ACIT, Chandigarh V. M/s Green Filed Enterprises, Chandigarh

ITA 971/CHANDI/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0053 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-11-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 04-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSHIL KUMARCITD R
• Keywords: Capital receipt
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 971/CHD/2013 ASSESSMENT YEAR: 2010-11 THE ACIT, VS M/S GREEN FIELD ENTERPRISES, CIRCLE - 5(1), SCO 36, SECTOR 26, CHANDIGARH. SECTOR 26, CHANDIGARH. PAN: AAGFG6666C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUSHIL KUMAR,CIT-D R RESPONDENT BY : SHRI T.N.SINGLA, C.A. DATE OF HEARING : 27.04.2016 DATE OF PRONOUNCEMENT : 02.05.2016 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY REVENUE HAS BEEN DIRECTED AGAINST THE ORDER OF CIT(APPEALS), CHANDIGARH DATED 31.07.2 013 FOR ASSESSMENT YEAR 2010-11. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. 3. GROUND NOS. 1 AND 4 OF THE DEPARTMENTAL APPEAL A RE GENERAL AND NEED NO ADJUDICATION. 4. ON GROUND NO. 2, REVENUE CHALLENGED THE ORDER OF THE LD. CIT(APPEALS) IN HOLDING THAT EXCISE DUTY RE FUND OF 2 RS. 1,39,00,952/- RECEIVED BY THE ASSESSEE CONSTITU TED A CAPITAL RECEIPT NOT LIABLE TO TAX. 5. THE BRIEF FACTS OF THE ISSUE ARE THAT ASSESSEE H AD CLAIMED DEDUCTION OF RS. 1,39,00,952/- UNDER SECTIO N 80IB OF THE ACT ON EXCISE DUTY RECEIVED. THE ASSES SING OFFICER QUESTIONED THE ASSESSEE REGARDING THE SAID CLAIM. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND DISALLOWED DEDUCTIO N UNDER SECTION 80IB OF THE ACT ON EXCISE DUTY RECEIV ED. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASS ESSEE SUBMITTED THAT DEDUCTION UNDER SECTION 80IB IS ALLO WABLE ON EXCISE DUTY RECEIVED IN VIEW OF THE DECISION OF ITAT CHANDIGARH BENCH IN THE CASE OF M/S SHIVALIK AGRO CHEMICALS VIDE ORDER DATED 20.12.2011 IN ITA 968/CHD/2010. 5(I) THE LD. CIT(APPEALS) NOTED THAT IN PRECEDING ASSESSMENT YEAR 2009-10 VIDE ORDER DATED 05.11.2012 . SIMILAR ADDITION DELETED BY HIM BY FOLLOWING DECISI ON OF ITAT CHANDIGARH BENCH IN THE CASE OF M/S SHIVALIK A GRO CHEMICALS (SUPRA), ACCORDINGLY, DELETED THE ADDITIO N. 6. THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET SUBMITTED THAT IN PRECEDING ASSESSMENT YEAR 2009-10 , THE REVENUE PREFERRED APPEAL BEFORE THE TRIBUNAL IN ITA 147/2013 AND DEPARTMENTAL APPEAL ON THE SAME ISSUE HAVE BEEN DISMISSED.FINDINGS IN PARA 8 TO 10 OF THE 3 ORDER DATED 06.04.2016 ARE REPRODUCED AS UNDER : 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. THE ISSUE TO BE DECIDED BY US IS WHETHER THE EXCISE DUTY REFUND CAN BE TREATED AS INCOME DERIVED FROM INDUSTRIAL ACTIVITY FOR THE PURPOSES OF ALLOWING DEDUCTION UNDER SECTION 80IB OF THE ACT. ON PERUSAL OF THE JUDGMENT OF THE GAUHATI HIGH COURT IN THE CASE OF MEGHALAYA STEELS LTD. (SUPRA), WE SEE THAT THE SAME ISSUE HAS BEEN DECIDED BY THE HON'BLE HIGH COURT IN FAVOUR OF THE ASSESSEE IN FOLLOWING TERMS : 17. INSOFAR AS THE SECOND QUESTION IS CONCERNED, THE CENTRAL EXCISE DUTY REFUND CLAIMED BY THE ASSESSEE IS ON THE BASIS OF EXEMPTION NOTIFICATIONS ISSUED BY THE MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) BEING NOTIFICATION NO. 32 OF 1999 AND NOTIFICATION NO. 33 OF 1999, BOTH DT. 8TH JULY, 1999. IN TERMS OF THESE NOTIFICATIONS, A MANUFACTURER IS REQUIRED TO FIRST PAY THE CENTRAL EXCISE DUTY AND THEREAFTER CLAIM A REFUND ON FULFILMENT OF CERTAIN CONDITIONS. IN THE NEXT MONTH, AFTER VERIFICATION OF THE CLAIM, THE CENTRAL EXCISE DUTY SO DEPOSITED IS REFUNDED TO THE ASSESSEE IF THE CONDITIONS LAID DOWN IN THE NOTIFICATIONS ARE FULFILLED. IN THE PRESENT CASE, THERE IS NO DISPUTE THAT THE ASSESSEE WAS ENTITLED TO THE CENTRAL EXCISE DUTY REFUND. 18. THE CENTRAL BOARD OF EXCISE AND CUSTOMS IN ITS CIRCULAR DT. 19TH DEC., 2002 CLARIFIED THAT THE REFUND IS NOT ON ACCOUNT OF 4 EXCESS PAYMENT OF EXCISE DUTY BUT IS BASICALLY DESIGNED TO GIVE EFFECT TO THE EXEMPTION AND TO OPERATIONALISE THE EXEMPTION GIVEN BY THE NOTIFICATIONS. IN THAT SENSE, THE CENTRAL EXCISE DUTY REFUND DOES NOT APPEAR TO BEAR THE CHARACTER OF INCOME SINCE WHAT IS REFUNDED TO THE ASSESSEE IS THE AMOUNT PAID UNDER THE MODALITIES PROVIDED BY THE DEPARTMENT OF REVENUE FOR GIVING EFFECT TO THE EXEMPTION NOTIFICATIONS. THERE IS ALSO NOTHING TO SUGGEST THAT THE ASSESSEE HAS RECOVERED OR PASSED ON THE EXCISE DUTY ELEMENT TO ITS CUSTOMERS. EVEN ASSUMING THE REFUND DOES AMOUNT TO INCOME IN THE HANDS OF THE ASSESSEE, IT IS A PROFIT OR GAIN DIRECTLY DERIVED BY THE ASSESSEE FROM ITS INDUSTRIAL ACTIVITY. THE PAYMENT OF CENTRAL EXCISE DUTY HAS A DIRECT NEXUS WITH THE MANUFACTURING ACTIVITY AND SIMILARLY, THE REFUND OF THE CENTRAL EXCISE DUTY ALSO HAS A DIRECT NEXUS WITH THE MANUFACTURING ACTIVITY. THE ISSUE OF PAYMENT OF CENTRAL EXCISE DUTY WOULD NOT ARISE IN THE ABSENCE OF ANY INDUSTRIAL ACTIVITY. THERE IS, THEREFORE, AN INEXTRICABLE LINK BETWEEN THE MANUFACTURING ACTIVITY, THE PAYMENT OF CENTRAL EXCISE DUTY AND ITS REFUND. IN THE CIRCUMSTANCES, WE ARE OF THE OPINION THAT QUESTION NO. 2 MUST BE ANSWERED IN THE AFFIRMATIVE, IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 9. SINCE WE OBSERVE THAT THE ISSUE IN QUESTION BEFORE THE HON'BLE GAUHATI HIGH COURT WAS EXACTLY SAME, WHICH IS THERE IN THE PRESENT APPEAL, RESPECTFULLY FOLLOWING THE SAME, WE DISMISS THE APPEAL OF THE DEPARTMENT. 5 10. BEFORE PARTING, WE WANT TO ADD THAT THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. MEGHALAYA STEELS LTD. (SUPRA), COPY OF WHICH WAS PROVIDED TO US BY THE LEARNED COUNSEL FOR THE ASSESSEE DURING THE COURSE OF HEARING, STATING THAT THE ISSUE OF EXCISE DUTY REFUND HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN THIS JUDGMENT ARISING OUT OF THE JUDGMENT OF GAUHATI HIGH COURT IN THE CASE OF MEGHALAYA STEELS LTD. (SUPRA). WE OBSERVE THAT IN THIS CASE BEFORE THE HON'BLE APEX COURT, THE ONLY ISSUE DECIDED WAS IN RESPECT OF THE ALLOWABILITY OF TRANSPORT SUBSIDY, INTEREST SUBSIDY AND POWER SUBSIDY FOR THE PURPOSES OF DEDUCTION UNDER SECTION 80IB OF THE ACT AND NOT THAT OF EXCISE DUTY REFUND. THOUGH NO HELP OF THE SAID JUDGMENT CAN BE TAKEN IN THE PRESENT APPEAL, THIS ALSO GOES TO SHOW THAT THE DECISION OF THE GAUHATI HIGH COURT WITH REGARD TO THE EXCISE DUTY REFUND HAS BECOME FINAL. 11. THE APPEAL OF THE DEPARTMENT IS DISMISSED. 7. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE AR E OF THE VIEW THE ISSUE IS COVERED IN FAVOUR OF THE ASSE SSEE BY ORDER OF ITAT CHANDIGARH BENCH IN THE CASE OF THE S AME ASSESSEE FOR PRECEDING ASSESSMENT YEAR 2009-10 IN W HICH THE LD. CIT(APPEALS) DELETED SIMILAR ADDITION VIDE ORDER DATED 05.11.2012 AND HIS ORDER HAS BEEN CONFIRMED B Y THE TRIBUNAL VIDE ORDER DATED 06.04.2016. THEREFORE , FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF SAME 6 ASSESSEE FOR ASSESSMENT YEAR 2009-10, WE DISMISS TH IS GROUND OF APPEAL OF THE REVENUE. 8. ON GROUND NO. 3, REVENUE CHALLENGED THE ORDER OF LD. CIT(APPEALS) IN HOLDING THAT ADDITION OF RS. 37,66, 509/- ON ACCOUNT OF REBATE AND DISCOUNT RELATES TO PURCHA SE OF MATERIAL WHICH WAS SHOWN ON THE CREDIT SIDE OF THE PROFIT & LOSS ACCOUNT AND ASSESSEE IS ELIGIBLE FOR DEDUCTI ON UNDER SECTION 80B OF THE INCOME TAX ACT. 8(I) THE BRIEF FACTS OF THE ISSUE ARE THAT ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80IB ON REBATE AND DISCOUNT AMOUNTING TO RS. 37,66,509/-. THE ASSESSI NG OFFICER DID NOT ALLOW DEDUCTION UNDER SECTION 80IB OF THE ACT ON THE GROUND THAT IT WAS NOT THE BUSINESS OF T HE ASSESSEE TO EARN REBATE AND DISCOUNT. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) THAT REBATE AND DISCOUNT RECEIVED BY THE ASSESSEE WAS ON MATERIAL PURCHASES WHICH WAS SHOWN SEPARATELY WITHOUT DEDUCT ING THE SAME FROM THE BILL. ACCORDING TO HIM, AMOUNT W AS DEDUCTED FROM THE PURCHASES AND WAS SHOWN SEPARATEL Y ON THE CREDIT SIDE OF THE PROFIT & LOSS ACCOUNT AND SINCE CREDITS RELATE TO MATERIAL PURCHASES, THEREFORE, AS SESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 80IB OF THE ACT. IT WAS SUBMITTED THAT THE PREDECESSOR OF LD. CIT(AP PEALS) HAS ALLOWED DEDUCTION UNDER SECTION 80IB ON SIMILAR NATURE OF REBATE AND DISCOUNT IN THE CASE OF SISTER CONCERN OF THE ASSESSEE IN ASSESSMENT YEAR 2005-06. 7 9. THE LD. CIT(APPEALS) FOUND THAT IMPUGNED REBATE AND DISCOUNT RELATES TO PURCHASE OF MATERIAL. THE ASSESSEE HAS NOT DEDUCTED THIS AMOUNT FROM THE PURCHASES BUT HAS SHOWN IT SEPARATELY ON CREDIT SID E OF THE PROFIT & LOSS ACCOUNT. SIMILARLY, DISALLOWANCE MADE UNDER SECTION 80IB OF THE ACT ON REBATE AND DISCOUN T WAS ALLOWED BY THE LD. CIT(APPEALS) IN THE CASE OF SIST ER CONCERN OF THE ASSESSEE M/S INDUSTRIAL EQUIPMENT CO . IN ASSESSMENT YEAR 2006-07 VIDE ORDER DATED 10.09.2007 AND THEREFORE, FOLLOWING THE ORDER OF HIS PREDECESS OR, LD. CIT(APPEALS) ALLOWED THIS GROUND OF APPEAL OF THE ASSESSEE. 10. THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET SUBMITTED THAT ITAT CHANDIGARH BENCH IN THE CASE OF M/S INDUSTRIAL EQUIPMENT CO. IN ASSESSMENT YEAR 200 6- 07 IN ITA 938/09 DISMISSED THE DEPARTMENTAL APPEAL VIDE ORDER DATED 15.10.2009, COPY OF THE SAME IS PLACED ON RECORD. HE HAS, THEREFORE, SUBMITTED THAT ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. 11. AFTER CONSIDERING RIVAL SUBMISSIONS, WE ARE OF THE VIEW THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY ORDER OF ITAT CHANDIGARH BENCH IN THE CASE OF M/S INDUSTRIAL EQUIPMENT CO. (SUPRA) IN WHICH THE TRIBU NAL HAS CONFIRMED ORDER OF THE LD. CIT(APPEALS) DATED 10.07.2009 FOLLOWED BY LD. CIT(APPEALS). NO INFIRMI TY IN THE ORDER OF THE LD. CIT(APPEALS) HAVE BEEN POINTED OUT, 8 THEREFORE, THIS GROUND OF APPEAL OF THE DEPARTMENTA L APPEAL HAS NO MERIT. THE SAME IS, ACCORDINGLY, DISM ISSED. 12. IN THE RESULT, DEPARTMENTAL APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (ANNAPURNA GUPTA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED: 2 ND MAY, 2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD