PAS Polymer Private Limited, Secunderabad V. DCIT, Hyderabad

ITA 962/HYD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59335 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-02-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 24-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS; K VISWANATHAN
• Assessee Lawyers: A V RAGHURAM
• Keywords: Capital asset; Depreciation
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE CHANDRA POOJARI, ACCOUNTANT MEMBER & SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.962/HYD/2009 ASSESSMENT YEAR 2005-06 M/S PAS POLYMERS PVT. LTD., SECUNDERABAD (PAN AACCP2176P) VS THE DCIT, CIRCLE 16(3), HYDERABAD APPELLANT RESPONDENT APPELLANT BY : SHRI A.V. RAGHURAM RESPONDENT BY : S/SHRI. V. SRINIVAS & K. VISWANATHAN DATE OF HEARING : 5/3/2012 DATE OF PRONOUNCEMENT : 9.3.2012 ORDER PER ASHA VIJAYARAGHAVAN, JM . THIS APPEAL PREFERRED BY THE ASSESSEE IS DIREC TED AGAINST THE ORDER PASSED BY THE CIT(A) V, HYDERABAD DATED 27.5 .2009 AND PERTAINS TO THE ASSESSMENT YEAR 2005-06. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSE E IN ITS APPEAL IS AS FOLLOWS: THE CIT HAS GROSSLY ERRED WHILE ADDING THE ENTIRE SUBSIDY AMOUNT RECEIVED BY THE ASSESSEE IN THE YEAR OF RECE IPT ITSELF CONSIDERING IT AS REVENUE IN NATURE. THE CIT HAS G ROSSLY ERRED IN APPLYING THE RATIO OF THE JUDGEMENT IN THE CASE OF HONBLE SUPREME COURT IN THE SHANE STEEL AND PRESS WORKS LTD. VS. CIT (228 ITR 253) AND RESTRICTING HIMSELF TO THE ITA NO.962/H/2009 PAS POLYMERS P LTD., S. BAD 2 PRINCIPLE FOR DETERMINING THE CHARACTER OF THE SUBS IDY AND CAME TO AN ERRONEOUS CONCLUSION WITHOUT APPLYING TH E PRINCIPLE OF PURPOSE TEST AS IN THE CASE OF PONNI S UGARS & CHEMICALS IN CIVIL APPEAL NO.5694/2008 DATED 16.9.2 008 WHERE IN THE HONBLE SC HAS CLARIFIED THE PRINCIPLE FURTHER AND AMPLIFIED THE SCOPE OF ITS OWN JUDGEMENT IN SAH NEY STEEL AND PRESS WORKS VS. CIT (228 ITR 253) HENCE APPLYING THE RATIO OF THE JUDGEMENT IN SHANEY STEEL AND PRESS WORKS LTD. VS. CIT (228 ITR 253) INCORRECT AN D HENCE THE CIT HAS NOT CONCLUDED IN CORRECTLY THAT THE REC EIPT IS SUBSIDY TO THE EXTENT OF RS.18,06,817/- IS OF REVEN UE NATURE AND DISALLOWED OUR APPEAL. 3. WE HEARD BOTH THE PARTIES AND PERUSED THE MATER IALS AVAILABLE ON RECORD. WE FIND THAT SIMILAR ISSUES C AME UP FOR CONSIDERATION BEFORE THIS TRIBUNAL VIDE ORDER DATE D 11.2.2011 IN ITA NO.365/HYD/2009 IN THE CASE OF M/S BALAJI CONSU MER CARE LTD., HYDERABAD VS. THE ACIT WHEREIN THE TRIBUNAL I N PARA NO.5 HAS HELD AS FOLLOWS: 5............WE HAVE CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. WE FIND FROM THE ORDERS OF THE LOWER AUTHORITIES THAT THE ASSESSEE HAS RECEIVED TH E SUBSIDY IN QUESTION IN TERMS OF THE POLICY DOCUMENT TITLED TA RGET-2000, NEW INDUSTRIAL POLICY, 1995 SCHEME, BY WAY OF STATE IN CENTIVES FOR SETTING UP OF NEW INDUSTRIES. THE QUANTUM OF SUBSI DY HAS BEEN WORKED OUT AT 20% OF THE FIXED CAPITAL INVESTMENT, NOT EXCEEDING RS.20 LAKHS. WE FIND THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE VISHAKHAPATNAM BE NCH OF THE TRIBUNAL IN THE CASE OF SASISRI EXTRACTIONS LTD. (S UPRA). WE FIND THAT IN THAT CASE BEFORE THE VISAKHAPATNAM BENCH OF THE TRIBUNAL, ASSESSEE RECEIVED SUBSIDY UNDER THE VERY SCHEME UND ER WHICH ITA NO.962/H/2009 PAS POLYMERS P LTD., S. BAD 3 THE ASSESSEE BEFORE US IN THIS APPEAL HAS RECEIVED. THE TRIBUNAL, AFTER CAREFUL PERUSAL OF THE SCHEME IN QUESTION, HE LD THAT THE INCENTIVE IN THE FORM OF SUBSIDY COULD NOT BE CONSI DERED AS A PAYMENT DIRECTLY OR INDIRECTLY TO MEET ANY PORTION OF THE ACTUAL COST, AND THUS, IT FELL OUTSIDE THE KEN OF THE EXPL ANATION 10 TO S.43(1) AND THEREFORE, FOR THE PURPOSE OF COMPUTING DEPRECIATION ALLOWABLE TO THE ASSESSEE, THE SUBSIDY AMOUNT COULD NOT BE REDUCED FROM THE COST OF THE CAPITAL ASSET. THE TR IBUNAL IN THAT ASSESSEE HAS ALSO CONSIDERED THE AMENDED PROVISIONS OF LAW, BY VIRTUE OF INSERTION OF EXPLANATION 10 BELOW S.43(1) . IN THE ABSENCE OF ANY DECISION TO THE CONTRARY BROUGHT TO OUR NOTI CE, WE ACCEPT THE CONTENTION OF THE ASSESSEE, AND DIRECT THE ASSESSIN G OFFICER TO ALLOW THE DEPRECIATION ALLOWANCE TO THE ASSESSEE WI THOUT REDUCING THE OPENING W.D.V. OF THE ASSETS BY THE AMOUNT OF S UBSIDY OF RS.20,00,000 RECEIVED BY THE ASSESSEE. FIRST GROUN D OF THE ASSESSEE IN THIS APPEAL IS ACCORDINGLY ALLOWED. 4. WE FIND THAT IN THE PRESENT CASE ALSO THE AS SESSEE HAS RECEIVED SUBSIDY IN TERMS OF POLICY DOCUMENT TITLED TARGET-2000 NEW INDUSTRIAL POLICY 1995 SIMILAR TO SUBSIDY REC EIVED BY M/S BALAJI CONSUMER CARE LTD., HYDERABAD. FOLLOWING TH E ORDER OF THE CO-ORDINATE BENCH, WE ALLOW THE GROUND TAKEN BY THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT O N: 9.3.2012 SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER DATED THE 9 TH MARCH, 2012 ITA NO.962/H/2009 PAS POLYMERS P LTD., S. BAD 4 COPY FORWARDED TO: 1. M/S PAS POLYMER P LTD. 102, SAI APARTMENTS, 32 KRISHNAPURI COLONY, WEST MAREDPALLY, SECUNDERABAD- 500026. 2. THE DY. CIT, CIRCLE 16(3), HYDERABAD 3. THE CIT(A)-V, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/