BRIJKISHORE RAMVILAS MANIYAR, MUMBAI V. DCIT CIR 15(1), MUMBAI

ITA 8851/MUM/2010

• Counselvise Citation: 885119914 RSA 2010
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-10-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 20-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVIN VARMA
• Assessee Lawyers: A K SHARMA
• Keywords: Business income; Capital receipt
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI PRAMOD KUMAR (A.M) ITA NO.8851/MUM/2010(A.Y. 2007-08) MR. BRIJKISHORE RAMVILAS MANIYAR, 801-802, SHIVTAPI APARTMENT, GOREGAONKAR ROAD, GAMDEVI, MUMBAI 400 007 PAN:AIEPM 7908B (APPELLANT) VS. THE DY. CIT, CIR.15 (1), MATRU MANDIR, OPP.BHATIA HOSPITAL, TARDEO, MUMBAI . (RESPONDENT) APPELLANT BY : SHRI A.K.SHARMA RESPONDENT BY : SHRI PRAVIN VARMA DATE OF HEARING : 20/12/2011 DATE OF PRONOUNCEMENT : 23/12 /2011 ORDER PER N.V.VASUDEVAN, J.M, THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORD ER DATED 29/11/2010 OF CIT(A) -26, MUMBAI RELATING TO ASSESSMENT YEAR 2 007-08. THE GROUND OF APPEAL RAISED BY THE ASSESSEE READ AS FOLLOWS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE ORDER PASSED BY THE LEARNED CIT(A) IS ARBITRARY, UN JUSTIFIED AND BAD IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED CIT(A) ERRED IN REJECTING THE CLAIM OF THE APPELLANT THAT THE CENTRAL EXCISE REFUND IS A CAPITAL RECEIPT AND THER EFORE NOT LIABLE TO BE TAXED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER AND HOLDING THAT THE CENTRAL EXCISE REFUND ALTHOUGH IS BUSINESS INCOME BUT IS NOT A PROFIT AND GAINS DERIVED FROM I NDUSTRIAL UNDER ITA NO.3832/MUM/2010&CO 43/M/2011 2 TAKING AND HENCE THE APPELLANT IS NOT ENTITLED FOR DEDUCTION UNDER SECTION 801B. 4. (A) THE ABOVE GROUNDS ARE INDEPENDENT AND WITHOU T PREJUDICE TO ONE ANOTHER. (B) THE ASSESSEE CRAVES LEAVE TO ADD, DELETE, AND A LTER/MODIFY THE ABOVE GROUNDS OF APPEAL. 2. THE ASSESSEE IS AN INDIVIDUAL. HE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF IT BASED ELECTRONIC PRODUCTS WHICH IS PUBLIC ADDRESS SYSTEM. THE ASSESSEE FILED THE RETURN OF INCOME O N 30/10/2007 SHOWING THE TOTAL INCOME AT RS. 17,930/-. THE ASSESSEES U NIT OF MANUFACTURER OF IT ENABLED PUBLIC ADDRESS SYSTEM WAS LOCATED IN JAMMU, AND WAS UNDER THE NAME AND STYLE PLATINUM I.T. SOLUTIONS( HEREINAFTER REFERRED TO AS PITS) AND OTHER UNIT LOCATED IN THE STATE OF SIKKIM UNDER THE NAME AND STYLE OF PENINSULA TECHNOLOGIES (HEREINAFTER REFERRED TO AS PT). THE ASSESSEE MAINTAINED SEPARATE BOOKS OF ACCOUNTS OF THESE TWO UNDERTAKINGS SHOWING NET PROFIT AT RS. 10,12,51,571/- FROM THE UNDERTAKI NG PLATINUM I.T. SOLUTIONS AND RS. 29,93,267/- FROM PENINSULA TECHNO LOGIES. THE ASSESSEE HAS CLAIMED DEDUCTION OF RS.10,12,33,644/- U/S. 80 IB IN RESPECT OF PITS AND RS. 29,93,267/- U/S. 80IB RELATING TO PT. IN T HIS WAY TOTAL INCOME WAS COMPUTED AT RS. 17,930/- PAYING NIL TAX. 3. THE AO EXAMINED THE CLAIM OF DEDUCTION U/S.801B IN RESPECT OF PROFITS DERIVED FROM INDUSTRIAL UNDERTAKING PITS AND FOUND FROM PERUSAL OF TRADING AND PROFIT & LOSS ACCOUNT, FOR THE YEAR ENDING 31:0 3:07 RELATING TO PITS, THAT THE ASSESSEE HAS SHOWN CREDIT OF RS.13,71,62,622/- ON ACCOUNT OF EXCISE SELF CREDIT REPRESENTING THE REFUND OF EXCISE DUTY, PAID BY THE EXCISE DEPARTMENT. IT WAS ALSO NOTED FROM THE PROFIT & LOSS ACCOUNT TH AT THE ASSESSEE HAS PAID EXCISE DUTY TO THE EXTENT OF RS.12,88,70,880/- DURI NG THE PREVIOUS YEAR RELEVANT TO THE A. Y. 2007-08. THE ASSESSEE WAS CA LLED UPON BY THE AO TO GIVE EXPLANATION REGARDING THE CLAIM OF DEDUCTION U /S.801B WITH REFERENCE TO THE RECEIPT ON ACCOUNT OF REFUND OF EXCISE SELF -CREDIT VIDE ORDER SHEET ITA NO.3832/MUM/2010&CO 43/M/2011 3 NOTING DATED 30.10. 09. THE ASSESSEE FLIED A DETAI LED REPLY VIDE HIS LETTER DATED 10/11/2009. THE ASSESSEE SUBMITTED THAT THEY ARE MANUFACTURING IT ENABLED PUBLIC ADDRESS SYSTEM HAVING UNIT AT JAMM U IN THE NOTIFIED EXEMPTED AREA SINCE 2004, CLAIMING EXEMPTION UNDER NOTIFICATION 56/2002 DATED 17/11/2002, AS AMENDED UNDER CENTRAL EXCISE A CT AND ARE ELIGIBLE TO CLAIM EXEMPTION U/S.801B OF THE ACT. IT WAS FURTHE R STATED THAT THE CLAIM OF EXEMPTION IN RESPECT OF EXCISE DUTY, THE GOVERNMEN T HAS FORMALISED METHODOLOGY THAT THE UNIT IN JK/NORTH EASTERN STAT ES/KUTCH WILL HAVE TO TAKE CEN VAT CREDIT ON THE INPUTS AND TO DEPOSIT T HE EXCISE PAYABLE AFTER GIVING CREDIT OF CEN VAT AMOUNT UPON DISPATCH OF FINISHED GOODS AND THEREAFTER, BEFORE 7 TH OF SUBSEQUENT MONTH, THE UNIT HAS TO FILE REFUND C LAIM WITH THE CENTRAL EXCISE DEPARTMENT OF THE SAME AMOU NT WHICH THIS UNIT HAS DEPOSITED CASH. THE ASSESSEE TRIED TO MAKE A POINT THAT SINCE THE REFUND OF EXCISE DUTY IS REPRESENTING THE EXCISE DUTY PAID, I T HAS GOT DIRECT NEXUS WITH THE INDUSTRIAL ACTIVITIES, AND THEREFORE, IT IS PR OFIT DERIVED FROM THE INDUSTRIAL UNDERTAKING, WHICH IS ELIGIBLE FOR DEDUC TION U/S.801B. THE ASSESSEE HAS PLACED RELIANCE ON VARIOUS DECISIONS - CIT V/S. SIDDHARTH TUBES LTD. 296 ITR 221(MP), AARTI INDUSTRIES LTD. V/S. DC IT 95 TTJ 14 (AHMEDABAD), SURESH KUINAR BAJORIA V/S. ITO 113 TI] 364 (JAIPUR) ACIT V/S DHARATNPAL PREMCHAND LTD., 113 TTJ 290 (DELHI), CI T V/S. MADRAS MOTORS LTD. 257 ITR 60 (MAD) AND ACIT V/S. P S. APPARELS, 101 TTJ 29 CHENNAI. THE CLAIM MADE BY THE ASSESSEE MAY BE SUMMARISED AS FOLLOWS: - 1. THAT THE EXCISE DUTY PAID OR REFUNDED IS DIRECT LY CONNECTED WITH THE ACTIVITIES OF THE UNIT AND THEREFORE, THE SAME FORM ING PART OF THE PROFITS OF THE UNIT WILL NOT BE TAXABLE AND WILL BE EXEMPT U/S.801 B OF THE ACT. 2. THE CREDITING OR DEBITING OF THE PROFIT & LOSS A /C. IN RESPECT OF THE EXCISE REFUND IS ONLY A MODE OF ACCOUNTING THE NET RESULT BEING AS NIL THE REFUND AND PAYMENT OF IDENTICAL SUMS. 3. THERE IS NO REFUND OF EXCESS EXCISE DUTY PAID BU T ONLY REFUND OF THE AMOUNT ACTUALLY PAID. ITA NO.3832/MUM/2010&CO 43/M/2011 4 4. SUCH REFUNDS NOT INCOME AS SUCH, AND EVEN IF I T IS INCOME IT IS DIRECTLY DERIVED FROM THE INDUSTRIAL UNIT. AS SUCH. IF AT AL L IT IS TAXABLE, THE SAME WOULD B4E EXEMPT UNDER THE PROVISIONS OF S.80IB, 4. THE AO REJECTED THE CLAIM OF THE ASSESSEE RELYI NG ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS. CIT, 317 ITR 218 (SC). ACCORDING TO THE AO THE REFUND OF EXCISE D UTY IN VIEW OF NOTIFICATION IS MORE OR LESS EQUIVALENT TO DEPB OR DUTY DRAW BACK BENEFIT, WHERE THEY WERE CONSIDERED ONLY AS ANCILLARY PROFIT HAVING GOT NO F IRST DEGREE OF NEXUS. THEREFORE, IN HIS CONSIDERED VIEW, ON THE FACTUAL C IRCUMSTANCES OF THE CASE THE RATIO OF DECISION OF LIBERTY INDIA LTD. VS. CIT WAS FULLY APPLICABLE TO THE CASE OF THE ASSESSEE. ACCORDINGLY, THE REFUND OF E XCISE DUTY RECEIVED BY THE ASSESSEE WAS BROUGHT TO TAX TREATING IT AS INCOME A ND ALSO INCOME WHICH CANNOT BE CONSIDERED AS ONE DERIVED FROM THE INDUST RIAL UNDERTAKING ELIGIBLE FOR DEDUCTION U/S.80-IB OF THE ACT. 5. BEFORE CIT(A) THE ASSESSEE MADE A SUBMISSION TH AT THE EXCISE DUTY REFUND RECEIVED BY THE ASSESSEE IS CAPITAL RECEIPT AND NOT CHARGEABLE TO TAX. THE CIT(A) AFTER REFERRING TO THE DECISION OF THE H ONBLE SUPREME COURT IN THE CASE OF SAHANEY STEELS PRESS WORK, 228 ITR 253 (SC) AND PONNI SUGAR & CHEMICALS LTD., 306 ITR 392(SC) WAS OF THE VIEW THA T THE RECEIPT IN QUESTION WAS A REVENUE RECEIPT CHARGEABLE TO TAX. SUCH REFU ND OF EXCISE DUTY COLLECTED AND DEPOSITED BY THE ASSESSEE WAS GIVEN N OT FOR SETTING UP OF A NEW INDUSTRIAL UNDERTAKING OR MANUFACTURING UNITS OR FO R PURCHASE OF PLANTS OR MACHINERY OR FOR PURCHASE OF LAND OR FOR DEVELOPMEN T OF AREA, BUT WAS GIVEN AS INCENTIVE TO COME TO A PARTICULAR AREA FOR DOING THE BUSINESS THAT TOO AFTER START OF MANUFACTURING AND SELLING OUT OF EXCISABLE GOODS. THEREFORE, SUCH INCENTIVE IS OBVIOUSLY OPERATIONAL AID OR ADDITIONA L PROFIT OR SEPARATE BENEFIT TO THE ASSESSEE WHICH CANNOT BE PRESUMED TO BE CAPI TAL RECEIPT BUT AN INCOME OR BENEFIT WHICH IS UNDOUBTEDLY A REVENUE RE CEIPTS IN NATURE. THE CIT(A) WAS OF THE VIEW THAT THE CONTENTION OF THE ASSESSEE THAT THE ITA NO.3832/MUM/2010&CO 43/M/2011 5 MEMORANDUM, DATED 14TH JUNE, 2002 OF THE GOVERNMENT OF INDIA, UNDER WHICH THE ASSESSEE GOT THE REFUND OF EXCISE DUTY DI D NOT HAVE AS ITS OBJECT THE PURPOSE OF GENERATION OF EMPLOYMENT. HE HELD T HAT THE SAID MEMORANDUM OFFERED A BUNCH OF INCENTIVES, WITH MIXE D PURPOSES UNDERLYING THEREIN. THE PURPOSES OF EACH INCENTIVE HAS TO BE J UDGED IN THE CONTEXT OF EACH ONE OF THEM WITH REFERENCE TO THE GRANTEE PROV IDED BY THE GOVT. AS TO HOW SUCH SCHEME HAS HELPED THE ASSESSEE. SOME OF TH E INCENTIVES AVAILABLE BY THE NOTIFICATION/MEMORANDUM ARE CLEARLY IN THE C APITAL FIELD BUT OTHER ONES ARE IN THE FORM OF FINANCIAL CONCESSIONS AND F OR EASY MARKET ACCESS AND COMMERCIAL BENEFITS. IN THE OPINION OF THE CIT(A) O N EXAMINATION OF THE PURPOSE FOR THE GRANT OF CENTRAL EXCISE DUTY REFUND , IT WAS CLEAR THAT IT WAS OBVIOUSLY FOR THE PURPOSE OF ATTRACTION AND INCENTI VES WHEREBY THE RECIPIENT OF SUCH INCENTIVE IS ABLE TO FEEL SECURED OR SAFE F ROM ECONOMIC POINT OF VIEW. THE CIT(A) HELD THAT THE REFUND OF THE EXCISE DUTY UNDER CENTRAL EXCISE NOTIFICATION NO. 56 OF 2002 PAID BY THE MANUFACTURE R IS PROVIDED JUST TO MET OUT VARIOUS CHALLENGES, DIFFICULTIES OR WITH A VIEW TO ATTRACT THE MANUFACTURER TO A PARTICULAR AREA INSTEAD OF PRE-OC CUPIED INDUSTRIAL AREA OR DEVELOPED AREA. THUS SUCH EXEMPTION OF DUTY GIVES COMMERCIAL BENEFIT TO THE ASSESSEE. THE CIT(A) ALSO REFERRED TO THE FOL LOWING DECISIONS RENDERED IN THE CONTEXT OF THE VERY SAME SCHEME BY THE AMRITSAR BENCH OF THE ITAT. IN THIS BACKGROUND THE HONBLE AMRITSAR BENCH OF ITAT IN THE CASE OF VINODKUMAR JAIN PROP. OF M/S. V.K.METAL WORKS VS. I TO WARD 1(3) JAMMU ITA NO.180(ASR)/2009 DATED 31/12/2009 AND IN THE CA SE OF SHRI BALAJI ALLOYS VS. ITO AND IN THE OTHER CASE OF PEE ELL ALL OYS VS. ITO (ITA NO.209/ASR/2009, A.Y 2005-06); RAVENBHEL HEALTHCARE (P) LTD. VS. ITO (ITA NO.305/ASR/2009; A.Y 2005-06 AND ITO VS. RAVENBHEL HEALTHCARE (P) LTD. (ITA NO.302/ASR/2009; A.Y 2005-06), WHEREIN IT WAS HELD THAT THE RECEIPT IN QUESTION WAS A REVENUE RECEIPT CHARGEABLE TO TAX. 6. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE THE TRIBUNAL. BEFORE US LD. COUNSEL FOR THE ASSESS EE ADDRESSED ARGUMENTS OF ITA NO.3832/MUM/2010&CO 43/M/2011 6 GROUND NO.2 RAISED IN THE GROUNDS OF APPEAL. HE B ROUGHT TO OUR NOTICE THAT AS AGAINST DECISIONS OF THE AMRITSAR BENCH REFERRED TO BY THE CIT(A), APPEALS WERE FILED BEFORE THE HONBLE JAMMU & KASHMIR HIGH COURT IN THE CASE OF BALAJI ALLOYS VS. JCIT & OTHERS AND THE HONBLE JAM MU & KASHMIR HIGH COURT HAS TO DEAL WITH THE FOLLOWING QUESTION OF LA W. WHETHER THE AMOUNT OF EXCISE REFUND AND INTEREST S UBSIDY RECEIVED BY THE APPELLANTS-ASSESSEES, IN PURSUANCE TO THE INCEN TIVES ANNOUNCED AND SANCTIONED VIDE GOVERNMENT OF INDIA, MINISTRY OF COMMERCE AND INDUS TRY (DEPARTMENT OF INDUSTRIAL POLICY AND PROMOTION) OFFICE MEMORANDUM NO.1(13)200 0-NER DATED 14.6.2002 AND CENTRAL EXCISE NOTIFICATION NOS. 56 AND 57 DATED 14 .11.2002 AND OTHER NOTIFICATIONS ISSUED ON THE SUBJECT, PERTAINING TO THE INDUSTRIAL POLICY INTRODUCED IN THE STATE OF JAMMU AND KASHMIR, IS CAPITAL RECEIPT AND, THUS, NO T LIABLE TO TAX UNDER THE PROVISIONS OF THE ACT, OR REVENUE RECEIPT, AS OPINE D BY THE AUTHORITIES UNDER THE ACT? THE HONBLE COURT ANALYZED THE ENTIRE SCHEME UNDER WHICH THE EXCISE REFUND IN QUESTION WAS ALLOWED IN THE LIGHT OF THE JUDICIA L PRONOUNCEMENTS OF THE HONBLE SUPREME COURT IN THE CASE OF SAHNEY STEEL ( SUPRA), PONNI SUGARS (SUPRA) AND M/S MEPCO INDUSTRIES LIMITED, MADURAI VS. COMMISSIONER OF INCOME TAX AND ANR., 2009 (7) SUPREME 564 AND HELD AS FOLLOWS: 20) THEREFORE, IN VIEW OF THE CLEAR LEGAL POSITION ADUMBRATED BY THE HON'BLE SUPREME COURT OF INDIA ON THE ISSUE IN QUES TION, THAT TO DETERMINE THE NATURE AND INTENT OF THE INCENTIVES AS TO WHETHER THOSE WERE REVENUE RECEIPTS OR CAPITAL RECEIPTS, THE PURP OSE UNDERLYING THE INCENTIVES WAS THE DETERMINATIVE TEST, THERE MA Y NOT BE ANY NECESSITY OF REFERRING TO THE JUDGMENTS OF OTHER HIGH COURTS OF THE COUNTRY RELIED UPON BY THE APPELLANTS' LEARNED CO UNSEL, SOME OF WHICH HAD BEEN CONSIDERED BY THE HON'BLE SUPREME C OURT OF INDIA IN THE ABOVE REFERRED CASES. 21) THUS, FINDING THAT THE NEW INDUSTRIAL POLICY AN D OTHER CONCESSIONS FOR THE STATE OF JAMMU AND KASHMIR HAS NOT BEEN C ORRECTLY APPRECIATED BY THE APPELLATE TRIBUNAL, WE PROCEED TO EXAMINE THE TRUE INTENT AND PURPOSE UNDERLYING THE POLICY AND T HE CONCESSIONS CONTEMPLATED BY THE OFFICE MEMORANDUM OF JUNE 14, 2 002 AND STATUTORY NOTIFICATIONS ISSUED IN THIS BEHALF. ITA NO.3832/MUM/2010&CO 43/M/2011 7 22) PERUSAL OF THE OFFICE MEMORANDUM DATED 14.06.20 02 INDICATING NEW INDUSTRIAL POLICY AND OTHER CONCESSIONS FOR T HE STATE OF JAMMU AND KASHMIR, MAKES IT EXPLICIT THAT THE CONCESSIO NS WERE ISSUED TO ACHIEVE TWIN OBJECTS VIZ. (I) ACCELERATION OF INDUS TRIAL DEVELOPMENT IN THE STATE OF JAMMU AND KASHMIR, WHICH HAD BEEN FOUN D LAGGING BEHIND IN SUCH DEVELOPMENT AND (II) GENERATION OF EMPLOYMENT IN THE STATE OF JAMMU AND KASHMIR. AMENDMENT INTRODUCED TO THE OFFICE MEMORANDUM VIDE NOTIFICATION OF NOVEMBER 28, 2003 OF THE GOVERNMENT OF INDIA, MINISTRY OF COMMERCE AND INDUS TRY (DEPARTMENT OF INDUSTRIAL POLICY AND PROMOTION) ELO QUENTLY DEMONSTRATES THE CENTRAL GOVERNMENT'S INTENTION I N EXTENDING THE INCENTIVES. THE GOVERNMENT'S OBJECTIVE, AS CONVEYE D BY HON'BLE THE PRIME MINISTER AT SRINAGAR ON APRIL 19, 2003, WAS, FOR CREATION OF ONE LAC EMPLOYMENT AND SELF EMPLOYMENT OPPORTUNITIES IN JAMMU AND KASHMIR STATE. 23) TO ACHIEVE THE PURPOSE AND OBJECTIVE REFERRED T O HEREIN ABOVE, IT WAS, INTER ALIA, PROVIDED IN THE CENTRAL EXCISE NO TIFICATIONS THAT THE EXEMPTIONS CONTAINED IN THE NOTIFICATIONS WOULD BE AVAILABLE ONLY ON PRODUCTION OF CERTIFICATE FROM GENERAL MANAGER OF THE CONCERNED DISTRICT INDUSTRY CENTRE TO THE JURISDICTIONAL DEPU TY COMMISSIONER OF THE CENTRAL EXCISE OR THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE, AS THE CASE MAY BE, TO THE EFFECT THAT THE UNIT HAD C REATED REQUIRED ADDITIONAL REGULAR EMPLOYMENT, WHICH WOULD NOT, HOW EVER, INCLUDE EMPLOYMENT PROVIDED BY THE INDUSTRIAL UNITS TO DAIL Y WAGERS OR CASUAL EMPLOYEES ENGAGED IN THE UNITS. 24) A CLOSE READING THE OFFICE MEMORANDUM AND THE A MENDMENT INTRODUCED THERETO WITH PARA NO.3 APPEARING IN THE CENTRAL EXCISE NOTIFICATION NOS.56 AND 57 OF NOVEMBER 11, 2002, TH US, MAKES IT AMPLY CLEAR THAT THE ACCELERATION OF DEVELOPMENT OF INDUSTRIES IN THE STATE WAS CONTEMPLATED WITH THE OBJECT OF GENERATIO N OF EMPLOYMENT IN THE STATE OF JAMMU AND KASHMIR AND THE GENERATION OF EMPLOYMENT, SO CONTEMPLATED, WAS NOT ONLY CASUAL OR TEMPORARY; BUT WAS ON THE OTHER HAND, OF PERMANENT NATURE. 25) CONSIDERED THUS, THE PARAMOUNT CONSIDERATION OF THE CENTRAL GOVERNMENT IN PROVIDING THE INCENTIVES TO THE NEW INDUSTRIAL UNITS AND SUBSTANTIAL EXPANSION OF THE EXISTING UNITS, W AS THE GENERATION OF EMPLOYMENT THROUGH ACCELERATION OF INDUSTRIAL DEVE LOPMENT, TO DEAL WITH THE SOCIAL PROBLEM OF UNEMPLOYMENT IN THE STAT E, ADDITIONALLY CREATING OPPORTUNITIES FOR SELF EMPLOYMENT, HENCE A PURPOSE IN PUBLIC INTEREST. 26) IN THIS VIEW OF THE MATTER, THE INCENTIVES PROV IDED TO THE INDUSTRIAL UNITS, IN TERMS OF THE NEW INDUSTRIAL POLICY, FOR ACCELERATED INDUSTRIAL ITA NO.3832/MUM/2010&CO 43/M/2011 8 DEVELOPMENT IN THE STATE, FOR CREATION OF SUCH IND USTRIAL ATMOSPHERE AND ENVIRONMENT, WHICH WOULD PROVIDE ADDITIONAL PE RMANENT SOURCE OF EMPLOYMENT TO THE UNEMPLOYED IN THE STATE OF JAM MU AND KASHMIR, WERE IN FACT, IN THE NATURE OF CREATION OF NEW ASSETS OF INDUSTRIAL ATMOSPHERE AND ENVIRONMENT, HAVING THE POTENTIAL OF EMPLOYMENT GENERATION TO ACHIEVE A SOCIAL OBJECT. SUCH INCENTIVES, DESIGNED TO ACHIEVE PUBLIC PURPOSE, CAN NOT, BY ANY STRETCH OF REASONING, BE CONSTRUED AS PRODUCTION OR OPERATION AL INCENTIVES FOR THE BENEFIT OF ASSESSES ALONE. 27) THUS, LOOKING TO THE PURPOSE, OF ERADICATION OF THE SOCIAL PROBLEM OF UNEMPLOYMENT IN THE STATE BY ACCELERATION OF TH E INDUSTRIAL DEVELOPMENT AND REMOVING BACKWARDNESS OF THE AREA THAT LAGGED BEHIND IN INDUSTRIAL DEVELOPMENT, WHICH IS CERTAINL Y A PURPOSE IN THE PUBLIC INTEREST, THE INCENTIVES PROVIDED BY THE OFF ICE MEMORANDUM AND STATUTORY NOTIFICATIONS ISSUED IN THIS BEHALF , TO THE APPELLANTS- ASSESSES, CANNOT BE CONSTRUED AS MERE PRODUCTION A ND TRADE INCENTIVES, AS HELD BY THE TRIBUNAL. 28) MAKING OF ADDITIONAL PROVISION IN THE SCHEME TH AT INCENTIVES WOULD BECOME AVAILABLE TO THE INDUSTRIAL UNITS, ENTITLE D THERETO, FROM THE DATE OF COMMENCEMENT OF THE COMMERCIAL PRODUCTION , AND THAT THESE WERE NOT REQUIRED FOR CREATION OF NEW ASSETS CAN NOT BE VIEWED IN ISOLATION, TO TREAT THE INCENTIVES AS PRODUCTION IN CENTIVES, AS HELD BY THE TRIBUNAL, FOR THE MEASURE SO TAKEN, APPEARS TO HAVE BEEN INTENDED TO ENSURE THAT THE INCENTIVES WERE MADE AVAILABLE ONLY TO THE BONAFIDE INDUSTRIAL UNITS SO THAT LARGER PUBLIC INTEREST OF DEALING WITH UNEMPLOYMENT IN THE STATE, AS INTENDED, IN TERMS OF THE OFFICE MEMORANDUM, WAS ACHIEVED. 29) THE OTHER FACTORS, WHICH HAD WEIGHED WITH THE T RIBUNAL IN DETERMINING THE INCENTIVES AS PRODUCTION INCENTIV ES MAY NOT BE DECISIVE TO DETERMINE THE CHARACTER OF THE INCENTIV E SUBSIDIES, WHEN IT IS FOUND, AS DEMONSTRATED IN THE OFFICE MEMORANDUM, AMENDMENT INTRODUCED THERETO AND THE STATUTORY NOTIFICATION T OO THAT THE INCENTIVES WERE PROVIDED WITH THE OBJECT OF CREA TING AVENUES FOR PERPETUAL EMPLOYMENT, TO ERADICATE THE SOCIAL PROB LEM OF UNEMPLOYMENT IN THE STATE BY ACCELERATED INDUSTRIAL DEVELOPMENT. 30) FOR ALL WHAT HAS BEEN SAID ABOVE, THE FINDING O F THE TRIBUNAL ON THE FIRST ISSUE THAT THE EXCISE DUTY REFUND, INTER EST SUBSIDY AND INSURANCE SUBSIDY WERE PRODUCTION INCENTIVES, HENC E REVENUE RECEIPT, CANNOT BE SUSTAINED, BEING AGAINST THE LAW LAID DOWN BY HON BLE SUPREME COURT OF INDIA IN SAHNEY STEEL AND PON NI SUGARS CASES (SUPRA). ITA NO.3832/MUM/2010&CO 43/M/2011 9 31) THE FINDING OF THE TRIBUNAL THAT THE INCENTIVES WERE REVENUE RECEIPT IS, ACCORDINGLY, SET ASIDE HOLDING THE INCE NTIVES TO BE CAPITAL RECEIPT IN THE HANDS OF THE ASSESSES. 7. THE AFORESAID DECISION OF THE HONBLE JAMMU & K ASHMI HIGH COURT IN RESPECT OF THE VERY SAME SCHEME WITH WHICH WE ARE C ONCERNED IN THE PRESENT APPEAL, WE ARE OF THE VIEW THAT THE RECEIPT IN QUES TION IS CAPITAL RECEIPT NOT CHARGEABLE TO TAX. RESPECTFULLY FOLLOWING THE AFOR ESAID DECISION, WE HOLD THAT THE RECEIPT IN QUESTION IS CAPITAL RECEIPT NOT CHAR GEABLE TO TAX. IN VIEW OF THE ABOVE THE QUESTION OF ALLOWING DEDUCTION UNDER SECT ION 80 IB OF THE ACT ON THE EXCISE DUTY REFUND DOES NOT ARISE FOR CONSIDERA TION. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 23 RD DAY OF DEC. 2011. SD/- SD/- (PRAMOD KUMAR ) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED. 23RD DEC.2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RB BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. ITA NO.3832/MUM/2010&CO 43/M/2011 10 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 20/12/2011 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 21/12/2011 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER