEAR AFTER YEAR RIGHT FROM ASSESSMENT YEAR 2012-13 AND IN THE SAID YEAR, THE MATTER HAS BEEN DULY EXAMINED BY THE ASSESSING OFFICER AND SAID SUBSIDY HAS BEEN TREATED AND ACCEPTED AS CAPITAL SUBSIDY AND NOT BRO UGHT TO TAX AND FOLLOWING THE SAME POSITION AS ADOPTED BY HIS PREDECESSOR HOL DING THE SAME CHARGE AS THAT OF ACIT, CIRCLE 4, JAIPUR, SUBSEQUENTLY FOLLOW ED IN AY 2013-14 BY ANOTHER PREDECESSOR HOLDING THE SAME CHARGE, WHERE THE ASSESSING OFFICER EXAMINED THE MATTER FOR THE IMPUGNED ASSESSMENT YEA R A.Y 2014-15 AND MAINTAINED THE PAST CONSISTENT POSITION SO ACCEPTED BY THE REVENUE, THE ORDER SO PASSED BY THE ASSESSING OFFICER CANNOT BE HELD AS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REV ENUE. THOUGH THE PRINCIPLES OF RES JUDICATA DOESNT APPLY IN THE INCOME TAX PRO CEEDINGS, HOWEVER, IT HAS ALSO BEEN LAID DOWN BY THE COURTS THAT UNLESS THERE ARE CHANGES IN THE FACTS AND CIRCUMSTANCES OF THE CASE, PAST CONSISTENT POSI TION SO ADOPTED SHOULD NOT BE DISTURBED. IN THE INSTANT CASE, WE FIND THA T UNDER THE SAME INVESTMENT PROMOTION SCHEME OF 2010 OF THE RAJASTHA N GOVERNMENT, THE ASSESSEE HAS RECEIVED THE SUBSIDY RIGHT FROM A.Y 20 12-13 ONWARDS AND SIMILAR TREATMENT HAS BEEN DONE BY THE ASSESSEE IN ITS FINANCIAL STATEMENTS WHERE THE AMOUNT OF SUBSIDY HAS BEEN CREDITED IN TH E CAPITAL RESERVE ACCOUNT AND SIMILAR TREATMENT HAS BEEN DONE WHILE F ILING ITS TAX RETURN WHICH SUBSIDY HAS NOT BEEN OFFERED TO TAX. THEREFORE, WE FIND THAT THE FACTS AND CIRCUMSTANCES OF THE CASE ARE EXACTLY IDENTICAL AS IN THE PAST YEARS AND WHERE THE ASSESSING OFFICER HAS FOLLOWED THE CONSIS TENT POSITION, THE ORDER SO PASSED BY HIM CANNOT BE HELD AS ERRONEOUS. 8. FURTHER, WE NOTE THAT IN THE PAST AS WELL AS CUR RENT YEAR, THE ASSESSING OFFICER HAS FOLLOWED THE DECISION OF THE HONBLE RA JASTHAN HIGH COURT IN CASE OF SHREE CEMENTS LTD (SUPRA) AND THERE IS NOTHING O N RECORD THAT SUCH ITA NO. 729/JP/2019 SHERA ENERGY PRIVATE LTD., VS. PR. CIT-II, JAIPUR 11 DECISION HAS BEEN OVERRULED BY THE HONBLE SUPREME COURT AT THE RELEVANT POINT IN TIME. THEREFORE, IN SUCH CIRCUMSTANCES, W HERE THE ASSESSING OFFICER HAS FOLLOWED THE DECISION OF THE HONBLE JURISDICTI ONAL HIGH COURT, THE ORDER SO PASSED BY HIM CANNOT BE HELD AS ERRONEOUS. THE LD PR. CIT HAS NOT POINTED OUT AS TO HOW THE SAID DECISION IS NOT APPL ICABLE OR THE SAME HAS BEEN WRONGLY FOLLOWED BY THE ASSESSING OFFICER. IN THIS REGARD, REFERENCE CAN BE DRAWN TO THE DECISION OF THE HONBLE SUPREME COU