DCIT, CC-2(2), KOLKATA, Kolkata V. M/s Nezone Industries Ltd., Guwahati

ITSSA 129/KOL/2015

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2822 (ITAT-KOLKATA)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-12-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 14-12-2015
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Section: 143(3); 153A; 80IB; 37; 132

Judgement Text

IT.SS.A.NOS.129 TO 135/KOL/2015-M/S. NEZONE INDUSTR IES LTD. A.Y.2007-08 TO 2013-14 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C, KO LKATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM AND DR.ARJ UN LAL SAINI, AM] IT(SS)A NOS.129 TO 135KOL/2015 ASSESSMENT YEARS : 2007-08 TO 2013-14 D.C.I.T., CENTRAL CIRCLE-2(2), -VERSUS- M/S. NEZON E INDUSTRIES LTD. KOLKATA. KOLKATA (PAN:AABCN 5479 J) (APPELLANT ) (RESPONDENT) FOR THE APPELLANT : SHRI G.MALLIKARJUNA, CIT(DR) FOR THE RESPONDENT : NONE DATE OF HEARING : 01.12.2016. DATE OF PRONOUNCEMENT : 09.12.2016. ORDER PER N.V.VASUDEVAN, JM THESE ARE APPEALS BY THE ASSESSEE AGAINST SEVEN ORDERS ALL DATED 14.09.2015 OF CIT(A)-20, KOLKATA RELATING TO A.Y.20 07-08 TO 2013-14. 2. GROUNDS OF APPEAL RAISED BY THE REVENUE IN AL L THESE APPEALS ARE IDENTICAL. FOR THE SAKE OF READY REFERENCE WE GIVE THE GROUNDS OF APPE AL RAISED BY THE REVENUE IN A.Y.2007-08 IN IT(SS)A.129/KOL/2015 WHICH READ AS F OLLOWS :- (L) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAD ERRED IN DELETING THE DISALLOWANCES MADE U/S 80IC OF THE INC OME TAX ACT,1961. (2) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAD ERRED IN RELYING ON THE DECISION OF THE HON 'BLE ITAT GUWAHA TI BENCH WHICH IN TURN HAD RELIED ON THE DECISION OF CIT V/S MEGHALAYA STEELS LIMITED (GUWAHATI HIGH COURT) WHICH IS PENDING IN THE HON'BLE SUPREME COURT AND HAS THUS N OT YET REACHED FINALITY. (3) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, APPEAL IN THIS CASE ON SIMILAR ISSUES ARE ALREADY PENDING BEFORE HON'BLE HIGH COUR T GUWAHATI. (4) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE DEPARTMENT CRAVES TO ADD OR ALTER ANY MORE GROUNDS AT THE TIME OF THE APPEAL . 3 . ALL THESE APPEALS ARISE UNDER THE FOLLOWING FAC TS AND CIRCUMSTANCES: - THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS O F MANUFACTURE OF MILD STEEL, BLACK AND GALVANIZED TUBES/PIPES ETC. THE AS SESSMENT IN THE CASE OF THE ASSESSEE IT.SS.A.NOS.129 TO 135/KOL/2015-M/S. NEZONE INDUSTR IES LTD. A.Y.2007-08 TO 2013-14 2 FOR A.YRS.2007-08 TO 2010-11 WERE COMPLETED U/S 143 (3) OF THE INCOME TAX ACT, 1961 (ACT) IN THE FOLLOWING MANNER :- SL. NO .ASSESSMENT YEAR DATE TOTAL INCOME DETERMINED 1. 2007-08 28.12.2010 RS.3,41,66,300/- 2. 2008-09 29.12.2010 RS.3,43,41,860/- 3. 2009-10 28.11.2011 RS.6,36,29,170/- 4. 2010-11 27.11.2011 RS.6,57,95,510/- 4.WHILE COMPLETING THE AFORESAID ASSESSMENT THE AO CONSIDERED THE TRANSPORT SUBSIDY, CENTRAL WORKING CAPITAL INTEREST SUBSIDY, STATE POWER SUBSIDY, SALES TAX REMISSION AS INCOME NOT ARISING FROM THE ACTIVITY, THE PROFITS AND GAINS OF WHICH WERE ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT. ACCORDI NG TO THE AO THE AFORESAID SUBSIDIES CANNOT BE SAID TO BE ARISING OUT OF MANUF ACTURING BUSINESS, THE PROFITS OF WHICH ALONE WERE ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT. SINCE THERE WAS NO NEXUS WITH THE BUSINESS OF THE MANUFACTURING ACTIVITY, TH E AO DISALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IC OF THE ACT ON THE A FORESAID RECEIPTS. 5.ON APPEAL BY THE ASSESSEE THE CIT(A) DISMISSED TH E ASSESSEES APPEAL IN SO FAR AS IT RELATES TO TRANSPORT, POWER AND INTEREST SUBSIDY AN D ALLOWED THE CLAIM OF THE ASSESSEE IN RESPECT OF TREATING THE SALES TAX REMISSION AS D ERIVED FROM ASSESSEES ELIGIBLE BUSINESS. ON FURTHER APPEAL BY THE ASSESSEE THE HON BLE ITAT, GAUHATI BENCH FOLLOWING THE DECISION OF THE HONBLE GAUHATI HIGH COURT IN THE CASE OF CIT VS MEGHALAYA STEELS LTD. (2013) 34 TAXMAN.COM 34 (GAU) WHEREIN IT WAS HELD THAT THE AFORESAID SUBSIDIES HAVE TO BE INCLUDED AS PART OF THE PROFITS OF THE ELIGIBLE BUSINESS ON WHICH DEDUCTION U/S 80 IC OF THE ACT IS TO BE ALLOW ED, ALLOWED THE CLAIM OF THE ASSESSEE. SINCE THE REVENUE HAD FILED APPEAL AGAINS T THE DECISION OF THE HONBLE GAUHATI HIGH COURT IN THE CASE OF MEGHALAYA STEELS LTD. (SUPRA) THE REVENUE HAD ALSO FILED AN APPEAL BEFORE THE HONBLE HIGH COURT OF GU WAHATI AGAINST THE DECISION OF THE TRIBUNAL IN ASSESSEES CASE. IT.SS.A.NOS.129 TO 135/KOL/2015-M/S. NEZONE INDUSTR IES LTD. A.Y.2007-08 TO 2013-14 3 6.WHILE THE MATTER STOOD THUS THERE WAS A SEARCH AN D SEIZURE OPERATION U/S 132 OF THE ACT IN THE CASE OF THE ASSESSEE ON 01.08.2012. CONS EQUENT TO THE SEARCH NOTICE U/S 153A OF THE ACT WAS ISSUED FOR A.YRS.2007-08 TO 201 3-14. AS FAR AS A.Y.2007-08 TO 2010-11 ARE CONCERNED, THE ASSESSEE FILED RETURN OF INCOME IN ACCORDANCE WITH THE RELIEF ALLOWED BY ITAT AGAINST THE ORDERS PASSED IN THE ASSESSMENTS COMPLETED U/S 143(3) OF THE ACT. SINCE THE REVENUE HAVE FILED THE APPEALS BEFORE THE HONBLE GAUHATI HIGH COURT AGAINST THE ORDERS OF THE TRIBUNAL ARISI NG OUT OF ASSESSMENTS U/S 143(3) OF THE ACT, THE AO WAS OF THE VIEW THAT INCOME THAT WA S DETERMINED AFTER GIVING THE APPEAL EFFECT (CIT(A) APPELLATE ORDER) THAT SHOULD BE CONSIDERED AS ASSESSED INCOME WHILE COMPLETING THE ASSESSMENTS U/S 153A R.W.S.143 (3) OF THE ACT. ACCORDINGLY THE AO DID NOT CONSIDER THE FOLLOWING SUBSIDY IN THE FO LLOWNG ASSESSMENT YEARS AS ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT : SL.NO. A.Y. NATURE OF THE SUBSIDY AMOUNT 1.2007-08 TRANSPORT SUBSIDY RS.1,35,09,550/- CENTRAL WORKING CAPITAL INTEREST SUBSIDY RS. 3 3,30,432/- STATE POWER SUBSIDY RS. 7,00,000/- SALES TAX REMISSION RS.1,34,22,175/- 2. 2008-09 TRANSPORT SUBSIDY RS.1,10,82,935/- CENTRAL WORKING CAPITAL INTEREST SUBSIDY RS. 4 1,43,852/- STATE POWER SUBSIDY RS. 7,00,000/- SALES TAX REMISSION RS.1,60,54,412/- 3.2009-10 TRANSPORT SUBSIDY RS.1,96,46,340/- CENTRAL INTEREST SUBSIDY RS. 26,57,536/- STATE POWER SUBSIDY RS. 7,00,000/- STATE TERM LOAN INTEREST SUBSIDY RS. 3,55,0 00/- 4.2010-11 TRANSPORT SUBSIDY RS. 90,03,535/- SALES TAX REMISSION RS.3,64,23,957/- CENTRAL INTEREST SUBSIDY RS. 25,79,569/- CENTRAL EXCISE DUTY REFUND RS.1,77,41,987/- 7. AS FAR AS A.Y.2011-12 , 2012-13 AND 2013-14 ARE CONCERNED THERE WAS NO EARLIER ASSESSMENTS COMPLETED U/S 143(3) OF THE ACT. THE AS SESSMENTS MADE FOR THESE IT.SS.A.NOS.129 TO 135/KOL/2015-M/S. NEZONE INDUSTR IES LTD. A.Y.2007-08 TO 2013-14 4 ASSESSMENT YEARS WERE U/S 153A R.W.S. 143(3) OF THE ACT. AS FAR AS THESE THREE ASSESSMENT YEARS ARE CONCERNED THE AO CONSIDERED CE RTAIN SUBSIDIES RECEIVED BY THE ASSESSEE AS NOT PART OF THE PROFIT ON WHICH DEDUCTI ON U/S 80IC OF THE ACT CAN BE ALLOWED. THE DETAILS OF THE SUBSIDY IN THIS REGARD ARE AS FOLLOWS :- SL.NO. A.Y. NATURE OF THE SUBSIDY AMOUNT 1.2011-12 TRANSPORT SUBSIDY RS.1,07,39,533/- WORKING CAPITAL INTEREST SUBSIDY RS. 57,74,96 7/- INSURANCE SUBSIDY RS. 2,56,294/- SALES TAX REMISSION RS.1,34,22,175/- 2. 2012-13 WORKING CAPITAL INTEREST SUBSIDY RS. 9,76,633/- INSURANCE SUBSIDY RS. 56,280/- 3.2013-14 WORKING CAPITAL INTEREST SUBSIDY RS. 2 3,72,613/- 8. THE ASSESSEE PREFERRED AN APPEAL BEFORE CIT( A) IN ALL THE AFORESAID ASSESSMENT YEARS CLAIMING THAT THE SUBSIDIES IN QUESTION HAD T O BE REGARDED AS INCOME ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT. THE CIT(A) IN SO FAR AS IT RELATES TO THE VARIOUS SUBSIDIES EXCEPT SALES TAX REMISSION HELD THAT THES E SUBSIDIES WILL HAVE TO BE REGARDED AS PART OF THE PROFITS ELIGIBLE