JSW STEEL LTD, MUMBAI v. DCIT CEN CIR 46, MUMBAI

CO 59/MUM/2012 | 2006-2007
Pronouncement Date: 29-11-2019 | Result: Allowed

Appeal Details

RSA Number 5919923 RSA 2012
Assessee PAN AAACJ4323N
Bench Mumbai
Appeal Number CO 59/MUM/2012
Duration Of Justice 7 year(s) 7 month(s) 3 day(s)
Appellant JSW STEEL LTD, MUMBAI
Respondent DCIT CEN CIR 46, MUMBAI
Appeal Type Cross Objection
Pronouncement Date 29-11-2019
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted Not Allotted
Tribunal Order Date 29-11-2019
Date Of Final Hearing 24-03-2015
Next Hearing Date 24-03-2015
First Hearing Date 24-03-2015
Assessment Year 2006-2007
Appeal Filed On 25-04-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH MUM BAI BEFORE SHRI PAWAN SINGH JUDICIAL MEMBER & SHRI G. MANJUNATHA ACCOUNTANT MEMBE R ITA NO.156/BANG/2011 ( ASSESSMENT YEAR: 2006-07 ) ACIT CIRCLE-11(5) NO.14/3 5 TH FLOOR NRUPATHAUNGA ROAD BANGALORE-560 001 VS. M/S. JSW STEEL LIMITED JINDAL MANSION NO.5A DR.G.DESHMUKH MARG MUMBAI-400 026 PAN/GIR NO. A AAC J4323N ( APPELLANT ) .. ( RESPONDENT ) & CO.NO.59/MUM/2012 ( ASSESSMENT YEAR: 2006-07 ) M/S. JSW STEEL LIMITED JINDAL MANSION NO.5A DR.G.DESHMUKH MARG MUMBAI-400 026 VS. DCIT CENTRAL CIRCLE-46 CENTRAL RANGE-10 AAYKAR BHAWAN MUMBAI- 400 020 PAN/GIR NO. AAACJ4323N ( APPELLANT ) .. ( RESPONDENT ) REVENUE BY SAMATHA MULLAMUDI CIT(DR) ASSESSEE BY KANCHUN KAUSHAL & MS. HIRALI DESAI ARS DATE OF HEARING 15/11/2019 DATE OF PRONOUNCEME NT 29 /1 1 /2019 / O R D E R PER G.MANJUNATHA (A.M) : THIS APPEAL FILED BY THE REVENUE AND CROSS OBJECTIO N FILED BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF THE LD. C OMMISSIONER OF INCOME TAX (APPEALS)-1 BANGALORE DATED 19/11/2010 FOR THE AY 2006-07. SINCE THE FACTS ARE IDENTICAL AND ISSUES ARE COMMON THE APPEAL FILED BY THE REVENUE AND CROSS OBJECTION FIL ED BY THE ASSESSEE IS HEARD TOGETHER AND ARE DISPOSED-OFF BY THIS CONSOLIDATED ORDER. JSW STEEL LIMITED 2 ITA.NO.156/BANG/2011:- 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL 1. THE ORDER OF THE LEARNED CIT (APPEALS) IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE IS OPPOSED TO LAW FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT (APPEALS) IS NOT JUSTIFIED IN D IRECTING THE ASSESSING OFFICER TO ALLOW THE DEPRECIATION OF RS 30 73 444 / - CLAIMED ON ACCOUNT OF EXCHANGE LOSS INCURRED ON CANCELLATION OF FORWARD E XCHANGE CONTRACTS WITHOUT APPRECIATING THE REASONS RECORDED BY THE AS SESSING OFFICER IN THE RELEVANT ASSESSMENT ORDER. 3. THE LEARNED CIT (APPEALS) HAS ERRED IN NOT APPRE CIATING THAT THE PROVISIONS OF SECTION 43A OF THE I.T ACT 1961 WERE NOT APPLICABLE AS THE LOSSES AROSE FROM CANCELLED FORWARD EXCHANGE CONTRA CTS AND NOT SETTLED CONTRACTS WHEREIN PAYMENTS RELATING TO PURCHASE OF CAPITAL ASSETS OR PAYMENTS TOWARDS LOANS TAKEN FOR PURCHASING CAPITAL ASSETS .WERE ACTUALLY MADE. 4 THE LEARNED CIT (APPEALS) WAS NOT JUSTIFIED IN DI RECTING THE ASSESSING OFFICER TO ALLOW DEPRECIATION OF RS.4 47 62 874/- I N RESPECT OF FOREIGN CURRENCY LOSS INCURRED ON CANCELLATION OF FORWARD E XCHANGE CONTRACTS ON WHICH DEPRECIATION WAS NOT ALLOWED BY THE ASSESSING OFFICER RESPECT OF THE ASSESSMENT YEAR 2005-06. 5. THE LEARNED CIT (APPEALS) WAS NOT JUSTIFIED IN D IRECTING THE ASSESSING OFFICER TO ALLOW DEPRECIATION OF RS. 6 81 21 607/- ON THE INCREASED WRITTEN DOWN VALUE (WDV) OF THE ASSETS WITHOUT APPRECIATIN G THE DETAILED REASONS RECORDED IN THE RELEVANT ASSESSMENT ORDER A ND THE ASSESSING OFFICERS ANALYSIS OF THE PROVISIONS OF EXPLANATION 2 AND 3 BELOW SECTION 43(6) AND THE PROVISIONS OF SECTION 72A OF THE I.T. ACT 1961. 6. THE LD. CIT(APPEALS) WAS NOT JUSTIFIED IN HOLDI NG THAT THE INTEREST OF RS.40 68.488/-AS BUSINESS INCOME AND NOT UNDER T HE HEAD 'INCOME FROM OTHER SOURCES' AS HELD BY THE ASSESSING OFFIC ER. 7. THE LEARNED CIT (APPEALS) HAS ERRED IN NOT ADJUD ICATING ON THE ISSUE INVOLVED IN THE APPEAL WITH REFERENCE TO THE FACTS AND CIRCUMSTANCES OF THE ASSESSEE'S CASE AND IN FOLLOWING THE TRIBUNAL'S ORDER ON THE ISSUE FOR THE ASSESSMENT YEAR 1995-96 EVEN THOUGH ON FURTHER APPEAL THE HONBLE SUPREME COURT HAD REMANDED THE MATTER TO THE HONBL E KARNATAKA HIGH COURT FOR FRESH CONSIDERATION. JSW STEEL LIMITED 3 8. THE LD.CIT(APPEALS) HAS ERRED IN NOT TAKING INT O CONSIDERATION THE DECISION OF [HE HON'BLE SUPREME COURT IN THE CASE O F M/S TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD. VS CIT REPORTED IN 22 7 ITR 172 WHILE ARRIVING AT HIS FINDINGS. 9. THE LEARNED CIT (APPEALS) WAS NOT JUSTIFIED I N HOLING THAT THE SALES- TAX INCENTIVES /CONCESSIONS ETC AMOUNTING TO RS.36 15.49 828/- AS CAPITAL RECEIPTS WITHOUT APPRECIATING THE REASONS RECORDED IN THE RELEVANT ASSESSMENT ORDER BY THE ASSESSING OFFICER WHILE TRE ATING THE SAME AS REVENUE RECEIPTS. 10. THE LEARNED CIT (APPEALS) HAS ERRED IN RELYING ON THE DECISIONS IN THE CASES OF CIT VS M/S PONNI SUGARS AND CHEMICALS LTD. S OTHERS 30G ITR 392(SC) AND DCIT VS. M/S RELIANCE' INDUSTRIES LTD. 68 ITD 273 (ITAT. MUMBAI BENCH) WHICH ARE NOT APPLICABLE TO THE FACTS OF THE ASSESSEE'S CASE. 11. THE LEARNED CIT(APPEALS) HAS ERRED IN HOLDING T HAT INTEREST U/S 234B OF THE I.T.ACT 1961 AMOUNTING TO RS 9 8494367/ - ATTRIBUTABLE TO THE PROVISION OF RS. 433 61 00 000/-FOR DEFERRED ; WHIC H WAS INTER-ALL A ADDED TO THE NET PROFIT WHILE COMMUTING THE BOOK PROFIT U /S 1L5JB OF THE ACT 1961 ON ACCOUNT OF RETROSPECTIVE AMENDMENT OF THE PROVIS IONS OF SECTION 115JB INSERTING CLAUSE (H) IN EXPLANATION 1 TO SE CTION 115JB OF THE I.T.ACT 1961W.R.E.F 01. 4.2001. 12. THE [EARNED CIT (APPEALS) HAS FAILED TO APP RECIATE THAT INTEREST U/S 234B IS CHARGEABLE WITH REFERENCE TO 'ASSESSED TAX 1 ' AS DEFINED IN EXPLANATION 1 BELOW SECTION 234B{1) OF THE I.T.ACT 1961 AND THE CIT (APPEALS)'S FINDING THAT INTEREST U/S 234B IS CHARG EABLE WITH REFERENCE TO A PAN OF SUCH 'ASSESSED TAX' FOR THE REASONS MENTIO NED IN THE APPELLATE ORDER IS CLEARLY NOT IN ACCORDANCE WITH THE RELEV ANT PROVISIONS OF THE I.T. ACT 1961. 13 THE LEARNED CIT (APPEALS) HAS ERRED IN NOT APP RECIATING THAT HIS FINDING ON THE ABOVE MENTIONED ISSUE IS NOT IN ACCO RDANCE WITH THE RATIO OF THE DECISIONS OF THE HONBLE SUPREME COURT IN TH E CASES OF CIT VS. CENTRAL PROVINCES MANGANESE ORE COMPANY LTD REPORTE D IN 160 ITR 961 AND CIT VS ANJUM M.H. GHASWALA AND OTHERS REPORTED IN 252 ITR 1. 14. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE UR GED AT THE TIME OF HEARING IT IS HUMBLY PRAYED THAT THE ORDER OF THE CJT(APPEALS) MAY BE REVERSED IN SO FAR AS THE ABOVE MENTIONED ISSUES AR E CONCERNED AND THAT OF THE ASSESSING OFFICER BE RESTORED 15. THE APPELLANT CRAVES LEAVE TO ADD AFTER AM END OR WITHDRAW ALL OR ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL.. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PUBLIC LIMITED COMPANY WHICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SELLING OF PELLETS HOT/COLD ROLLED COILS/SHEE TS GALVANIZED JSW STEEL LIMITED 4 COILS/SHEETS AND PLATES AND SLAG CEMENT. THE ASSESS EE HAS FILED ITS RETURN OF INCOME FOR AY 2006-07 ON 30/11/2006 DECL ARING THE TOTAL INCOME OF RS. NIL UNDER NORMAL PROVISION OF INCO ME TAX ACT 1961 AND BOOK PROFIT OF RS. 960 77 05 749/- U/S 115JB O F THE I.T.ACT 1961. SUBSEQUENTLY A REVISED RETURN OF INCOME WAS FILED ON 31/03/2008 WHEREIN THE LOSS TO BE CARRIED FORWARD UNDER THE NORMAL PROVISION OF THE ACT WAS INCREASED TO BE RS. 10 45 47 550/- ON ACCOUNT OF DISALLOWANCES OF CONSUMPTION OF WORK RO LLS ADDITIONAL DEPRECIATION ON ACCOUNT OF LOSS ON FORWARD CONTRAC TS CAPITALIZED AND ADDITIONAL DEDUCTION U/S 43B OF THE ACT ON PAYMENT BASIS. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT HAS BE EN COMPLETED U/S 143(3) OF THE I.T.ACT 1961 ON 31/12/2008 AND D ETERMINED TOTAL INCOME OF RS. 159 27 34 354/- UNDER THE NORMAL PROV ISIONS OF THE ACT AND BOOK PROFIT OF RS. 1 297 87 51 517/- U/S 1 15JB OF THE I.T.ACT 1961. THE ASSESSEE CARRIED THE MATTER IN A PPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE LD.CIT(A) FOR DETAIL ED REASONS RECORDED IN HIS APPELLATE ORDER DATED 19/11/2010 DECIDED AL L ISSUES IN FAVOUR OF THE ASSESSEE . AGGRIEVED BY THE LD.CIT(A) ORDER THE REVENUE IS IN APPEAL BEFORE US AND THE ASSESEE HAS FILED CROSS OB JECTION ON THE ISSUE I.E WHERE THE SALES TAX INCENTIVES IS CONSI DERED AS CAPITAL RECEIPT THE SAME SHOULD ALSO NOT BE CONSIDERED W HILE COMPUTING THE BOOK PROFITS U/S 115JB OF THE I.T.ACT 1961. 4. GROUND NO.1 OF REVENUE APPEAL IS GENERAL IN NATU RE AND DOES NOT REQUIRE SEPARATE ADJUDICATION AND HENCE THE S AME IS DISMISSED. 5. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM GROUND NO. 2 AND 3 IS DISALLOWANCES OF DEPRECIATION OF RS. 30 73 444/- ON FIXED ASSETS DUE TO INCREASE IN COST OF ASSETS ON A CCOUNT OF LOSS JSW STEEL LIMITED 5 ARISING ON CANCELLATION OF FORWARD FOREIGN EXCHA NGE CONTRACTS. THE FACTS BORNE OUT FROM THE RECORDS SHOWS THAT DURING THE PREVIOUS YEAR THE ASSESSEE HAD BORROWED VARIOUS FOREIGN CUR RENCY LOANS FOR THE PURPOSE OF PURCHASE OF CERTAIN PLANT AND MACHIN ERY FROM OUTSIDE INDIA. FOR SAFEGUARDING ITS INTEREST FROM F OREIGN EXCHANGE FLUCTUATIONS THE ASSESEE HAS ENTERED INTO FORWARD CONTRACTS WITH AUTHORIZED DEALERS FOR RECEIVING FOREIGN CURRENCY A T THE RATES SPECIFIED IN CONTRACT AT FUTURE STIPULATED DATES T O ENABLE REPAYMENT OF INSTALLMENTS OF FOREIGN CURRENCY LOANS. DURING T HE YEAR UNDER CONSIDERATION THE SAID CONTACTS WERE SETTLED/CANC ELLED RESULTING IN A FOREIGN EXCHANGE LOSS OF RS.2 04 89 627/-. IN THE O RIGINAL RETURN OF INCOME THE ASSESEE HAS OMITTED TO ADJUST COST OF T HE CAPITAL ASSET FOR LOSS ON FORWARD CONTRACT IN TERMS OF SECTION 43 A OF THE ACT. BUT SUBSEQUENTLY THE SAME WAS CLAIMED IN THE REVISED R ETURN FILED FOR THE YEAR UNDER CONSIDERATION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE LD. AO REJECTED THE CLAIM OF THE A SSESSEE TO ADJUST COST OF ASSET ON THE GROUND THAT ON CANCELLATION OF THE FORWARD CONTRACTS NO PAYMENTS WERE ACTUALLY MADE AND THE L OSS ON CANCELLATION OF FORWARD CONTRACT WAS NOT COVERED BY SECTION 43A OF THE ACT AND ACCORDINGLY COULD NOT BE ADDED TO THE WRITTEN DOWN VALUE(WDV) OF THE ASSESSE. 6. THE LD. DR SUBMITTED THAT THE LD.CIT(A) WAS ERRE D IN DELETED ADDITIONS MADE BY THE AO TOWARDS ADJUSTMENT TO COST OF ASSETS FOR LOSS ARISING ON ACCOUNT OF FORWARD FOREIGN EXCHANGE CONTRACTS WITHOUT APPRECIATING THE FACT THAT PROVISION OF SE CTION 43A OF THE I.T.ACT 1961 WERE NOT APPLICABLE AS THE LOSSES ARO SE FROM CANCELLED FORWARD FOREIGN EXCHANGE CONTRACTS ARE NOT SETTLED AND ALSO JSW STEEL LIMITED 6 PAYMENTS RELATING TO PURCHASE OF CAPITAL ASSETS WERE ACTUALLY NOT MADE. 7. THE LD. AR FOR THE ASSESEE ON THE OTHER HAND SU BMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE ITAT BANGALORE BENCH IN ASSESSEES OWN CASE FOR AY 2005-06 IN ITA NO. 924/BANG/2009 WHERE UNDER IDENTICAL SET OF FACTS THE TRIBUNAL HELD THAT LOSS ARISING ON SETTLEMENT/CANCE LLATION OF FORWARD FOREIGN EXCHANGE CONTACTS SHOULD BE CAPITALIZED TO THE COST OF FIXED RECEIPTS. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD ALONG WITH CASE LAWS CITED BY T HE LD. AR FOR THE ASSESSEE. WE FIND THAT THE TRIBUNAL IN ASSESSEES O WN CASE FOR AY 2005-06 IN ITA NO. 924/BANG/2009 HAD AN OCCASION TO CONSIDER AN IDENTICAL ISSUE AND BY FOLLOWING THE DECISION OF HO NBLE SUPREME COURT IN THE CASE OF ACIT VS ELECON ENGINEERING CO .LTD.322 ITR 20 HELD THAT SINCE FORWARD FOREIGN EXCHANGE CONTRACTS WERE TAKEN FOR ACQUIRING CAPITAL ASSETS THE PROFITS/LOSS ARISING ON SETTLEMENT OF SUCH CONTRACTS HAD TO BE ADJUSTED AGAINST THE COST OF THE CONCERNED CAPITAL ASSET IN TERMS OF SECTION 43A OF THE ACT A ND DEPRECIATION WAS TO BE ALLOWED ON SUCH ADJUSTED VALUE OF THE CAP ITAL ASSETS. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE AS UNDER:- '6. WE HAVE CONSIDERED THE MATTER IN DETAIL. SECTIO N 4$A WAS INSERTED BY FINANCE ACT 1967 WITH EFFECT FROM 1 ST APRIL 1967. FT APPLIES AS A RESULT OF CHANGE IN THE RATS OF EXCHANGE. THERE MAY BE INCREA SE FIR DECREASED IN THE LIABILITY OF TIN ASSESSES IN TERMS OF INDIAN RU PEE. THE EAST OF ASSETS PROCURED IN FOREIGN EXCHANGE MAY INCREASE OR DECREA SE. THE CRUCIAL FEATURE IN LAW STATED IN SEC. 43A TILL THE AMENDMEN T BROUGHT IN BIT FINANCE ACT 2002 WAS THAT AN ASSESSEE HAS TO REVALUE THE FO REIGN EXCHANGE LIABILITY AT THE END OF EVERY PREVIOUS YEAR AND PRO VIDE FOR THE INCREASE OR DECREASE AS A RESULT OF FOREIGN EXCHANGE FLUCTUATIO N. THESE ADJUSTMENTS HAVE TO BE MADE EVEN IN A CASE WHERE PAYMENT WAS NO T ACTUALLY MADE. THE ADJUSTMENTS HAVE TO BE MADE ON THE BASIS OF THE LIABILITY AS ON THE JSW STEEL LIMITED 7 LAST DAY OF THE PREVIOUS YEAR. THIS POSITION OF LAW CONTINUED TILL IT WAS SUBSTITUTED BY INSERTION OF SEC. 43A THROUGH FINANC E ACT 2002 WHICH BROUGHT A CHANGE WITH REFERENCE TO THE TIME OF RECO GNITION OF THE LIABILITY FOR THE PURPOSE OF ADJUSTING THE INCREASE OR DECREA SE IN THE COST/ PROFIT AND LOSS ACCOUNT. FOR THAT PURPOSE THE AMENDMENT M ADE IT DEAR THAT INCREASE OR DECREASE MAY BE ADJUSTED AT THE TIME OF MAKING PAYMENT. IN OTHER WORDS SUCH ADJUSTMENT CAN 6E MODE ONLY IN TH E PREVIOUS YEAR IN WHICH THE FOREIGN ACCOUNT WAS SETTLED BY AN ASSESSE E. 7. AS FAR AS THE ASSESSEE'S APPEAL IS CONCERNED TH E AMENDED LAW OF SECTION.43A APPLIES. NOW WHETHER SHE ASSESSEE IS EN TITLED FOR CLAIMING THE LOSS ON ACCOUNT OF SETTLEMENT OF FOREIGN EXCHA NGE FORWARD CONTRACT OR NOT. HAS TO BE CONSIDERED IN LIGHT OF THE RECENT J UDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS ELKCON ENGINEE RING COMPANY LTD.RE REPORTED M 322 ITR 20. THE HONBLE COURT HAS CONSIDERED THE IMPACT OF SEC.43A BOTH BEFORE AMENDMENT AND AFTER A MENDMENT. THE COURT WAS INTACT EXAMINING THE DEDUCTIBILITY OF ROL L OVER PREMIUM IN RESPECT OF FOREIGN EXCHANGE FORWARD CONTRACTS. THE COURT HAS HELD THAT WHATEVER THE FOREIGN EXCHANGE LOANS WERE AVAILED FO R SECURING CAPITAL ASSETS THE DECREASE OR INCREASE WOULD AFFECT THE C APITAL ASSET . IF THE FOREIGN EXCHANGE LOAN WAS ACQUIRED FOR WORKING CAPI TAL! OR OTHER REVENUE COMMITMENTS THE FLUCTUATION EFFECT SHALL BE ADJUST ED IN REVENUE ACCOUNT. TILL THE AMENDMENT BROUGHT IN BY FINANCE A CT 2002 THIS ADJUSTMENT HAS TO BE MADE ON YEARLY BASIS EVALUATIN G THE POSITION ON THE LAST DAY OF THE CONCERNED PREVIOUS YEAR. RUT AFTER THE AMENDMENT THE ADJUSTMENT SHALL BE MADE ON THE ACTUAL PAYMENT OR S ETTLEMENT OF CONTRACTS AND DUES. THIS POSITION HAS BEEN MADE DEA R BY THE HANKIE COURT IN THE ABOVE CASE. THE HONBLE COURT HAS FURT HER DELIBERATED UPON THE CAPITAL NATURE AND REVENUE NATURE OF SUCH ADJUS TMENTS ARISING OUT OF FOREIGN EXCHANGE FLUCTUATION. APART FROM THE ABOVE GENERAL PROPOSITION OF LAW THE HONBLE COURT FURTHER EXAMINED WHETHER THE ROLL OVER PREMIUM IN RESPECT OF FOREIGN EXCHANGE FORWARD CONTRACT IS ELI GIBLE FOR DEPRECIATION IN THE NATURE OF EXPENDITURE TO BE ADDED TO THE COST O F THE CAPITAL ASSET; OF TO BE DEBITED IN THE PROFIT AND LOSS ACCOUNT IF IT IS IN [HE REVENUE ACCOUNT. IF ROLL OVER PREMIUM ON FORWARD CONTRACT B Y ITSELF IS HELD TO BE ADMISSIBLE AS A DEDUCTION OR ADJUSTMENT. THEN THERE IS NO DOUBT THAT THE LOSS ARISES OUT OF THE FORWARD CONTRACTS WOULD BE V ERY MUCH ENTITLED FOR DEDUCTION OR ADJUSTMENT IF IT IS IS A LOSS. 8. WE ORE OF THE VIEW THAT THE ISSUE RAISED BY THE ASSESSES IS SQUARELY COVERED BY THE JUDGMENT OF THE. HONBLE SUPREME CO URT RENDERED IN THE CASE OF ELHCON ENGINEERING LTD. 322 ITR 20. 9. IN THE PRESENT CASE THERE IS NO DISPUTE REGARDI NG THE FACTS OF THE CASE AS EXPLAINED BY SHE ASSESSEE THAT THE FOREIGN EXCHA NGE CONTRACTS WERE MADE FOR THE PURPOSE OF ACQUIRING CAPITAL ASSETS AN D THE FORWARD CONTRACTS USERS SETTLED DURING THE PREVIOUS YEAR RE LEVANT TO THE ASSESSMENT WAR UNDER APPEAL. THEREFORE THE CLAIM O F THE ASSESSEE TO ADJUST FOR THE LASS OF RS. 397892211/- IS LEGITIMA TE. 10. AS THE SETTLEMENT HAS RESULTED IN LOSS TO THE ABOVE ET XTENT THE SAID AMOUNT NEEDS TO BE ADDED TO THE COST OF THE CO NCERNED CAPITAL JSW STEEL LIMITED 8 ASSETS. DEPRECIATION SHALL BE ALLOWED ON THE ENHANC ED VALUE OF THE CAPITAL ASSETS. THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. (EMPHASIS SUPPLIED) 9. IN THIS VIEW OF THE MATTER AND CONSISTENT WITH V IEW TAKEN BY THE COORDINATE BENCH IN ASSESSEE OWN CASE FOR THE EARLI ER YEARS WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO ERROR IN TH E FINDINGS RECORDED BY THE LD.CIT(A) WHILE DELETING ADDITIONS MADE TOW ARDS DISALLOWANCES OF DEPRECIATION ON FIXED ASSETS ON AC COUNT OF ADJUSTED COST OF FIXED ASSETS TOWARDS LOSS AROSE ON ACCOUNT OF CANCELLATION/SETTLEMENT OF FORWARD FOREIGN EXCHANGE CONTRACTS. HENCE WE ARE INCLINED TO UPHOLD FINDING OF THE LD. CIT(A) AND REJECT GROUND TAKEN BY THE REVENUE. 10. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM GROUND NO.4 OF REVENUE APPEAL IS DISALLOWANCES OF DEPRECIA TION OF RS.4 47 62 874/- ON LOSS ARISING ON CANCELLATION OF FORWARD FOREIGN EXCHANGE CONTRACTS DURING THE ASSESSMENT YEAR 2005- 06. IN THIS GROUND THE ASSESSEE SEEKING CONSEQUENTIAL DEPRECIA TION FOR THE CURRENT YEAR ON LOSS THAT ARISING ON THE FORWARD FO REIGN CONTRACTS SETTLED/ CANCELLATION IN THE PREVIOUS YEAR RELEVANT ASSESSMENT YEAR 2005-06. WE FIND THAT ITAT BANGALORE BENCH IN ASSE SSEES OWN CASE HELD THAT SUCH LOSS ARISING ON FORWARD FOREIGN EXCHANGE CONTRACTS SHOULD BE ADDED TO THE COST OF ASSET IN T ERMS OF SECTION 43A OF THE ACT AND CONSEQUENTLY DEPRECIATION SHOU LD BE ALLOWED ON THE SAME. ACCORDINGLY THE ASSESEE IS SEEKING CONSE QUENTIAL DEPRECIATION FOR THE CURRENT YEAR ON SUCH ADJUSTED COST OF ASSETS AS WHICH THE LD. AO HAS FAILED TO GRANT. THE LD.CIT(A) AFTER CONSIDERING RELEVANT FACTS HAS RIGHTLY DIRECTED THE LD. AO TO A LLOW CONSEQUENTIAL DEPRECIATION ON FIXED ASSETS TOWARDS ADJUSTED COS T ON ACCOUNT OF LOSS ARISING ON CANCELLATION OF FORWARD FOREIGN EX CHANGE CONTRACTS JSW STEEL LIMITED 9 DURING THE AY 2005-06. WE DO NOT FIND ANY ERROR IN FINDINGS OF THE LD.CIT(A) AND HENCE WE ARE INCLINED UPHOLD FINDIN GS OF LD.CIT(A) AND REJECT GROUND TAKEN BY THE REVENUE. 11. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM GROUND NO.5 OF REVENUE APPEAL IS ALLOWANCES OF DEPRECIATIO N OF RS. 6 81 21 607/- ON INCREASED WDV OF ASSETS TRANSFERRE D ON AMALGAMATION. THE BRIEF FACTS OF THE IMPUGNED DISPU TE ARE THAT THE ASSESEE IS IN THE BUSINESS OF STEAL MANUFACTURING. IN ORDER TO BACKWARD INTEGRATE ITS OPERATIONS THE ASSESSEE HAD AMALGAMATED WITH EURO COKE AND ENERGY PRIVATE LIMITED (EURO COK E) EURO IKON IRON AND STEEL PVT.LTD. (EURO IKON) AND JSW POWER P RIVATE LIMITED (JPL) WITH EFFECT FROM 1/04/2005. FOR THE FINANCIAL YEAR 2004-05 TO RELEVANT AY 2005-06 THESE COMPANIES FILED THEIR RE TURN OF INCOME DECLARING LOSS OF RS.37 98 45 412/- (EURO COKE) AND RS.42 35 06 813/- (EURO IKON) AFTER CLAIMING DEPREC IATION. M/S JPL HAD NOT COMMENCED BUSINESS ACTIVITIES UNTIL AY 2005 -06. THE ASSESSMENT OF EURO COKE AND EURO ENERGY WAS COMPLET ED AFTER ALLOWING NORMAL DEPRECIATION HOWEVER DUE TO INSU FFICIENT PROFITS THE AFORESAID DEPRECIATION COULD BE ABSORBED IN AY 2005-06 TO THE EXTENT OF RS. 5 85 045/- IN CASE OF EURO COKE AND OF RS. 13 12 05 089/- IN CASE OF EURO IKON. FOR BETTER UND ERSTANDING THE RELEVANT DETAILS OF ACTUAL DEPRECIATION AND DEPRE CIATION ACTUALLY ALLOWED DURING THE AY 2005-06 IS AS FOLLOWS. 5.4 THE ASSESSMENT OF EURO COKE AND EURO ENERGY WA S COMPLETED AFTER ALLOWING NORMAL DEPRECIATION AND COMPUTING THE WRIT TEN DOWN VALUE OF ASSETS OF BOTH THE COMPANIES AS AN 31 MARCH 2005 AS UNDER: PARTICULARS EURO COKE EURO IKON TOTAL ACTUAL COST /WDV AS ON 31.03.2004 1 90 78 08 292 2 81 67 54 825 LESS: NORMAL (23 79 92 360) (34 79 81 822) JSW STEEL LIMITED 10 DEPRECAITION WDV AS ON 31.03.2005 1 66 98 12 932 2 46 87 73 003 4 13 85 935 5.5 HOWEVER DUE TO INSUFFICIENT PROFITS THE AFORE SAID DEPRECIATION COULD BE ABSORBED IN AY 2005-06 ONLY TO THE EXTENT GIVEN BEL OW PARTICULARS REFERENCE EURO COKE EURO IKON NORMAL DEPRECIATION AS PER RETURN OF INCOME A 23 79 92 360 34 7981 822 DEPRECIATION ACTUALLY ALLOWED TO THE EXTENT OF AVAILABLE PROFITS IN AY 2005-06 B 5 85 045 13 12 05 089 BALANCE DEPRECIATION NOT ALLOWED /UNABSORBED DEPRECIATION C 23 74 07 315 21 67 76 733 12. IN THE RETURN OF INCOME FILED BY THE ASSESSEE FOR THE YEAR OF AMALGAMATION I.E AY 2006-07 THE ASSESEE HAS COMPUT ED WDV IN RESPECT OF THE ASSETS TRANSFERRED BY THE AMALGAMATI NG COMPANIES BY REDUCING THE AMOUNT OF DEPRECATION ( ACTUALLY ALLO WED) IN AY 2005- 06 IN ACCORDANCE WITH THE PROVISIONS OF EXPLANATION (2) TO SECTION 43(6) OF THE ACT 1961. HOWEVER THE LD. AO OBSERVED THAT CLOSING WDV OF THE AMALGAMATING COMPANY BECOMES THE WDV IN THE HANDS OF AMALGAMATED COMPANY AND ACCORDINGLY DETERMINED T HE WDV OF ASSETS ACQUIRED ON AMALGAMATION AFTER CONSIDERING N ORMAL DEPRECIATION ALLOWED ON ASSETS OF TWO AMALGAMATING COMPANIES AND CONSEQUENTLY DISALLOWED EXCESS DEPRECIATION OF RS . 6 81 27 607/- (BEING 15% OF THE DIFFERENCE IN WDV OF RS. 45 41 84 048/-). 13. THE LD. DR SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN DIRECTING THE AO TO ALLOW DEPRECIATION ON THE INCR EASED WRITTEN DOWN VALUE OF THE ASSETS WITHOUT APPRECIATING THE DETAI LED REASONS JSW STEEL LIMITED 11 RECORDED IN THE RELEVANT ASSESSMENT ORDER AND THE A O ANALYSIS OF THE PROVISION OF EXPLANATION (2) AND (3) TO SECTION 43(6) AND THE PROVISION OF SECTION 72A OF THE I.T.ACT 1961. 14. THE LD. AR FOR THE ASSESSEE ON THE OTHER HAND STRONGLY SUPPORTING ORDER OF THE LD.CIT(A) SUBMITTED THAT TH E LD.CIT(A) HAS RIGHTLY APPRAISED THE FACTS IN LIGHT OF EXPLANATION (2) AND (3) TO SECTION 43C OF THE ACT TO COME TO THE CONCLUSION T HAT WDV OF AMALGAMATED COMPANIES SHALL BE TAKEN AFTER ALLOWING DEPRECIATION ACTUALLY ALLOWED WITHOUT CONSIDERING NORMAL DEPRECI ATION ALLOWABLE ON SUCH ASSETS. THE LD. AR FURTHER SUBMITTED THAT THE PROVISIONS RELATING TO COMPUTATION OF WDV OF ASSETS TRANSFERRE D ON AMALGAMATION OR SPECIFICALLY STATED UNDER THE EXPLA NATION (2) TO SECTION 43(6) OF THE ACT. EXPLANATION 3 TO SECTION 43(6) WHICH WORKS UNDER A DEEMING FICTION CANNOT BE RELIED UPON TO I MPORT THE MEANING OF THE WORD ACTUALLY ALLOWED SINCE THE A SSESEE COMPANY IS NOT BEING ABLE TO CARRY FORWARD THE UNABSORBED DEPRECIATION IN TERMS OF SECTION 32(2) OF THE ACT. ACCORDINGLY EX PLANATION (2) TO SECTION 43(6) HAS TO BE READ INDEPENDENTLY AND THE WORDS ACTUALLY ALLOWED HAVE TO BE ASCRIBED THEIR NATURAL MEANING. THE LD. AR FURTHER SUBMITTED THAT ASSESSEE HAS COMPUTED THE WD V OF ASSETS SO TRANSFERRED ON AMALGAMATION IN ACCORDANCE WITH THE PROVISIONS OF EXPLANATION (2) TO SECTION 43(6) OF THE ACT. ACCORD INGLY IF THE DEPRECIATION IS NOT FULLY ABSORBED IN THE PRECEDING YEAR IN THE CASE OF THE AMALGAMATING COMPANIES THEN THE UNABSORBED DE PRECIATION WILL BE ADDED TO THE WDV OF THE AMALGAMATING COMPANIES. IN THIS REGARD HE RELIED UPON VARIOUS JUDICIAL PRECEDENTS INCLUDING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS SILICAL METALLURGIC LTD. ( 2010) 324 ITR 29. JSW STEEL LIMITED 12 15. WE HAVE HEARD BOTH THE PARTIES PERUSED THE MAT ERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW ALONG WITH CERTAIN CASE LAWS CITED BY BOTH THE PARTIES. T HE ONLY DISPUTE UNDER CONSIDERATION IS WHETHER THE WRITTEN DOWN VA LUE OF THE ASSETS TRANSFERRED ON AMALGAMATION WAS TO BE COMPUTED IN T HE HANDS OF THE AMALGAMATED COMPANY CONSIDERING THE UNABSORBED DEPRECIATION I.E DEPRECIATION NOT GIVEN EFFECT TO IN THE ASSESSMENT OF THE AMALGAMATING COMPANIES. THE PROVISIONS OF EX PLANATION (2) AND (3) TO SECTION 43(6) WHICH EXPLAINS WHAT WILL BE THE WDV OF ASSETS IN THE HANDS OF AMALGAMATED COMPANY IN THE CASES OF AMALGAMATION. SIMILARLY SECTION 32(2) WHICH PROVI DES FOR CARRY FORWARD OF UNABSORBED DEPRECIATION AND SECTION 72A WHICH PROVIDES FOR CARRY FORWARD OF BUSINESS LOSS AND UNABSORBED D EPRECIATION IN THE HANDS OF THE AMALGAMATED COMPANY IN THE CASES O F AMALGAMATION. IF YOU GO THROUGH EXPLANATION (2) TO SECTION 43(6) IT IS VERY CLEAR THAT THE WORD USED THEREIN SPEAKS ABO UT DEPRECIATION ACTUALLY ALLOWED IN RELATION TO SAID PRECEDING YE AR IN CASE OF AMALGAMATED COMPANY. THUS IN VIEW OF EXPLANATION ( 2) TO SECTION 43(6) OF THE ACT THE WDV IN THE HANDS OF THE ASSES SE AS ON 01/4/2005 (APPOINTED DATE) WOULD BE THE WDV OF BLOC K OF ASSETS AS ON 31/03/2004 AS REDUCED BY THE DEPRECIATION ACTUA LLY ALLOWED DURING THE SAID PRECEDING YEAR I.E FY 2004-05 IN TH E HANDS OF THE AMALGAMATING COMPANIES. ACCORDINGLY THE WDV OF ASS ETS TRANSFERRED ON AMALGAMATION IN THE HANDS OF THE AMA LGAMATING COMPANY HAS TO BE NECESSARILY COMPUTED IN TERMS OF EXPLANATION (2) TO SECTION 43(6) OF THE ACT. AS CAN BE SEEN FROM T HE ABOVE IN TERMS OF EXPLANATION (2) TO SECTION 43(6) WHILE COMPUTAT ION THE WDV ON AMALGAMATION DEPRECIATION ACTUALLY ALLOWED HAS TO BE REDUCED. JSW STEEL LIMITED 13 HOWEVER THE CASE OF THE AO IS THAT EXPLANATION (3) HAS TO BE READ INTO EXPLANATION (2) AND ACCORDINGLY THE WDV OF AS SETS TRANSFERRED ON AMALGAMATION HAS TO BE COMPUTED AFTER REDUCING T HE TOTAL DEPRECIATION IN THE HANDS OF THE AMALGAMATED COMPAN IES. ACCORDINGLY IT IS NECESSARY TO READ AND COMPREHEND AS TO WHY PROVISION OF SECTION (3) TO SECTION 43(6) OF THE AC T CANNOT BE APPLIED IN THE FACTS OF THE PRESENT CASE. EXPLANATION (3) T O SECTION 43(6) STATES THAT ANY DEPRECIATION WHICH IS CARRY FORWAR D U/S 32(2) OF THE ACT SHALL BE DEEMED TO BE DEPRECIATION ACTUALLY AL LOWED. AS CAN BE SEEN FROM THE ABOVE EXPLANATION (2) AND (3) TO SEC TION 43(6) OF THE ACT BOTH USED THE TERM DEPRECIATION ACTUALLY ALLOW ED. HOWEVER AS AGAINST EXPLANATION (2) EXPLANATION (3) TO SECTION 43(6) OF THE ACT OPERATES AS A DEEMING FICTION WHEREIN DEPRECIATION WHICH IS CARRIED FORWARD U/S 32(2) OF THE ACT IS DEEMED TO HAVE BEE N ACTUALLY ALLOWED. IN OUR CONSIDERED VIEW EXPLANATION (3) BE ING A DEEMING FICTION OPERATES ONLY IN A PARTICULAR CONDITIONS A ND IN ORDER TO REMOVE AN ANOMALY WHICH OTHERWISE WOULD HAVE BEEN CREATED UNDER THE OTHER PROVISIONS OF THE ACT. IT THUS FOLL OWS THAT WHILE INTERPRETING EXPLANATION (3) ONE NEEDS TO BE AWARE OF THE INTENTION OF THE STATUTE. THESE PROVISIONS ALONG WITH THEIR I NTENT HAVE BEEN EXPLAINED ELABORATELY BY THE HONBLE BOMBAY HIGH CO URT IN THE CASE OF HINDUSTAN PETROLEUM CORPORATION LIMITED (SU PRA) WHERE IT WAS HELD THAT EXPLANATION (3) TO SECTION 43(6) OF T HE ACT SEEKS TO FIND CERTAIN ANOMALIES WHICH WOULD HAVE OTHERWISE E XISTS UNDER THE ACT. THE INTENTION OF EXPLANATION (3) IS NOT A SIMP LY TO NULLIFY THE PROVISION OF EXPLANATION (2) TO SECTION 43(6) AS H AS BEEN READ BY THE LD.AO. THIS IS ALSO EVIDENT FROM THE FACT THAT THE EXPLANATION (2) HAS BEEN INTRODUCED FROM 01.4.1988 WHEREAS EXPLANATION (3) WAS ALWAYS ON STATUTE WHICH CLEARLY IMPLIES THAT EXPLA NATION (3) WHICH IS JSW STEEL LIMITED 14 A LEGAL/DEEMING FICTION WAS NOT INTRODUCED TO NULL IFY THE IMPACT OF EXPLANATION (2) OF THE ACT. ACCORDINGLY IN TERMS O F EXPLANATION (3) TO SECTION 43(6) IN THE PRESENT CASE UNLESS THE UNAB SORBED DEPRECIATION OF THE AMALGAMATING COMPANIES IS CARRI ED FORWARD IN THE HANDS OF THE AMALGAMATED COMPANY U/S 32(2) OF T HE ACT EXPLANATION (3) CANNOT BE READ INTO EXPLANATION (2) TO SIMPLY CONCLUDE THAT DEPRECIATION ACTUALLY ALLOWED ALSO INCLUDES UNABSORBED DEPRECIATION. 