Dy. CIT, Circle 1(1), Pune V. Ajay Metachem Pvt. Ltd., Pune

ITA 775/PUN/2013

• Counselvise Citation: 77524514 RSA 2013
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-10-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 02-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P S NAIK
• Keywords: Capital receipt; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER. ITA.NO.520/PN/2013 (ASSTT. YEAR : 2007-08) ASK CHEMICALS FOUNDRY SOLUTION INDIA PRIVATE LIMITED (FORMERLY KNOWN AS AJAY METACHEM PRIVATE LIMITED), 72-76, NEAR BHARAT FORGE, MUNDHWA, PUNE-411036 PAN NO.AACCA0713D .. APPELLANT VS. ACIT, RANGE-1, PUNE. .. RESPONDENT ITA.NO.775/PN/2013 (ASSTT. YEAR : 2007-08) DY.CIT, CIRCLE-1(1), PUNE .. APPELLANT VS. ASK CHEMICALS FOUNDRY SOLUTION INDIA PRIVATE LIMITED (FORMERLY KNOWN AS AJAY METACHEM PRIVATE LIMITED), 72-76, NEAR BHARAT FORGE, MUNDHWA, PUNE-411036 PAN NO.AACCA0713D .. RESPONDENT ASSESSEE BY : SHRI KISHOR PHADKE RESPONDENT BY : SHRI P.S. NAIK DATE OF HEARING : 09-02-2015 DATE OF PRONOUNCEMENT : 18-02-2015 ORDER PER G.S. PANNU, AM : THE CAPTIONED APPEALS ARE CROSS APPEALS PREFERRED BY THE ASSESSEE AND THE REVENUE FOR A.Y. 2007-08. THESE APPEALS WE RE HEARD TOGETHER AND ARE BEING DISPOSED-OFF BY WAY OF A CONSOLIDATED ORD ER FOR THE SAKE OF CONVENIENCE AND BREVITY. THE CAPTIONED CROSS APPEA LS ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S)-I, PUNE DATED 08- 2 01-2013 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DA TED 30-12-2009 PASSED BY THE ASSESSING OFFICER OF THE INCOME TAX ACT, 196 1 (IN SHORT THE ACT). 2. IN THE APPEAL OF THE ASSESSEE, THE SOLITARY ISSU E RELATES TO ADDITION OF RS.34,50,000/- ON ACCOUNT OF EXPENSES INCURRED FOR AVAILING SALES TAX DEFERRAL BENEFIT BY THE ASSESSEE. 3. AT THE TIME OF HEARING, THE LEARNED REPRESENTATI VE SUBMITTED THAT SIMILAR DISPUTE CAME UP FOR THE EARLIER A.YRS 2005- 06 AND 2006-07. THE ASSESSEE HAD CLAIMED DEDUCTION OF SUCH EXPENSES AS A REVENUE EXPENDITURE IN A SINGLE YEAR. WHEREAS THE STAND OF THE DEPARTM ENT WAS THAT THE SAME ARE TO BE ALLOWED IN DIFFERENT YEARS SPREAD OUT FOR THE PERIOD OF THE SCHEME. IN THIS CONNECTION, IT WAS POINTED OUT THAT FOR A.Y RS. 2005-06 AND 2006-07 THE APPEAL OF THE ASSESSEE TRAVELLED TO THE TRIBUNA L WHICH HAS SINCE BEEN DISMISSED VIDE ORDER IN ITA NOS. 313 & 314/PN/2012 ORDER DATED 20-06- 2013. IN VIEW OF THE PRECEDENT IN ASSESSEES OWN C ASE FOR A.YRS. 2005-06 AND 2006-07 (SUPRA), THE IMPUGNED ORDER OF THE CIT( A) IS HEREBY AFFIRMED. THUS, ON THIS ASPECT ASSESSEE FAILS. 4. IN THE APPEAL OF THE REVENUE, THE SOLITARY ISSUE IS WITH REGARD TO THE TAXABILITY OF THE SURPLUS IN THE HANDS OF THE ASSES SEE ON ACCOUNT OF PRE- PAYMENT ON NET PRESENT VALUE (NPV) OF THE SALES TAX DEFERRAL LOAN. THE ASSESSEE WAS ENTITLED TO CERTAIN INCENTIVES UNDER T HE PACKAGE SCHEME OF INCENTIVES PROVIDED BY MAHARASHTRA GOVERNMENT. IN TERMS OF THE SAID SCHEME, IT REPAID THE UNSECURED LOAN AVAILED FROM T HE SALES TAX DEPARTMENT ON THE BASIS OF THE NET PRESENT VALUE OF THE LOAN. AS A CONSEQUENT OF THE AVAILMENT OF SUCH FACILITY, THE L OAN OF RS.1,84,00,000/- WAS REPAID AT RS.56,79,400/- AND THE BALANCE OF RS. 1,27,20,600/- WAS 3 TREATED BY THE ASSESSEE AS A CAPITAL RECEIPT NOT CH ARGEABLE TO TAX. THE ASSESSING OFFICER, HOWEVER, TREATED THE SURPLUS OF RS.1,27,20,600/- AS A REVENUE RECEIPT CHARGEABLE TO TAX. THE CIT(A) HAS DELETED THE ADDITION FOLLOWING THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF SULZER INDIA LTD. VS. JCIT REPORTED IN 138 ITD 137 (MUM) (SB). ACCORDINGLY, REVENUE IS IN APPEAL BEFORE US. 5. AT THE TIME OF HEARING, IT WAS A COMMON POINT BE TWEEN THE PARTIES THAT THE DECISION OF THE SPECIAL BENCH OF THE TRIBU NAL IN THE CASE OF SULZER INDIA LTD. (SUPRA) WHICH HAS BEEN RELIED UPON BY TH E CIT(A) HAS SINCE BEEN AFFIRMED BY THE HONBLE BOMBAY HIGH COURT VIDE ITS JUDGMENT IN CIT VS. SULZER INDIA LTD. DATED 05-12-2014. IN VIEW OF THE AFORESAID, WE FIND NO REASON TO INTERFERE WITH THE CONCLUSION DRAWN BY THE CIT(A) WHICH IS HEREBY AFFIRMED. 6. IN THE RESULT, APPEALS OF THE ASSESSEE AS WELL A S THAT OF THE REVENUE ARE DISMISSED. ORDER P RONOUNCED ON 18 TH FEBRUARY, 2015. SD/- SD/- ( R.S.PADVEKAR ) ( G.S.PANNU ) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH/SUJEET PUNE, DATED 18 TH FEBRUARY, 2015 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-I, PUNE. 4. THE CIT-I, PUNE. 5. THE DR A BENCH, PUNE. 6. GUARD FILE BY ORDER //TRUE COPY// ASSISTANT REGISTRAR, INCOME TAX APPELLAT E TRIBUNAL, PUNE