M/s. Shandar Interiors Pvt. Ld., Pune V. Pr. Commissioner of Income-tax : 3, Pune

ITA 910/PUN/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7619 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-03-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 13-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Opportunity of being heard; Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKAR A RAO, AM . / ITA NO.1672/PUN/2016 / ASSESSMENT YEAR : 2012-13 SHRI UMESH CHANDRASHEKHAR KABBUR, 1, CHAITALI CO-OP HOUSING SOCIETY, DEGAON PHATA, KODOLI, SATARA 415 001 PAN : ABOPK4117D . /APPELLANT VS. ITO, WARD-2, SATARA . / RESPONDENT / APPELLANT BY : SMT. DEEPA KHARE / RESPONDENT BY : SHRI MUKESH JHA, JCIT / DATE OF HEARING : 14.03.2018 / DATE OF PRONOUNCEMENT: 14.05.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF C IT(A)-4, PUNE, DATED 25-04-2016 FOR THE ASSESSMENT YEAR 2012-13. 2. GROUNDS RAISED BY THE ASSESSEE ARE EXTRACTED AS UNDER : 1. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN CONF IRMING ADDITION OF RS.16,00,000/- ON ACCOUNT OF SPECIAL CAPITAL INCENT IVE UNDER THE SCHEME OF GOVERNMENT OF MAHARASHTRA UNDER PACKAGE SCHEME WHIC H IS A CAPITAL RECEIPT NOT LIABLE TO TAX. 2. LD.CIT(A) FAILED TO APPRECIATE THAT EXEMPTION FR OM ELECTRICITY CHARGES WAS NOT CONNECTION WITH CAPITAL INCENTIVE SCHEME BU T WAS IN ADDITION TO THE SPECIAL CAPITAL INCENTIVE. 3. THE APPELLANT CRAVES TO ADD, ALTER, MODIFY OR SU BSTITUTE ANY GROUND OF APPEAL AT THE TIME OF HEARING. 2 3. BRIEFLY STATED RELEVANT FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND IS A RESELLER OF INDUSTRIAL COMPRESSED GAS IN THE NAME OF M/S. BHARAT DISTRIBUTORS. ASSESSEE FILED THE RETURN OF INCOME ON 26-09 -2012 DECLARING TOTAL INCOME OF RS.3,08,490/-. IN THE SCRUTINY ASSESSMENT, AO ANALYSED THE ISSUES RELATING TO THE SUBSIDY OF RS.16 LAKHS RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AND TREATED THE SA ME AS INCOME OF THE ASSESSEE. UNDER THE SPECIAL CAPITAL INCENTIVE OF G OVERNMENT OF MAHARASHTRA, THERE IS AN APPROVAL OF GRANT OF RS. 20 LAK HS OF INCENTIVE TO THE ASSESSEE IN ADDITION TO THE PROVISION FOR EXEMPTION O F ELECTRICITY DUTY FOR 15 YEARS FROM 01-04-2007 ONWARDS. AS PART OF IT, TH E ASSESSEE RECEIVED THE SAID SUBSIDY OF RS.16 LAKHS AND, HOWEVER, AO ASSUMED THAT IT WAS PROVIDED TOWARDS MEETING THE ELECTRICITY CHARGES AND THE CONTENTS OF PARA 3 OF THE ASSESSMENT ORDER ARE RELEVANT. AO TREATED THE SAME AS FINANCIAL ASSISTANCE FOR THE PURPOSE OF RUNNING HIS BUSINESS. ACCOR DINGLY, AO RELIED ON THE JUDGMENT OF SUPREME COURT IN THE CASE OF RAJAR AM MAIZE PRODUCTS 119 TAXMAN 492 (SC) WHICH HOLDS THAT THE ELECTRICITY SUBS IDY RECEIPTS RECEIVED BY THE ASSESSEE CONSTITUTES A REVENUE RECEIPT . EVENTUALLY, THE SUM OF RS.16 LAKHS RECEIVED ON ACCOUNT OF ELECTRICITY CHARG ES IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. EVENTUALLY, THE ASSES SED INCOME IS DETERMINED AT RS.23,29,200/-. CIT(A) CONFIRMED THE SAID ADDIT ION IN THE FIRST APPELLATE PROCEEDINGS AS PER THE DISCUSSION GIVEN IN PARA NO.5 OF HIS ORDER. ACCORDING TO THE CIT(A), THE ISSUE OF POWER SUBSIDY CONSTITUTES TAXABLE INCOME OF THE ASSESSEE. 4. AGGRIEVED WITH THE SAME, ASSESSEE IS IN APPEAL BEFORE U S WITH THE GROUNDS EXTRACTED ABOVE. 5. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ELIGIBILITY CERTIFICATE FOR GRANT OF SPECIAL CAPITAL INCENTIVE UNDER PSI 3 2001 SCHEME DATED 24-01-2011 (PAGE 3 OF THE PAPER BOO K) AND SUBMITTED THAT THE SUBSIDY GRANTED TO ASSESSEE CONSTITUTES TWO SEGMENTS IN THE SPECIAL CAPITAL INCENTIVE ( IN SHORT SCI) AND APPROVED BY THE MAHARASHTRA GOVERNMENT. REFERRING TO PAGE 4 OF THE PA PER BOOK, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ACTUAL ADMIS SIBLE INVESTMENT ON THIS ACCOUNT OF SCI IS RS.20 LAKHS. OUT OF IT, ASSESS EE RECEIVED ONLY RS.16 LAKHS IN THIS YEAR. FURTHER, REFERRING TO THE WRITTE N SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE CIT(A) DATED 26-04-201 6, LD. COUNSEL SUBMITTED THAT, IN GRANTING THE SUBSIDY TO THE INDUSTRIES, THE MAHAR ASHTRA GOVERNMENTS MOTTO IS TO PROMOTE INDUSTRIES IN THE BAC KWARD AREA OF THE STATE. FOR THIS, GRANTING ELECTRICITY SUBSIDY TO THE ASSES SEE IS PART OF IT AND HENCE, IT CONSTITUTES A CAPITAL SUBSIDY AIMED AT GENER ATION OF EMPLOYMENT IN THE BACKWARD AREAS OF THE STATE. THEREFO RE, THE SAME CONSTITUTE A CAPITAL RECEIPT WHICH IS NOT A TAXABLE RECEIPT. F URTHER, RELYING ON THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RE LIANCE INDUSTRIES LTD. 339 ITR 632 (BOM.), LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE ISSUE UNDER CONSIDERATION STANDS COVERED IN FAVOUR OF THE ASSESSEE. FURTHER ALSO, LD. COUNSEL SUBMITTED THAT THERE IS SOME CO NFUSION IN APPRECIATION OF FACTS BY THE INCOME-TAX AUTHORITIES WITH RE GARD TO THE FACTS, FIGURES AND THE PURPOSE OF SUBSIDY. REFERRING TO THE CITED JURISDICTIONAL HIGH COURT JUDGMENT IN THE CASE OF RELIANCE INDUSTRIES LT D. (SUPRA), LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CASE OF THE ASSESSEE IS SIMILAR TO THAT OF ONE EXAMINED BY THE SAID HONBLE BOMBAY HIGH COURT. LD. COUNSEL ALSO MENTIONED THAT THERE ARE VARIOUS SCHEMES OF SUBSIDY GRANTED BY THE MAHARASHTRA GOVERNMENT SINCE 2001 AND THE 200 1 SCHEME STANDS AMENDED BY THE 2007 SCHEME. AS PER THE LD. COUNSEL, IN THE MIND OF THE AO, THERE IS SOME CONFUSION IN THE MATTERS WITH REGARD TO THE APPLICABLE SCHEME AS WELL AS THE SUBSIDY/INCENTIVE GRANTED TO THE A SSESSEE UNDER 4 CONSIDERATION. SHE ALSO REFERRED TO CLAUSES 5.1 AND 5.4 OF THE PSI 2001 SCHEME AND SUBMITTED THAT THE AMOUNT OF RS.16 LAKHS RECE IVED IS A CAPITAL RECEIPT. SHE ALSO SUBMITTED THAT THERE IS NO ISSUE WITH REFERENCE TO THE GRANTING OF ELECTRICITY DUTY RECEIVED BY THE ASSESSEE. RE FERRING ALL THESE FACTS, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE A O TOTALLY ERRED IN UNDERSTANDING THE FACTS OF THE SCHEME AS WELL AS THE BE NEFITS GRANTED TO THE ASSESSEE AND THEREFORE, LD. COUNSEL SUBMITTED THAT THE MATTER MAY BE REMANDED TO THE FILE OF AO FOR REMOVAL OF THE CONFUSION AND BRINGING CLARITY INTO THE FACTS. 6. ON THE OTHER HAND, LD. DR FOR THE REVENUE RELIED HEA VILY ON THE ORDERS OF THE AO AND THE CIT(A) AND SUBMITTED THAT ADDIT ION OF RS.16 LAKHS OF SUBSIDY CONSTITUTES A RECEIVE RECEIPT. 7. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AND THE DOCUMENTS PLACED BEFORE US FOR CONSIDERATION. THE UNDISPUTED FACTS INCLUDE THAT THE ASSESSEE RECEIVED RS.16 LAKHS OUT OF THE TOTAL BENEFIT OF RS. 20 LAKHS OF SUBSIDY. THE SAME IS DULY ACCOUNTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. IT IS THE CLAIM OF THE ASSESSEE THAT THE SAME WAS UTILISED FOR THE FIXED ASSETS AND THEREFORE, THE SAME CONS TITUTES A CAPITAL RECEIPT. HOWEVER, PER CONTRA, THE DEPARTMENT IS OF THE V IEW THAT THE SAME CONSTITUTES A REVENUE RECEIPT AS IT WAS GIVEN TOWARDS T HE ELECTRICITY CHARGES. ON PERUSAL OF THE ELIGIBILITY CERTIFICATE ISSUED UNDER PSI 2001 SCHEME, WE FIND THAT THERE IS A REFERENCE TO THE FIGURE OF RS.20 LAKHS UNDER SPECIAL CAPITAL INCENTIVE GRANTED TO THE ASSESSEE. IN ADDITION, ASSESSEE IS ALSO ELIGIBLE FOR EXEMPTION OF ELECTRICITY DUTY AS PER CLAUSE 5 .4 OF THE AMENDED PSI 2001 SCHEME FROM 01-04-2007 TO 31-03-202 3. ASSESSEE RECEIVED RS.16 LAKHS IN THIS YEAR AND THE SAME IS SAID TO HAVE BEEN UTILISED FOR FIXED ASSETS. AS SUCH, AO MISUNDERSTOOD THE WHOLE SC HEME OF SUBSIDY, 5 AND, IS OF THE OPINION THAT THE SUBSIDY IS TOWARDS THE ELE CTRICITY CHARGES AND NOT FOR FIXED ASSETS OF THE BUSINESS. AO DID NOT EX AMINE THE OBJECT/PURPOSE OF GRANT OF THE SAID SUBSIDY AS WELL AS TH E MANNER OF UTILIZATION OF THE SAID RS.16 LAKHS QUA THE OBJECTS OF THE SCHEME. THEREFORE, IN OUR VIEW, THERE IS A REQUIREMENT OF EXAMINING THE PURPOSE/OBJECTS FOR WHICH THE SAID SUBSIDY IS GRANTED T O THE ASSESSEE. THE BINDING JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF RELIANCE INDUSTRIES LTD. (SUPRA) IS ALSO TO BE CONSIDERED WHILE RE-EX AMINING THE ISSUE. IT IS THE REQUEST OF THE LD. COUNSEL FOR THE ASSE SSEE THAT THE MATTER MAY BE REMANDED TO THE FILE OF AO FOR WANT OF CLARITY OF FACT S IN THE MIND OF AO ON THE ISSUE. WE FIND MERIT IN THE SAME. CONSIDERING TH E SAME, WE ARE OF THE OPINION THAT THE WHOLE ISSUE, RELATING TO ADDITION OF RS.16 LAKHS RECEIVED BY THE ASSESSEE UNDER SPECIAL CAPITAL INCENTIVE BY THE MAHARASHTRA GOVERNMENT, IS REMANDED TO THE FILE OF AO FOR FRESH EXAMINATION INTO THE FACTS. IT GOES WITHOUT SAYING THAT T HE AO SHALL GRANT REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. AO SHALL NOTE THAT THE SUBSIDY OF RS.16 LAKHS IS DIFFERENT FROM THE ADDITIONAL BE NEFIT RELATING TO SUBSIDY OF EXEMPTION OF ELECTRICITY DUTY. FURTHER, THE AO SHALL SCRUTINISE THE DOCUMENTS ON THE APPLICABLE SCHEME OF INCENTIVE ON ONE SIDE AND THE MANNER OF UTILIZATION OF RS.16 LAKHS QUA THE OBJECT S/PURPOSE OF THE SAID INCENTIVE/SUBSIDY BEFORE CHARACTERISING THE NATUR E OF THE SUBSIDY. AO SHALL NOTE THAT IT IS A SETTLED LEGAL PROPOSITION THAT T HE SUBSIDY FOR ENCOURAGING THE SET UP OF INDUSTRIES IN BACKWARD AREAS FO R GENERATING THE EMPLOYMENT, CONSTITUTE THE CAPITAL RECEIPT AS HELD BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF RELIANCE INDUSTRIES LTD. (SUPRA). THUS, AO SHALL PASS A SPEAKING ORDER AFTER CONSIDERING THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF RELIANCE INDUSTRIES LTD. (SUPRA) 6 CITED BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE US. ACC ORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES . 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 14 TH DAY OF MAY, 2018. SD/- SD/- (SUSHMA CHOWLA) (D.KARUNAKAR A RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; DATED : 14 TH MAY, 2018. SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A)-4, PUNE 4. / THE CIT-4, PUNE 5. , , / DR SMC, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, P //TRUE COPY// //TRUE COPY// SENIO R PRIVATE SECRETARY , / ITAT, PUNE