DCIT, Circle - 1, Kolkata, Kolkata V. M/s. Gloster Jute Mills Ltd., Kolkata

ITA 766/KOL/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78342 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-07-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 16-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: IMLIMEREN JAMIR
• Assessee Lawyers: SOUMEN ADAK; HARISH AGARWAL A RS
• Keywords: Depreciation; Question of law; Cost of acquisition; Capital receipt; Unabsorbed depreciation
• Section: 260A; 10B

Judgement Text

I.T.A. NO.: 766/KOL./2010 & I.T.A. NO. 687/KOL/2010 AS SESSMENT YEAR : 2005-2006 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA CORAM : SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI SHAMIM YAHYA (A CCOUNTANT MEMBER) I.T.A. NO.: 766/KOL./ 2010 ASSESSMENT YEAR : 2005-2006 DEPUTY COMMISSIONER OF INCOME TAX,................ ...APPELLANT CIRCLE-1, KOLKATA, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -VS.- M/S. GLOSTER JUTE MILLS LTD.,...................... ..........................RESPONDENT 21, STRAND ROAD, KOLKATA-700 001 [PAN : AAACG 9800 G] & I.T.A. NO.: 687/KOL./ 2010 ASSESSMENT YEAR : 2005-2006 M/S. GLOSTER JUTE MILLS LTD.,...................... .............................APPELLANT 21, STRAND ROAD, KOLKATA-700 001 [PAN : AAACG 9800 G] -VS.- ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE-1, KOLKATA APPEARANCES BY: SHRI IMLIMEREN JAMIR, JCIT, SR. D.R., FOR THE DEPAR TMENT SHRI SOUMEN ADAK & SHRI HARISH AGARWAL, A.RS., FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : JUNE 30, 2014 DATE OF PRONOUNCING THE ORDER : JULY 02, 2014 O R D E R PER SHAMIM YAHYA: ITA NO. 687/KOL/2010 1. THIS APPEAL BY THE ASSESSEE EMANATES OUT OF THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XIII, KOLKATA DATED 29.01.2010 FOR THE ASSESSMENT YEAR 2005-06. I.T.A. NO.: 766/KOL./2010 & I.T.A. NO. 687/KOL/2010 AS SESSMENT YEAR : 2005-2006 2 2. GROUND OF APPEAL READS AS UNDER :- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) WAS NOT JUSTIFIED RATHER GROSSLY ERRED IN HO LDING INTEREST SUBSIDY OF RS.77,18,242/- RECEIVED UNDER THE TECHNO LOGY UPGRADATION FUND SCHEME (TUFS) AS REVENUE RECEIPT. 3. IN THIS CASE THE ASSESSEE IS A PUBLIC LIMITED CO MPANY ENGAGED IN MANUFACTURING OF JUTE & JUTE ALLIED PRODUCTS AND GE NERATION OF POWER. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFF ICER NOTED THAT UNDER THE TECHNOLOGY UPGRADATION FUND SCHEME (IN SHORT TUFS), THE ASSESSEE RECEIVED SUBSIDY FROM CENTRAL GOVERNMENT O F RS.77,18,242/- ON ACCOUNT OF INTEREST REFUND. THOUGH THE ASSESSEE D EBITED THE P&L A/C. WITH THE NET AMOUNT OF INTEREST, AFTER ADJUSTMENT O F THE ABOVEMENTIONED SUBSIDY OF RS.77,18,242/-. IN COMPUTING THE ASSESSA BLE INCOME THE ASSESSEE DEDUCTED THE SAID AMOUNT ON THE PLEA THAT THE SUBSIDY WAS CAPITAL IN NATURE. 4. THE ASSESSING OFFICER DID NOT AGREE WITH THE ABO VE PROPOSITION AND REJECTED THE ASSESSEES CLAIM THAT SUBSIDY UNDER TU FS SHOULD BE TREATED AS A SCHEME OF CAPITAL SUBSIDY. HE OPINED THAT THE SUBSIDY WAS REVENUE IN NATURE AND HAD TO BE ADDED IN THE TOTAL INCOME OF T HE ASSESSEE AS A REVENUE RECEIPT. 5. UPON ASSESSEES APPEAL, IN THIS REGARD LD. CIT(A PPEAL) AFFIRMED THE ASSESSING OFFICERS ACTION HOLDING AS UNDER:- I HAVE CONSIDERED THE ABOVE SUBMISSIONS OF THE A/R S OF THE ASSESSEE. FIRST OF ALL, I AGREE WITH THE AO THAT TH E ASSESSEE CANNOT CLAIM THE INTEREST REFUND UNDER TUFS TO BE C APITAL IN NATURE JUST ON THE GROUND THAT THERE WAS AN OFFER T O CHOOSE BETWEEN TUFS & CLCS WHICH APPEARS TO BE A SCHEME OF CAPITAL SUBSIDY. FIRST OF ALL THIS EQUALITY BETWEEN THE TWO SCHEMES IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE BECAUSE THE ASSESSEE WAS NOT ELIGIBLE FOR CLCS AS IT WAS NOT A SMALL SCALE I NDUSTRY. SECONDLY, EVEN IF THE ASSESSEE WAS ELIGIBLE FOR CLC S THE NATURE OF THE SUBSIDY HAS TO BE DECIDED ON THE BASIS OF TH E ACTUAL SCHEME UNDER WHICH THE ASSESSEE RECEIVED. I.T.A. NO.: 766/KOL./2010 & I.T.A. NO. 687/KOL/2010 AS SESSMENT YEAR : 2005-2006 3 NOW, IF WE CONSIDER THE NATURE OF THE TUFS WE FIND THAT UNDER THIS SCHEME IF THE ELIGIBLE INDUSTRY INVESTS IN CERTAIN SPECIFIED PLANTS& MACHINERY, FACTORY BUILDING, CAPT IVE POWER PLANT ETC. USING FUNDS BORROWED FROM CERTAIN BANKS/ FINANCIAL INSTITUTIONS, THEN OUT OF THE INTEREST PAID ON SUCH BORROWED FUNDS, 5% IS REFUNDED BY THE GOVT. THUS IT CAN BE S EEN THAT THE OBJECTIVE OF THIS SCHEME MAY BE TO ENCOURAGE THE EL IGIBLE INDUSTRIES TO INVEST IN UPGRADATION OF TECHNOLOGY B UT THE ASSISTANCE/ INCENTIVE GIVEN DOES NOT HAVE ANY DIREC T RELATION WITH THE COST OF ACQUISITION OF SUCH PLANT & MACHIN ERY ETC. RATHER, THE SUBSIDY/ INCENTIVE/ ASSISTANCE GIVEN IN THE FORM OF SHARING/ REIMBURSING 5% OF THE INTEREST WHICH IS PA ID ON THE FUNDS BORROWED FOR ACQUIRING THE PLANT AND MACHINER Y EC. THUS, IT CAN BE SEEN THAT THE SUBSIDY GIVEN HAS A VERY RE MOTE CONNECTION WITH THE COST OF ACQUISITION OF PLANT & MACHINERY. THEREFORE, IT CANNOT BE SAID THAT THROUGH THIS SUBS IDY GOVT. HAS MET A PART OF THE COST OF PLANT & MACHINERY USED FO R UPGRADING THE TECHNOLOGY. RATHER, THE GOVT. HAS MET A PART OF THE INTEREST PAID BY THE ASSESSEE WHICH IS VERY MUCH A REVENUE E XPENDITURE AND IS