M/s Industrial Organics Limited, Ludhiana V. DCIT, Ludhiana

ITA 860/CHANDI/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73586 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-03-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 17-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Capital receipt; Revised return
• Section: 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R. SOOD, A.M AND MS. SUSHMA CHOWLA, JM ITA NO. 860/CHD/2012 ASSESSMENT YEAR : 2006-07 INDUSTRIAL ORGANICS LTD VS. D.C.I.T. CIRCLE I, (NOW IOL CHEMICALS AND LUDHIANA PHARMACEUTICALS LTD) 85, INDUSTRIAL AREA A LUDHIANA AABCI 1842 A (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI ASHWANI KUMAR DEPARTMENT BY: SHRI MANJIT SINGH DATE OF HEARING 1 1.3.2014 DATE OF PRONOUNCEMENT 20.3.2014 O R D E R PER T.R.SOOD, A.M THIS APPEAL IS DIRECTED AGAINST THE ORDER DATED 12. 7.2012 OF THE LD. CIT(A)-II. LUDHIANA. 2 IN THIS APPEAL THE ASSESSEE HAS FILED THE FOLLOWI NG GROUNDS: 1 THAT ORDER PASSED U/S 250(6) BY THE LD. CIT(A)-I I, LUDHIANA IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS HE WAS NOT JUSTIFIED TO ARBITRARILY UPHOLD THE ACTION OF THE ASSESSING OFFI CER IN NEGATING THE CLAIM MADE BY THE ASSESSEE OF TREATMENT OF SALES TA X SUBSIDY AMOUNTING TO RS. 60695274/- TO BE CAPITAL IN NATURE ON THE G ROUND THAT THE SAME HAD NOT BEEN CLAIMED BY FILING A REVISED RETURN. 3 AFTER HEARING BOTH THE PARTIES WE FIND THAT DURIN G THIS YEAR THE ASSESSEE HAS RECEIVED SALES TAX SUBSIDY AMOUNTI NG TO RS. 60695271/- WHICH WAS TREATED AS REVENUE RECEIPT AND RETURN WAS FILED ACCORDINGLY. DURING ASSESSMENT PROCEEDING S THE ASSESSEE SUBMITTED A LETTER DATED 16.10.2008 THROUG H WHICH IT WAS STATED THAT THOUGH THIS RECEIPT WAS TREATED AS REVENUE RECEIPT BUT SINCE A SLP HAS BEEN ADMITTED BY THE HO N'BLE 2 SUPREME COURT THEREFORE THIS AMOUNT OF SALES TAX SU BSIDY WAS TREATED AS CAPITAL RECEIPT. THE ASSESSING OFFICER EXAMINED THE SUBMISSIONS AND DID NOT FIND FORCE AND REJECTED THE CLAIM VIDE PARA 2.1 OF THE ASSESSMENT ORDER WHICH IS AS UNDER : I HAVE GONE THROUGH AND CONSIDERED THE EXPLANATION FURNISHED BY THE ASSESSE ON THIS ISSUE. SINCE THE ISSUE ALREADY STAN DS COVERED BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN TH E ASSESSEES OWN CASE FOR THE A.Y. 1998-99 IN FAVOUR OF REVENUE, IT MERIT S NO CONSIDERATION THOUGH ITS SLP AGAINST THE SAID DECISION IS PENDING IN THE HONBLE SUPREME COURT OF INDIA. STILL, HOWEVER, FACTS IN TH E ASSESSEES CASE ARE FOUND TO BE VARIANCE IN AS MUCH AS IN THE YEAR UNDE R ASSESSMENT, NEITHER THE ASSESSEE MADE ANY CLAIM FOR SUCH SUBSID Y AS TO BE CAPITAL RECEIPT IN ITS RETURN OF INCOME NOR BY ANY FOOT NOT E IN THE COMPUTATION CHART THERETO NOR THE ASSESSEE HAS FILED ANY REVISE D RETURN BY VALIDITY MAKING THIS CLAIM NOR THE RETURN FOR THE YEAR UNDER ASSESSMENT COULD BE REVISED AFTER 31.03.2008. AS REGARDS THE CLAIM MADE VIDE ITS LETTER DATED 16.10.2008, IT HAS NO LEGAL STANDING AS NO CLAIM MA DE DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON A LETTER WITHOUT REVIS ING THE RETURN IS ALLOWABLE IN VIEW OF THE CASE OF GOETZE (INDIA) LTD . VS. CIT REPORTED AT (2006) 284 ITR 323 (SC) IN WHICH IT HAS BEEN SPECIF ICALLY HELD THAT NO CLAIM BE MADE EXCEPT BY REVISIO OF RELEVANT RETURN. THUS CONSIDERING AND FOLLOWING, THE CLAIM MADE BY THE ASSESSEE FOR CONSI DERING SALES TAX SUBSIDY AS CAPITAL RECEIPT IS HEREBY REJECTED ACCOR DINGLY WITH THE RESULT THAT THE AMOUNT OF SALES TAX SUBSIDY IS TREATED AS REVENUE RECEIPT AS ITSELF DECLARED BY THE ASSESSEE. 4 ON APPEAL BEFORE THE LD. CIT(A) FORM NO. 8 U/S 15 8 A(1) WAS FILED. THE LD. CIT(A) IN TURN FORWARDED THE SA ME TO THE ASSESSING OFFICER. THE ASSESSING OFFICER GAVE THE FOLLOWING REPORT: FROM THE ABOVE STATED FACTS, IT IS NOTICED THAT TH E GROUND RAISED BY THE ASSESSEE BEFORE THE LD. CIT(A) ON THE ISSUE OF SALE S-TAX SUBSIDY IS AT VARIANCE FROM THE GROUND OF APPEAL PENDING BEFORE T HE APEX COURT. IN FACT, FOR A/Y 2006-07 THE ASSESSEE HIMSELF HAS TREA TED THE SALES TAX SUBSIDY AS REVENUE RECEIPT IN ITS RETURN OF INCOME. THUS THE QUESTION OF TREATING SALES TAX SUBSIDY AS REVENUE RECEIPT OR CA PITAL RECEIPT DID NOT ARISE AT ALL. IT IS IMPORTANT TO CLARIFY HERE THAT THE AO HAS INFACT ACCEPTED THE CLAIM OF THE ASSESSEE AS PER ITS RETURN OF INCO ME BY TREATING SALES TAX SUBSIDY AS REVENUE RECEIPT. THE ASSESSEE SUBSEQ UENTLY CLAIMED IT TO BE A CAPITAL RECEIPT VIDE LETTER DATED 16.10.2008 D URING THE COURSE OF ASSESSMENT PROCEEDINGS. THIS CLAIM WAS REJECTED BY THE AO ON THE GROUND THAT THE ASSESSEES CLAIM COULD NOT BE ENTER TAINED AS IT HAS NOT FILED REVISED RETURN AND IT HAS NO LEGAL STANDING A S NO CLAIM MADE DURING THE CORUSE OF ASSESSMENT PROCEEDINGS ON A LETTER WI THOUT REVISING THE RETURN IS ALLOWABLE IN VIEW OF THE CASE OF GOETZE ( INDIA)LTD. VS. CIT REPORTED AT (2006) 284 ITR 323 (SC) IN WHICH IT HAS BEEN SPECIFICALLY HELD THAT NO CLAIM BE MADE EXCEPT BY REVISION OF RE LEVANT RETURN. THIS REPORT WAS CONFRONTED TO THE ASSESSEE. IN RES PONSE IT WAS STATED THAT CLAIM IS BEING MADE BEFORE THE LD. CIT( A) AND THERE WAS NO BAR FOR ADMISSION OF SUCH CLAIM IN VIEW OF T HE DECISION 3 OF HON'BLE SUPREME COURT IN CASE OF NATIONAL THERMA L POWER CO. LTD VS. CIT, 229 ITR 383 WHICH HAS BEEN CONFIRM ED BY THE HON'BLE DELHI HIGH COURT IN CASE OF CIT VS. JAI PA RABOLIC SPRINGS LTD., 306 ITR 42. 5 THE LD. CIT(A) DID NOT FIND FORCE IN THE SUBMISSI ONS AND REJECTED THE CLAIM IN VIEW OF THE DECISION OF HON'B LE SUPREME COURT IN CASE OF GOETZE (INDIA) LTD VS. CIT, (SUPR A). 6 BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THERE WAS NO JUSTIFICATION IN REJECTING THIS C LAIM PARTICULARLY IN THE LIGHT OF THE DECISION OF HON'BL E PUNJAB AND HARYANA HIGH COURT IN CASE OF CIT VS. RANCO INTERNATIONAL, 332 ITR 306 AND HON'BLE DELHI HIGH COURT IN CASE OF CIT VS. JAI PARABOLIC SPRINGS LTD. (SUPR A). 7 ON THE OTHER HAND, THE LD. D.R. FOR THE REVENUE SUPPORTED THE ORDER OF THE LD. CIT(A). 8 AFTER CONSIDERING THE RIVAL SUBMISSIONS AND THE M ATERIAL ON RECORD, WE FIND FORCE IN THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE. HON'BLE PUNJAB AND HARYANA HIGH COURT IN CASE OF CIT VS. RANCO INTERNATIONAL CLEARLY OBSERVE D THAT THERE WAS NO BAR IN ADMISSION OF FRESH CLAIM BY AN APPELL ATE AUTHORITY. SAME VIEW HAS BEEN TAKEN BY THE HON'BLE DELHI HIGH COURT IN CASE OF CIT VS. JAI PARABOLIC SPRINGS LTD . (SUPRA). HOWEVER, AT THE SAME TIME THE ISSUE ON MERITS REMAI NS DECIDED AGAINST THE ASSESSEE IN THE LIGHT OF THE DECISION O F HON'BLE PUNJAB AND HARYANA HIGH COURT IN CASE OF ABHISHEK INDUSTRIES, 286 ITR 1. THEREFORE WE SET ASIDE THE O RDER OF THE LD. CIT(A) AND REMIT THE MATTER BACK TO HIS FILE WI TH A DIRECTION TO ADMIT THE CLAIM AND THEN KEEP IT IN ABEYANCE UND ER THE 4 PROVISIONS OF SECTION 158A(1) AS THE FORM NO. 8 H AS BEEN FILED BY THE ASSESSEE. 8 IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 20.3.2014 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 20.3.2014 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR