PR COMMISSIONER OF INCOME TAX 1 CHANDIGARH V. M/S SHIVALIK AGRO CHEMICAL NEELAM CINEMA COMPLEX

ITA/265/2016

AI Insights

The case involves an appeal by the Pr. Commissioner of Income Tax-I, Chandigarh against M/s Shivalik Agro Chemical concerning the assessment year 2011-2012. The primary issues were the taxability of an excise duty refund received by the assessee and the determination of the first year of production commencement for tax purposes. The Tribunal had ruled in favor of the assessee, leading to the present appeal. The High Court, referencing a Supreme Court judgment, affirmed the Tribunal's decision on both counts, concluding that the excise duty refund was a capital receipt and that the production commencement date was after the year 2006.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 701009 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 26-09-2016
• Assessment Year: misc
• Other Referred Cases: CIT, Jammu and another Vs M/s Shree Balaji Alloys and other connected appeals
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: URVASHI DHUGGA
• Keywords: Assessment Year; Capital receipt; Excise duty refund; Commencement of production
• Section: 80IB

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA-265-2016 (O&M) Date of decision:- 26.09.2016 Pr. Commissioner of Income Tax-I, Chandigarh ...Appellant Versus M/s Shivalik Agro Chemical, Neelam Cinema Complex, Sector 17-E, Chandigarh. ...Respondent CORAM: HON'BLE MR. JUSTICE S.J. VAZIFDAR, CHIEF JUSTICE HON’BLE MR. JUSTICE DEEPAK SIBAL Present:- Ms. Urvashi Dhugga, Advocate, for the appellant. * * * * S.J. VAZIFDAR, C.J. (ORAL) This is an appeal against the order of the Tribunal in respect of the assessment year 2011-2012. 2. The matter relates to the deduction claimed by the assessee under Section 80IB of the Income Tax Act, 1961. 3. The revenue-appellant contends that this appeal raises the following substantial questions of law:- “(i) Whether in the facts and circumstances of the case and in law, the Hon’ble ITAT is right in holding that the excise duty refund received by the assessee amounting to Rs. 2,23,11,239/- constituted capital receipt not liable to tax under the provision of Income Tax Act, 1961? (ii) Whether in the facts and circumstances of the case and in law, the Hon’ble ITAT is right in not treating A.Y. 2006-07 as the first year of commencement of production when the certificate issued by District Industries Centre, Jammu, clearly show the date of commencement was 02.03.2006?” Amodh Sharma 2016.09.26 16:45 I attest to the accuracy and authenticity of this document chandigarh ITA-265-2016 (O&M) 2 4. Ms. Dhugga, learned counsel appearing on behalf of the appellant invites our attention to the judgement of the Supreme Court dated 19.04.2016 in Civil Appeal No. 10061 of 2011 titled as CIT, Jammu and another Vs M/s Shree Balaji Alloys and other connected appeals. In view of the said judgement, this issue is answered against the appellant. 5. The second question does not raise any question of law much less a substantial question of law. The issue pertained to the year in which the respondent-assessee had commenced production. The Assessing Officer had relied upon a certificate of permanent registration with the District Industries Centre, Jammu dated 04.03.2006 in which the date of commencement of production was mentioned as 02.03.2006. The Tribunal, however, accepted the contention that this certificate did not establish that the production had commenced and in any event is not conclusive of the issue. The Tribunal referred to several other documents and facts and circumstances which established that the production had commenced only after 01.04.2006. For instance, the first sale bill was issued after 01.04.2006. The initial assessment year 2007-2008 is mentioned in form 10CCB of the assessee’s audit report and no objection had ever been raised in respect thereof. In that form, the date and year of commencement of operation was mentioned as 07.05.2006 which was accepted by the revenue. In fact, in the previous assessment year, the work had been shown as being in progress. Further, still even the power consumption bills for the six months period ending 16.03.2006 showed that only five units had been consumed. Based thereon, the Tribunal’s inference that there was no production activity till 31.03.2006 cannot be faulted. The excise returns submitted by the assessee Amodh Sharma 2016.09.26 16:45 I attest to the accuracy and authenticity of this document chandigarh ITA-265-2016 (O&M) 3 for the year ending 31.03.2006 are of nil quantity manufactured and it was the excise returns for the month of May, 2006 that for the first time indicated the production. The Tribunal’s decision is entirely one on facts which can neither be said to be perverse or arbitrary. 6. The appeal is, therefore, dismissed. (S.J. VAZIFDAR) CHIEF JUSTICE (DEEPAK SIBAL) JUDGE 26.09.2016 Amodh Whether speaking/reasoned Yes/No Whether reportable Yes/No Amodh Sharma 2016.09.26 16:45 I attest to the accuracy and authenticity of this document chandigarh "