DEBITED BY THE ASSESSEE IN THE P& L A/C. AS SUCH. AS PER THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F SAHANI STEELS (SUPRA) THIS SUBSIDY HAS NOT BEEN GIVEN TO T HE ASSESSEE FOR SETTING UP ANY BUSINESS RATHER IT HAS BEEN GIVE N TO THE ASSESSEE AFTER COMMENCEMENT OF PRODUCTION AND IT GO ES ON TO INCREASE ITS PROFITABILITY. THEREFORE, IT IS IN THE NATURE OF A TRADE RECEIPT AND HAS TO BE TAXED AS INCOME OF THE ASSESSEE. I HAVE EXAMINED THE VARIOUS COURT CASES CITED BY T HE A/R AND FIND THAT THE FACTS OF THESE COURT CASES ARE DI FFERENT FROM THE FACTS OF THE ASSESSEES CASE AND HENCE, THEY AR E NOT APPLICABLE HERE. IN VIEW OF THE ABOVE DISCUSSION, I CONFIRM THE ADD ITION OF RS.77,18,242/- MADE BY THE AO. 6. AGAINST THE ABOVE ORDER OF LD. CIT(APPEALS), ASS ESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. LD. COUNSEL OF THE ASSESSEE SU BMITTED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY TH E DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS.- SH. SHAM LAL BANSAL IN ITA NO. 472 OF 2010, WHEREIN IT HAD BEEN HELD THAT INTEREST SUBSIDY RECEIVED UNDER TUF SCHEME IS CAPITAL IN NAT URE. LD. COUNSEL FOR THE ASSESSEE HAS FURTHER SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF I.T.A. NO.: 766/KOL./2010 & I.T.A. NO. 687/KOL/2010 AS SESSMENT YEAR : 2005-2006 4 THE ASSESSEE BY THE DECISION OF THE HONBLE APEX CO URT IN THE CASE OF CIT VS.- PONNI SUGARS & CHEMICALS LTD. REPORTED ILN (20 08) 306 ITR 392 (SC) WHEREIN IT HAS BEEN HELD THAT IT IS THE PURPOSE OF THE INCENTIVE WHICH DECIDES ITS NATURE AND NOT THE MODALITY OR THE SOUR CE THEREOF. THAT THIS ISSUE IS ALSO FAVOURABLY COVERED BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS.- RASOI LTD. (201 1) 335 ITR 438 (CAL.), WHEREIN IT HAS HELD THAT SUBSIDY RECEIVED FOR EXPAN SION OF CAPACITIES, MODERNIZATION AND IMPROVING THE MARKETING CAPABILIT IES TO TIDE OVER THE CRISES FOR PROMOTION OF INDUSTRY IN THE STATE IS TO BE TREATED AS CAPITAL IN NATURE. THAT SIMILARLY, THE ISSUE IS COVERED IN THE CASE OF SHREE BALAJI ALLOYS & ORS. VS.- CIT (2011) 333 ITR 335 (J&K) WH EREIN IT HAS BEEN HELD THAT EXCISE DUTY REFUND AND INTEREST SUBSIDY RECEIV ED FOR THE PURPOSE OF ERADICATION OF UNEMPLOYMENT IN THE STATE BY ACCELER ATION OF INDUSTRIAL DEVELOPMENT AND REMOVING BACKWARDNESS OF THE AREA T HAT LAGGED BEHIND IN INDUSTRIAL DEVELOPMENT IS TO BE TREATED AS CAPIT AL RECEIPT. LD. A.R. ALSO SUBMITTED THAT SIMILAR VIEW WAS GIVEN IN FOLLOWING DECISIONS:- DCIT VS.- RELIANCE INDUSTRIES (2004) 88 ITD 273 ( MUM.)(SB); CIT VS.- CHAPHALKAR BROTHERS (2013) 351 ITR 309 ( BOM.); CIT VS.- BIRLA VXL LTD. (2013) 90 DTR 376 (GUJ.)( HC); HYDRO CARBONS & CHEMICALS VS.- ACIT (ITA NO. 1982- 86/KOL/09 DATED 29.04.2011); INDO RAMA SYNTHETICS (I) LTD. VS.- ACIT (2012) 33 CCH 526 (DEL.)(ITAT). 8. LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HA ND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. WE FIND CONSIDERABLE COGENCY IN THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE. WE FIND THAT IDENTICAL ISSUE UNDER THE TE CHNOLOGY UPGRADATION FUND SCHEME (IN SHORT TUFS) OF MINISTRY OF TEXTIL ES WAS CONSIDERED BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN ITA NO. 472 OF 2010 VIDE I.T.A. NO.: 766/KOL./2010 & I.T.A. NO. 687/KOL/2010 AS SESSMENT YEAR : 2005-2006 5 DECISION DATED 17.01.2011. HONBLE HIGH COURT HAS C ONSIDERED AND HELD THE ISSUE AS UNDER:- 2. THE ASSESSEE IS ENGAGED IN MANUFACTURE AND SAL E OF WOOLEN GARMENTS. IT RECEIVED SUBSIDY FOR REPAYMENT OF LOAN TAKEN FOR BUILDING, PLANT AND MACHINERY UNDER THE CREDIT LINKED CAPITAL SUBSIDY S CHEME UNDER TECHNOLOGY UPGRADATION FUND SCHEME (TUFS) OF MINISTRY OF TEXTI LES, GOVERNMENT OF INDIA. THE ASSESSEE CLAIMED THE SAID SUBSIDY TO BE CAPITAL RECEIPT BUT THE ASSESSING OFFICER DID NOT ACCEPT THE SAME AND ADDED BACK THE SAME TO THE INCOME OF THE ASSESSEE HOLDING THE SAME TO BE REVENUE RECEIPT. ON APPEAL, THE CIT(A) UPHELD THE PLEA OF THE ASSESSEE, WHICH VIEW HAS BEEN AFFIR MED BY THE TRIBUNAL WITH THE FOLLOWING OBSERVATIONS:- HAVING REGARD TO THE AFORESAID, IN OUR VIEW, IT IS QUITE CLEAR THAT THE OBJECTIVE OF THE SUBSIDY SCHEME WAS TO ENHANCE THE TECHNOLOGY APPARATUS OF THE ASSESSEE BY ASSISTING IN ACQUIRING MACHINERY AND FURTHER THAT THE SUBSIDY SO RECEIVED WAS UTILIZED F OR REPAYMENT OF LOANS TAKEN BY THE ASSESSEE TO SET UP THE NEW UNIT, AS WAS THE INTENTION OF THE SUBSIDY. 10. CONSIDERED IN THE AFORESAID LIGHT, IN OUR VIEW , THE FACTS OF THE INSTANT CASE ARE ON ALL FOURS COMPARABLE TO THOSE CONSIDERE D BY THE HONBLE SUPREME COURT IN THE CASE OF PONNI SUGARS & CHEMICALS LTD. (SUPRA) AND THEREFORE, A NATURAL COROLLARY IS THAT THE NATURE OF THE SUBSIDY IN QUESTION IS CAPITAL. THEREFORE, BOTH ON THE ISSUE OF THE OBJECTIVE OF TH E SCHEME AND ON THE UTILIZATION OF THE FUNDS RECEIVED AS SUBSIDY, THE S UBSIDY IS TO BE VIEWED AS CAPITAL IN NATURE HAVING REGARD TO THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF PONNI SUGARS & CHEMICAL LTD. (SUPRA) . 11. RELIANCE PLACED BY THE REVENUE ON THE CASE OF SAWHNEY STEELS AND PRESS WORKS LTD. & OTHERS (SUPRA), IN OUR VIEW, IS NOT APPROPRIATE HAVING REGARD TO THE AFORESAID FEATURES OF THE SCHEME, WHI CH ARE NOT IN DISPUTE. MOREOVER, IN THE CASE OF SAWHNEY STEELS AND PRESS W ORKS LTD. & OTHERS (SUPRA), IT WAS FOUND AS A FACT THAT THE SUBSIDY WAS GIVEN T O MEET RECURRING EXPENDITURE AND WAS NOT FOR ACQUIRING A CAPITAL ASS ET. WHEREAS IN THE INSTANT CASE, ADMITTEDLY, THERE IS NO PROVISION IN THE SCHE ME TO GRANT SUBSIDY TO MEET ANY RECURRING EXPENDITURE AND NEITHER SUCH A CASE H AS BEEN SET UP BY THE DEPARTMENT. THE ONLY OBJECTIONS OF THE DEPARTMENT A RE THAT THE SUBSIDY HAS BEEN GIVEN AFTER COMMENCEMENT OF PRODUCTION AND, SE CONDLY THAT IT WAS FOR REPAYMENT OF LOANS. BOTH THESE FACTORS DO NOT DISTR ACT FROM THE NATURE OF THE SUBSIDY BEING TREATED AS CAPITAL, AS EXPLAINED BY T HE HONBLE SUPREME COURT IN THE CASE OF PONNI SUGARS CHEMICALS LTD. (SUPRA). 3. WE HAVE HEARD LEARNED COUNSEL FOR THE APPELLANT . 4. LEARNED COUNSEL FOR THE REVENUE SUBMITTED THAT THE SUBSIDY WAS NOT GIVEN AT THE TIME OF SETTING UP OF THE INDUSTRY BUT AFTER COMMENCEMENT OF PRODUCTION FOR REPAYMENT OF LOAN. IN SUCH SITUATION , THE AMOUNT SHOULD HAVE I.T.A. NO.: 766/KOL./2010 & I.T.A. NO. 687/KOL/2010 AS SESSMENT YEAR : 2005-2006 6 BEEN TREATED AS REVENUE RECEIPT, AS PER JUDGMENT OF THE HONBLE SUPREME COURT IN SAHNEY STEEL & PRESS WORKS LTD. & ORS. V. CIT (1 997) 228 ITR 253. 5. WE ARE UNABLE TO ACCEPT THE SUBMISSION. 6. THE PURPOSE OF SCHEME UNDER WHICH THE SUBSIDY I S GIVEN, HAS BEEN DISCUSSED BY THE TRIBUNAL. TO SUSTAIN AND PROVE THE COMPETITIVENESS AND OVERALL LONG TERM VIABILITY OF THE TEXTILE INDUSTRY , THE CONCERNED MINISTRY OF TEXTILE ADOPTED THE TUFS SCHEME, ENVISAGING TECHNOL OGY UPGRADATION OF THE INDUSTRY. UNDER THE SCHEME, THERE WERE TWO OPTIONS, EITHER TO REIMBURSE THE INTEREST CHARGED ON THE LENDING AGENCY ON PURCHASE OF TECHNOLOGY UPGRADATION OR TO GIVE CAPITAL SUBSIDY ON THE INVES TMENT IN COMPATIBLE MACHINERY. IN THE PRESENT CASE, THE ASSESSEE HAS TA KEN TERM LOANS FOR TECHNOLOGY UPGRADATION AND SUBSIDY WAS RELEASED UND ER AGREEMENT DATED 12.7.2005 WITH SMALL INDUSTRY DEVELOPMENT BANK OF I NDIA. THE RELEVANT CLAUSE OF THE AGREEMENT UNDER WHICH THE SUBSIDY WAS GIVEN IS AS UNDER:- PARA 8. - TO PREVENT MISUTILIZATION OF CAPITAL SUB SIDY AND TO PROVIDE AN INCENTIVE FOR REPAYMENT, THE CAPITAL SUBSIDY WIL L BE TREATED AS A NON INTEREST BEARING TERM LOAN BY THE BANK/FIS. THE REPAYMENT SCHEDULE OF THE TERM LOAN HOWEVER WILL BE WORKED OU T EXCLUDING THE SUBSIDY AMOUNT AND SUBSIDY WILL BE ADJUSTED AGAINST THE TERM LOAN ACCOUNT OF THE BENEFICIARY AFTER A LOCK IN PERIOD O F THREE YEARS ON A PRO-RATE BASIS IN TERMS OF RELEASE OF CAPITAL SUBSI DY. THERE IS NO APPARENT OR REAL FINANCIAL LOSS TO A BORROWER SINCE THE COUNTERVAILING CONCESSION IS EXTENDED TO THE LOAN A MOUNT. 7. IN VIEW OF ABOVE, THE VIEW TAKEN IN SAHNEY STEE L & PRESS WORKS LTD. & ORS., COULD NOT BE APPLIED IN THE PRESENT CASE, AS IN SAID CASE THE SUBSIDY WAS GIVEN FOR RUNNING THE BUSINESS. FOR DETERMINING WHE THER SUBSIDY PAYMENT WAS REVENUE RECEIPT OR CAPITAL RECEIPT, CHARACTER O F RECEIPT IN THE HANDS OF THE ASSESSEE HAD TO BE DETERMINED WITH RESPECT TO THE P URPOSE FOR WHICH SUBSIDY IS GIVEN BY APPLYING THE PURPOSE TEST, AS HELD IN SAHN EY STEEL & PRESS WORKS LTD. & ORS. ITSELF AND REITERATED IN LATER JUDGMENT IN CI T V. PONNI SUGARS & CHEMICALS LTD. & ORS. (2008) 306 ITR 392, REFERRED TO IN THE IMPUGNED ORDER OF THE TRIBUNAL. 8. IN VIEW OF ABOVE, SINCE THE MATTER IS COVERED B Y JUDGMENT OF THE HONBLE SUPREME COURT IN PONNI SUGARS & CHEMICALS LTD. & OR S. AGAINST THE REVENUE, NO SUBSTANTIAL QUESTION OF LAW ARISES. THUS WE FIND THAT ON IDENTICAL ISSUE THE MATTER HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. IN THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT AS HELD HEREINABOVE IN ORDER TO SUSTAIN COMPETITIVENESS IN THE DOMESTIC AS WELL AS INTERNATIONAL MARKETS AND OVERALL LONG-TERM VIAB ILITY OF THE INDUSTRY, I.T.A. NO.: 766/KOL./2010 & I.T.A. NO. 687/KOL/2010 AS SESSMENT YEAR : 2005-2006 7 THE CONCERNED MINISTRY ADOPTED THE TUFS SCHEME ENVI SAGING TECHNOLOGY UPGRADATION OF THE INDUSTRY. HENCE, THE SUBSIDY REC EIVED IN THIS REGARD FALLS INTO CAPITAL FIELD. HENCE RESPECTFULLY FOLLOW ING THE PRECEDENT AS ABOVE WE SET ASIDE THE ORDER OF THE LD. CIT(APPEALS ) AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. 11. ITA NO. 766/KOL/2010 (REVENUES APPEAL) THIS APPEAL BY THE REVENUE EMANATES OUT OF THE ORD ER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XIII, KOLKATA DATED 29.01.2010 FOR THE ASSESSMENT YEAR 2005-06. 12. GROUND OF APPEAL READS AS UNDER :- LD. CIT(A) HAS ERRED ON THE FACTS AND IN LAW IN DI RECTING THE AO TO ALLOW SET OFF OF UNABSORBED DEPRECIATION OF RS.54,47,722/- AND UNABSORBED BUSINESS OF RS.39,18, 762/- FROM 100% EOU AGAINST THE TAXABLE INCOME OF THE ASS ESSEE FROM OTHER UNITS. 13. IN THIS CASE, THE ASSESSEE DURING THE YEAR UNDE R CONSIDERATION HAD THREE DIFFERENT UNITS OF INCOME AS UNDER:- SL. NO. UNIT PROFIT BEFORE TAXATION (1) DTA RS.7,96,69,247/ - (2) 100% EOU RS.91,66,484 (LOSS) (3) POWER PLANT RS.45,93,612/- RS.7,50,96,375/ - THE ABOVE-STATED LOSS OF EOU WAS ARRIVED AT AFTER C HARGING OF THE DEPRECIATION OF RS.52,47,722/-. THE COMMERCIAL PROD UCTION AT THE EOU STARTED IN THE PREVIOUS YEAR RELEVANT TO THE AY 200 4-05. IN THAT YEAR ALSO, I.T.A. NO.: 766/KOL./2010 & I.T.A. NO. 687/KOL/2010 AS SESSMENT YEAR : 2005-2006 8 THE ASSESSEE SUFFERED LOSS. IN THE COMPUTATION OF I NCOME, THE ASSESSEE SET OFF THE LOSS FROM EOU WITH THE PROFIT OF OTHER UNIT S. THE ASSESSING OFFICER DISALLOWED UNABSORBED DEPRECIATION OF RS.52,47,722/ - AND BUSINESS LOSS OF RS.39,18,762/- FOR THE TEXTILE UNIT OF THE ASSES SEE ON THE GROUND THAT THESE LOSSES RELATE TO A UNIT WHOSE PROFITS ARE EXE MPT UNDER SECTION 10B AND HENCE, SUCH LOSSES CANNOT BE ADJUSTED AGAINST P ROFIT OF TAXABLE UNITS. 14. UPON REVENUES APPEAL, LD. CIT(APPEALS) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE HOLDING AS UNDER:- I HAVE PERUSED THE FACTS AND CIRCUMSTANCES OF THIS ISSUE AND ALSO THE DECISION OF HONBLE ITAT IN THE CASE O F THE ASSESSEE ITSELF FOR AY 2004-05 IN THE ORDER DATED 28.03.2008. I FIND THAT THE FACTS OF THIS ISSUE FOR AY 2005-06 ARE THE SAME AS WERE IN AY 2004-05. SINCE FOR AY 20 04-05 HONBLE ITAT HAS GIVEN A DECISION IN FAVOUR OF THE ASSESSEE, THEREFORE, FOR AY 2005-06 ALSO THE SAME DECISION WI LL PREVAIL, THEREFORE, RESPECTFULLY FOLLOWING THE DECI SION OF HONBLE ITAT I HOLD THAT THE BUSINESS LOSS AND DEPR ECIATION LOSS IN RESPECT OF THE 100% EOU UNIT SHALL BE SET O FF AGAINST THE PROFITS OF OTHER UNITS. 15. AGAINST THE ABOVE ORDER OF LD. CIT(APPEALS), RE VENUE IS IN APPEAL BEFORE US. 16. IT HAS BEEN URGED THAT LD. CIT(APPEALS) HAS ERR ED IN GRANTING RELIEF TO THE ASSESSEE BY RELYING ON THE DECISION OF THE H ONBLE ITAT IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004-0 5, WHICH HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND APPEAL UNDER SECTION 260A HAS BEEN FILED BEFORE THE HONBLE HIGH COURT OF KOLKATA. 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT IT IS CLEAR THAT IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL I N EARLIER YEARS. IT IS NOT THE CASE THAT HONBLE JURISDICTIONAL HIGH COURT HAS REVERSED THE ORDER OF I.T.A. NO.: 766/KOL./2010 & I.T.A. NO. 687/KOL/2010 AS SESSMENT YEAR : 2005-2006 9 THE TRIBUNAL. IN THESE CIRCUMSTANCES, WE DO NOT FIN D ANY INFIRMITY IN THE ORDER OF LD. CIT(APPEALS). HENCE, WE UPHOLD THE SAM E. 18. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND DAY OF JULY, 2014. SD/- SD/- MAHAVIR SINGH SHAMIM YAHYA (JUDICIAL MEMBER) (ACC OUNTANT MEMBER) KOLKATA, THE 2 ND DAY OF JULY, 2014 COPIES TO : (1) DEPUTY /ADDITIONAL COMMISSIONER OF INCOME TAX, CIRCLE-1, KOLKATA, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (2) M/S. GLOSTER JUTE MILLS LTD., 21, STRAND ROAD, KOLKATA-700 001 (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.