RT IN CASE OF CIT VS G.M MITTAL STAINLESS STEEL (P) LTD (SUPRA) WHEREIN IT W AS HELD AS UNDER: 5. IN THIS PARTICULAR CASE, THE CIT HAS NOT RECORD ED ANY REASON WHATSOEVER FOR COMING TO THE CONCLUSION THAT THE AS SESSING OFFICER WAS ERRONEOUS IN DECIDING THAT THE POWER SUBSIDY WA S CAPITAL RECEIPT. GIVEN THE FACT THAT THE DECISION OF THE JURISDICTIO NAL HIGH COURT WAS OPERATIVE AT THE MATERIAL TIME, THE ASSESSING OFFIC ER COULD NOT BE SAID TO HAVE ERRED IN LAW. THE FACT THAT THIS COURT HAD SUBSEQUENTLY REVERSED THE DECISION OF THE HIGH COURT WOULD NOT J USTIFY THE CIT IN TREATING THE ASSESSING OFFICER'S DECISION AS ERRONE OUS. THE POWER OF THE CIT UNDER SECTION 263 OF THE ACT MUST BE EXERCI SED ON THE BASIS OF THE MATERIAL THAT WAS AVAILABLE TO HIM WHEN HE EXER CISED THE POWER. AT THAT TIME, THERE WAS NO DISPUTE THAT THE ISSUE W HETHER THE POWER SUBSIDY SHOULD BE TREATED AS CAPITAL RECEIPT HAD BE EN CONCLUDED AGAINST THE REVENUE. THE SATISFACTION OF THE CIT, T HEREFORE, WAS BASED ON NO MATERIAL EITHER LEGAL OR FACTUAL WHICH WOULD HAVE GIVEN HIM THE JURISDICTION TO TAKE ACTION UNDER SECTION 263 OF TH E ACT. 6. THE DECISIONS OF THE HIGH COURTS RELIED UPON BY LE ARNED COUNSEL APPEARING FOR THE APPELLANT DO NOT, IN OUR VIEW, AS SIST THE REVENUE. THE MADRAS HIGH COURT IN SESHASAYEE PAPER BOARDS LT D.'S CASE (SUPRA) CONSIDERED A SITUATION WHERE THE ASSESSING OFFICER HAD RELIED UPON A PARTICULAR DECISION IN FRAMING THE ASSESSMENT ORDER . THE DECISION RELIED UPON WAS ITSELF THE SUBJECT-MATTER OF AN APPEAL BEF ORE THE SUPREME ITA NO. 729/JP/2019 SHERA ENERGY PRIVATE LTD., VS. PR. CIT-II, JAIPUR 12 COURT. IN THOSE CIRCUMSTANCES, THE HIGH COURT WAS O F THE VIEW, AND CORRECTLY SO THAT THE CIT COULD HAVE INITIATED PROC EEDING UNDER SECTION 263. IT IS NOBODY'S CASE THAT THE DECISION IN DUSAD INDUSTRIES' CASE (SUPRA) WAS THE SUBJECT-MATTER OF ANY APPEAL BEFORE THIS COURT. AS FAR AS THE REVENUE AUTHORITIES IN MADHYA PRADESH WERE C ONCERNED THE ISSUE COULD NOT BE SAID TO BE ALIVE. 7. THE CALCUTTA HIGH COURT DECISION, HAS IN FACT HELD CONTRARY TO WHAT IS BEING SUBMITTED ON BEHALF OF THE APPELLANT. IN T HAT CASE THE ASSESSING OFFICER HAD INITIATED REASSESSMENT PROCEE DINGS ON THE BASIS OF A DECISION OF THE RAJASTHAN HIGH COURT. THE DECI SION OF THE RAJASTHAN HIGH COURT WAS SUBSEQUENTLY REVERSED BY T HIS COURT. THE CALCUTTA HIGH COURT HELD THAT DESPITE SUCH REVERSAL , IT COULD NOT BE SAID THAT REASSESSMENT PROCEEDINGS WERE WITHOUT JURISDIC TION ON THE BASIS OF THE LAW AS IT STOOD WHEN THE PROCEEDINGS WERE IN ITIATED. 8. APART FROM THE LANGUAGE OF SECTION 263 OF THE ACT, IF WE WERE TO ACCEPT THE SUBMISSION OF THE APPELLANT THAT THE REV ENUE AUTHORITIES WITHIN THE STATE COULD REFUSE TO FOLLOW THE JURISDI CTIONAL HIGH COURT'S DECISION ON THE GROUND THAT THE DECISION OF SOME OT HER HIGH COURT WAS PENDING DISPOSAL BY THIS COURT, IT WOULD LEAD TO AN ANARCHIC SITUATION WITHIN THE STATE. IF AT THE TIME WHEN THE POWER UND ER SECTION 263 WAS EXERCISED THE DECISION OF THE JURISDICTIONAL HIGH C OURT HAD NOT BEEN SET ASIDE BY THIS COURT OR AT LEAST HAD NOT BEEN APPEAL ED FROM, IT WOULD NOT BE OPEN TO THE CIT TO HAVE PROCEEDED ON THE BAS IS THAT THE HIGH COURT WAS ERRONEOUS AND THAT THE ASSESSING OFFICER WHO HAD ACTED IN TERMS OF THE HIGH COURT'S DECISION HAD ACTED ERRONE OUSLY. 9. IN THE INSTANT CASE, AT THE TIME WHEN THE POWER UNDER SECTION 263 WAS EXERCISED BY THE LD PR CIT, THERE IS NOTHING ON REC ORD TO SUGGEST THAT THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT HAD BE EN SET ASIDE BY HONBLE ITA NO. 729/JP/2019 SHERA ENERGY PRIVATE LTD., VS. PR. CIT-II, JAIPUR 13 SUPREME COURT OR HAS BEEN SUBJECT MATTER OF APPEAL BEFORE THE HONBLE SUPREME COURT, IN SUCH CIRCUMSTANCES, IT WOULD NOT BE OPEN TO THE LD PR. CIT TO HOLD THAT THE ASSESSING OFFICER WHO HAD ACTED IN TERMS OF THE HIGH COURT'S DECISION HAD ACTED ERRONEOUSLY. 10. WE HAVE ALSO GONE THROUGH THE DECISIONS CITED B Y THE LD CIT DR, HOWEVER, WE FIND THAT THE SAME HAVE BEEN RENDERED I N THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE AND ARE THUS DISTINGUISHA BLE. 11. IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LIGHT OF AFORESAID DISCUSSION AND FOLLOWING THE DECISION REF ERRED SUPRA, WE ARE OF THE CONSIDERED VIEW THAT THE LD PR CIT WAS NOT CORRECT IN EXERCISING JURISDICTION UNDER SECTION 263 OF THE ACT AND THE ORDER PASSED B Y THE LD PR. CIT PASSED U/S 263 IS ACCORDINGLY SET-ASIDE AND THE ORDER PASS ED BY THE AO U/S 143(3) IS SUSTAINED. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15/04/2020. SD/- SD/- ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED:- 15/04/2020 * GANESH KR. COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S SHERA ENERGY PRIVATE LIMITED, JA IPUR 2. THE RESPONDENT- PR. COMMISSIONER OF INCOME-TAX-II, JAIPUR 3. CIT 4. CIT(A) ITA NO. 729/JP/2019 SHERA ENERGY PRIVATE LTD., VS. PR. CIT-II, JAIPUR 14 5. DR, ITAT, JAIPUR. 6. GUARD FILE {ITA NO. 729/JP/2019} BY ORDER, ASST. REGISTRAR