M/s. Bharat Re-rolling Steel Industries, Pune V. Income-tax Officer, Sangli

ITA 859/PUN/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7912 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 07-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHABANA PARVEEN
• Keywords: Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.859/PUN/2017 / ASSESSMENT YEAR : 2013-14 M/S. BHARAT RE-ROLLING STEEL INDUSTRIES, C/O SHAH KHANDELWAL JAIN & ASSOCIATES, CAS, LEVEL-3, RIVERSIDE BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE-411001. PAN : AABFB4726H ....... / APPELLANT / V/S. ITO, WARD-2(3), SANGLI. / RESPONDENT ASSESSEE BY : SHRI NEELESH KHANDELWAL REVENUE BY : SMT. SHABANA PARVEEN / DATE OF HEARING : 04.07.2019 / DATE OF PRONOUNCEMENT : 14.08.2019 / ORDER PER D. KARUNAKARA RAO, AM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-1, KOLHAPUR DATED 06.02.2017 FOR THE ASSESSMENT YEAR 2013-14. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER THE PROVISIONS OF LAW, IT BE HELD THAT THE LD. AO AND THE HONBLE CIT(A) ERRED IN TREATING THE SUBSIDY RECEIVED AMOUNTING TO RS.41,66,000/- AS REVENUE IN NATURE. IN VIEW OF THE SAME, THE ADDITION MADE BY THE LD. AO AND CONFIRMED BY THE HONBLE CIT(A) IS UNJUSTIFIED, IMPROPER, AND CONTRARY TO THE PROVISIONS OF LAW AND SCHEME. THE ADDITION MADE BE DELETED. THE APPELLANT BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT. 2 ITA NO.859/PUN/2017 2. THE APPELLANT PRAYS TO BE ALLOWED TO ADD, AMEND, MODIFY, RECTIFY, DELETE, AND RAISE ANY GROUNDS OF APPEAL AT THE TIME OF HEARING. 3. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE RAISED IN THE GROUNDS RELATES TO THE TREATMENT OF THE SALES TAX SUBSIDY IN MATTERS OF TAXATION OF THE SAME UNDER I.T. ACT. WHILE THE ASSESSEE CONSIDERED THE SAME AS A CAPITAL RECEIPT, THE ASSESSING OFFICER AS WELL AS THE CIT(A) TREATED THE SAME AS REVENUE RECEIPT AND TAXED THE SAME. OTHERWISE, THE ASSESSEE RECEIVED RS.41,66,000/- IN TWO INSTALMENTS BEING SALES TAX REFUND. MENTIONING THAT THE SAID SALES TAX REFUND WAS GRANTED UNDER THE PACKAGE SCHEME OF INCENTIVES, 2007, LD. COUNSEL SUBMITTED THAT THE ASSESSEES RECEIVED SIMILAR SUBSIDY IN THE PAST AND THE SAME WAS THE SUBJECT-MATTER OF ADJUDICATION IN VARIOUS DECISIONS OF THE TRIBUNAL OF PUNE BENCHES. REFERRING TO THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF KLAUS MULTIPARKING SYSTEM PVT. LTD. VS. ITO VIDE ITA NO.498/PUN/2017 FOR THE ASSESSMENT YEAR 2012-13 DATED 03.06.2019, LD. COUNSEL SUBMITTED THAT ON SIMILAR FACTS, THE SAID SUBSIDY WAS HELD NOT TAXABLE, BEING CAPITAL IN NATURE. 4. ON THE OTHER HAND, LD. DR FOR THE REVENUE RELIED HEAVILY ON THE ORDERS OF THE REVENUE AUTHORITIES. 5. ON HEARING BOTH THE SIDES, WE FIND THE CONTENTS OF PARA 4 AND 5 OF THE SAID ORDER OF THE TRIBUNAL (SUPRA) ARE RELEVANT AND THE SAME ARE EXTRACTED HEREUNDER :- 4. BOTH SIDES HEARD. ORDERS OF THE AUTHORITIES BELOW PERUSED. THE ONLY ISSUE RAISED BY THE ASSESSEE IN APPEAL IS AGAINST THE FINDINGS OF 3 ITA NO.859/PUN/2017 COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE ASSESSMENT ORDER HOLDING THE INCENTIVE RECEIVED BY ASSESSEE UNDER INDUSTRIAL PROMOTION SUBSIDY SCHEME, 2007 AMOUNTING TO RS.26,49,450/- AS REVENUE RECEIPT CHARGEABLE TO TAX. WE FIND THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEARS I.E. ASSESSMENT YEARS 2010-11 AND 2011-12 SIMILAR ADDITIONS WERE MADE BY THE ASSESSING OFFICER HOLDING THE SUBSIDY RECEIVED BY THE ASSESSEE UNDER INDUSTRIAL PROMOTION SUBSIDY SCHEME. THE TRIBUNAL IN APPEALS BY THE ASSESSEE IN ITA NOS. 308 & 309/PUN/2017 (SUPRA) AFTER CONSIDERING THE FACTS OF THE CASE, AND ON THE DECISION OF TRIBUNAL IN THE CASE OF INNOVENTIVE INDUSTRIES LTD. VS. DCIT IN ITA NO. 601/PN/2013 FOR ASSESSMENT YEAR 2009-10 DECIDED ON 24-03-2017 HELD THAT THE SUBSIDY RECEIVED BY THE ASSESSEE UNDER THE PACKAGE INCENTIVE SCHEME, 2007 IS CAPITAL RECEIPT IN THE HANDS OF ASSESSEE. THE OPERATIVE PART OF THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEARS IS REPRODUCED HERE-IN-BELOW : 17. THE ISSUE ARISING BEFORE US IS IDENTICAL TO THE ISSUE BEFORE THE TRIBUNAL IN INNOVENTIVE INDUSTRIES LTD. VS. DCIT (SUPRA) AND THE ASSESSEE HAD RECEIVED INCENTIVE / SUBSIDY FROM THE STATE GOVERNMENT FOR SETTING UP THE PROJECT IN THE CLASSIFIED AREA. HENCE, WE HOLD THAT SUBSIDY RECEIVED BY THE ASSESSEE UNDER PSI, 2007 IS CAPITAL RECEIPT IN THE HANDS OF ASSESSEE. ACCORDINGLY, WE DELETE THE ADDITION OF 26,37,000/-. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 5. THE LD. DR HAS FAIRLY ADMITTED THAT THE FACTS IN ASSESSMENT YEAR UNDER APPEAL ARE IDENTICAL TO THE FACTS IN ASSESSMENT YEARS 2010-11 AND 2011-12. NO CONTRARY DECISION HAS BEEN BROUGHT TO OUR NOTICE BY THE DEPARTMENT. THEREFORE, WE FIND NO REASON TO TAKE A DIFFERENT VIEW. RESPECTFULLY FOLLOWING THE ORDER OF CO-ORDINATE BENCH OF TRIBUNAL, WE HOLD THAT THE SUBSIDY RECEIVED BY THE ASSESSEE UNDER INDUSTRIAL PROMOTION SUBSIDY SCHEME, 2007 IS CAPITAL RECEIPT, NOT LIABLE TO BE TAXED IN THE HANDS OF ASSESSEE. ACCORDINGLY, THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ARE REVERSED AND THE APPEAL OF ASSESSEE IS ALLOWED. 6. CONSIDERING THE ABOVE AND FOLLOWING THE PRINCIPLES OF CONSISTENCY, WE ARE OF THE OPINION, RECEIPT OF SUBSIDY UNDER CONSIDERATION PACKAGE INCENTIVE SCHEME, 2007 CONSTITUTES A CAPITAL RECEIPT. THE CONTENTS OF PARA 7.0 OF THE ORDER OF THE CIT(A) CONFIRMS THE DETAILS ON THE PACKAGE INCENTIVE SCHEME, 2007. THE GROUNDS RAISED BY THE ASSESSEE SHOULD BE ALLOWED IN FAVOUR OF THE ASSESSEE. THUS, THE RELEVANT GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 4 ITA NO.859/PUN/2017 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 14 TH DAY OF AUGUST, 2019. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 14 TH AUGUST, 2019. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-1, KOLHAPUR. 4. THE PR. CIT-I, KOLHAPUR. 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.