Birla Corporation Ltd., Kolkata V. DCIT, Circle-6, Kolkata, Kolkata

MA 4/KOL/2015

• Counselvise Citation: [2015] 124 COUNSELVISE.COM (IT) 3050 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 01-05-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 29-01-2015
• Court: TRIBUNAL
• Keywords: Depreciation; Question of law; Capital receipt
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOLKATA [BEFORE S H RI MAHAVIR SINGH, JM & SHRI B. P. JAIN ] M. A. NO. 0 4 /KOL /201 5 IN I.T.A NO. 683 / KOL/20 1 1 ASSESSMENT YEAR: 200 7 - 0 8 BIRLA CORPORATION LTD. VS. DEPUTY COMMISSIONER OF INCOME - TAX , (PAN: AABCB2075J) CIRCLE - 6, KOLKATA. ( APPLICANT ) ( RESPONDENT ) DATE OF HEARING : 0 1.0 5 .201 5 DATE OF PRONOUNCEMENT: 0 1.0 5 .201 5 FOR THE A PPLICANT : SHRI J. P. KHAITAN, SR. ADVOCATE & SHRI SANJAY BHOWMIK, ADVOCATE FOR THE RESPONDENT: SHRI K. L. KANAK , J CIT, SR. DR ORDER PER MAHAVIR SINGH, JM: BY THIS MISCELLANEOUS APPLICATION, THE ASSESSEE HAS REQUESTED THE BENCH TO RECTIFY THE MISTAKE APPARENT FROM RECORD AS ENTERED IN PARA 25 OF THE TRIBUNAL S ORDER IN ITA NO.683/KOL/2011, WHICH READS AS UNDER: 25. AS WE HAVE HELD THIS SUBSIDY RECEIPT ON ACCOUNT OF INTEREST ON LOAN FOR EXPANSION OF MANUFACTURING UNIT OF THE ASSESSEE - COMPANY, WE ARE OF THE VIEW, EVEN ADMITTED BY ASSESSEE, THAT IN THE EVENT THE CONTENTION OF THE ASSESSEE FOR TREA TMENT OF THE SUBSIDY AS A CAPITAL RECEIPT IS ACCEPTED, IN VIEW OF THE PROVISIONS OF EXPLANATION 10 TO SECTION 43(1) OF THE ACT, THE ASSESSING OFFICER MAY BE DIRECTED TO REDUCE THE AMOUNT OF SUBSIDY IN DETERMINING THE ACTUAL COST OF THE FIXED ASSETS FOR DEP RECIATION ALLOWANCE. WE DIRECT THE AO TO REDUCE THE AMOUNT OF SUBSIDY IN DETERMINING THE ACTUAL COST OF THE FIXED ASSETS FOR DEPRECIATION ALLOWANCE. THIS ISSUE OF ASSESSEE S APPEAL IS ALLOWED. 2. LD. COUNSEL FOR THE ASSESSEE SHRI J. P. KHAITAN SR. ADVOCA TE ARGUED THAT THE ASSESSEE HAS CHALLENGED THE DIRECTION OF CIT(A) TO REDUCE THE INCENTIVE I.E. SALES TAX INCENTIVE AMOUNT FROM COST OF FIXED ASSET FOR THE PURPOSE OF COMPUTING DEPRECIATION BY APPLYING EXPLANATION (1) TO SECTION 43(1) OF THE ACT. LD. COUN SEL FOR THE ASSESSEE STATED THAT THE SAID APPEAL S WERE HEARD ON AUGUST 29, 2014, SEPTEMBER 11,2014, SEPTEMBER 15,2014 AND SEPTEMBER 19,2014 AND WAS REPRESENTED BY THE SAME SET OF COUNSEL WHO HAD CONDUCTED APPEAL S BEFORE THE COMMISSIONER OF INCOME TAX (APPE ALS). HE STATED THAT THE QUESTION WHETHER EXPLANATION 10 TO SECTION 43(1) OF THE ACT WAS APPLICABLE IN RESPECT OF AMOUNTS RECEIVED UNDER DIFFERENT 2 MA NO. 0 4 /K/201 5 BIRLA CORPN. LTD. A. Y 200 7 - 0 8 SCHEMES WAS A QUESTION OF LAW. IT WAS ARGUED THAT UPON RECONSIDERATION OF THE MATTER HAVING REGARD TO THE COR RECT CONSTRUCTION TO BE PLACED ON THE STATUTORY PROVISIONS AND THE PROVISIONS OF THE SCHEMES UNDER WHICH THE INTEREST SUBSIDY AND INDUSTRIAL PROMOTION ASSISTANT WERE GRANTED, IT WAS REALISED THAT IT WAS WRONGLY CONCEDED BEFORE THE COMMISSIONER OF INCOME TA X (APPEALS) THAT THE SAID EXPLANATION 10 WAS APPLICABLE IN RESPECT OF INTEREST SUBSIDY AND INDUSTRIAL PROMOTION ASSISTANCE. HE ARGUED THAT THE ASSESSEE WAS RESILING FROM THE SAID CONCESSION WRONGLY MADE WHICH CANNOT BIND THE PARTIES. IT WAS ACCORDINGLY ARG UED THAT THE QUESTION AS TO WHETHER EXPLANATION 10 TO SECTION 43(1) WAS APPLICABLE IN RESPECT OF SALES TAX INCENTIVE OR INTEREST SUBSIDY OR INDUSTRIAL PROMOTION ASSISTANCE MAY BE ADJUDICATED ON MERITS AND NOT ON THE BASIS OF ANY CONCESSION WRONGLY MADE BEF ORE THE COMMISSIONER OF INCOME TAX (APPEALS). HE STATE D THAT RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN CIT V P. J. CHEMICALS LTD., (1994) 210 ITR 830 (SC) AND ON THE DECISION OF THIS HON'BLE TRIBUNAL IN DEPUTY COMMISSIONER OF INCO ME TAX V RASOI LTD., (2014) 46 TAXMANN.COM 214. LD COUNSEL STATED THE FACT THAT THIS TRIBUNAL WAS PLEASED TO DISMISS GROUND NO.2 OF THE REVENUE'S APPEAL AND ALLOW GROUND NO.1 OF P ETITIONER'S APPEAL THEREBY HOLDING THAT THE SALES TAX INCENTIVE WAS A CAPITAL RECEIPT BUT EXPLANATION 10 TO SECTION 43(1) OF THE ACT WAS NOT APPLICABLE IN RESPECT THEREOF. HE BROUGHT THE MISTAKE IN THE NOTICE OF THE BENCH THAT IN RESPECT OF GROUND NO.3 OF PETITIONER'S APPEAL RELATING TO INTEREST SUBSIDY, ALTHOUGH IT WAS HELD THAT T HE SAME WAS A CAPITAL RECEIPT, IN PARAGRAPH 25 OF THE SAID ORDER DATED DECEMBER 8, 2014, IN VIEW OF THE WRONG CONCESSION MADE BY PETITIONER'S COUNSEL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), THIS TRIBUNAL DIRECTED THE ASSESSING OFFICER TO REDUCE TH E AMOUNT OF SUBSIDY IN DETERMINING THE ACTUAL COST OF THE FIXED ASSETS FOR DEPRECIATION ALLOWANCE. IN VIEW OF THE ABOVE, HE ARGUED THAT THE ISSUE RELATING TO INDUSTRIAL PROMOTION ASSISTANCE WAS NOT DECIDED BECAUSE THERE WAS NO ADJUDICATION THEREON BY THE A UTHORITIES BELOW AND THE MATTER WAS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICE TO TAKE A DECISION AFTER GRANTING OPPORTUNITY. 3. WE HAVE GONE THROUGH THE TRIBUNAL S ORDER AND SEEN THAT THE ENTIRE PREMISES FOR DIRECTING THE AO TO REDUCE THE INCENTIVE PORTION FROM COST OF THE ASSET IN VIEW OF EXPLANATION (10) TO SECTION 43(1) OF THE ACT WAS THAT THE ASSESSEE CONCEDED BEFORE CIT(A). NOW THE LD. COUNSEL FOR THE ASSESSEE BEFORE US MADE ARGUMENT THAT IT WAS STRONGLY ARGUED BEFORE TRIBUNAL AND ON MERITS TH E ASSESSEE HAS MADE ARGUMENTS. THE ASSESSEE QUA THAT HAS ALSO FILED AFFIDAVIT. WE FIND THAT THE ASSESSEE SHOULD BE GIVEN OPPORTUNITY AS THE ISSUE WAS 3 MA NO. 0 4 /K/201 5 BIRLA CORPN. LTD. A. Y 200 7 - 0 8 NOT ADJUDICATED ON MERITS. IN TERMS OF THE ABOVE AND QUA THE ISSUE ONLY, WE RECALL OUR ORDER AND DIRECT THE REGISTRY TO FIX THE APPEAL FOR HEARING IN REGULAR COURSE. 4 . IN THE RESULT, MISC. APPLICATION OF ASSESSEE IS ALLOWED IN TERMS OF ABOVE . ORDER IS PRONOUNCED IN THE OPEN COURT . SD/ - SD/ - ( B. P. JAIN ) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 0 1 ST MAY , 201 5 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPLICANT : BIRLA CORPORATION LTD., BIRLA BUILDING, 4 TH FLOOR, 9/1, R. N. MUKHERJEE ROAD, KOLKATA - 700 001. 2 RESPONDENT D CIT, CIRCLE - 6, KOLKATA 3 . THE CIT(A ) , KOLKATA 4. CIT , KOLKATA 5 . DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, ASSTT. REGISTRAR .