FOR DEDUCTION U/S 8 0IC OF THE ACT. AS FAR AS THE SALES TAX REMISSION RECEIVED BY THE ASSESSEE IS CONCERNED THE CIT(A) FOUND THAT IN ASSESSEES OWN CASE THE HONBLE ITAT, GAUHATI BENCH IN ITA NO. 54/GAU/2013 HELD THAT THE SALES TAX REMISSION RECEIVED BY THE ASSESSEE WAS AL SO TO BE CONSIDERED AS PART OF THE PROFITS ON WHICH DEDUCTION U/S 80IC OF THE ACT SHOU LD BE ALLOWED. FOLLOWING AFORESAID ORDER, THE CIT(A) HELD THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION U/S 80IC OF THE ACT BY INCLUDING THE SALES TAX REMISSION AS PART OF THE PROFITS ON WHICH DEDUCTION U/S 80IC OF THE ACT SHOULD BE ALLOWED. 9. AGGRIEVED BY THE ORDERS OF CIT(A) THE REVENU E HAS PREFERRED THE PRESENT APPEALS BEFORE THE TRIBUNAL. 10. AT THE TIME OF HEARING OF THE APPEAL IT WAS BROUGHT TO OUR NOTICE THAT THE HONBLE SUPREME COURT IN CIVIL NO.7622 OF 2014 JUDGMENT DAT ED 09.03.2016 HAS UPHELD THE IT.SS.A.NOS.129 TO 135/KOL/2015-M/S. NEZONE INDUSTR IES LTD. A.Y.2007-08 TO 2013-14 5 ORDER OF THE HONBLE GAUHATI HIGH COURT IN THE CASE OF MEGHALAYA STEELS LTD (SUPRA). IT WAS ALSO BROUGHT TO OUR NOTICE THAT CBDT HAS ISS UED CIRCULAR NO.39/2016 DATED 29.11.2016 WHEREBY THEY HAVE AFTER TAKING COGNIZANC E OF THE DECISION OF THE HONBLE SUPREME COURT REFERRED TO ABOVE, INSTRUCTED THE OFF ICERS OF THE DEPARTMENT THAT SUBSIDIES OF TRANSPORT, POWER AND INTEREST GIVEN BY THE GOVERNMENT TO THE INDUSTRIAL UNDERTAKINGS ARE RECEIPTS WHICH ARE REIMBURSED FOR COST OF PRODUCTION RELATING TO MANUFACTURE OR SALE OF THE PRODUCTS AND THEREFORE H AVE A DIRECT NEXUS WITH THE PROFITS AND GAINS OF THE INDUSTRIAL UNDERTAKINGS. THE DEPAR TMENT HAS ACCORDINGLY DIRECTED THE OFFICERS IN THE FIELD TO ALLOW DEDUCTION U/S 80IC O F THE ACT ON SUCH RECEIPTS ALSO. THE SAID CIRCULAR ALSO MENTIONS THAT APPEALS FILED BY T HE DEPARTMENT ON THE ABOVE ISSUE SHOULD NOT BE PRESSED. 11. WE FIND THAT THIS ISSUE HAS BEEN ELABORATELY D EALT 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 DECISIO N IN RESPECT OF EACH CATEGORY OF SUBSIDY WHICH IS IN DISPUTE BEFORE US:- 1. TRANSPORT SUBSIDY 88. IN THE LIGHT OF WHAT HAVE BEEN DISCUSSED ABOVE , THERE CAN BE ESCAPE FROM THE CONCLUSION THAT TRANSPORT SUBSIDY WAS AIME D AT REDUCING THE COST OF PRODUCTION OF THE INDUSTRIAL UNDERTAKINGS COVERE D BY TRANSPORT SUBSIDY SCHEME. THUS, THERE WAS A FIRST DEGREE NEXUS BETWE EN THE TRANSPORT SUBSIDY, ON THE ONE HAND, AND COST OF PRODUCTION, O N THE OTHER. WHEN COST IS REDUCED, IT NATURALLY HELPS IN EARNING OF PROFIT A ND, AT TIMES, HIGHER PROFITS. SUCH PROFITS AND GAINS OUGHT TO HAVE 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 DISTINGUI SH THE DECISION, IN JAI BHAGWAN OIL & FLOUR MILLS CASE (SUPRA), IN ANY MANN ER WHATSOEVER, WHEN THIS DECISION MAKES IT MORE THAN ABUNDANTLY CLEAR T HAT TRANSPORT SUBSIDY GOES ON TO REDUCE THE COST OF PRODUCTION OF THE IND USTRIAL UNDERTAKING LEADING TO EARNING OF PROFITS AND MAKING OF GAINS B Y THE INDUSTRIAL UNDERTAKING. IT.SS.A.NOS.129 TO 135/KOL/2015-M/S. NEZONE INDUSTR IES LTD. A.Y.2007-08 TO 2013-14 6 94. PUT SHORTLY, THERE IS AN EXISTENCE OF DIRECT NE XUS BETWEEN TRANSPORT SUBSIDY, ON THE ONE HAND, AND THE MANUFACTURING/PRO DUCTION ACTIVITIES OF INDUSTRIAL UNDERTAKING, ON THE OTHER, STANDS WELL E STABLISHED. UNLESS SHOWN OTHERWISE, THE INDUSTRIAL UNDERTAKINGS, IN THE PRES ENT SET OF APPEALS, WHICH HAVE BEEN GRANTED TRANSPORT SUBSIDY, ARE ENTITLED T O CLAIM DEDUCTIONS IN TERMS OF THE DIRECTIONS OF THE LEARNED TRIBUNAL. 2. POWER SUBSIDY : 105. FROM A COMBINED READING OF THE TWO DECISIONS , RENDERED IN RAJARAM MAIZE PRODUCTS (SUPRA) AND EASTERN ELECTRO CHEMICAL INDUSTRIES CASE (SUPRA), WHAT BECOMES TRANSPARENT IS THAT POWER SUB SIDY IS MEANT TO ENABLE A PERSON MEET A CERTAIN PERCENTAGE OF EXPENDITURE O N POWER AND IS, THEREFORE, REVENUE IN NATURE. HOWEVER, THOUGH REVEN UE IN NATURE, THE FACT REMAINS THAT IT HELPS IN NOT ONLY GROWTH OF THE IND USTRIAL UNDERTAKING, BUT ALSO HELP AN INDUSTRIAL UNDERTAKING TO EARN PROFITS AND MAKE GAINS. SUCH A SUBSIDY, THOUGH REVENUE IN NATURE AND TAXABLE ACCOR DINGLY, IS 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 P RODUCTS CASE (SUPRA) AND EASTERN ELECTRO CHEMICAL INDUSTRIES CASE (SUPRA ), IS THAT WHEN A SUBSIDY, GRANTED BY GOVERNMENT, IS OPERATIONAL IN N ATURE, WHICH HELPS IN GENERATION OF PROFITS FOR ANY INDUSTRIAL UNDERTAKIN G, SUCH A PROFIT IS, INDEED, COVERED BY THE PROVISIONS EMBODIED IN SECTI ON 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, WA S ), HAS, UPON CONSIDERATION OF THE SUBSIDY INVOLVED, TOOK THE VIE W THAT THE AMOUNT OF SUBSIDY, GIVEN BY WAY OF ASSISTANCE OR GRANTS BY TH E GOVERNMENT, SERVES AS STIMULUS TO THE WILLING INDUSTRIAL ESTABLISHMENTS T O CATER TO THE GROWTH OF THE REGION AND, THUS, REINFORCE THE EVENTUAL 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 PETITION AND NOT AN APPEAL UNDER THE ACT, THE FACT REMAINS THAT THE LAW, LAID DOWN THEREIN, IS RELEVANT IN DETERMINING THE CONTROVERSY, WHICH IS R EQUIRED TO BE DEALT WITH IN THIS SET OF APPEALS. THE RELEVANT OBSERVATIONS, APPEARING AT PARA 32, IN PANCHARATNA CEMENT (P.) LTD. (SUPRA), IS, THEREFORE , QUOTED BELOW : IT.SS.A.NOS.129 TO 135/KOL/2015-M/S. NEZONE INDUSTR IES LTD. A.Y.2007-08 TO 2013-14 7 ..IT CANNOT BE GAINSAID THAT HAVING REGARD TO TH E LAYOUT OF INVESTMENT AND INCOME DESIGNED FOR ANY COMMERCIA L OR BUSINESS VENTURE, REIMBURSEMENT OF THE EXPENSES INCURRED TO WHATEVER EXTENT, WOULD LOGICALLY CONTRIBUTE TO THE PROFITS AND GAINS DERIVED FROM THE RELATED ENTERPRISE AND THUS WOULD AUGMENT THE OVERA LL INCOME. THE AMOUNTS OF SUBSIDIES AS THE FACTS OF THE CASE REVEA L ARE BY WAY OF GOVERNMENT ASSISTANCE OR GRANTS UNDER THE SCHEMES T O PROVIDE STIMULUS TO THE WILLING INDUSTRIAL ESTABLISHMENTS TO CATER T O THE INDUSTRIAL GROWTH IN THE REGION AND, THEREFORE, THE SAME (SUBSIDY) ARE A IMED NECESSARILY AT NEUTRALIZING THE EXPENSES INCURRED AND THUS REINFOR CE 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 LA W 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 OPERATIONAL SUBSIDY? IF THE OBJECT OF THE RELEVANT SCHEME IS BORNE IN MIND, IT CLEARLY SHOWS THAT INTEREST SUBSIDY, HAVING AIME D AT REDUCING THE INTEREST PAYABLE ON WORKING CAPITAL BY AN INDUSTRIAL UNDERTA KING, HELPS DIRECTLY IN REDUCING THE COST OF MANUFACTURING OR PRODUCTION AC TIVITIES AND ESTABLISH THEREBY DIRECT AND FIRST DEGREE NEXUS BETWEEN THE I NDUSTRIAL ACTIVITIES OF THE ASSESSEE-RESPONDENTS, ON THE ONE HAND, AND THE INTE REST SUBSIDY, ON THE OTHER, RECEIVED BY THE ASSESSEE-RESPONDENTS AND, IN CONSEQUENCE THEREOF, SINCE INTEREST SUBSIDY RESULTS INTO PROFITS AND GAI NS DERIVED FROM, OR DERIVED BY, AN INDUSTRIAL UNDERTAKING, THERE IS NO REASON A S TO WHY SUCH PROFITS AND GAINS, EARNED BY AN INDUSTRIAL UNDERTAKING ON THE S TRENGTH OF SUCH A SUBSIDY, NAMELY, INTEREST SUBSIDY, BE NOT ALLOWED T O BE DEDUCTED FROM THE TAXABLE INCOME OF THE INDUSTRIAL UNDERTAKING CONCER NED. 12. 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 H AND, AND MANUFACTURING/PRODUCTION, ON THE OTHER. DEPB ENTITL EMENT WAS BASED ON THE ARTIFICE OF DEEMED IMPORT CONTENT OF EXPORT PRO DUCT AND WAS NOT EVEN BASED ON ACTUAL IMPORT CONTENT OF THE EXPORT PRODUC T; WHEREAS, IN THE CASES AT HAND, THE TRANSPORT SUBSIDY WAS MADE AVAILABLE O N THE RAW MATERIAL ACTUALLY CONSUMED IN THE MANUFACTURING PROCESS AND FINISHED GOODS, WHICH WERE ACTUALLY PRODUCED AND TAKEN TO THE EXISTING MA RKET FOR SALE AND, SIMILARLY, POWER SUBSIDY, INTEREST SUBSIDY, AND INS URANCE SUBSIDY ARE, AS IT.SS.A.NOS.129 TO 135/KOL/2015-M/S. NEZONE INDUSTR IES LTD. A.Y.2007-08 TO 2013-14 8 ALREADY INDICATED ABOVE, MADE AVAILABLE ON THE ACTU AL AMOUNT OF THE POWER BILL, INTEREST AND INSURANCE PREMIUM PAID BY THE AS SESSEE-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 TH E OBJECT BEHIND DEPB WAS TO NEUTRALIZE THE INCIDENCE OF CUSTOMS DUTY PAYMENT ON THE IMPORT DUTY OF THE EXPORT PRODUCT AND, HENCE, THE DEPB SCHEME WAS NOT AIMED AT NEUTRALIZING THE COST OF PRODUCTION; RATHER, AS OBS ERVED BY THE SUPREME COURT, IT WAS AN INCENTIVE FOR EXPORT AND ENTITLEME NT 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 REFU ND OF AN AMOUNT ARITHMETICALLY EQUAL TO EXEMPTION DUTY OR CENTRAL EXCISE DUTY ACTUALLY PAID BY AN INDIVIDUAL IMPORTER/MANUFACTURER. THIS IS THE STRIKING DIFFERENCE BETWEEN SUBSIDIES ON TRANSPORTATION COST, POWER, IN TEREST AND INSURANCE, IN THE CASES AT HAND, ON THE ONE HAND, AND DUTY DRAWBA CK SCHEME, ON THE OTHER, INASMUCH AS THE SUBSIDIES, SO PROVIDED TO TH E ASSESSES CONCERNED, ARE ARITHMETICALLY EQUIVALENT TO THE COST OF RAW MA TERIALS ACTUALLY USED IN THE MANUFACTURING PROCESS AND THE FINISHED GOODS, W HICH IS ACTUALLY TAKEN TO THE EXISTING MARKET FOR SALE WITHIN AND OUTSIDE THE NORTH-EASTERN REGION AND, SIMILARLY, THE ASSESSEES CONCERNED HAVE THE RI GHT TO RECEIVE POWER SUBSIDY, ARISING OUT OF POWER BILLS PAID, OR INTERE ST SUBSIDY OR INSURANCE SUBSIDY, EQUIVALENT TO THE AMOUNT PAID ON INTEREST AND INSURANCE RESPECTIVELY. THESE ASPECTS OF DEPB AND DUTY DRAWBA CK SCHEME GIVE RISE TO THE INFERENCE THAT THE DECISION, IN LIBERTY INDI A (SUPRA), WAS RENDERED, IN THE LIGHT OF ITS OWN FACTS, AND NOT FOR UNIVERSAL A PPLICATION. THIS INFERENCE GETS STRENGTHENED FROM THE FOLLOWING OBSERVATIONS M ADE 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 EXC ISE ACT, 1944 EMPOWER GOVERNMENT OF INDIA TO PROVIDE FOR REPAYMEN T OF CUSTOMS AND EXCISE 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 MANUFACTURE OF EXP ORT GOODS OF SPECIFIED CLASS. THE RULES DO NOT ENVISAGE A REFUN D OF AN AMOUNT ARITHMETICALLY EQUAL TO CUSTOMS DUTY OR CENTRAL EXC ISE DUTY ACTUALLY PAID BY AN INDIVIDUAL IMPORTER-CUM-MANUFACTURER. SU B-SECTION (2) OF SECTION 75 OF THE CUSTOMS ACT REQUIRES THE AMOUN T OF DRAWBACK TO BE DETERMINED ON A CONSIDERATION OF ALL THE CIRC UMSTANCES IT.SS.A.NOS.129 TO 135/KOL/2015-M/S. NEZONE INDUSTR IES LTD. A.Y.2007-08 TO 2013-14 9 PREVALENT IN A PARTICULAR TRADE AND ALSO BASED ON T HE FACTS SITUATION RELEVANT IN RESPECT OF EACH OF VARIOUS CLASSES OF G OODS IMPORTED. BASICALLY, THE SOURCE OF DUTY DRAWBACK RECEIPT LIES IN SECTION 75 OF THE CUSTOMS ACT AND SECTION 37 OF THE CENTRAL EXCIS E ACT (EMPHASIS SUPPLIED) 128. IN SHORT, THUS, THE DEPB AND DUTY DRAWBACK SCH EME WERE NOT, AS ALREADY INDICATED ABOVE, RELATED TO THE BUSINESS OF INDUSTRIAL UNDERTAKING PER SE FOR ITS MANUFACTURING OR PRODUCTION. ENTITLE MENT FOR DEPB OR DUTY DRAWBACK SCHEME AROSE, WHEN THE UNDERTAKING DECIDED TO EXPORT AFTER MANUFACTURING OR PRODUCTION AND THIS INCENTIVE WAS RESTRICTED ONLY TO THE EXPORT OF GOODS OF A SPECIFIED CLASS. CONSEQUENTLY, IF THERE WAS NO EXPORT, THERE WAS NO INCENTIVE FROM DEPB OR DUTY DRAWBACK. THIS APART, DEPB OR DUTY DRAWBACK SCHEME DID NOT PROVIDE REFUND OF E XEMPTION 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 AMOUNT OF DUTY PAID. IN THE CASE OF TRANSPORT SUBSI DY, POWER SUBSIDY AND INSURANCE SUBSIDY, THE RELATION BETWEEN SUBSIDY REC EIVED, ON THE ONE HAND, AND THE PROFITS EARNED OR THE GAINS MADE, BY AN IND USTRIAL UNDERTAKING, STAND, AS ALREADY OBSERVED AT PARAGRAPH 127, WELL E STABLISHED. 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 RELATE TO EXPORT OF GOODS BY AN INDUSTRIAL UNDERTAKING; WHERE AS THE SCHEME OF TRANSPORT SUBSIDY, INTEREST SUBSIDY, POWER SUBSIDY AND INSURANCE SUBSIDY, IS INEXTRICABLY AND DIRECTLY CONNECTED WITH THE REDUCT ION OF COST OF PRODUCTION AND MANUFACTURING OF AN INDUSTRIAL UNDERTAKING ENTI TLING 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 SUBSIDI ES AT HAND. 13. 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 AND TAK ING INTO CONSIDERATION ALL THE ABOVE ASPECTS, WE ARE OF THE VIEW THAT THE ORDERS OF CIT( A) WHICH IS IN CONFORMITY WITH THE DECISION OF THE HONBLE SUPREME COURT AND CBDT CIRC ULAR REFERRED TO ABOVE, DOES IT.SS.A.NOS.129 TO 135/KOL/2015-M/S. NEZONE INDUSTR IES LTD. A.Y.2007-08 TO 2013-14 10 NOT CALL FOR ANY INTERFERENCE. WE THEREFORE DO NOT FIND ANY MERIT IN THESE APPEALS BY THE REVENUE. ACCORDINGLY THE APPEALS OF THE REVENUE ARE DISMISSED. 14. IN THE RESULT THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 09.12.2016. SD/- SD/- [DR.ARJUN LAL SAINI] [N.V.VASUDEVAN] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 09.12.2016. SS (.P.S.) COPY OF THE ORDER FORWARDED TO: 1. M/S. NEZONE INDUSTRIES LTD., 5 TH FLOOR, D.D.TOWER, G.S.ROAD, CHRISTIAN BASTI, GUWAHATI-781005. 2 THE D.C.I.T., CENTRAL CIRCLE-2(2), KOLKATA. 3. THE CIT(A)-20, KOLKATA. 4. CIT-CEN TRAL-I, KOLKATA. 5. DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES