M/s. Jindal World Wide Ltd., Ahmedabad V. The ACIT, Circle-2(1)(2), Ahmedabadq

MA 187/AHD/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5916 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 22-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 10-12-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Capital receipt
• Section: 115JB; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER) (THROUGH VIRTUAL COURT) M.A. NO: 187/AHD/2020 (IN ITA NO. 2316/AHD/2018) (ASSESSMENT YEAR: 2014-15) M/S. JINDAL WORLD WIDE LTD., JINDAL CORPORATE HOUSE, D-MART, SHYAMAL SHIVRANJINI CROSS ROAD, AHMEDABAD PAN NO. AFCPA 7813A V/S THE ACIT, CIRCLE-2(1)(2), AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VARTIK CHOKSHI , A.R. RESPONDENT BY : SHRI RAJDEEP SINGH, SR. D.R. ( )/ ORDER DATE OF HEARING : 19 -04-2021 DATE OF PRONOUNCEMENT : 22-04-2021 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THE INSTANT MISCELLANEOUS APPLICATION IS FILED BY THE ASSESSE AGAINST THE ORDER OF ITAT IN ITA NO. 2316/AHD/2018 DATED 24.11.2020. M.A. NO. 187/AHD/2020 . A.Y. 2014-15 2 2. IN THE MISCELLANEOUS APPLICATION, IT IS SUBMITTED THAT THERE IS A MISTAKE APPARENT FROM RECORD AS THE MAIN GROUND OF THE ASSESSE FROM SERIAL NO. 1 TO 1.3 WAS NOT ADJUDICATED. THESE GROUNDS OF APPEAL ARE REPRODUCED AS UNDER: 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LD. CIT(A) HAS ERRED IN NOT ADMITTING THE ADDITIONAL GROUNDS RAISED BY THE APPELLANT DURING THE COURSE OF APPELLATE PROCEEDINGS AND NOT REDUCING TAXABLE INCOME BY INTEREST SUBSIDY OF RS. 5,77,14,810/- AND RS. 20,39,344/- RECEIVED BY THE APPELLANT UNDER TECHNOLOGY UPGRADATION FUND SCHEME (TUFS) FOR TEXTILE AND JUTE INDUSTRIES. 1.1 IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LD. CIT(A), WHILE NOT ADMITTING THE ADDITIONAL GROUNDS RAISED BY APPELLANT, HAS ERRED IN STATING THAT DECISION OF SUPREME COURT IN CASE OF NTPC [229 ITR 383] IS NOT APPLICABLE IN ITS CASE WHEN THE SAME IS DULY APPLICABLE IN CASE OF APPELLANT. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT APPELLANT IS ELIGIBLE TO RAISE ANY ADDITIONAL GROUND BEFORE APPELLATE AUTHORITIES IN VIEW OF DECISION OF HON'BLE GUJARAT HIGH COURT IN CASE OF MITESH IMPEX REPORTED IN 46 TAXMANN.COM 30 AND KUSH PROTEINS (P.) LTD. V/S. PRINCIPAL COMMISSIONER OF INCOME-TAX [2018] 93 TAXMANN.COM 42 (GUJARAT). 1.2 IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT INTEREST SUBSIDY OF RS.5,77,14,810/- OFFERED AS INCOME DURING THE YEAR AND RS.20,39,3447- REDUCED FROM CAPITAL WORK IN PROGRESS SHOULD INSTEAD BE TREATED AS CAPITAL RECEIPT IN VIEW OF DECISION OF HON'BLE SUPREME COURT IN CASE OF SHREE BALAJI ALLOYS REPORTED IN 80 TAXMANN.COM 239 WHICH IS DULY APPLICABLE ON FACTS OF APPELLANT'S CASE. 1.3 IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LD. CIT(A) HAS ERRED IN STATING THAT DECISIONS RELIED BY APPELLANT FOR REDUCING INTEREST SUBSIDY FROM TAXABLE INCOME ARE NOT APPLICABLE TO ITS CASE. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT DECISION OF HON'BLE SUPREME COURT IN CASE OF SHREE BALAJI ALLOYS REPORTED IN 80 TAXMANN.COM 239 IS ON SIMILAR FACTS AND IS DULY APPLICABLE IN CASE OF APPELLANT. SIMILARLY, THE DECISION RELIED BY APPELLANT IN CASE OF SHAM LAL BANSAL 11 TAXMANN.COM 369 (P&H) AND GLOSTER JUTE MILLS LTD. 51 TAXMANN.COM 547 (KOL ITAT) DULY SUPPORT THE VIEW OF THE APPELLANT AND ALLEGED INTEREST INCOME IS REQUIRED TO BE REDUCED FROM TAXABLE INCOME. 3. IT IS MENTIONED IN THE MISCELLANEOUS APPLICATION THAT IT WAS CONTENDED BEFORE THE ITAT THAT THESE THREE GROUNDS OF APPEAL ARE DULY COVERED BY ASSESSEES OWN M.A. NO. 187/AHD/2020 . A.Y. 2014-15 3 CASE FOR A.Y. 2012-13 BY THE ORDER OF THE ITAT, AHMEDABAD VIDE ITA NO. 1843/AHD/2016. 4. HEARD BOTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOTICED THAT THE APPEAL OF THE ASSESSE WAS ADJUDICATED VIDE ITA NO. 2316/AHD/2018 ON 24.11.2020. DURING THE YEAR UNDER CONSIDERATION IN THE CASE OF THE ASSESSE MAT WAS LEVIED ON THE BASIS OF BOOK PROFIT U/S 115JB OF THE ACT THEREFORE THE ADDITIONAL GROUND OF THE ASSESSE FOR REDUCING THE AMOUNT OF SUBSIDY FROM THE BOOK PROFIT WHILE COMPUTING U/S 115JB WAS ALLOWED. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, THESE THREE GROUNDS OF APPEAL OF THE ASSESSE WERE BECOME ACADEMIC IN NATURE THEREFORE THE SAME WERE NOT ADJUDICATED. AFTER PERUSAL OF THE MATERIAL ON RECORD, IT IS NOTICED THAT CO- ORDINATE BENCH OF ITAT VIDE ITA NO. 1843/AHD/2016 HAS ADJUDICATED THE SIMILAR ISSUE ON IDENTICAL FACTS IN ASSESSEES OWN CASE FOR A.Y. 2012-13. 5. WITH THE ASSISTANCE OF LD. REPRESENTATIVE, WE HAVE GONE THROUGH THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF ASSESSE FOR A.Y. 2012-13 AS CITED ABOVE. THE RELEVANT PART OF THE FINDING OF THE DECISION IS DISCUSSED AS UNDER: 21.4 A LEGAL ISSUE ALSO CROPPED UP IN THE COURSE OF HEARING AS TO WHETHER ADDITIONAL GROUND COULD BE RAISED IN A CROSS OBJECTION FILED BY THE ASSESSEE UNDER S.253(4) OF THE ACT. ON BEING ENQUIRED ON THIS ASPECT OF THE MATTER, IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THERE IS NO PERCEPTIBLE DISTINCTION BETWEEN THE POSITION OF LAW QUA CROSS OBJECTION IN THE MATTER OF FILING ADDITIONAL GROUND. IT WAS SUBMITTED THAT A CROSS OBJECTION HAS ALL THE TRAPPINGS OF A REGULAR APPEAL MORE SO IN THE LIGHT OF LANGUAGE EMPLOYED UNDER S.253(4) OF THE ACT. 21.5 WE FIND OURSELVES IN AGREEMENT WITH THE PROPOSITIONS MADE ON BEHALF OF THE ASSESSEE THAT IN A CROSS OBJECTION, THERE IS NO BAR TO RAISE LEGAL ISSUES FOR THE FIRST TIME BEFORE ITAT. A CROSS OBJECTION IS LIKE AN APPEAL. IT HAS ALL THE TRAPPINGS OF AN APPEAL. IT IS FILED IN THE FORM OF MEMORANDUM AND IT IS REQUIRED TO BE DISPOSED IN SAME MANNER AS AN APPEAL. EVEN WHERE THE APPEAL IS WITHDRAWN OR DISMISSED FOR DEFAULT, CROSS OBJECTION MAY NEVERTHELESS BE HEARD AND DETERMINED. CROSS OBJECTION IS NOTHING BUT AN APPEAL, A CROSS APPEAL AT THAT. THIS APART, RAISING OF ADDITIONAL GROUND WOULD ONLY ENABLE M.A. NO. 187/AHD/2020 . A.Y. 2014-15 4 THE AUTHORITY CONCERN TO CORRECTLY ASSESS THE TAX LIABILITY OF THE ASSESSEE. SIMILAR VIEW HAS BEEN EXPRESSED BY THE CO-ORDINATE BENCH IN THE CASE OF ITO VS. JASJIT SINGH (DEL) IN CROSS OBJECTION NOS. 138 TO 142/DEL/2014 INTERIM ORDER DATED 23.09.2014. WE THUS DO NOT SEE ANY IMPEDIMENT IN ENTERTAINING THE ADDITIONAL GROUNDS. THE RELEVANT FACTS ARE AVAILABLE ON RECORD. 21.6 IN SO FAR AS THE MERITS OF THE CLAIM MADE IN ADDITIONAL GROUND IS CONCERNED, WE OBSERVE THAT WHERE THE AO HAS READJUSTED THE QUANTUM OF DEPRECIATION IN THE SUBSEQUENT ASSESSMENT YEAR, THE ASSESSEE IS WITHIN ITS LEGITIMATE RIGHTS TO BE GRANTED DEPRECIATION IN AY 2009-10 AS PER THE FIGURES WORKED BY THE AO HIMSELF. WE DO NOT SEE ANY PERCEPTIBLE REASON FOR NOT ADMITTING SUCH CLAIM OF THE ASSESSEE. WE ALSO FIND BONAFIDES IN THE PLEA OF THE ASSESSEE FOR RAISING NEW CLAIM ON ACCOUNT OF DEPRECIATION BY WAY OF ADDITIONAL GROUND AT THIS BELATED STAGE. THE ORDER FOR THE AY 2012-13 WAS PASSED ON 29.03.2015. BY VIRTUE OF THIS ORDER, THE ASSESSEE CAME TO KNOW ABOUT THE REVISION IN THE CLAIM OF DEPRECIATION CONCERNING AY 2012-13. BY THAT TIME, THE ORDER OF THE CIT(A) DATED 13.12.2013 WAS ALREADY PASSED. THEREFORE, THE ASSESSEE WAS INCAPACITATED TO PUT FORWARD SUCH NEW CLAIM TOWARDS DEPRECIATION ON GOODWILL AMOUNTING TO RS.5,57,63,315/- FOR WHICH RELEVANT FACTS ARE DULY AVAILABLE ON RECORD IN THE LIGHT OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT [2006] 284 ITR 323 (SC) & NTPC VS. CIT 229 ITR 383 (SC). 22. IN THE RESULT, ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ALLOWED. 11.2 HAVING ADMITTED THE ADDITIONAL GROUND FOR ADJUDICATION AS NOTED ABOVE WE NOW TURN TO THE RELEVANT FACTS TOUCHING THE ISSUE. AS POINTED OUT ON BEHALF OF THE ASSESSEE, A TECHNOLOGY UPGRADATION FUND SCHEME (TUFS) WAS INTRODUCED IN 1999 TO CATALYZE INVESTMENTS IN TEXTILE INDUSTRIES. THE PURPOSE OF SCHEME UNDER WHICH THE SUBSIDY WAS GIVEN WAS STATED TO BE TO SUSTAIN AND PROVE THE COMPETITIVENESS AND FOR LONG TERM VIABILITY OF TEXTILE INDUSTRY. THE CONCERNED MINISTRY OF TEXTILE ADOPTED TUFS SCHEME ENVISAGING TECHNOLOGY UPGRADATION OF THE INDUSTRY AS PER THE SCHEME. THE OBJECT OF THE SCHEME WAS TO ENHANCE SUSTAINABLE GROWTH IN VALUE CHAIN FOR OVERALL GROWTH OF TEXTILE INDUSTRY. PURSUANT TO TUFS, CERTAIN SUBSIDY BENEFITS BY WAY OF INTEREST ON REIMBURSEMENT OF LOANS TAKEN FROM AUTHORIZED AGENCIES FOR INVESTMENT IN PLANT AND MACHINERY FOR SPINNING UNITS AND OTHER MACHINERIES IN TEXTILE INDUSTRY WAS AVAILED BY TEXTILE SECTOR. 11.3 IN THIS BACKGROUND, IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT THE ASSESSEE HEREIN AS OBTAINED SUBSIDY BY WAY OF REIMBURSEMENT OF INTEREST UNDER THE SCHEME. THE ASSESSEE HAS TREATED THE AFORESAID INTEREST M.A. NO. 187/AHD/2020 . A.Y. 2014-15 5 REIMBURSEMENT SUBSIDY MISTAKENLY AS REVENUE RECEIPT IN THE P&L ACCOUNT AND DISCLOSED THE SAME BY WAY OF NET OFF FROM INTEREST EXPENSES. THE TAXABLE INCOME WAS THUS STATED TO BE OVERSTATED TO THIS EXTENT. IT WAS CONTENDED THAT THE CHARACTER OF SUCH SUBSIDY IN THE HANDS OF RECIPIENT ASSESSEE IS CAPITAL IN NATURE HAVING REGARD TO THE PURPOSE FOR WHICH THE SUBSIDY WAS GIVEN I.E. ACCELERATION OF DEVELOPMENT OF TEXTILE INDUSTRY. 11.4 REFERENCE WAS MADE TO THE NOTES FORMING PART OF THE FINANCIAL ACCOUNT DETAILING THE INTEREST SUBSIDY AGGREGATING TO RS.2,16,45,161/- AS REDUCED FROM THE INTEREST COSTS. OUR ATTENTION WAS ALSO ADVERTED TO NOTES TO THE FINANCIAL STATEMENT WHEREIN SUITABLE DISCLOSURE WAS MADE TOWARDS CLAIM OF INTEREST SUBSIDY. 11.5 IN THE CIRCUMSTANCES, IT IS THE CASE OF THE ASSESSEE THAT WHERE SUCH SUBSIDY IS INTENDED AND BESTOWED NOT WITH THE OBJECT OF RUNNING THE BUSINESS BUT WITH A SOLEMN OBJECT OF ATTRACTING INDUSTRIAL INVESTMENT OR EXPANSION, SUCH INTEREST SUBSIDY IS IN THE NATURE OF CAPITAL RECEIPT AND THEREFORE CANNOT BE REDUCED FROM THE INTEREST COSTS. IT IS THUS CONTENDED THAT SUCH CAPITAL RECEIPT IS NOT CHARGEABLE TO TAX IN THE RELEVANT AY 2012- 13 IN QUESTION BEING A CAPITAL RECEIPT. 12. WE FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSEESSEE BY THE DECISION OF THE HONBLE SUPREME COURT IN CIT VS. CHAPHALKAR BROTHERS PUNE [2017] 88 TAXMANN.COM 178 (SC); CIT VS. MEGHALAYA STEELS LTD. [2016] 67 TAXMANN.COM 158 (SC) AND CIT VS. SHAM LAL BANSAL [2011] 11 TAXMANN.COM 369 (P&H). IN THE LIGHT OF AFORESAID JUDGMENTS, WE FIND MERIT IN THE PLEA OF THE ASSESSEE THAT HAVING REGARD TO THE OBJECT AND PURPOSES OF THE SCHEME, THE INTEREST SUBSIDY IS REQUIRED TO BE TREATED AS CAPITAL RECEIPT OF NON-TAXABLE NATURE HAVING REGARD TO THE PROPOSITIONS LAID DOWN IN THE JUDICIAL PROCEEDINGS NOTED ABOVE. 13. THE AFORESAID VIEW IS ALSO FORTIFIED BY THE LEGISLATURE IN VIEW OF AMENDMENT AS PER SUB CLAUSE (XVIII) TO SECTION 2(24) OF THE IT ACT AS INSERTED BY THE FINANCE ACT, 2015 WHICH READS AS UNDER: [(XVIII) ASSISTANCE IN THE FORM OF A SUBSIDY OR GRANT OR CASH INCENTIVE OR DUTY DRAWBACK OR WAIVER OR CONCESSION OR REIMBURSEMENT (BY WHATEVER NAME CALLED) BY THE CENTRAL GOVERNMENT OR A STATE M.A. NO. 187/AHD/2020 . A.Y. 2014-15 6 GOVERNMENT OR ANY AUTHORITY OR BODY OR AGENCY IN CASH OR KIND TO THE ASSESSEE [OTHER THAN, (A) THE SUBSIDY OR GRANT OR REIMBURSEMENT WHICH IS TAKEN INTO ACCOUNT FOR DETERMINATION OF THE ACTUAL COST OF THE ASSET IN ACCORDANCE WITH THE PROVISIONS OF EXPLANATION 10 TO CLAUSE (1) OF SECTION 43; OR (B) .. A CLAIM ON BEHALF OF THE ASSESSEE, AS A COROLLARY TO SAID AMENDMENT, SUCH A CAPITAL RECEIPT MAY BECOME CHARGEABLE TO TAX WHICH IS OTHERWISE A CAPITAL RECEIPT W.E.F. 01.04.2016. THE AFORESAID AMENDMENT HAS THUS COME INTO FORCE W.E.F. AY 2016-17 WHICH REINFORCES THE IMPRESSION OF SUCH CAPITAL RECEIPT BEING OUT OF TAX NET FOR THE ASSESSMENT YEAR IN QUESTION. 14. THUS, ON FIRST PRINCIPLES, WE FIND OURSELVES IN TOTAL AGREEMENT WITH THE CONTENTIONS ON BEHALF OF THE ASSESSEE FOR NON CHARGEABILITY OF SUCH CAPITAL RECEIPTS REGARDLESS OF ITS TREATMENT IN BOOKS AS REVENUE RECEIPTS. WE ARE HOWEVER CONSCIOUS IN SAME VAIN THAT THE ISSUE HAS BEEN RAISED FOR THE FIRST TIME BEFORE THE TRIBUNAL. THE REVENUE AUTHORITIES HAD NO OCCASION TO LOOK INTO THE RELEVANT FACTS. WE ACCORDINGLY CONSIDER IT EXPEDIENT TO RESTORE THE ISSUE TO THE FILE OF THE AO FOR VERIFICATION OF RELEVANT FACTUAL ASPECTS TOWARDS QUANTUM OF RECEIPT OF INTEREST SUBSIDY AND RELEVANT DOCUMENTATION IN THIS REGARD, IF SO CONSIDERED NECESSARY IN THE OPINION OF THE AO. THE AO SHALL ACCORDINGLY GRANT RELIEF TO THE ASSESSEE IN ACCORDANCE WITH LAW IN THE LIGHT OF OUR OBSERVATIONS AND SHALL EXCLUDE THE SUBSIDY FROM THE AMBIT OF TAXATION ON BEING SATISFIED ABOUT THE FACTUAL CORRECTNESS ON QUANTUM OF SUCH SUBSIDY. 6. AFTER CONSIDERING THE DECISION OF THE CO-ORDINATE BENCH ON THE IDENTICAL ISSUE ON SIMILAR FACTS AS ELABORATED ABOVE FOR A.Y. 2012-13 IN THE CASE OF ASSESSE ITSELF, WE CONSIDER THAT ISSUE RAISED IN GROUNDS NO. 1 TO 1.3 AS ABOVE COVERED IN FAVOUR OF THE ASSESSE AFTER FOLLOWING THE DECISION OF CO-ORDINATE BENCH AS SUPRA THAT THE INTEREST SUBSIDY IS REQUIRED TO BE TREATED AS CAPITAL RECEIPT OF NON-TAXABLE NATURE. THEREFORE, SIMILAR TO THE DIRECTION LAID DOWN BY THE CO-ORDINATE BENCH FOR A.Y. 2012-13, WE RESTORE THIS ISSUE TO THE FILE OF THE M.A. NO. 187/AHD/2020 . A.Y. 2014-15 7 A.O. FOR VERIFICATION AND TO EXCLUDE THE SUBSIDY FROM THE AMBIT OF TAXATION AS DIRECTED IN THE DECISION OF THE CO-ORDINATE BENCH. THEREFORE, THESE GROUNDS OF APPEAL OF THE ASSESSE ARE ALLOWED FOR STATISTICAL PURPOSE. 7. IN THE RESULT, THE MISC. APPLICATION FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 22 - 04- 2021 SD/- SD/- (AMARJIT SINGH) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 22/04/2021 RAJESH COPY OF THE ORDER FORWARDED TO:- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD