ACIT, Circle-2(2), Kolkata, Kolkata V. M/s. The State Fisheries Development Corporation Ltd., Kolkata

ITA 845/KOL/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8909 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 25-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHURY CITSRDR
• Assessee Lawyers: AMIT SARAF
• Keywords: Question of law; Capital receipt
• Section: 143(3)

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI, M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 845 / KOL / 20 17 ASSESSMENT YEAR :2008-09 ACIT, CIRCLE-2(2), AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 V/S . M/S THE STATE FISHERIES DEVELOPMENT CORPORATION LTD., BIKASH BHAWAN, 1 ST FLOOR, NORTH BLOCK, BIDHAN NAGAR, KOLKAA-91 [ PAN NO.AABCT 2090 D ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI ROBIN CHOUDHURY, ADDL. CIT-SR-DR /BY RESPONDENT SHRI AMIT SARAF, FCA /DATE OF HEARING 04-12-2018 /DATE OF PRONOUNCEMENT 26-12-2018 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2008-09 A RISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-17,KOLKATAS O RDER DATED 22.12.2016 PASSED IN CASE NO.300/CIT(A)-17/KOL/14-15 INVOLVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE REVENUES SOLE SUBSTANTIVE GRIEVANCE PLEADED IN THE INSTANT APPEAL READS THAT CIT(A) HAS ERRED IN LAW AS WELL AS ON FA CTS THEREBY HOLDING THAT THE ASSESSEES IMPUGNED GRANT-IN-AID OF 4.68 CRORES RECEIVED FROM GOVERNMENT OF WEST BENGAL IS A CAPITAL RECEIPT NOT LIABLE TO T AX VIDE FOLLOWING DETAILED DISCUSSION:- DECISION: THIS GROUND OF THE ASSESSEE IS GENERAL IN NATURE, H ENCE, NOT ADJUDICATED UPON. ITA NO.845/KOL/2017 A. Y. 2008-09 ACIT, CIR-2(2), KOL. VS. THE STAT E FISHERIES DEVELOPMENT CORPN. LTD. PAGE 2 3.2 GROUND NO.2 & 3: FOR THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE ACTION OF THE LD AO IN ADDING BACK THE GRANTS IN AID AMOUNTING TO RS .4.68 CRORES RECEIVED BY THE ASSESSEE TO THE TOTAL INCOME BY CONSIDERING THE SAME AS REVENUE RECEIPT IS ARBITRARY, UNWARRANTED, UNJUSTIFIED AND ILLEGAL. FOR THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE ASSESSEE, THE LD. AO SHOULD BE DIRECTED TO CONSIDER THE GRANTS IN AID AM OUNTING TO RS.4.68 CRORES AS A CAPITAL RECEIPT. THE ASSESSEE HAS FILED A DETAILED SUBMISSION ON THI S ISSUE WHICH IS AS UNDER: 'THE APPELLANT IS A GOVERNMENT OF WEST BENGAL UNDER TAKING AND DURING THE YEAR UNDER CONSIDERATION THE APPELLANT HAD RECEIVED GRANT IN AID AMOUNTING TO RS. 4.68 CRORES FROM ITS SOLE SHAREHOLDER I.E GO VERNMENT OF WEST BENGAL. THE SAID GRAND IN AID WAS RECEIVED FOR THE FOLLOWIN G PURPOSES:- I) GRANT RECEIVED FROM GOVERNMENT OF WB FOR SALARY &.3.60 CRORES II) GRANT RECEIVED FROM GOVERNMENT OF WB FOR PISC ICULTURE &.80 LACS III) GRANT RECEIVED FROM GOVERNMENT OF WB FOR RIVER RENCHING &.28 LACS THE APPELLANT HAD TREATED THE SAID GRANT IN AID AS CAPITAL RECEIPT. HOWEVER, THE LD AO HAD DISALLOWED THE SAME AS HE WAS OF THE VIEW THAT THE GRANT- IN- AID WAS A REVENUE RECEIPT. THE LD AO HAD DISALLOWED THE SAME MAINLY R ELYING UPON THE ASSESSMENT ORDER OF THE EARLIER YEARS IN WHICH THE THEN ASSESS ING OFFICER HAD ALSO DISALLOWED THE GRANT-IN-AID. IN THIS REGARD IT MAY BE NOTED THAT THE LD AO HAD A LSO MADE AN ADDITION ON IDENTICAL ISSUES IN THE ASSESSMENT YEAR 2005-2006 AND HON'BLE CIT(A) HAD ALSO AFFIRMED THE ADDITIONS. HOWEVER ON FURTHER APPEAL THE HON'BLE JU RISDICTIONAL ITAT HAD DELETED THE ENTIRE ADDITION AND REVERSED THE ORDER OF THE ID AD . THE COPY OF THE SAID ORDER IS ENCLOSED HEREWITH. DURING THE COURSE OF HEARING BEFORE YOUR HONOUR ON 23.05.2016, WHEN THIS FACT WAS BROUGHT TO YOUR HONOUR'S NOTICE THAT THE HON'BLE IT AT HAS UPHELD THE VIEW TAKEN BY APPELLANT THAT THE GRANT-IN-AID WAS A CAPITAL RECEI PT, YOUR HONOUR HAVE ACCEPTED THAT FINDINGS OF THE HON 'BLE ITAT IN RESPECT OF GRANT-I N AID WHICH RELATES TO SALARY OF RS.3.60 CRORES AND ASKED US 10 EXPLAIN WHY GRANT-IN - AID WHICH RELATES TO PISCICULTURE AND RIVER DRENCHING AMOUNTING TO &.80 LACS AND &.28 LACS RESPECTIVELY WILL ALSO DEEMED TO BE COVERED BY THIS RULING OF THE ITAT. IN THIS REGARD IT MAY BE NOTED THAT THE HON'BLE ITA T HAD ALLOWED THE APPEAL OF THE APPELLANT BY OBSERVING AS UNDER:- 'FROM THE AFORESAID DECISION WE OBSERVE THAT THE SU BSIDIES WERE GIVEN TO THE CLASS OF INDUSTRIES AS PER THE SCHEMES DESIGNED BY THE RESPECTIVE GOVERNMENTS. THE PURPOSE OF THE AFORESAID SUBSIDIES WAS TO PROMOTE THE CERTAIN CLASS OF INDUSTRIES PROVIDED, THEY MEET THE ELIGIBILITY CRITERIA LAID DOWN IN THOSE SCHEME. HOWEVER, IN THE INSTANT CASE WE FI ND THAT THE GRANT IN AID WAS GIVEN TO THE ASSESSEE EXCLUSIVELY AND THERE WAS NO SCHEME AS SUCH. THEREFORE IN OUR CONSIDERED VIEW THE CASE LAW CITED BY AO IN THE CASE OF SAHNEY STEEL & PRESS WORKS LTD. (SUPRA) ARE DIFFERE NT FROM THE INSTANT CASE OF THE ASSESSEE, AS IT WAS GIVEN FOR THE SPECIFIC P AYMENT OF SALARY AND PF . 'WE FIND THAT THE GRANT GIVEN BY THE GOVERNMENT TO THE ASSESSEE WAS NOT AS PER THE SCHEME DESIGN FOR THE PROMOTION OF S OME CLASS OF INDUSTRIES BUT IT WAS GIVEN BY THE GOVERNMENT BEING A SOLE ITA NO.845/KOL/2017 A. Y. 2008-09 ACIT, CIR-2(2), KOL. VS. THE STAT E FISHERIES DEVELOPMENT CORPN. LTD. PAGE 3 SHAREHOLDER OF THE ASSESSEE COMPANY. IN OUR CONSIDE RED VIEW, THE RATION LAID DOWN BY THE HON 'BLE DELHI HIGH COURT I N THE CASE OF CIT VS HANDICRAFIS AND HANDLOOMS EXPORT CORPORATION OF IND IA LTD (2014) 360 ITR 130 (DEL) IS APPLICABLE TO THE ASSESSEE' FROM THE ABOVE OBSERVATION IT APPEARS THAT THE HON 'BLE ITAT HAD GIVEN RELIEF BASED ON THE RELATIONSHIP BETWEEN THE GOVERNMENT OF WEST BENGAL AND ASSESSEE BEING THAT OF SHAREHOLDER AND COMPANY AS AGAINST THE OTHE R CASES WHERE THE RELATIONSHIP WAS THAT OF GOVERNMENT AND INDUSTRY. IF THE GOVERNMENT OF WEST BENGAL WOULD HAVE GIVEN S IMILAR TYPES OF GRANT-IN-AID TO OTHER COMPANIES ALSO ON THE BASIS OF SOME SCHEMES T HEN THE SAID GRANT-IN-AID WOULD NOT HAVE BEEN CONSIDERED AS CAPITAL RECEIPT AS THE NATURE OF RELATIONSHIP OF GIVER AND TAKER BECOMES CHANGED FROM GOVERNMENT TO INDUSTRIES . IN THE INSTANT CASE GOVERNMENT OF WEST BENGAL IS A SOLE SHAREHOLDER OF THE APPELLANT AND IT HAD GIVEN THE GRANT-IN-AID TO IT IN THE CAPA CITY OF 1 00% SHAREHOLDER AND NOT IN THE CAPACITY OF GOVERNMENT AND THIS ISSUE HAS BEEN DEALT WITH AT LENGTH IN THE DECISION OF HON'BLE ITAT AS WELL AS HON 'BLE DELHI HIGH COURT BASED ON WHICH THE ITAT HAD DELETED THE ADDITION. THEREFORE THE ALL TYPES OF GRANT-IN-AID ARE COVERED BY THE SAID DECISION OF HON'BLE ITAT KOLKATA BENCHES IN OUR OPINION AND IT IS SUBMI TTED THAT THE ENTIRE ADDITION IN THIS REGARD BE DELETED' THE ISSUE IS WHETHER THE GRANT IN AID OF RS.4.68 CR ORES RECEIVED FROM THE GOVERNMENT OF WEST BENGAL IS A REVENUE RECEIPT OR A CAPITAL RECEIPT. THE A.O. HAS HELD THE SAME TO BE A REVENUE RECEIPT AND HAS BROUG HT IT TO TAX. THE ASSESSEE ARGUES THAT THE SAME IS A CAPITAL RECEIPT AND HAS P LACED RELIANCE ON THE DECISION OF THE JURISDICTIONAL ITAT, IN HIS OWN CASE FOR A.Y. 2 005-06 AND 2006-07. THE HON'BLE ITAT VIDE THEIR ORDER DTD. 19-04-2016 FOR A.Y. 2005 -06 HAVE DISMISSED THE APPEAL OF REVENUE ON THIS GROUND. THE OPERATIVE PARA STATING THE DECISION IS AS UNDER: 'ACCORDINGLY, WE ANSWER THE QUESTION OF LAW AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. THE LOWER AUTHORITIES HAVE ALSO MADE THE ADDITION ON THE GROUND THAT SIMILAR DISALLOWANCE WAS MADE IN TH E EARLIER ASSESSMENT YEAR 2003-04. IN THIS CONNECTION, WE FIND THAT THE A.O. MADE THE ADDITION OF GRANT- IN-AID FOR RS.48,22,698/- IN THE ASSESSMENT YEAR 20 03-04 BUT THE A.O. IN THE ASSESSMENT YEAR 2004-05 HAS ALLOWED THE RELIEF OF G RANT-IN-AID FOR RS.44 LACS. FROM THE FACTS OF THE CASE, WE FIND THAT GRANT-IN-A ID FOR RS.48,22,698/- PERTAINING TO THE ASSESSMENT YEAR 2003-04 WAS ALLOW ED IN THE IMMEDIATE SUBSEQUENT ASSESSMENT YEAR 2004-05 FOR RS.44 IACS. THE ID A/R HAS PRODUCED THE COPIES OF THE ASSESSMENT ORDERS FOR TH E AYS 2003-04 AND 2004- 05 IN SUPPORT OF ITS CLAIM AND THE SAME ARE PLACED ON THE RECORD SIMILARLY, WE ALSO FIND THAT THE GRANT-IN-AID RECEIVED BY THE ASS ESSEE IN THE ASSESSMENT YEAR 2004-05 WAS NOT DISALLOWED BY THE A.O. THE LD DR FAILED TO BRING ANYTHING ON RECORD CONTRARY TO THE ARGUMENT OF THE LD. A/R AND HE LEFT THE ISSUE TO THE DISCRETION OF THE BENCH. IN VIEW OF TH E ABOVE, AND IN THE INTEREST OF JUSTICE, WE ARE INCLINED TO TREAT THE GRANT-IN-A ID AS CAPITAL IN NATURE, THEREFORE, IT IS NOT LIABLE TO TAX. ' DECISION: IN ALLOWING THE APPEAL OF THE ASSESSEE, HON 'BLE TR IBUNAL HAS RELIED ON THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF HANDICRAFTS & HANDLOOMS EXPORT CORPORATION OF INDIA LTD. ITR 130 (DEL) FOR THE PROPOSITION THAT T HE GRANT GIVEN BY THE WEST BENGAL GOVERNMENT ASSESSEE WAS IN THE CAPACITY OF THE SOLE SHARE HOLDER OF THE COMPANY. ITA NO.845/KOL/2017 A. Y. 2008-09 ACIT, CIR-2(2), KOL. VS. THE STAT E FISHERIES DEVELOPMENT CORPN. LTD. PAGE 4 RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE JU RISDICTIONAL ITAT, THE GRANT IN AID RECEIVED FROM THE W.B GOVT. IS TREATED AS CAPITAL I N NATURE AND THE APPEAL OF THE ASSESSEE ON THIS ISSUE IS TREATED AS FOLLOWED. WE FIND THAT THE ABOVE REVENUES IMPUGNED SOLE GRIE VANCE SEEKING TO REVIVE ASSESSING OFFICERS ACTION TREATING GRANT-IN-AID IS SUE TO BE REVENUE RECEIPT IS NO MORE RES INTEGRA AS HON'BLE JURISDICTIONAL HIGH COURTS DECISION IN ITS OWN CASE (2018) 94 TAXMANN.COM 466 (CAL) PCIT KOLKATA-1 VS. STATE FISHERIES DEVELOPMENT CORPORATION LTD . FOR ASSESSMENT YEAR 2006-07 HAS UPHELD LEARNED CO-ORDINATE BENCHS ORDER UPHOLDING THE CIT (A)S SIMILAR STAND IN SAID EARLIER ASSESSMENT YEAR. THERE IS NO DISTINCTION ON FACTS OR LAW HIGHLIGHTED AT THE REVENUES BEHEST. WE ADOPT JUDICIAL CONSISTENCY TO AFFIRM CIT(A)S FINDINGS UNDER CHALLENGE. 3. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 26 /12/2018 SD/- SD/- ( %) (' %) (M.BALAGANESH) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S (- 26 / 12 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ACIT, CIR-2(2), AAYAKAR BHAWAN, P-7, CHO WRINGHEE SQ. KOLKATA-69 2. /RESPONDENT-M/S THE STATE FISHERIES DEVELOPMENT COR PORATION LTD., BIKASH BHAWAN, 1 ST FL, NORTH BLOCK, BIDHAN NAGAR, KOLKATA-91 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 ''3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ / 3,