Brahmaputra Carbon Ltd, Kolkata V. C.I.T - I,kolkata, Kolkata

ITA 894/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4666 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 22-04-2013
• Court: TRIBUNAL
• Department Lawyers: S SRIVASTAVA
• Keywords: Depreciation; Wrong claim
• Section: 143(3); 80IB; 37; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SHRI P.M.JAGTAP, AM & SRI N.V.VA SUDEVAN, JM ] I.T.A NO. 894/KOL/201 3 ASSESSMENT YEAR : 2008-0 9 BRAHMAPUTRA CARBON LTD. -VS.- C.I.T.- I, KOLKATA KOLKATA KOLKATA [PAN : AAACH7120D]] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SUBASH AGAR WAL, ADVOCATE FOR THE RESPONDENT : SHRI S.SRIVASTAVA, CIT (DR) DATE OF HEARING : 24.05.2016. DATE OF PRONOUNCEMENT : 01.06.2016 ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 28.03.2013 OF CIT-I, KOLKATA PASSED U/S 263 OF THE INCOME TAX ACT, 1961 (ACT). 2. THE ASSESSEE IS A COMPANY. IT IS ENGAGED IN TH E BUSINESS OF MANUFACTURE OF CALCINED PETROLEUM COKE. FOR A.Y.2008-09 THE ASSESSEE FILED RETURN OF INCOME DEC LARING TOTAL INCOME AT RS. NIL. THE ASSESSEE WAS ENTITLED TO CLA IM DEDUCTION U/S 80IC(2)(A)(III) OF THE ACT. SEC.80-IC (1) OF THE ACT PROVIDES THAT WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN E NTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB-SECTION (2) , THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED, IN COMP UTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION FROM SUCH PROFITS AND GAINS, AS SPECIFI ED IN SUB-SECTION (3). THE ASSESSEE IS AN UNDERTAKING OR AN ENTERPRISE REFERRED TO SEC.80- IC(2)(III) OF THE ACT VIZ., AN UNDERTAKING WHICH HAS BEGUN OR BEGINS TO MANUFACTU RE OR PRODUCE ANY ARTICLE OR THING, NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE THI RTEENTH SCHEDULE, OR WHICH 2 ITA NO.894/KOL/2013 M/S.BRAHMAPUTRA CARBOND LTD. A.YR.2008-09 2 MANUFACTURES OR PRODUCES ANY ARTICLE OR THING, NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE THIRTEENTH SCHEDULE AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE PERIOD BEGINNING ON THE 24TH DAY OF DECEMBER, 1997 AND EN DING BEFORE THE 1ST DAY OF APRIL, 2007, IN ANY EXPORT PROCESSING ZONE OR INTEGRATED I NFRASTRUCTURE DEVELOPMENT CENTRE OR INDUSTRIAL GROWTH CENTRE OR INDUSTRIAL ESTATE OR INDUSTRIAL PARK OR SOFTWARE TECHNOLOGY PARK OR INDUSTRIAL AREA OR THEME PARK, A S NOTIFIED BY THE BOARD IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY T HE CENTRAL GOVERNMENT IN THIS REGARD, IN ANY OF THE NORTH-EASTERN STATES. THERE IS NO DISPUTE WITH REGARD TO THE QUESTION AS TO WHETHER THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION U/S.80-IC(2)(III) OF THE ACT. WHILE ARRIVING AT THE PROFITS ON WHICH THE AFORESAI D DEDUCTION WAS CLAIMED BY THE ASSESSEE THE ASSESSEE CONSIDERED THE TRANSPORT SUBS IDY, CENTRAL INSURANCE SUBSIDY, POWER SUBSIDY AND INTEREST SUBSIDY OF RS.1,00,30,783/-, R S.4,18,402/-, RS.10,00,000/- AND RS. 9,74,629/- RESPECTIVELY AS PROFITS DERIVED FROM THE BUSINESS OF MANUFACTURE OF ARTICLE OR THING VIZ., CALCINED PETROLEUM COKE WHICH WAS MANUF ACTURED IN A NEW CENTRAL UNIT AT INDUSTRIAL ESTATE, P.O.AND DIST. NEW BONGAIGAON, AS SAM. 3. IN THE ACCOUNTING POLICIES AND NOTES ON ACCOUNT S IN NOTE NO.6 THE ASSESSEE HAS EXPLAINED AS FOLLOWS :- SUBSIDIES : THE COMPANY FOLLOWS THE SYSTEM OF ACCOUNTING CLAIMS FOR VARIOUS SUBSIDIES AS AND WHEN THE CLAIMS ARE ACTUALLY FILED AND SUCH FILING IS NO T STRICTLY BASED ON YEAR TO YEAR BASIS. DURING THE YEAR, THE COMPANY HAS FILED CLAIM FOR VA RIOUS SUBSIDIES. THE AMOUNT OF TRANSPORT SUBSIDY OF RS.100307083 CENTRAL INSURANCE SUBSIDY OF RS.,418402/-, POWER SUBSIDY OF RS.1000000/- AND INTEREST SUBSIDY RS.974 629/- BEING IN THE NATURE OF REIMBURSEMENT OF EXPENSES INCURRED BY THE COMPANY, HAS BEEN ADJUSTED AGAINST RESPECTIVE EXPENSES HEAD. 4. THE AO PASSED ORDER OF ASSESSMENT DATED 15.1 1.2010 U/S 143(3) OF THE ACT ACCEPTING THE CLAIM OF DEDUCTION U/S 80IC(2)(A)(III ) OF THE ACT. THE CLAIM OF THE ASSESSEE U/S 80IC (2) OF THE ACT WAS RS.18,94,50,246/-. THE CLAIM FOR DEDUCTION WAS HOWEVER 3 ITA NO.894/KOL/2013 M/S.BRAHMAPUTRA CARBOND LTD. A.YR.2008-09 3 RESTRICTED TO THE TOTAL INCOME OF THE ASSESSEE VIZ. , RS.17,47,36,922/-. THE ASSESSEES COMPUTATION OF INCOME WAS AS FOLLOWS :- COMPUTATION OF TAXABLE INCOME FOR THE ASSESSMENT YE AR 2008-2009 1. TAXABLE INCOME AMOUNT (RS.) PROFIT AS PER PROFIT AND LOSS ACCOUNT 18,94,50, 246/- ADD DEPRECIATION AS PER P&L ACCOUNT - 1,39,3 0,518/- (CONSIDERED SEPARATELY) 20,33,80,764/- LESS : DEPRECIATION AS PER I.T. RULES 2,86,43 ,842/- (DETAILS GIVEN IN TAX AUDIT REPORT) TOTAL INCOME - 17,47,36,922/- LESS DEDUCTION U/S 80IC(2)(A)(III) 17,47,36,9 22/- TAXABLE INCOME NIL 5. THE AO COMPUTED THE TOTAL INCOME AS FOLLOWS :- THE TOTAL INCOME OF THE ASSESSEE COMPANY AS PER CO MPUTATION RS. NIL ADD : DEPRECIATION RS. 35,498/- CHARITY AND DONATION RS.4,99,230/- RS.5,34,728/- LESS : DEDUCTION U/S 80IC(2)(A)(III) RS.5,34,72 8/- ASSESSED INCOME NIL 6. THE CIT IN EXERCISE OF HIS POWERS U/S 263 OF THE ACT WAS OF THE VIEW THAT THE SUBSIDIES THAT WERE CONSIDERED AS PROFITS OF THE BU SINESS FOR ALLOWING DEDUCTION U/S 80IC OF THE ACT CANNOT BE SO CONSIDERED FOR ALLOWING DED UCTION U/S 80IC OF THE ACT. ACCORDING TO THE CIT THE AFORESAID SUBSIDIES HAD TO BE CONSIDERED AS INCOME FROM OTHER SOURCES AND THEREFORE WAS NOT ELIGIBLE FOR DEDUCTIO N U/S.80-IC(2)(A)(III) OF THE ACT. THE CIT ACCORDINGLY ISSUED A SHOW CAUSE NOTICE U/S.263 OF THE ACT DATED 26.3.2013 AND AFTER CONSIDERING THE REPLY OF THE ASSESSEE, CONCLUDED AS FOLLOWS :- 12. IN THIS CASE THE ASSESSEE IN ITS ACCOUNTS PRES ENTED THE SUBSIDIES AS WELL AS THE INCENTIVES AFTER NETTING OFF AND THE AO HAS FAILED TO TAKE NOTICE OF THE FACT THAT THE SUBSIDIES AND INCENTIVE IS NOT ALLOWABLE AS DEDUCTI ON U/S 80LC OF THE I T ACT' 61. THE AO. HAS ALSO FAILED TO TAKE NOTICE OF WRONG CLAIM MADE BY THE ASSESSEE IN HIS RETURN OF INCOME. THEREFORE, THE ORDER PASSED BY HIM IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 4 ITA NO.894/KOL/2013 M/S.BRAHMAPUTRA CARBOND LTD. A.YR.2008-09 4 IN VIEW OF THE ABOVE THE ORDER PASSED BY THE AO. IS SET ASIDE WITH THE DIRECTION THAT HE SHOULD PASS THE ASSESSMENT ORDER AFTER EXAMINING TH E ALLOWABILITY OF DEDUCTION OF SUBSIDIES AND INCENTIVE U/S 80IC OF THE I T ACT'61 WITH REFERENCE TO THE RELEVANT DOCUMENTS, FACTS AND EVIDENCES AND THE CASE LAWS RE FERRED TO IN PARA 4 OF THIS ORDER. HE IS ALSO DIRECTED TO EXAMINE THOROUGHLY THE AMOUNT OF S UBSIDIES AND INCENTIVE OF ANY NATURE RECEIVED FROM CENTRAL AND STATE GOVERNMENT. THE AO SHOULD PASS SPEAKING ORDER AFTER PROVIDING REASONABLE OPPORTUNITY TO THE ASSESSEE AN D VERIFYING DOCUMENTS AND EVIDENCES CONNECTED WITH THE ISSUES. 13. HENCE THE ORDER PASSED 'BY THE A. O. U/S. 143(3 ) OF THE IT ACT, 1951 FOR THE ASSESSMENT YEAR 2008-09 IS SET ASIDE TO BE FRAMED DE-NOVO AS P ER DIRECTION CONTAINED IN THE ABOVE PARTS OF THIS ORDER. 7. AGGRIEVED BY THE ORDER OF CIT, THE ASSESSEE H AS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 8. AT THE TIME OF HEARING IT WAS BROUGHT TO OUR NOTICE THAT THE HONBLE GAUHATI HIGH COURT IN THE CASE OF CIT VS MEGHALAYA STEELS LTD. ( 2013) 34 TAXMAN.COM 34 HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE HOLDING THAT ALL THE ABOVE SUBSIDIES HAVE TO BE CONSIDERED AS PROFITS AND GAINS DERIVED FROM THE BUSINESS OF THE ASSESSEE AND THEREFORE HAVE TO BE CONSIDERED FOR THE PURPOSE OF ALLOWING DEDUCTION U/S 80IC OF THE ACT. IT WAS ALSO BROUGHT TO OUR NOTICE THAT THE HON BLE SUPREME COURT HAS CONFIRMED THE ORDER OF HONBLE GAUHATI HIGH COURT IN THE CASE OF CIT VS MEGHALAYA STEELS LTD. (2016) 67 TAXMANN.COM 158(SC). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THIS ISSUE HAS BEEN ELABORATEL Y DEALT WITH BY THE HONBLE GAUHATI HIGH COURT IN THE CASE OF CIT VS MEGHALAYA STEELS L TD VIDE ORDER DATED 29.05.2013 WHEREIN THEIR LORDSHIPS HAD CLEARLY DISTINGUISHED T HE DECISION OF THE HONBLE APEX COURT IN THE CASE OF LIBERTY INDIA CASE AND IT IS P ERTINENT TO GO INTO THE OPERATIVE PORTION OF THE HONBLE GAUHATI HIGH COURTS DECISION IN RES PECT OF EACH CATEGORY OF SUBSIDY WHICH IS IN DISPUTE BEFORE US:- 1. TRANSPORT SUBSIDY 5 ITA NO.894/KOL/2013 M/S.BRAHMAPUTRA CARBOND LTD. A.YR.2008-09 5 88. IN THE LIGHT OF WHAT HAVE BEEN DISCUSSED ABOVE , THERE CAN BE ESCAPE FROM THE CONCLUSION THAT TRANSPORT SUBSIDY WAS AIMED AT REDU CING THE COST OF PRODUCTION OF THE INDUSTRIAL UNDERTAKINGS COVERED BY TRANSPORT SUBSID Y SCHEME. THUS, THERE WAS A FIRST DEGREE NEXUS BETWEEN THE TRANSPORT SUBSIDY, ON THE ONE HAND, AND COST OF PRODUCTION, ON THE OTHER. WHEN COST IS REDUCED, IT NATURALLY HELPS IN EARNING OF PROFIT AND, AT TIMES, HIGHER PROFITS. SUCH PROFITS AND GAINS OUGHT TO HAV E BEEN TREATED, AND HAS RIGHTLY BEEN TREATED, BY THE LEARNED TRIBUNAL, TO BE PROFITS AND GAINS DERIVED FROM, OR DERIVED BY, THE INDUSTRIAL UNDERTAKING CONCERNED. 89. THE REVENUE, IT HAS BEEN RIGHTLY CONTENDED BY M R.AGARWALLA, LEARNED SENIOR COUNSEL, HAS NOT EVEN ATTEMPTED TO DISTINGUISH THE DECISION, IN JAI BHAGWAN OIL & FLOUR MILLS CASE (SUPRA), IN ANY MANNER WHATSOEVER, WHEN THIS DECISI ON MAKES IT MORE THAN ABUNDANTLY CLEAR THAT TRANSPORT SUBSIDY GOES ON TO REDUCE THE COST OF PRODUCTION OF THE INDUSTRIAL UNDERTAKING LEADING TO EARNING OF PROFITS AND MAKIN G OF GAINS BY THE INDUSTRIAL UNDERTAKING. 94. PUT SHORTLY, THERE IS AN EXISTENCE OF DIRECT NE XUS BETWEEN TRANSPORT SUBSIDY, ON THE ONE HAND, AND THE MANUFACTURING/PRODUCTION ACTIVITIES O F INDUSTRIAL UNDERTAKING, ON THE OTHER, STANDS WELL ESTABLISHED. UNLESS SHOWN OTHERWISE, TH E INDUSTRIAL UNDERTAKINGS, IN THE PRESENT SET OF APPEALS, WHICH HAVE BEEN GRANTED TRA NSPORT SUBSIDY, ARE ENTITLED TO CLAIM DEDUCTIONS IN TERMS OF THE DIRECTIONS OF THE LEARNE D TRIBUNAL. 2. POWER SUBSIDY : 105. FROM A COMBINED READING OF THE TWO DECISIONS , RENDERED IN RAJARAM MAIZE PRODUCTS (SUPRA) AND EASTERN ELECTRO CHEMICAL INDUS TRIES CASE (SUPRA), WHAT BECOMES TRANSPARENT IS THAT POWER SUBSIDY IS MEANT TO ENABL E A PERSON MEET A CERTAIN PERCENTAGE OF EXPENDITURE ON POWER AND IS, THEREFORE, REVENUE IN NATURE. HOWEVER, THOUGH REVENUE IN NATURE, THE FACT REMAINS THAT IT HELPS IN NOT ONLY GROWTH OF THE INDUSTRIAL UNDERTAKING, BUT ALSO HELP AN INDUSTRIAL UNDERTAKING TO EARN PROFITS AND MAKE GAINS. SUCH A SUBSIDY, THOUGH REVENUE IN NATURE AND TAXABLE ACCORDINGLY, I S NONETHELESS COVERED BY THE PROVISIONS EMBODIED IN SECTION 80IB OR 80IC, AS THE CASE MAY BE. 106. SITUATED THUS, THE PRINCIPLE, DEDUCIBLE FROM T HE CASES OF SAHNEY STEEL & PRESS WORKS LTDS . CASE (SUPRA), RAJARAM MAIZE PRODUCTS CASE (SUPRA) AND EASTERN ELECTRO CHEMICAL INDUSTRIES CASE (SUPRA), IS THAT WHEN A SUBSIDY, GR ANTED BY GOVERNMENT, IS OPERATIONAL IN NATURE, WHICH HELPS IN GENERATION OF PROFITS FOR AN Y INDUSTRIAL UNDERTAKING, SUCH A PROFIT IS, INDEED, COVERED BY THE PROVISIONS EMBODIED IN S ECTION 80IB OR 80IC, AS THE CASE MAY BE. 109. WE, NOW, TURN TO THE CASE OF PANCHARATNA CEMEN T (P) LTD. (SUPRA), WHEREIN AMITAVA ROY, J., (AS HIS LORDSHIP, THEN, WAS ), HAS, UPON C ONSIDERATION OF THE SUBSIDY INVOLVED, TOOK THE VIEW THAT THE AMOUNT OF SUBSIDY, GIVEN BY WAY OF ASSISTANCE OR GRANTS BY THE 6 ITA NO.894/KOL/2013 M/S.BRAHMAPUTRA CARBOND LTD. A.YR.2008-09 6 GOVERNMENT, SERVES AS STIMULUS TO THE WILLING INDUS TRIAL ESTABLISHMENTS TO CATER TO THE GROWTH OF THE REGION AND, THUS, REINFORCE THE EVENT UAL INCOME OF THE BUSINESS OF THE UNDERTAKING. THOUGH THE CASE OF PANCHARATNA CEMENT (P.) LTD. (SUPRA) IS, AS RIGHT POINTED OUT BY THE LEARNED ASG, AROSE OUT OF A WRIT PETITIO N AND NOT AN APPEAL UNDER THE ACT, THE FACT REMAINS THAT THE LAW, LAID DOWN THEREIN, IS RE LEVANT IN DETERMINING THE CONTROVERSY, WHICH IS REQUIRED TO BE DEALT WITH IN THIS SET OF A PPEALS. THE RELEVANT OBSERVATIONS, APPEARING AT PARA 32, IN PANCHARATNA CEMENT (P.) LT D. (SUPRA), IS, THEREFORE, QUOTED BELOW : ..IT CANNOT BE GAINSAID THAT HAVING REGAR D TO THE LAYOUT OF INVESTMENT AND INCOME DESIGNED FOR ANY COMMERCIAL OR BUSINESS VENT URE, REIMBURSEMENT OF THE EXPENSES INCURRED TO WHATEVER EXTENT, WOULD LOGICALLY CONTRI BUTE TO THE PROFITS AND GAINS DERIVED FROM THE RELATED ENTERPRISE AND THUS WOULD AUGMENT THE OVERALL INCOME. THE AMOUNTS OF SUBSIDIES AS THE FACTS OF THE CASE REVEAL ARE BY WA Y OF GOVERNMENT ASSISTANCE OR GRANTS UNDER THE SCHEMES TO PROVIDE STIMULUS TO THE WILLIN G INDUSTRIAL ESTABLISHMENTS TO CATER TO THE INDUSTRIAL GROWTH IN THE REGION AND, THEREFORE, THE SAME (SUBSIDY) ARE AIMED NECESSARILY AT NEUTRALIZING THE EXPENSES INCURRED A ND THUS REINFORCE THE EVENTUAL INCOME OF THE BUSINESS UNDERTAKING. (EMPHASIS SUPPLIED) 110. WE RESPECTFULLY AGREE WITH THE ABOVE OBSERVATI ONS, MADE IN PANCHARATNA CEMENT (P)LTD. CASE (SUPRA), AND THE LAW LAID DOWN THEREIN . 3.INTEREST SUBSIDY : 112. THE FACTS ARE, THEREFORE, NOT IN DISPUTE O N THIS ASPECT. THE DISPUTE IS : WHETHER THE INTEREST SUBSIDY IS PAYABLE ON NON-OPERATIONAL OR O PERATIONAL SUBSIDY? IF THE OBJECT OF THE RELEVANT SCHEME IS BORNE IN MIND, IT CLEARLY SHOWS THAT INTEREST SUBSIDY, HAVING AIMED AT REDUCING THE INTEREST PAYABLE ON WORKING CAPITAL BY AN INDUSTRIAL UNDERTAKING, HELPS DIRECTLY IN REDUCING THE COST OF MANUFACTURING OR P RODUCTION ACTIVITIES AND ESTABLISH THEREBY DIRECT AND FIRST DEGREE NEXUS BETWEEN THE I NDUSTRIAL ACTIVITIES OF THE ASSESSEE- RESPONDENTS, ON THE ONE HAND, AND THE INTEREST SUBS IDY, ON THE OTHER, RECEIVED BY THE ASSESSEE-RESPONDENTS AND, IN CONSEQUENCE THEREOF, S INCE INTEREST SUBSIDY RESULTS INTO PROFITS AND GAINS DERIVED FROM, OR DERIVED BY, AN I NDUSTRIAL UNDERTAKING, THERE IS NO REASON AS TO WHY SUCH PROFITS AND GAINS, EARNED BY AN INDUSTRIAL UNDERTAKING ON THE STRENGTH OF SUCH A SUBSIDY, NAMELY, INTEREST SUBSID Y, BE NOT ALLOWED TO BE DEDUCTED FROM THE TAXABLE INCOME OF THE INDUSTRIAL UNDERTAKING CO NCERNED. 10. THE HONBLE GAUHATI HIGH COURT HAD DISTINGUISH ED THE DECISION OF THE HONBLE APEX COURT IN LIBERTY INDIA CASE AS FOLLOWS:- 124. LOGICALLY EXTENDED, THIS WOULD MEAN THAT THE RE WAS NO RELATIONSHIP OR NEXUS BETWEEN THE EXPORT INCENTIVE, ON THE ONE HAND, AND MANUFACTURING/PRODUCTION, ON THE OTHER. DEPB ENTITLEMENT WAS BASED ON THE ARTIFICE O F DEEMED IMPORT CONTENT OF EXPORT PRODUCT AND WAS NOT EVEN BASED ON ACTUAL IMPORT CON TENT OF THE EXPORT PRODUCT; WHEREAS, IN THE CASES AT HAND, THE TRANSPORT SUBSIDY WAS MAD E AVAILABLE ON THE RAW MATERIAL 7 ITA NO.894/KOL/2013 M/S.BRAHMAPUTRA CARBOND LTD. A.YR.2008-09 7 ACTUALLY CONSUMED IN THE MANUFACTURING PROCESS AND FINISHED GOODS, WHICH WERE ACTUALLY PRODUCED AND TAKEN TO THE EXISTING MARKET FOR SALE AND, SIMILARLY, POWER SUBSIDY, INTEREST SUBSIDY, AND INSURANCE SUBSIDY ARE, AS ALREADY INDI CATED ABOVE, MADE AVAILABLE ON THE ACTUAL AMOUNT OF THE POWER BILL, INTEREST AND INSUR ANCE PREMIUM PAID BY THE ASSESSEE- RESPONDENTS CONCERNED THE INFERENCE, SO DRAWN, GETS REINFORCED FROM THE FACT THAT DEPB ENTITLEMENT WAS FREELY TRANSFERABLE AND SALEABLE RE SULTING IN PROFIT OR LOSS. 125. THAT THE CASE OF LIBERTY INDIA CASE (SUPRA) I S NOT APPLICABLE TO THE CASES AT HAND IS ALSO EVIDENT FROM THE FACT THAT THE OBJECT BEHIND D EPB WAS TO NEUTRALIZE THE INCIDENCE OF CUSTOMS DUTY PAYMENT ON THE IMPORT DUTY OF THE EXPO RT PRODUCT AND, HENCE, THE DEPB SCHEME WAS NOT AIMED AT NEUTRALIZING THE COST OF PR ODUCTION; RATHER, AS OBSERVED BY THE SUPREME COURT, IT WAS AN INCENTIVE FOR EXPORT AND E NTITLEMENT AROSE, WHEN EXPORT WAS MADE AND NOT OTHERWISE. 127. MOST IMPORTANTLY, POINTED OUT THE SUPREME COU RT, IN LIBERTY INDIA CASE (SUPRA), THAT THE RULES DO NOT ENVISAGE A REFUND OF AN AMOUNT A RITHMETICALLY EQUAL TO EXEMPTION DUTY OR CENTRAL EXCISE DUTY ACTUALLY PAID BY AN INDIVIDU AL IMPORTER/MANUFACTURER. THIS IS THE STRIKING DIFFERENCE BETWEEN SUBSIDIES ON TRANSPORTA TION COST, POWER, INTEREST AND INSURANCE, IN THE CASES AT HAND, ON THE ONE HAND, A ND DUTY DRAWBACK SCHEME, ON THE OTHER, INASMUCH AS THE SUBSIDIES, SO PROVIDED TO TH E ASSESSES CONCERNED, ARE ARITHMETICALLY EQUIVALENT TO THE COST OF RAW MATERI ALS ACTUALLY USED IN THE MANUFACTURING PROCESS AND THE FINISHED GOODS, WHICH IS ACTUALLY T AKEN TO THE EXISTING MARKET FOR SALE WITHIN AND OUTSIDE THE NORTH-EASTERN REGION AND, SI MILARLY, THE ASSESSEES CONCERNED HAVE THE RIGHT TO RECEIVE POWER SUBSIDY, ARISING OUT OF POWER BILLS PAID, OR INTEREST SUBSIDY OR INSURANCE SUBSIDY, EQUIVALENT TO THE AMOUNT PAID ON INTEREST AND INSURANCE RESPECTIVELY. THESE ASPECTS OF DEPB AND DUTY DRAWBACK SCHEME GIVE RISE TO THE INFERENCE THAT THE DECISION, IN LIBERTY INDIA (SUPRA), WAS RENDERED, I N THE LIGHT OF ITS OWN FACTS, AND NOT FOR UNIVERSAL APPLICATION. THIS INFERENCE GETS STRENGTH ENED FROM THE FOLLOWING OBSERVATIONS MADE IN LIBERTY INDIA CASE (SUPRA) : THE NEXT QUESTION IS WHAT IS DUTY DRAWBACK? SEC TION 75 OF THE CUSTOMS ACT, 1962 AND SECTION 37 OF THE CENTRAL EXCISE ACT, 1944 EMPOWER GOVERNMENT OF INDIA TO PROVIDE FOR REPAYMENT OF CUSTOMS AND EXCIS E DUTY PAID BY AN ASSESSEE. THE REFUND IS OF THE AVERAGE AMOUNT OF DUTY PAID ON MATERIALS OF ANY PARTICULAR CLASS OR DESCRIPTION OF GOODS USED IN THE MANUFACTU RE OF EXPORT GOODS OF SPECIFIED CLASS. THE RULES DO NOT ENVISAGE A REFUN D OF AN AMOUNT ARITHMETICALLY EQUAL TO CUSTOMS DUTY OR CENTRAL EXCISE DUTY ACTUAL LY PAID BY AN INDIVIDUAL IMPORTER-CUM-MANUFACTURER. SUB-SECTION (2) OF SECTI ON 75 OF THE CUSTOMS ACT REQUIRES THE AMOUNT OF DRAWBACK TO BE DETERMINED ON A CONSIDERATION OF ALL THE CIRCUMSTANCES PREVALENT IN A PARTICULAR TRADE AND A LSO BASED ON THE FACTS SITUATION RELEVANT IN RESPECT OF EACH OF VARIOUS CL ASSES OF GOODS IMPORTED. BASICALLY, THE SOURCE OF DUTY DRAWBACK RECEIPT LIES IN SECTION 75 OF THE CUSTOMS ACT AND SECTION 37 OF THE CENTRAL EXCISE ACT (EMP HASIS SUPPLIED) 8 ITA NO.894/KOL/2013 M/S.BRAHMAPUTRA CARBOND LTD. A.YR.2008-09 8 128. IN SHORT, THUS, THE DEPB AND DUTY DRAWBACK SCH EME WERE NOT, AS ALREADY INDICATED ABOVE, RELATED TO THE BUSINESS OF INDUSTRIAL UNDERT AKING PER SE FOR ITS MANUFACTURING OR PRODUCTION. ENTITLEMENT FOR DEPB OR DUTY DRAWBACK S CHEME AROSE, WHEN THE UNDERTAKING DECIDED TO EXPORT AFTER MANUFACTURING O R PRODUCTION AND THIS INCENTIVE WAS RESTRICTED ONLY TO THE EXPORT OF GOODS OF A SPECIFI ED CLASS. CONSEQUENTLY, IF THERE WAS NO EXPORT, THERE WAS NO INCENTIVE FROM DEPB OR DUTY DR AWBACK. THIS APART, DEPB OR DUTY DRAWBACK SCHEME DID NOT PROVIDE REFUND OF EXEMPTION FROM CENTRAL EXCISE DUTY ACTUALLY PAID. 129. THUS, THE RELATIONSHIP UNDER THE DEPB OR DUTY DRAWBACK SCHEME, ON THE ONE HAND, AND THE MANUFACTURING OR PRODUCTION, ON THE OTHER , WAS NOT PROXIMATE AND DIRECT. THE ENTITLEMENT WAS BASED ON THE ARTIFICE OF AVERAGE AM OUNT OF DUTY PAID. IN THE CASE OF TRANSPORT SUBSIDY, POWER SUBSIDY AND INSURANCE SUBS IDY, THE RELATION BETWEEN SUBSIDY RECEIVED, ON THE ONE HAND, AND THE PROFITS EARNED O R THE GAINS MADE, BY AN INDUSTRIAL UNDERTAKING, STAND, AS ALREADY OBSERVED AT PARAGRAP H 127, WELL ESTABLISHED. 131. LIBERTY INDIA CASE (SUPRA), IT MAY BE NOTED, I S, THUS, AN EXPOSITION OF LAW ON THE SCHEMES OF DEPB AND DUTY DRAWBACK SCHEME, WHICH REL ATE TO EXPORT OF GOODS BY AN INDUSTRIAL UNDERTAKING; WHEREAS THE SCHEME OF TRANS PORT SUBSIDY, INTEREST SUBSIDY, POWER SUBSIDY AND INSURANCE SUBSIDY, IS INEXTRICABLY AND DIRECTLY CONNECTED WITH THE REDUCTION OF COST OF PRODUCTION AND MANUFACTURING OF AN INDUS TRIAL UNDERTAKING ENTITLING THEREBY THE ELIGIBLE INDUSTRIAL UNDERTAKINGS TO CLAIM DEDUCTION UNDER SECTION 80IB OR 80IC, AS THE CASE MAY BE. 132. THE DECISION, IN LIBERTY INDIA CASE (SUPRA), I S, THEREFORE, NOT, IN OUR CONSIDERED VIEW, RELEVANT TO THE SCHEMES OF SUBSIDIES AT HAND. 11. THE HONBLE SUPREME COURT HAS ALSO CONFIRMED THE AFORESAID VIEW OF THE HONBLE GAUHATI HIGH COURT. IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT ON IDENTICAL ISSUE ON THE VERY SAME SUBSIDY, WE ARE OF THE VIEW THAT THE VIEW TAKEN BY THE AO CANNOT BE CONSIDERED TO BE ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF THE REVENUE. THOUGH THE CIT HAS EXERCISED THE JURISDICTION ON THE GROUND TH AT THE AO HAD FAILED TO MAKE PROPER INQUIRIES BEFORE CONCLUDING THE ASSESSMENT, WE ARE OF THE VIEW THAT IN THE LIGHT OF THE DECISION OF THE HONBLE SUPREME COURT, SUCH AN INQU IRY AT THIS STAGE WOULD BE A FUTILE EXERCISE. THE DECISION RENDERED BY THE HONBLE SUPR EME COURT HAS TO BE CONSIDERED AS LAW AS IT STOOD AT ALL TIMES AND THEREFORE THE ORDE R OF ASSESSMENT IN THE PRESENT CASE PASSED BY THE AO THAT WAS SOUGHT TO BE REVISED BY T HE CIT U/S.263 OF THE ACT, CANNOT BE CONSIDERED AS ERRONEOUS AND PREJUDICIAL TO THE INTE REST OF THE REVENUE. FOR THE REASONS GIVEN ABOVE WE QUASH THE ORDER U/S 263 AND ALLOW TH E APPEAL OF THE ASSESSE.,M 9 ITA NO.894/KOL/2013 M/S.BRAHMAPUTRA CARBOND LTD. A.YR.2008-09 9 12. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 01.06.2016. SD/- SD/- [P.M.JAGTAP] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 01.06.2016. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.M/S. BRAHMAPUTRA CARBOND LTD., 37A, BENTICK STREE T, KOLKATA-700069. 2. C.I.T.-I, KOLKATA KOLKATA. 3. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSTT.REGISTRAR, ITAT, KOLKATA BENCHES