ACIT CIR -1, MUMBAI V. HMTD ENGINEERING P. LTD, MUMBAI

ITA 7911/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100900 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 01-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 23-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: R C JAIN
• Keywords: Capital receipt
• Section: 43B

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NO.7911/MUM/2011 ASSESSMENT YEAR: 2006-07 ACIT, CIR-1, THANE, MIDC, VARDAAN BLDG. WAGLE ESTATE, LOWER GROUND FLOOR, THANE(W), / VS. M/S HMTD ENGINEERING PVT. LTD. A-21, ROAD NO.9, WAGALE ESTATE, THANE(W)-400604 ( / REVENUE) ( !' # /ASSESSEE) P.A. NO. AAACH4223M / REVENUE BY SHRI DR. SUMAN RATNAM DARSI-DR !' # / ASSESSEE BY SHRI R.C. JAIN $ % & # ' / DATE OF HEARING : 01/09/2015 & # ' / DATE OF ORDER: 30/09/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 13/07/2011 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. GROUNDS NO. 1 TO 3 PERTAINS TO DELETING THE ADDITIO N MADE ON ACCOUNT OF DISALLOWANCE OF SALES TAX BENEFIT OF RS. 17,02,526/- IN RESPECT OF WIND ENERGY GENERATOR, INSTALLED IN S ATARA HMTD ENGINEERING LTD. ITA NO.7911/MUM/2011 2 DISTRICT, WHICH WAS NOT ROUTED THROUGH PROFIT & LOS S ACCOUNT BUT WAS SHOWN AS UNSECURED LOANS IN THE BALANCE SHE ET. 2. DURING HEARING OF THIS APPEAL, THE LD. DR, DR, SUMAN RATNAM DARSI, ADVANCED HIS ARGUMENTS, WHICH A RE IDENTICAL TO THE GROUND RAISED BY FURTHER SUBMITTIN G THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONCLUDING THAT SALES INCENTIVES, RECEIVED FROM GOV T. OF MAHARASHTRA, IS A RESULT OF CAPITAL INVESTMENT, THE REFORE, IT IS A CAPITAL RECEIPT, WHEREAS, ACTUALLY ITS A REVENUE RECEIPT GIVEN BY WAY OF INTEREST FREE UNSECURED LOANS. THU S, THE ASSESSEE HAS TAKEN BOTH THE BENEFITS. ON THE OTHER HAND, THE CRUX OF ARGUMENT ADVANCED BY SHRI R.C. JAIN, LD. CO UNSEL FOR THE ASSESSEE IS THAT THE ASSESSEE RECEIVED SALES TA X LOANS AND NOT SUBSIDY. OUR ATTENTION WAS INVITED TO PAGE 7 O F THE PAPER BOOK. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ARGUMENTS ADVANCED BY LD. COUNSEL FROM BOTH SIDES A ND THE MATERIAL AVAILABLE ON RECORD, AS IS EVIDENT FROM CI RCULAR NO.496 DATED 25/09/1987, (PAGE 7 OF THE PAPER BOOK ) WITH RESPECT TO SECTION 43B OF THE ACT, THE MATTER WAS E XAMINED IN CONSULTATION WITH MINISTRY OF LAW AND VARIOUS OTHER DEPARTMENT OF THE STATE GOVERNMENT, IT WAS OPINED T HAT IF THE STATE GOVT. MAKES AN AMENDMENT IN THE SALES TAX ACT TO THE EFFECT THAT THE SALES TAX DEFERRED UNDER THE SCHEME SHALL BE TREATED AS ACTUALLY PAID, SUCH DEEMING PROVISION WI LL MEET THE REQUIREMENT OF SECTION 43B, MEANING THEREBY, TH E HMTD ENGINEERING LTD. ITA NO.7911/MUM/2011 3 STATUTORY LIABILITY SHALL BE TREATED TO HAVE BEEN D ISCHARGED. IN VIEW OF THIS FACTUAL POSITION, WE REMAND THIS IS SUE TO THE FILE OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) TO EXAMINE THE FACTUAL ASPECT OF THE MATTER AND AFTER ASCERTAINING THE FACTS DECIDE IN ACCORDANCE WITH LA W. THE ASSESSEE BE GIVEN OPPORTUNITY TO SUBSTANTIATE ITS C LAIM. THUS, THIS GROUND (GROUNDS NO. 1 TO 3) OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 3. THE LAST GROUND PERTAINS TO DELETING THE ADDITI ON OF RS.3,41,895/-, BEING INTEREST PAID ON BORROWED FUND S, USE FOR INVESTMENT IN SHARES. THE CRUX OF ARGUMENT ADVANCED BY LD. DR IS THAT INTEREST BEARING FUNDS WERE DIVERTED FOR NON BUSINESS PURPOSES TO A RELATED COMPANY. IT WAS CON TENDED THAT SHARE APPLICATION MONEY WAS GIVEN TO SISTER CO NCERN AND NO SCHEDULE WAS FILED WITH RESPECT TO TYPE OF INVES TMENT FOR WHICH OUR ATTENTION WAS INVITED TO PAGE 17 AND 26 O F THE PAPER BOOK. IT WAS ALSO PLEADED THAT IT IS ALMOST LIKE AN INVESTMENT LYING WITH THE SISTER CONCERN FOR THE LA ST THREE TO FOUR YEARS. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER. 3.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WITHOUT G OING INTO MUCH DELIBERATION AND ON CONSIDERATION OF MATERIAL FACTS AND THE ARGUMENTS FROM BOTH SIDES, WE ARE OF THE VIEW, THAT NORMALLY SHARES ARE TO BE ALLOTTED FROM THE PERIOD OF 90 DAYS FROM THE DATE OF APPLICATION AS IS REQUIRED PER COM PANIES ACT, HMTD ENGINEERING LTD. ITA NO.7911/MUM/2011 4 THUS, THIS FACTUAL ASPECT HAS NOT BEEN CONSIDERED I N THE IMPUGNED ORDER, CONSEQUENTLY, THE ASSESSEE IS TO EX PLAIN THE FACT BEFORE THE LD. COMMISSIONER OF INCOME TAX (APP EALS), WHO WILL EXAMINE THE CLAIM OF THE ASSESSEE WITH RES PECT TO NATURE OF THE AMOUNTS INVOLVED AND NO SCHEDULE HAS BEEN FILED BY THE ASSESSEE WITH RESPECT TO NATURE AND TY PE OF INVESTMENT AS IS EVIDENT FROM PAGES 17 AND 26 OF TH E PAPER BOOK. THUS, THE LD. COMMISSIONER OF INCOME TAX (APP EALS) IS DIRECTED TO EXAMINE THE CLAIM OF THE ASSESSEE AND D ECIDE IN ACCORDANCE WITH LAW. THE ASSESSEE BE GIVEN OPPORTUN ITY OF BEING HEARD. THIS GROUND OF THE REVENUE IS ALSO ALL OWED FOR STATISTICAL PURPOSES. FINALLY, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 01/09/2015. SD/ - (RAMIT KOCHAR) SD/ - (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER $ % MUMBAI; ) DATED : 30/09/2015 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,-. / THE APPELLANT 2. /0-. / THE RESPONDENT. 3. 1 1 $ 2# ( +, ) / THE CIT, MUMBAI. 4. 1 1 $ 2# / CIT(A)- , MUMBAI HMTD ENGINEERING LTD. ITA NO.7911/MUM/2011 5 5. 45 /# , 1 +,' + 6 , $ % / DR, ITAT, MUMBAI 6. 7! 8% / GUARD FILE. / BY ORDER, 04,# /# //TRUE COPY// / (DY./ASSTT. REGISTRAR) , $ % / ITAT, MUMBAI