16. THE MEANING OF THE TERM ACTUALLY ALLOWED IS INT ERPRETED BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. DOOM DOOMA INDIA LTD. (2009) 310 ITR 392 (SC) WHEREIN IT HAS BEEN H ELD THAT THE TERM DEPRECIATION ACTUALLY ALLOWED MEANS DEPRECIA TION OF WHICH THE ASSESSEE HAS RECEIVED EFFECTIVE ADVANTAGE OR BENEFI T AND NOT MERELY WHICH IS NOTIONALLY ALLOWED OR WHICH IS ALL OWABLE. ACCORDINGLY THE WORDS ACTUALLY ALLOWED UNDER EXPLA NATION (2) ONLY MEAN DEPRECIATION WHICH HAS BEEN GIVEN EFFECT TO IN THE COMPUTATION OF INCOME OF THE AMALGAMATING COMPANIES AND WILL NOT INCLUDE UNABSORBED DEPRECIATION. THIS LEGAL PROPOSI TION IS SUPPORTED DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS SILICAL METALLURGIC LTD. (2000) 324 ITR 29 MAD HC). WHERE THE HONBLE COURT HELD THAT THE STATUTORY PROVISION MAKES IT CL EAR THAT THE WDV OF THE ASSET WOULD BE THE ACTUAL COST OF THE ASSETS OF THE ASSESSEE LESS DEPRECIATION ALLOWED TO THE COMPANY. ANY UNABSORBED DEPRECIATION WHICH WAS NOT SET OFF FOR CARRY FORWARD COULD NOT B E TAKEN INTO ACCOUNT. A SIMILAR VIEW WAS TAKEN BY THE BOMBAY HIG H COURT IN THE CASE OF CIT VS. HINDUSTAN PETROLEUM CORPORATION LTD . (SUPRA). FURTHER IT IS RELEVANT TO NOTE THAT A SPECIAL LEA VE PETITION FILED AGAINST THE AFORESAID HIGH COURT DECISION HAS BEEN DISMISSED BY THE JSW STEEL LIMITED 15 HONBLE SUPREME COURT ON MERITS IN SLP (C) NO. 1905 4 OF 2008(SC). A SIMILAR PROPOSITION HAS BEEN LAID DOWN BY THE HONBLE MADRAS HIGH COURT IN THE CASE OF EID PARRY INDIA S VS CIT (ITA.NO. 1311 & 1312/2005) (MAD HC). 17. IN THE PRESENT CASE THE LD. AO HAS ALLEGED THA T THE UNABSORBED DEPRECIATION OF THE AMALGAMATING COMPANI ES WILL BE CARRIED FORWARD IN THE HANDS OF THE AMALGAMATING CO MPANIES IN TERMS OF SECTION 72A OF THE ACT. WE FIND THAT IN AL L ABOVE DECISIONS OF VARIOUS HIGH COURTS WE NOTED THAT THE APPLICABILIT Y OF PROVISION OF SECTION 72A HAD BEEN CONSIDERED AND EVEN AFTER THE COURTS HELD THAT DEPRECATION ACTUALLY ALLOWED SHALL NOT INCLUDE ANY UNABSORBED DEPRECIATION. THEREFORE WE ARE OF THE CONSIDERED V IEW THAT THE WDV IN THE HANDS OF THE AMALGAMATED COMPANY WAS TO BE C ALCULATED WITHOUT CONSIDERING THE UNABSORBED DEPRECIATION OF THE AMALGAMATING COMPANIES FOR WHICH SET OFF WAS NEVER ALLOWED. THE LD.CIT(A) AFTER CONSIDERING RELEVANT FACTS HAS RIGH TLY DELETED ADDITIONS MADE BY THE LD.AO. HENCE WE ARE INCLINE D TO UPHOLD THE FINDINGS OF LD.CIT(A) AND REJECT GROUND TAKEN BY T HE REVENUE. 18. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERAT ION FROM GROUND NO. 6 TO 8 OF REVENUE APPEAL IS TREATMENT OF INTERE ST OF RS.40 68 488/- AS BUSINESS INCOME INSTEAD OF INCOME FROM OTHER SOURCES. DURING THE YEAR UNDER CONSIDERATION THE A SSESEE EARNS CERTAIN INTEREST INCOME ON FIXED DEPOSITS WITH BANK S. THE FIXED DEPOSITS WERE KEPT WITH BANKS IN THE NORMAL COURSE OF BUSINESS FOR EXTENDING GUARANTEE TO THE GOVERNMENT AUTHORITIES IN RESPECT OF DISPUTED TAXES DUTIES AND LETTER OF CREDITS OPENED FOR IMPORT OF CAPITAL GOODS ETC. THE ASSESEE HAS CONSIDERED THE INTEREST INCOME JSW STEEL LIMITED 16 UNDER THE HEAD INCOME FROM BUSINESS. THE LD. AO REJ ECTED THE CLAIM OF THE ASSESSEE AND FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TUTICORIN ALKALI CHEM ICALS & FERTILIZERS VS. CIT (1997) 227 ITR 172 (SC) HELD TH AT THE SAID INTEREST INCOME WAS TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. THE LD.AO ACKNOWLEDGED THE FACT THAT THE S AID ISSUE WAS COVERED IN FAVOUR OF THE ASSESEE BY THE DECISION OF THE BANGALORE TRIBUNAL FOR AY 1995-96. HOWEVER HE CHOSE NOT TO F OLLOW THE SAME SINCE THE SAID DECISION OF THE BANGALORE TRIBUNAL W AS SET ASIDE BY THE HONBLE KARNATAKA HIGH COURT. 19. THE LD. DR SUBMITTED THAT THE LD.CIT(A) WAS ERR ED IN FOLLOWING THE TRIBUNAL ORDER ON THE ISSUE FOR AY 1995-96 EVE N THOUGH ON FURTHER APPEAL THE HONBLE SUPREME COURT HAD REMAND ED THE MATTER TO THE HONBLE KARNATAKA HIGH COURT FOR FRESH CONSI DERATION. THE LD. DR FURTHER SUBMITTED THAT THE LD.CIT(A) HAD ERRED IN NOT TAKING INTO CONSIDERATION THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS L TD.VS. CIT (SUPRA) WHILE ARRIVE AT HIS FINDINGS. 20. THE LD.AR FOR THE ASSESEE SUBMITTED THAT THIS I SSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF HONBLE KARNATAKA HIGH COURT IN ASSESEES OWN CASE FOR AY 1995- 96. THE LD. AR FURTHER SUBMITTED THAT ALTHOUGH TH E HONBLE KARNATAKA HIGH COURT SET ASIDE THE AFORESAID ORDER OF THE ITAT IN FIRST ROUND OF LITIGATION BUT ON SECOND ROUND OF LITIGATION AS PER THE DIRECTIONS OF HONBLE SUPREME COURT ALLOWED RELIEF TO THE ASSESEE AND DIRECT THE LD.AO TO ASSESS INTEREST INCOME UNDE R THE HEAD INCOME FROM BUSINESS. THE LD.CIT(A) AFTER CONSIDERI NG NECESSARY JSW STEEL LIMITED 17 FACTS HAS RIGHTLY DIRECTED THE LD.AO TO CONSIDER IN TEREST INCOME UNDER THE HEAD INCOME FROM BUSINESS. 21. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. INITIALLY THE ITAT BANGALORE TRIBUNAL RULED IN FAVOUR OF THE ASSESSEE BY HOLDING THAT INTEREST INC OME ARISING TO THE ASSESEE WAS TO BE TAXED UNDER THE HEAD BUSINESS INC OME. THE DEPARTMENT APPEALED AGAINST THE SAID ORDER OF THE B ANGALORE TRIBUNAL BEFORE THE HONBLE KARNATAKA HIGH COURT W HEREIN THE ORDER OF THE TRIBUNAL WAS SET ASIDE. BASIS THE AFORESAI D DECISION OF THE HONBLE KARNATAKA HIGH COURT THE AO TAXED THE INTE REST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. THEREAFTE R AGAINST THE SAID ORDER OF THE HONBLE KARNATAKA HIGH COURT THE ASSESSE PREFERRED AN APPEAL BEFORE THE HONBLE SUPREME COUR T WHEREIN THE HONBLE SUPREME COURT VIDE ORDER DATED 29 TH SEPTEMBER 2009 IN SLP (CIVIL APPEAL) NO. 6555 OF 2009 SET ASIDE THE O RDER OF THE HONBLE KARNATAKA HIGH COURT AND DIRECTED TO ANSWER THE QUESTION OF LAW WHICH WAS RAISED BEFORE IT. IN SET ASIDE PR OCEEDINGS THE HONBLE HIGH COURT VIDE ITS ORDER DATED 17/08/2011 HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND HELD THAT INTER EST INCOME EARNED BY THE ASSESSEE FROM FIXED DEPOSIT IN THE NORMAL CO URSE OF BUSINESS WAS TO BE TAXED AS BUSINESS INCOME. THE RELEVANT FI NDINGS OF THE COURT ARE AS UNDER:- '23. THEREFORE FROM THE AFORESAID JUDGMENT II IS DEAR THAT TILL THE COMPANY COMMENCES ITS BUSINESS AND EARNS INCOME IF THEY HAVE KEPT THEIR SURPLUS FUNDS IN SHORT DEPOSITS IN ORDER TO E ARN INTEREST THAT INTEREST INCOME IS CHARGEABLE UNDER SECTION 56 OF THE ACT H OWEVER ONCE THE ASSESSES COMMENCES BUSINESS AND EARNS INCOME AND IN ADDITION TO THE INCOME SO CORNED THE COMPANY ALSO EARNS INTEREST B Y WAY OF SUCH DEPOSITS THEN THE SAID INCOME CANNOT BE CONSTRUED AS INCOME FROM OTHER SOURCES. . JSW STEEL LIMITED 18 34. THEREFORE IN THE FACTS OF THE CASE WEE ARE SA TISFIED THAT THE FINDING RECORDED BY THE TRIBUNAL IS ON A PROPER APPRECIAT ION OF THE MATERIAL ON RECORD KEEPING IN MIND THE LAW ON THE POINT AND IS JUST AND PROPER AND DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY TH E SUBSTANTIAL QUESTIONS OF LAW ARE ANSWERED IN FAVOUR OF THE ASSESEE AND AG AINST THE REVENUE.' 22. THE HONBLE KARNATAKA HIGH COURT HAS ALSO DISTI NGUISHED THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS (S UPRA) IN THE FOLLOWING PARAGRAPHS:- 21. RELIANCE IS PLACED BY THE REVENUE ON THIS JUDG MENT OF THE APEX COURT IN THE CASE OF TLTICORIN ALKALI CHEMICAIS & F ERTILIZERS LTD VS. COMMISSIONER OF INCOME TAX REPORTED IN (19 97) 227 ITR 172 (SC). 22. IN THE AFORESAID JUDGMENT IKE SUPREME COURT H AS MADE THE POSITION DEAR AT PARA 4 WHICH READS AS '4. THE BASIC PROPOSITION THAT HAS TO BE BORNE IN M IND IN THIS CASE IS THAT IT IS POSSIBLE FOR A COMPANY TO HAVE SIX D IFFERENT SOURCES OF INCOME EACH ONE OF WH.IFH WILL BE CHARGEABLE TO IN COME-TAX 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' IS ON LY VIE OF THE HEAD UNDER WHICH THE COMPANY'S INCOME IS LIABLE TO ASSES SED TO TAX. IF A COMPANY HAS NOT COMMENCED BUSINESS THERE CANNOT BE ANY QUESTION OF ASSESSMENT OF ITS PROFITS AND GAINS OF BUSINESS. THAT DOES NOT MEAN THAT DOES NOT MEAN THAT UNTIL AND UNL ESS THE COMPANY COMMENCES ITS BUSINESS ITS INCOME FROM ANY OTHER SOURCE WILL NOT BE NOTED. IF THE COMPANY EVEN BEFOR E IT COMMENCES BUSINESS INVESTS THE SURPLUS FUND IN IT S HAND FOR PURCHASE OF LAND OR HOUSE PROPERTY AND LATER SELLS IT OF PROFIT THE GAIN MADE BY THE COMPANY WILL BE ASSESSABLE UNDER T HE HEAD CAPITAL GAINS. SIMILARLY IF A COMPANY PURCHASES A RENTED HOUSE AND GETS RENT WHICH RENT WILL BE ASSESSABLE TO TAX UNDER SECTION22 OF THE ACT AS INCOME FRO HOUSE PROPERTY. LIKEWISE A COMPANY MAY HAVE INCOME FROM OTHER SOURCES. IT AY BUY SHARES AN D GET DIVIDENDS. SUCH DIVIDENDS WILL BE TAXABLE UNDER SEC TION 56. THE COMPANY MAY ALSO AS IN THIS CASE KEEP THE SURPLUS FUND IN SHORT TERM DEPOSITS IN ORDER TO EARN INTEREST. SUCH INTER EST WILL BE CHARGEABLE UNDER SECTION 56. THE COMPANY HAS CHOSEN NOT TO KEEP ITS SURPLUS CAPI TAL IDEL BUT HAS DECIDED TO INVEST IT FRUITFULLY. THE FRUITS OF SUCH INVESTMENT WILL CLEARLY BE OF REVENUE NATURE. 23. THEREFORE FROM THE AFORESAID JUDGMENT IT IS C LEAR THAT TILL THE COMPANY COMMENCES ITS BUSINESS AND EARNS INCOME IF THEY HAVE KEPT THEIR SURPLUS FUNDS IN SHORT DEPOSITS IN ORDER TO E ARN INTEREST THAT INCOME IS CHARGEABLE UNDER SECTION 56 FO THE ACT. HOWEVER ONCE THE ASSESSEE COMMENCES ITS BUSINESS AND EARNS INCOME AND IN ADDI TIONS TO THE INCOME SO EARNED THE COMPANY ALSO EARNS INTEREST B Y WAY OF SUCH JSW STEEL LIMITED 19 DEPOSITS THEN THE SAID INCOME CANNOT BE CONSTRUED AS INCOME FROM OTHER SOURCES. 23. FROM THE ABOVE DECISION IT IS CLEAR THAT THE M ATTER HAS BEEN FINALLY SETTLED BY THE HONBLE KARNATAKA HIGH COURT IN FAVOR OF THE ASSESEE AND HENCE WE ARE OF THE CONSIDERED VIEW TH AT THERE IS NO ERROR IN THE FINDINGS OF LD.CIT(A) IN TREATING INT EREST INCOME FROM FIXED DEPOSITS UNDER THE HEAD INCOME FROM BUSINESS AND ACCORDINGLY WE REJECT GROUND TAKEN BY THE REVENUE. 24. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM GROUND NO 9 AND 10 OF REVENUE APPEAL IS TREATMENT OF SALES TAX SUBSIDY RECEIVED OF RS. 36 15 49 828/- AS CAPITAL IN NATUR E INSTEAD OF REVENUE IN NATURE. THE FACTS BORNE OUT FROM RECORDS SHOW THAT IN THE YEAR 1993 THE GOVERNMENT OF KARNATAKA PROPOSED A N EW INDUSTRIAL POLICY 1993 AND PACKAGE OF INCENTIVES AND CONCESSI ONS FOR A PERIOD OF FIVE YEARS. THE ASSESEE HAS FILED COPY OF NOTIF ICATION ISSUED BY THE GOVERNMENT OF KARNATAKA. AS CAN BE SEEN FROM TH E SAID NOTIFICATION THE NEW INDUSTRIAL POLICY 1993 AND T HE PACKAGE OF INCENTIVES AND CONCESSIONS (1993-98) WAS INTRODUCED WITHIN THE OBJECTIVE TO ATTRACT NEW INDUSTRIAL INVESTMENTS AND ACCELERATE INDUSTRIAL DEVELOPMENT IN THE STATE TO PROMOTE THE DEVELOPMENT OF BACKWARD REGIONS AND GENERATE EMPLOYMENT OPPORTUNIT IES FOR THE LOCAL PEOPLE. THE SCHEME ALSO AIMED TO GENERATE ADD ITIONAL EMPLOYMENT OPPORTUNITIES FOR THE LOCAL PEOPLE OF TH E STATE OF KARNATAKA. IN TERMS OF THE STATE POLICY IN THE YEAR 1994 THE ASSESSEE PROPOSED TO SET UP AN INTEGRATED STEEL PLA NT FOR MANUFACTURE OF 1.25 MILLION TONS PER ANNUM (MTPA) O F HOT ROLLED (HR) COILS AT VILLAGE TORANAGALLU BELLARY HOSPET KARNATAKA WITH AN JSW STEEL LIMITED 20 INITIAL INVESTMENT OF RS. 3 200 CRORES. ACCORDINGLY THE ASSESEE HAS MADE A APPLICATION ON 29 TH JANUARY 1994 UNDER THE INDUSTRIAL POLICY TO THE GOVERNMENT OF KARNATAKA FOR GRANT OF INFRAST RUCTURAL ASSISTANCE AND INCENTIVES UNDER THE POLICY. IN RESP ECT OF THE AFORESAID APPLICATION THE GOVERNMENT OF KARNATAKA PASSED AN ORDER NO. CI 29 SPI 94 BANGALORE DATED 11/10/1994 GRANT ING EXEMPTION FROM PAYMENT OF PURCHASE-TAX AND ENTRY- TAX ON ALL MATERIALS PLANT AND MACHINERY AND OTHER PRODUCTION ASSETS ACQUIRED FOR THE IMPLEMENT OF THE PROJECT FOR A PERIOD OF 14 YEARS. IT ALSO INCLUDED EXEMPTION FROM PAYMENT OF SALES TAX ON SALE OF FINI SHED GOODS BY PRODUCTS AND WASTE PRODUCTS. CONSEQUENTIAL NOTIFICA TION TO THIS EFFECT WAS PASSED BY THE GOVERNMENT OF KARNATAKA VIDE NO. ED 165 CSL 94 (I) DATED 14/02/1995 BY WHICH THE TAX PAYABLE UNDER SECTION 5 AND 6C OF THE KARNATAKA SALES TAX ACT 1957 WAS TRE ATED AS EXEMPT FOR A PERIOD OF 14 YEARS FROM THE DATE OF COMMERCI AL PRODUCTION. FURTHER ON INTRODUCTION OF VAT REGIME FROM 1 ST APRIL 2005 IN THE STATE OF KARNATAKA TAX WAS CHARGED ON THE PURCHASE S MADE FROM FOR WHICH INPUT TAX CREDIT AVAILABLE. THE ASSESSEE WAS ALSO CHARGED AND COLLECTED TAX ON ALL ITS SALES MADE TO CUSTOMER S. THE TAX SO COLLECTED (NET OF INPUT TAX CREDIT) WAS DEPOSITED W ITH THE STATE GOVERNMENT. ACCORDINGLY IN ORDER TO NULLIFY THE EF FECT OF VAT VIS-- VIS OF VAT INCENTIVE SCHEME OF THE STATE GOVERNMENT THE TAX SO CHARGED AND DEPOSITED ON SALES WAS REFUNDED ON A MO NTHLY BASIS AS SALES TAX SUBSIDY. A NOTIFICATION TO THIS EFFECT W AS ALSO PASSED BY THE GOVERNMENT OF KARNATAKA VIDE NO. FD 56 CSL 200 5(I) DATED 18/04/2005 BY WHICH THE TAX PAYABLE UNDER THE KARN ATAKA SALES TAX ACT 1957 WAS TREATED AS EXEMPT SUBJECT TO CER TAIN CONDITIONS. JSW STEEL LIMITED 21 25. IN THE RETURN OF INCOME FILED FOR AY 2006-07 T HE ASSESEE HAD CLAIMED THAT SINCE SALES TAX SUBSIDY WAS INTRINS ICALLY RELATED TO SET UP OF THE PLANT IN THE BACKWARD AREA THE SAME WAS ON CAPITAL ACCOUNT AND HENCE NOT TAXABLE . DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO REJECTED THE CONTENTION OF THE ASSESEE AND CONCLUDED THAT SALES TAX EXEMPTION WAS GIVEN BY THE STATE GOVERNMENT OF KARNATAKA TO HELP THE ASSESSEE TO USE THE FUNDS FOR ITS DAY TO DAY ACTIVITIES AND HENCE THE SALES TAX SUBSIDY WAS REVENUE IN NATURE AND TAXABLE IN THE HANDS OF THE A SSESEE. ON APPEAL BEFORE THE FIRST APPELLATE AUTHORITY THE LD .CIT(A) ALLOWED RELIEF TO THE ASSESEE AND HELD THAT SALES TAX SUBSI DY RECEIVED BY THE ASSESEE WAS NOT GIVEN TO FACILITATE THE BUSINESS OP ERATIONS OF THE ASSESEE BUT WAS GIVEN AS AN INCENTIVE FOR DEVELOPM ENT OF THE BACKWARD AREAS AS STATED IN THE POLY. ACCORDINGLY BY RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F RELIANCE INDUSTRIES LTD. (339 ITR 632) HELD THAT SUBSIDY RE CEIVED BY THE ASSESEE IS IN THE NATURE OF CAPITAL RECEIPT AND N OT LIABLE FOR TAX. 26. THE LD. DR SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT SALES TAX INCENTIVES/CONCESSIONS ETC. AMOUNTING TO RS. 36 15 49 828/- AS CAPITAL RECEIPTS WITHOUT APPRECI ATING THE REASONS RECORDED IN THE RELEVANT ASSESSMENT ORDER BY THE LD .AO. THE LD. DR FURTHER SUBMITTED THAT THE LD.CIT(A) WAS ERRED IN RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CI T VS PONNI SUGARS AND CHEMICALS LTD. AND OTHER ( 306 ITR 392) AND THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F RELIANCE INDUSTRIAL LIMITED VS CIT 33 ITR 632 WITHOUT APPRE CIATING THE FACT THAT THE LD. AO HAS BROUGHT OUT CLEAR FACTS TO THE EFFECT THAT THE SUBSIDY WAS GIVEN FOR DAY TO DAY MAINTENANCE OF TH E ASSESEE JSW STEEL LIMITED 22 WHICH IS IN THE NATURE OF THE REVENUE RECEIPT BUT NOT CAPITAL RECEIPT. THE LD. DR FURTHER REFERRING TO THE DECISION OF HO NBLE SUPREME COURT IN THE CASE OF M/S SAHNEY STEEL & PRES WOR KS LTD.VS CIT(SUPRA) SUBMITTED THAT THE HONBLE COURT CATEGOR ICALLY HELD THAT WHEN PAYMENTS ARE MADE AFTER INDUSTRIES HAVE BEEN SET UP THEN THE SAID PAYMENTS ARE NOT BEING MADE FOR THE PURPO SE OF SETTING UP OF THE INDUSTRIES AND THE PACKAGE OF INCENTIVES WE RE GIVEN TO THE INDUSTRIES TO RUN MORE PROFITABLY FOR A PERIOD OF 5 YEARS FROM THE DATE OF COMMENCEMENT OF PRODUCTION. IN OTHER WORDS HELPI NG HAND WAS BEING PROVIDED TO THE INDUSTRIES DURING THE EARLIER DAYS TO ENABLE THEM TO COME TO A COMPETITIVE LEVEL WITH OTHER ESTA BLISHED INDUSTRIES. IN THIS CASE ON PERUSAL OF SCHEME OF INCENTIVES GI VEN BY THE STATE GOVERNMENT OF KARNATAKA IT WAS VERY CLEAR THAT THE SAID INCENTIVES HAVE BEEN GIVEN AFTER COMMENCEMENT OF PRODUCTION FO R A PERIOD OF 5 YEARS FOR PAYMENT TAX ON SALE OF GOODS. THEREFORE THE FACTS OF THE PRESENT CASE ARE SQUARELY COVERED BY THE DECISION O F THE M/S SAHNEY STEEL & PRES WORKS LTD. AND ACCORDINGLY LD. CIT(A) WAS TOTALLY ERRED IN ALLOWING THE RELIEF TO THE ASSESEE . 27. THE LD. AR FOR THE ASSESEE ON THE OTHER HAND S TRONGLY SUPPORTING ORDER OF THE LD.CIT(A) SUBMITTED THAT IT IS EVIDENT FROM THE NEW INDUSTRIAL POLICY 1993 ANNOUNCED BY THE STATE GOVERNMENT OF KARNATAKA THAT THE INCENTIVES SCHEME WAS GIVEN TO A TTRACT NEW INDUSTRIAL INVESTMENTS IN THE STATE OF KARNATAKA A ND TO CREATE ADDITIONAL EMPLOYMENT OPPORTUNITIES WITH A DIRECTIO N FOR EMPLOYMENT IN UNDER DEVELOPED BACKWARD AREAS OF KARNATAKA. IN OTHER WORDS THE SUBSIDY WAS GRANTED TO THE ASSESEE SINCE IT IS FULFILLED THE CRITERIA SPECIFIED IN THE SCHEME FOR GRANT OF CONCE SSION AND INCENTIVES. THE PURPOSE OF THE CONCESSION /INCENTI VES WAS VERY JSW STEEL LIMITED 23 CLEAR AS PER WHICH THE ASSISTANCE WAS NOT GIVEN FO R GENERAL ASSISTANCE TO CARRY ON ITS BUSINESS AS ALLEGED BY T HE LD.AO. THE LD. AR FURTHER SUBMITTED THAT THERE IS A DISTINCTION B ETWEEN THE SUBSIDY GIVEN WITH THE OBJECT OF ENCOURAGING THE INDUSTRIAL GROWTH AND SETTING UP INDUSTRIES IN BACKWARD AREAS AND SUBSIDY GIVEN W ITH THE OBJECT OF ASSISTING INDUSTRIES FOR A PERIOD AFTER THEY ARE SE TUP. THE LD. AR FOR THE ASSESSEE REFERRING TO PLETHORA OF JUDICIAL PREC EDENTS INCLUDING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CHAPHALKAR BROTHERS (CA NOS. 6513 & 6514 OF 2012) SUBMITTED T HAT THE POSITION OF THE HONBLE SUPREME COURT ON THIS ISSUE IS VERY CATEGORICAL IN THE CATENA OF THE DECISIONS WHERE IT HAS BEEN HELD THA T THE MECHANISM THE SOURCE THE POINT IN TIME THE FORM IN WHICH SU BSIDY HAVE BEEN GRANTED ARE IRRELEVANT AND WHAT IS RELEVANT IS THE PURPOSE FOR WHICH THE SUBSIDY IS GRANTED TO DECIDE WHETHER THE SUBS IDY IS REVENUE OR CAPITAL IN NATURE. THE LD.AR FURTHER SUBMITTED THA T IF YOU GO THROUGH THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT I N VARIOUS CASES IT WAS VERY CLEAR THAT THE HONBLE SUPREME COURT HAS C ONSIDERED RATIO LAID DOWN BY THE COURT IN THE CASE OF M/S. SAHNEY S TEEL AND PRESS WORKS LTD AND AGAIN HELD THAT PURPOSE IS VERY RELEV ANT TO DECIDE THE NATURE OF SUBSIDY WHETHER IT IS ON ACCOUNT OF CAP ITAL ACCOUNT OR REVEUNE ACCOUNT BUT FORM IS IRRELEVANT. THE LD. AR FURTHER SUBMITTED THAT IN ALL CASES SUBSIDY WAS RECEIVED AF TER THE COMMENCEMENT OF BUSINESS AND ALLOWED IN TERMS OF SA LES TAX EXEMPTION FOR A PERIOD OF FIVE YEARS ALSO AND IN TH OSE FACTS THE HIGH COURTS CAME TO THE CONCLUSION THAT EVEN THOUGH TH E SUBSIDY WAS GIVEN IN TERMS OF SALES TAX SUBSIDY AFTER COMMENCEM ENT OF PRODUCTION BUT SUCH SUBSIDY WAS GIVEN TO REIMBURSE THE COST INCURRED BY THE ASSESSEE TO SET UP INDUSTRIES. THER EFORE HE STRONGLY SUBMITTED THAT IT IS ONLY THE PURPOSE OF THE SCHEME THAT HAS TO BE JSW STEEL LIMITED 24 SEEN TO FIND OUT WHETHER THE SCHEME IS IN FACT CAP ITAL REVENUE IN NATURE. THE SOURCE OF FUNDS FOR THE SCHEME AND FORM OF THE SCHEME ARE IRRELEVANT AND POINT IN TIME WHEN SUBSIDY IS R ECEIVED IS ALSO IMMATERIAL. ACCORDINGLY HE SUBMITTED THAT THE CASE LAWS RELIED UPON BY THE LD. DR IN THE CASE OF M/S SAHNEY STEEL AND PRESS WORKS (SUPRA) HAS NO APPLICATION TO FACTS OF THE PRESENT CASE. THE LD.CIT(A) AFTER CONSIDERING RELEVANT FACTS HAS RIG HTLY DELETED ADDITIONS MADE BY THE AO AND HIS ORDER SHOULD BE UP HELD. 28. WE HAVE HEARD BOTH THE PARTIES PERUSED THE MAT ERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW ALONG WITH PLETHORA OF CASE LAWS CITED BY BOTH PARTIES. A S WE DISCUSSED IN EARLIER YEAR PARAGRAPH THE FACTS CLEARLY INDICATES THAT IN THE YEAR 1993 THE GOVERNMENT OF KARNATAKA PROPOSED A NEW IND USTRIAL POLICY 1993 AND PACKAGE OF INCENTIVES AND CONCESSION WITH AN OBJECTIVE TO ATTRACT NEW INDUSTRIAL INVESTMENTS AND TO ACCELERAT E INDUSTRIAL DEVELOPMENT IN THE STATE TO PROMOTE THE DEVELOPME NT OF BACKWARD REGIONS AND GENERATE EMPLOYMENT FOR THE LOCAL PEOPL E. IT IS ALSO AN ADMITTED FACT THOSE IN TERMS OF THE SAID POLICY IN THE YEAR 1994 THE ASSESSEE PROPOSED TO SET UP A INTEGRATED STEEL PLAN T FOR MANUFACTURING OF 1.25 MILLION TONS PER ANNUM (MTPA) OF HOT ROLLED (HR) COILS AT VILLAGE TORANGALLU BELLARY HOSPET K ARNATAKA STATE WITH AN INITIAL INVESTMENT OF RS. 3 200 CRORES. IT IS ALSO NOT IN DISPUTE THAT THE ASSESEE HAS MADE AN APPLICATION UNDER THE INDUSTRIAL POLICY TO THE GOVERNMENT OF KARNATAKA FOR WHICH THE ORDER HAS BEEN PASSED BY THE GOVERNMENT OF KARNATAKA GRANTING EXEM PTION FROM PAYMENT OF PURCHASE TAX AND ENTRY TAX AND ALSO EXEM PTION FROM PAYMENT OF SALES TAX ON SALE OF FINISHED GOODS. JSW STEEL LIMITED 25 29. IN THIS FACTUAL BACK GROUND IF YOU EXAMINE THE CLAIM OF THE ASSESEE THAT SALES TAX SUBSIDY RECEIVED FROM STATE GOVERNMENT OF KARNATAKA IS CAPITAL OR REVEUNE IN NATURE WHICH IS LIABLE TO TAX ONE HAS TO UNDERSTAND THE PURPOSE FOR WHICH SAID SUBSID Y WAS GIVEN BY THE STATE GOVERNMENT. IF YOU GO THROUGH THE INDUST RIAL POLICY 1993 ANNOUNCED BY THE STATE GOVERNMENT AND CONSEQUENT NO TIFICATION ISSUED THERE UNDER IT IS ABUNDANTLY CLEAR THAT THE INCENTIVE SCHEME WAS GRANTED WITHIN AN OBJECTIVE TO ATTRACT NEW INDU STRIAL INVESTMENTS IN THE STATE OF KARNATAKA AND TO ACCELERATE INDUSTR IAL DEVELOPMENT IN BACKWARD AREAS OF KARNATAKA. IN OTHER WORDS THE SU BSIDY WAS GRANTED TO THE ASSESEE FOR SETTING UP OF A UNIT AND TO INCENTIVES WAS GIVEN TO PROMOTE INDUSTRY IN A BACKWARD AREA OF KAR NATAKA AND THEREBY GENERATING EMPLOYMENT IN THE STATE. THUS T HE PURPOSE OF THE CONCESSION/INCENTIVES WAS CLEARLY NOT TO PROVID E GENERAL ASSISTANCE TO CARRY ON ITS BUSINESS AS ALLEGED BY T HE LD.AO. FURTHER THERE IS A DISTINCTION BETWEEN THE SUBSIDY GIVEN WI TH THE OBJECTIVE OF ENCOURAGING THE INDUSTRIAL GROWTH AND SETTING UP IN DUSTRIES IN BACK WARD AREAS AND SUBSIDY GIVEN WITH THE OBJECT OF ASS ISTING INDUSTRIES FOR A PERIOD AFTER THEY ARE SET UP. ACCORDINGLY IF THE PURPOSE OF THE SUBSIDY IS TO HELP ITS BUSINESS/EXPANDED ITS BUSINE SS THE SUBSIDY MUST BE TREATED AS TO HAVE BEEN GIVEN FOR CAPITAL P URPOSES WHEREAS IF IT IS GIVEN BY WAY OF ASSISTANCE TO THE ASSESSEE IN CARRYING OF ITS TRADE/BUSINESS IT HAS TO BE TREATED AS A TRADING R ECEIPTS. THIS CONTROVERSY HAS BEEN EXAMINED BY THE HONBLE SUPREM E COURT AND ALSO VARIOUS HIGH COURTS IN LIGHT OF INDUSTRIAL PO LICY OF VARIOUS STATE GOVERNMENTS AND CAME TO THE CONCLUSION THAT THE MEC HANISM THE SOURCE POINT IN TIME AND THE FORM IN WHICH SUBSIDY HAS BEEN GRANTED ARE IRRELEVANT AND WHAT IS RELEVANT IS ONLY THE PUR POSE FOR WHICH THE SUBSIDY IS GRANTED TO DECIDE WHETHER THE SUBSIDY I S REVENUE OR JSW STEEL LIMITED 26 CAPITAL IN NATURE. THE HONBLE SUPREME COURT IN THE CASE OF CHAPHALKAR BROTHERS (SUPRA) HAD CONSIDERED AN IDENT ICAL ISSUE IN THE LIGHT OF SETTING UP A NEW MULTIPLEX THEATRE COM PLEX AND HELD THAT IF THE OBJECT OF THE SCHEME WAS TO PROMOTE CINEMA HOUSES BY CONSTRUCTING MULTIPLEX THEATRES THEN IRRESPECTIVE OF THE FACT THAT THE MULTIPLEXES HAVE BEEN CONSTRUCTED OUT OF THE OWN FU NDS OR BORROWED FUNDS THE RECEIPT OF SUBSIDY WOULD BE ON CAPITAL A CCOUNT. FURTHER THE HONBLE SUPREME COURT WHILE DELIVERING THE JUD GMENT HAS CONSIDERED ITS EARLIER DECISION IN THE CASE OF SAH NEY STEEL & PRESS WORKS LTD. VS CIT(SUPRA) AND HELD THAT EVEN IN SAHN EY STEEL AND PRESS WORKS LTD(SUPRA) THE COURT HAS CONSIDERED T HE PURPOSE FOR WHICH THE SAID SUBSIDY WAS GIVEN AND CAME TO THE C ONCLUSION THAT IN THE FACTS OF THOSE CASE THE SUBSIDY WAS GIVEN FOR RUNNING OF BUSINESS AFTER COMMENCEMENT OF PRODUCTION AND HENC E OPINED THAT SUBSIDY/INCENTIVE RECEIVED IS IN THE NATURE OF REVE NUE RECEIPT. 30. A SIMILAR ISSUE HAS BEEN CONSIDERED BY THE HON BLE GUJARAT HIGH COURT IN THE CASE OF BIRLA VXL LTD. IN ITA NO .S 316 TO 318 OF 2013 WHERE IT WAS HELD THAT THE PURPOSE OF THE SUB SIDY IS RELEVANT TO DECIDE THE NATURE WHETHER IT IS ON CAPITAL ACCOUNT OR REVENUE ACCOUNT. THE COURT FURTHER HELD THAT THOUGH THE BE NEFIT WAS COMPUTED IN TERMS OF SALES TAX LIABILITY IN THE HAN DS OF THE RECIPIENT THE SAME WAS NOT MEANT TO BE GIVEN ANY BENEFIT AND DAY TO DAY FUNCTIONING OF THE BUSINESS OR FOR MAKING THE INDUS TRY MORE PROFITABLE. THE PRINCIPLE AIM OF THE SCHEME WAS TO COVER THE CAPITAL OUTLAY ALREADY MADE BY THE ASSESSE IN UNDERTAKING S PECIAL MODERNIZATION OF ITS EXISTING INDUSTRY. A SIMILAR V IEW HAS BEEN EXPRESSED BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF MUNJAL AUTO INDUSTRIES (SUPRA). THE HONBLE JAMMU & KASHMI R HIGH COURT JSW STEEL LIMITED 27 IN THE CASE OF SHRI BALAJI ALLOYS ITA NO. 02/2010 HAD CONSIDERED AN IDENTICAL ISSUE AND HELD THAT THE PURPOSE FOR WHICH SUBSIDY WAS GIVEN IS VERY RELEVANT TO DECIDE THE NATURE OF RECI PIENT BUT NOT THE MANNER IN WHICH SUCH SUBSIDY WAS QUANTIFIED. THE H ONBLE GUJARATH HIGH COURT IN THE CASE OF SHIVSHAKTI FLOUR MILLS (P .) IN ITA NO 06/2014 HAD CONSIDERED AN IDENTICAL ISSUE AND HELD THAT THE PURPOSE OF THE TRANSFER SUBSIDY WAS TO ENCOURAGING INVESTMENT AND THEREBY STIMULATE INDUSTRIAL ACTIVITY IN DIFFICULT AND FAR FLUNG STATES IN THE NORTH EASTERN REGION FOR CREATING EMPLOYMENT OP PORTUNITIES. THEREFORE IT IS IN THE NATURE OF CAPITAL RECEIPT. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF WELSPUN STEEL LTD. VS CI T (103 TAXANN.COM 436) HELD THAT THE SCHEME WAS ENVISAGED TO ENCOURAGE INVESTMENT WHICH WOULD IN TURN PROVIDE FRESH EMPLO YMENT OPPORTUNITY IN THE DISTRICT WHICH HAS SUFFERED DUE TO DEVASTATING EARTHQUAKE. THE COMPUTATION OF SUBSIDY MAY BE ON TH E BASIS OF SALES TAX OR EXCISE DUTY. BUT NEVERTHELESS THE P URPOSE TEST WOULD ENSURE THAT THE SUBSIDY WAS CAPITAL IN NATURE. THE HONBLE KOLKATA HIGH COURT IN THE CASE OF SHYAM STEEL INDUSTRIES LT D. (303 CTR 628) HAD EXPRESSED SIMILAR VIEW AND HELD THAT PURPOSE TE ST IS MOST RELEVANT TO DECIDE THE NATURE OF SUBSIDY. THE SUM A ND SUBSTANCE OF THE RATIO LAID DOWN BY HONBLE SUPREME COURT AND VA RIOUS HIGH COURTS ARE THAT IF THE ASSISTANCE/SUBSIDY WAS GIVEN TO ENABLE TO SET UP A NEW UNIT OR TO EXPAND THE EXISTING UNIT IN THE BACKWARD AREA THE RECEIPT OF THE SUBSIDY WAS ON CAPITAL ACCOUNT. 31. IN THIS CASE ON PERUSAL OF FACTS IT IS ABUNDA NTLY CLEAR THAT THE ASSESSE HAS SETUP A NEW INDUSTRY UNDER THE INDUSTRI AL POLICY 1993 OF GOVERNMENT OF KARNATAKA AND PACKAGE OF INCENTIVE S AND CONCESSIONS GIVEN BY THE STATE OF KARNATAKA WAS TO ACCELERATE JSW STEEL LIMITED 28 INDUSTRIAL DEVELOPMENT IN THE STATE OF KARNATAKA. T HE SAID SUBSIDY ALTHOUGH WAS QUALIFY IN TERMS OF SALES TAX EXEMPTIO N ON PURCHASE OF RAW MATERIALS AND PLANT AND MACHINERY AND ALSO ON SALE OF FINISHED GOODS AFTER COMMENCEMENT OF PRODUCTION BUT THE PUR POSE OF THE SUBSIDY WAS TO REIMBURSE THE COST OF EXPENDITURE IN CURRED FOR SETTING UP THE NEW INDUSTRY. THEREFORE WE ARE OF THE CON SIDERED VIEW THAT WHEN THE SUBSIDY WAS GIVEN WITH AN OBJECT TO EFFEC T NEW INDUSTRIES IN THE BACKWARD AREA OF THE STATE IN TERMS OF SALES TAX EXEMPTION THEN THE SAID SUBSIDY SHALL BE TREATED AS CAPITOL RECEIPT. THE LD. CIT(A) AFTER CONSIDERING RELEVANT FACTS HAS RIGHTLY HELD THAT SUBSIDY RECEIVED BY THE ASSESSEE FROM STATE GOVERNMENT OF K ARNATAKA IS FOR THE PURPOSE OF SETTING UP OF A NEW INDUSTRY AND I N THE NATURE OF CAPITAL RECEIPT NOT CHARITABLE TAX. WE DO NOT FIND ANY ERROR IN THE FINDINGS OF THE LD.CIT(A) AND HENCE WE ARE INCLINE D TO UPHOLD THE FINDINGS OF THE LD.CIT(A) AND REJECT GROUND TAKEN B Y THE REVENUE. 32. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM GROUND NO. 11 TO 13 OF REVENUE APPEAL IS LEVY OF INTEREST U/S 234B OF THE ACT OF RS.9 84 94 367/- ON TOTAL INCOME COMPUTED U/S 11 5JB OF THE I.T.ACT 1961 ON ACCOUNT OF RETROSPECTIVE AMENDMENT TO SECTION 115JB OF THE ACT. THE FACTS BORNE OUT FROM THE RECO RDS SHOW THAT IN THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31/ 03/2006 THE ASSESEE HAD DEBITED PROVISION FOR DEFERRED TAX OF R S.433.61 CRORES/-. IN THE RETURN OF INCOME FILED FOR AY 2006-07 THE A FORESAID PROVISION WAS NOT ADDED BACK WHILE COMPUTING BOOK PROFIT U/S 115JB OF THE ACT. HOWEVER SUBSEQUENTLY FINANCE ACT 2008 MADE A RETROSPECTIVE AMENDMENT TO SECTION 115JB OF THE ACT BY INSERTING CLAUSE (H) IN EXPLANATION 1 TO SECTION 115JB OF THE ACT ACCORDIN G TO WHICH BOOK PROFITS ARE REQUIRED TO BE INCREASED BY AN AMOUNT O F DEFERRED TAX JSW STEEL LIMITED 29 AND PROVISION THEREOF AND THE SAID AMENDMENT WAS MA DE WITH RETROSPECTIVE EFFECT FROM AY 2001-02. ACCORDINGLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHILE COMPUTING BOOK PRO FITS UNDER SECTION 115JB OF THE ACT THE LD. AO ADDED THE PROV ISION FOR DEFERRED TAX LIABILITY AND CONSEQUENTLY INTEREST U /S 234B OF THE ACT ON ACCOUNT OF THE RETROSPECTIVE AMENDMENT TO SECTIO N 115JB OF THE ACT 1961. ON APPEAL THE LD.CIT(A) ALLOWED RELIEF TO THE ASSESSEE AND DELETED INTEREST LEVIED U/S 234B OF THE ACT ON THE GROUND THAT NO LIABILITY CAN BE FASTNED ON THE ASSESEE ON THE B ASIS OF RETROSPECTIVE AMENDMENT TO THE ACT. 33. THE LD. DR SUBMITTED THAT THE LD.CIT(A) HAS ERR ED IN HOLDING THAT INTEREST U/S 234B OF THE I.T.ACT 1961 ATTRIB UTABLE TO THE PROVISION OF RS. 433.61 CRORES FOR DEFERRED TAX LI ABILITY WHICH WAS INTER ALIA ADDED TO THE NET PROFIT WHILE COMPUTING BOOK PROF IT 115JB OF THE I.T.ACT 1961 ON ACCOUNT OF RETROSPECTIVE AMENDMENT TO THE PROVISION OF SECTION 115JB OF THE ACT BY INSERTING CLAUSE(H) IN EXPLANATION 1 TO SECTION 115JB OF THE ACT 1961 WITH RETROSPECTIVE EFFECT FROM 01/04/2001. THE LD. DR FURTHER SUBMIT TED THAT THE FINDINGS OF THE LD.CIT (A) ARE NOT IN ACCORDANCE WI TH THE RATIO OF THE DECISION THE HONBLE SUPREME COURT IN THE CASE OF C IT VS CENTRAL PROVINCES MANGANESE ORE CO. LTD. 160 ITR 961 AND CIT VS ANJUM GHASWALA AND OTHERS (252 ITR 1). 34. THE LD. AR FOR THE ASSESEE ON THE OTHER HAND SUBMITTED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASS ESSEE BY THE DECISION OF ITAT BANGALORE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2005-06 IN ITA. NO. 924/BANG/2009 WHEREIN IT WAS H ELD THAT NO JSW STEEL LIMITED 30 INTEREST CAN BE LEVIED U/S 234B OF THE ACT WHERE T HE LIABILITY ARISES ON ACCOUNT OF RETROSPECTIVE AMENDMENT IN THE ACT. 35. WE HAVE HEARD BOTH THE PARTIES PERUSED THE MAT ERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW. WE FIND THAT WHETHER INTEREST US/ 234B CAN BE CHARGED ON T HE BASIS OF RETROSPECTIVE AMENDMENT TO SECTION 115JB OF THE ACT 1961 ON RECOMPUTED BOOK PROFIT IS NO LONGER IS RES INTEGRA. THE COORDINATE BENCH OF ITAT BANGALORE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2005-06 IN ITAT NO. 924/BANG/2009 HAD CONSIDERED AN IDENTICAL ISSUE AND HELD THAT NO INTEREST CAN BE LEVIED U/S 2 34 B OF THE ACT WHERE LIABILITY ARISES ON ACCOUNT OF RETROSPECTIVE AMENDMENT IN THE ACT. THE RELEVANT FINDINGS O THE TRIBUNAL ARE AS UN DER:- 16. WE CONSIDERED THE ISSUE IN DETAIL. IT IS A FACT THAT CLAUSE(H) IN EXPLANATION 1 TO SEC. 115JB OF THE ACT WAS INSERTED BY FINANCE ACT 2008. THIS NEW SUB CLAUSE MADE IT MANDATORY TO ADD BACK T HE AMOUNT OF DEFERRED TAX FOR THE PURPOSE OF COMPUTING BOOK PROF ITS U/S 115JB. IT IS ALSO MADE CLEAR THAT AMENDMENT IS RETROSPECTIVE WI TH EFFECT FROM THE ASSESSMENT YEAR 2001-02. IF ACADEMICALLY SPEAKING THE SAID AMENDMENT WHICH IS RETROSPECTIVE W.E.F ASSESSMENT YEAR 2001-0 2 IS APPLICABLE TO THE IMPUGNED ASSESSMENT YEAR 2005-06 AS WELL. 17. BUT AS RIGHTLY CONTENDED BY THE APPELLANT BY T HE TIE THE AMENDMENT WAS BROUGHT IN THE YEAR 2008 THE RELEVAN T PREVIOUS YEAR 2004-05 WAS ALREADY OVER AND THE APPELLANT HAD NOT OCCASION TO ADD BACK THE DEFERRED TAX PROVISION TO COMPUTE THE BOOK PROFITS U/S 115JB. BY THE TIME THE RETROSPECTIVE AMENDMENT WAS MADE THE FINANCIAL YEARS 2004-05 TO 2007-08 RELEVANT TO THE AY 2005-06 TO 20 08-09 HAVE ALREADY BEEN OVER AND THE APPELLANT COULD NOT HAVE PAID ANY ADVANCE TAX RETROSPECTIVELY IN RESPECT OF THESE YEARS. THE APPE LLANT CANNOT CALL BACK THE BYGONE TIME. EVEN THOUGH A RETROSPECTIVE AMENDM ENT IS POSSIBLE A RETROSPECTIVE PHYSICAL OF ADVANCE TAX IS IMPOSSIBLE . THEREFORE WE CANNOT OVER LOOK THE ACCLAIMED PRINCIPLE. LEX NON COGIT AD IMPOSSIBILLA. THE LAW DOS NOT COMMAND TO DO WHICH IS IMPOSSIBLE T O DO. THE LEGAL VIEW PREVAILED AT THE TIME OF PREVIOUS YEAR 2004-0 WAS T HAT DEFERRED TAX LIABILITY IS NOT TO BE ADDED BACK WHILE COMPUTING T HE BOOK PROFITS U/S 115JB. . 20. THIS POSITION WAS CONSIDERED BY THE HONBLE MAD RAS HIGH COURT IN THE CASE OF CIT VS REVATHY EQUIPMENT LTD. 298 ITR 67. I N THAT CASE THE JSW STEEL LIMITED 31 APPELLANT COMPANY O THE ASSESSMENT YEAR 2001-02 BE ING UNDER THE IMPRESSION THAT THE PAYMENT UNDER THE VOLUNTARY RET IREMENT SCHEME WERE ALLOWABLE DEDUCTION HAD FAILED TO PAY THE ADVANCE T AX. THE ASSESSING OFFICER LEVIED INTEREST U/S 234B AND 234C OF THE IN COME TAX ACT 1961 AND COMPLETED THE ASSESSMENT. ON APPEAL THE LD.CIT( A) CONFIRMED THE LEVY OF INTEREST. ON APPEAL BY THE REVENUE THE HON BLE HIGH COURT HELD THAT THE APPELLANT HAD PAID ADVANCE TAX AFTER DEDUC TING THE PAYMENTS MADE UNDER THE VOLUNTARY RETIREMENT SCHEME. IN VIEW OF THE DECISIONS OF THE JURISDICTIONAL HIGH COURT THE APPELLANT WAS AL LOWED TO DEDUCT EXPENDITURE INCURRED TOWARDS VOLUNTARY RETIREMENT S CHEME. SINCE SEC. 35DDA WAS INTRODUCED BY THE FINANCE AC 2001 W.E.F. APRIL 2001 AND RECEIVED ASSESSMENT ON 11.05.2001 THE APPELLANT COU LDNT HAVE ENVISAGED THAT IT WOULD BECOME LIABLE FOR PAYMENTS OF TAX REVENUE AGAINST VOLUNTARY RETIREMENT PAYMENTS WHICH WERE H IGHER TO DEDUCTIBLE. THE APPELLANT COULD NOT HAVE VISUALIZED THAT A NEW LIABILITY WOULD BE FATTENED ON THE APPELLANT BY A SUBSEQUENT AMENDMEN T. THE COURT HELD THAT IN SUCH CIRCUMSTANCES NO LIABILITY EXISTED F OR PAYMENT OF ADVANCE TAX MUCH LESS THE LIABILITY TO PAY INTEREST. 21. WE FIND THAT THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF JINDAL THERMAL POWER COMPANY LTD. VS. DCIT 286 ITR 182 RENDERED IN A WRIT PETITION ON A FUNDAMENTALLY DIFFERENT LEG AL ISSUE IS NOT APPLICABLE TO THE PRESENT CASE. THE JUDGMENT OF THE HONBLE MA DRAS HIGH COURT IN THE CASE OF REVATHY EQUIPMENT LTD. VS. DCIT 298 ITR 67 IS DIRECTLY APPLICABLE. 22. IN A RECENT ORDER ITAT DELHI A BENCH HAS CONS IDERED A SIMILAR SITUATION. THE TRIBUNAL HELD IN THE CASE OF ROYALJO RDANIAN AIRLINES VS. DDI (INTL. TAXATION) 3 ITR (TRIB.) 181 (DEL) THAT W HERE ONE APPELLANT IS UNDER BONAFIDE RELIEF THAT INCOME IS NOT CHARGEABLE TO TAX INTEREST CANNOT BE LEVIED U/S 234B.THSI PROPOSITION TREMENDOUSLY SU PPORTS THE CASE IN HAND. NOT ONLY BONAFIDE BELIEF BUT EVEN THE STATUT ORY MANDATE TO ADD BACK THE DEFERRED TAX PROVISION TO THE BOOK PROFITS U/S 115JB WAS UNKNOWN DURING THE PERIOD OF THE RELEVANT PREVIOUS YEARS. 23. THEREFORE WE HOLD THAT THE LEVY OF INTEREST U /S 234B ON THE INCREMENTAL AMOUNT OF TAX COMPUTED U/S 115JB IS NOT JUSTIFIED IN THE PRESENT CASE. ACCORDINGLY THE LEVY OF SAID INTERES T IS DELETED. (EMPHASIS SUPPLIED) 36. IN THE CURRENT YEAR AS WELL THE LIABILITY FOR INTEREST UNDER SECTION 234B OF THE ACT HAS ARISEN ONLY ON ACCOUNT OF A RETROSPECTIVE AMENDMENT TO THE PROVISION OF SECTION 115JB OF THE ACT 1961 WITH EFFECT FROM AY 2001-02. ACCORDINGLY THE ASSESEE WO ULD NOT HAVE ANTICIPATED THE RETROSPECTIVE AMENDMENT AT THE TIME OF MAKING THE PAYMENTS FOR ADVANCE TAX BUT TO ESTIMATE THE LIABI LITY TO PAY JSW STEEL LIMITED 32 ADVANCE TAX ON THE BASIS OF EXISTING PROVISIONS. TH EREFORE WE ARE OF THE CONSIDER VIEW THAT THERE IS NO ERROR IN THE FIN DINGS RECORDED BY THE LD.CIT(A) WHILE DELETING THE INTEREST LIABILIT Y U/S 234B OF THE ACT. HENCE WE ARE INCLINED TO UPHOLD THE FINDINGS OF LD .CIT(A) AND REJECTE GROUND TAKEN BY THE REVENUE. 37. IN THE RESULT APPEAL FILED BY THE REVENUE IS DI SMISSED. CO.NO. 59/MUM/2012:- 38. THE ASSESSE HAS RAISED THE FOLLOWING GROUNDS OF CROSS OBJECTION. GROUND I: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CLT (A)'] ERR ED IN NOT GIVING DIRECTION TO REDUCE SALES TAX SUBSIDY BY TREATING I T AS CAPITAL RECEIPT FROM THE BOOK PROFITS COMPUTED U/S 115JB OF THE INCOME T AX ACT 1961 (THE ACT 1 ). IT IS PRAYED THAT THE LEARNED CIT(A) BE DIRECTED TO REDUCE SALES TAX SUBSIDY FROM THE BOOK PROFITS COMPUTED U/S 115JBOF THE ACT. THE CROSS-OBJECTOR CRAVES LEAVE TO ADD TO ALTER AN D/OR AMEND ALL OR ANY OF THE FOREGOING GROUND OF MEMORANDUM OF CROSS OBJECTI ONS. 39. AT THE TIME OF HEARING THE LD. AR FOR THE ASSE SEE SUBMITTED THAT THERE IS A DELAY OF 371 DAYS IN FILING CROSS OBJECTION FILED BY THE ASSESEE FOR WHICH NECESSARY PETITION FOR CONDONATI ON OF CROSS OBJECTION ALONG WITH AFFIDAVIT HAS BEEN FILED EXPLA INING THE REASONS FOR DELAY IN FILING CROSS OBJECTION. THE LD. AR FU RTHER SUBMITTED THAT DURING THE AY THE LD. AO MADE VARIOUS ADDITIONS B UT THE ASSESEE WAS ASSESSED TO TAX UNDER THE MAT PROVISION OF THE ACT. AGAINST AFORESAID ADDITIONS THE ASSESEE HAS PREFERRED APPE AL BEFORE THE JSW STEEL LIMITED 33 LD.CIT(A) AND THE LD.CIT(A) HAS DECIDED ALL THE ISS UES IN FAVOUR OF THE ASSESEE INCLUDING THE ISSUE OF SALES TAX SUB SIDY HELD TO BE CAPITA IN NATURE HOWEVER HE DO NOT GIVE A CORRESP ONDING REDUCTION OF MAT PROFITS TO THE EXTENT OF SALES TAX SUBSIDY IT BEING HELD TO BE CAPITAL IN NATURE. ACCORDINGLY THE ASSESSEE HAS F ILED CROSS OBJECTION AGAINST THE FINDINGS OF THE LD.CIT(A) IN NOT REDUCI NG THE SALES TAX SUBSIDY FROM BOOK PROFITS COMPUTED U/S 115JB. HE F URTHER SUBMITTED THAT A COPY OF THE APPEAL FILED BY THE DEPARTMENT W AS SERVED ON THE ASSESSEE 21/03/2011. HOWEVER THE ASSESEE DID NOT F ILE CROSS OBJECTION UNDER THE MISCONCEPTION OF FACT THAT THE LD.CIT(A)HAS DECIDED ALL THE ISSUES IN FAVOUR OF THE ASSESSEE. B UT ON THE FIRST DATE OF HEARING WHEN THE MATTER CAME UP FOR DISCUSSION WITH THE ASSESEES CONSULTANTS IT WAS REALIZED THAT THE LD. CIT(A) WHILE ADJUDICATING ON THE GROUND FOR SALES TAX INCENTIVE WHETHER TO BE CONSIDERED AS REVENUE OR CAPITAL RECEIPT DID NOT GI VE CONSEQUENTIAL DIRECTION TO REDUCE SALES TAX INCENTIVES FROM THE B OOK PROFITS U/S 115JB OF THE ACT. ACCORDINGLY THE ASSESSE HAS FIL ED CROSS OBJECTION CHALLENGING THE FINDINGS OF THE LD.CIT(A) ON 25/0 4/2012 AFTER A DELAY OF 371 DAYS. THE SAID DELAY IS UNINTENTIONALL Y AND ON BONAFIDE MISTAKEN OF FACTS AND THEREFORE THE SAME MAY BE CO NDONED AND DECIDE THE ISSUE ON MERITS. IN THIS REGARD HE RELI ED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF C OLLECTOR LAND ACQUISITION ANANTNAG AND ANR. VS. KATIJI AND ORS ( 167 ITR 471). 40. THE LD. DR ON THE OTHER HAND STRONGLY OPPOSING CONDONATION PETITION FILED BY THE ASSESEE SUBMITTED THAT THE RE ASONS GIVEN FOR NOT FILING APPEAL IN TIME DOES NOT COME UNDER THE PURVI EW OF REASONABLE CAUSE AND HENCE THE CONDONATION APPLICATION FILED BY THE ASSESEE SHOULD BE REJECTED. JSW STEEL LIMITED 34 41. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD ALONG WITH CASE LAWS CITED BY T HE LD. AR FOR THE ASSESEE. WE FIND THAT THERE IS A DELAY OF 371 DAYS IN FILING CROSS OBJECTION FILED BY THE ASSESEE FOR WHICH NECESSARY PETITION ALONG WITH AFFIDAVIT HAS BEEN FILED FOR CONDONATION OF DE LAY. ACCORDING TO THE ASSESEE THE DELAY IN FILING CROSS OBJECTION IS UNDER BONAFIED MISTAKEN OF FACTS. IN THE LIGHT OF ABOVE AVERTMENT IF YOU CONSIDER THE LEGAL POSITION WE FIND THAT THE STATUTE PROVIDES F OR A RIGHT OF APPEAL TO THE AGGRIEVED PERSONS AGAINST ANY ORDER PASSED B Y AN AUTHORITY BUT SUCH RIGHT IS NOT ABSOLUTE AND IT COMES WITH A LIMITATION. AS PER THE PRESENT PROVISION OF ACT THE ASSESEE OUGHT TO HAVE FILED APPEAL OR CROSS OBJECTION AGAINST ORDER OF THE LD.CIT(A) O N OR BEFORE 60 DAYS FROM THE DATE OF RECEIPT OF IMPUGNED ORDER. B UT AS PER THE PROVISION OF SECTION 253 OF THE INCOME TAX ACT 196 1 TRIBUNAL HAS INHERENT POWERS TO CONDONE THE DELAY IF THE ASSESS EE MAKES OUT A CASE FOR CONDONATION OF DELAY WITH PLAUSIBLE REASON S. THE HONBLE SUPREME COURT HAD ALSO EXPLAINED THE POSITION OF LA W IN THE CASE OF COLLECTOR OF LAND ACQUISITION ANANTNAG AND ANR. VS. KATIJI AND ORS(SUPRA) AND HELD THAT WHEN TECHNICAL CONSIDERA TION AND SUBSTANTIAL JUSTICE ARE PITTED AGAINST EACH OTHER THE COURTS ARE EXPECTED TO FURTHER THE CAUSE OF SUBSTANTIAL JUSTIC E. THE RELEVANT FINDINGS OF THE HONBLE SUPREME COURT ARE AS UNDER: - '3. THE LEGISLATURE HAS CONFERRED THE POWER TO COND ONE DELAY BY ENACTING SECTION 5 OF THE LIMITATION ACT OF 1963 IN ORDER TO ENABLE THE COURT TO DO SUBSTANTIAL JUSTICE TO PARTIES BY DISPO SING OF MATTERS ON 'MERITS'. THE EXPRESSION 'SUFFICIENT CAUSE' EMPLOYE D BY THE LEGISLATURE IS ADEQUATELY ELASTIC TO ENABLE THE COURTS TO APPLY TH E (AM IN A MEANINGFUL MANNER WHICH SUB SERVES THE ENDS OF JUSTICE - THAT BEING THE LIFE-PURPOSE OF THE EXISTENCE OF THE INSTITUTION OF COURTS. IT I S COMMON KNOWLEDGE THAT THIS COURT HAS BEEN MAKING O JUSTIFIABLY LIBERAL AP PROACH IN MUTTERS INSTITUTED IN THIS COURT. BUT THE MESSAGE DOES NOT APPEAR TO HAVE PERCOLATED DOWN TO ALL THE OTHER COURTS IN THE HIER ARCHY JSW STEEL LIMITED 35 4. AND SUCH A LIBERAL APPROACH IS ADOPTED ON PRINCI PLE AS IT IS REALIZED THAT: 1.. ORDINARILY A LITIGANT DOES NOT STAND TO BENEFI T BY LODGING AN APPEAL FATE. 2. REFUSING TO CONDONE DELAY CAN RESULT IN A MERITO RIOUS MATTER BEING THROWN OUT AT THE VERY THRESHOLD AND CAUSE OF JUSTICE BEING DEFEATED AS AGAINST THIS WHEN DELAY IS CONDONED T HE HIGHEST THAT CAN HAPPEN IS THAT A CAUSE WOULD BE DECIDED ON MERI TS AFTER HEARING THE PARTIES. 3. 'EVERY DAY'S DELAY MUST BE EXPLAINED' DOES NOT M EAN THAT A PEDANTIC APPROACH SHOULD BE MADE. WHY NOT EVERY HOU R'S DELAY EVERY SECOND' DELAY? THE DOCTRINE MUST BE APPLIED IN A RATIONAL COMMON SENSE AND PRAGMATIC MANNER. 4. WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERA TIONS AM PITTED AGAINST EACH OTHER THE CAUSE OF SUBSTANTIAL JUSTIC E DESERVES TO BE PREFERRED FOR THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF A NON-DELIBERATE DE LAY. 5. THERE IS NO PRESUMPTION THAT DELAY IS OCCASIONED DELIBERATELY OR ON ACCOUNT OF CULPABLE NEGLIGENCE OR ON ACCOUNT OF MA LA FIDES. A LITIGANT DOES NOT STAND TO BENEFIT BY RESORTING TO DELAY. IN FACT HE RUNS A SERIOUS RISK. 6. IT MUST BE GRASPED THAT THE JUDICIARY IS RESPECT ED NOT ON ACCOUNT OF ITS POWER TO LEGALIZE INJUSTICE ON TECHNICAL GROUNDS BU T BECAUSE IT IS CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO.' 42. IN THIS CASE THE ASSESEE HAS GIVEN REASONS FOR NOT FILING APPEAL OR CROSS OBJECTION WITHIN TIME ALLOWED UNDER THE ACT AS PER WHICH IT WAS UNDER THE BONAFIDE BELIEF THAT THE LD .CIT(A) HAD ALLOWED RELIEF IN RESPECT OF ADDITIONS MADE BY THE AO AND HENCE NO NEED TO FILE ANY APPEAL OR CROSS OBJECTION. BUT WH EN THE MATTER CAME UP FOR HEARING IN CASE OF REVENUE APPEAL IT W AS NOTICED THAT THE LD.CIT(A) DID NOT GIVE CONSEQUENTIAL RELIEF IN RESPECT OF BOOK PROFIT COMPUTED U/S 115JB OF THE I.T.ACT 1961 AND THEREFORE THE ASSESSEE HAS DECIDED TO FILE CROSS OBJECTION AGAINS T ORDER OF THE LD.CIT(A). WE FIND THAT THE REASONS GIVEN BY THE AS SESSEE FOR NOT FILING CROSS OBJECTION WITHIN THE TIME ALLOWED UNDE R THE ACT IS UNDER A BONAFIDE BELIEF AND MISTAKEN OF FACTS AND COMES W ITHIN AMBIT OF REASONABLE CAUSE AS PROVIDED UNDER THE ACT. THEREFO RE CONSIDERING THE FACTS AND CIRCUMSTANCES OF THIS CASE AND ALSO BY FOLLOWING THE JSW STEEL LIMITED 36 DECISION OF HONBLE SUPREME COURT IN THE CASE OF C OLLECTOR LAND ACQUISITION VS M.S. KATIJI (SUPRA) WE CONDONED TH E DELAY IN FILING CROSS OBJECTION FILED BY THE ASSESSEE AND PROCEED TO DISPOSE OF THE ISSUE ON MERITS. 43. THE BRIEF FACTS OF THE ISSUE IN QUESTION IN CRO SS OBJECTION FILED BY THE ASSESSEE ARE THAT THE ASSESSE HAD RECEIVED A SALES TAX SUBSIDY OF RS. 36 15 49 828/- FROM THE GOVERNMENT O F KARNATAKA FOR SETTING UP A NEW INDUSTRIAL UNIT IN THE BACKWARD AR EA OF THE STATE. THE REFUND OF SALES TAX SUBSIDY WAS ROUTED THROUGH THE PROFIT AND LOSS ACCOUNT AND HENCE THE SAME WAS CONSIDERED AS PART OF THE BOOK PROFITS U/S 115JB OF THE I.T.ACT 1961. SUBSEQ UENTLY THE ASSESEE REALIZED THAT SALES TAX SUBSIDY BEING CAPIT AL RECEIPT AS HELD BY THE LD.CIT(A) THE SAME IS NOT TAXABLE UNDER T HE MAT PROVISIONS AND ACCORDINGLY THE ISSUE WAS RAISED BEFORE THE TR IBUNAL. 44. THE LD. AR FOR THE ASSESEE AT THE OUTSET SUBM ITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESEE BY THE DECISION OF ITAT MUMBAI IN ASSESSEES OWN CASE FOR AY 2004-05 I N ITA NO. 923/BANG/2009 WHERE IT HAS BEEN HELD THAT WHEN A R ECEIPT IS HELD TO BE CAPITAL IN NATURE AND NOT CHARGEABLE TO TAX UNDE R THE NORMAL PROVISIONS OF THE ACT THE SAME CANNOT BE TAXED U/S . 115JB OF THE ACT AS WELL. IN THIS REGARD HE RELIED UPON THE FOL LOWING CASE LAWS. SHIVALIK VENTURE (P) LTD. VS. DCIT [2015) 173 TTJ (MUM) 238 ACTT VS. SHREE CEMENT LTD. (ITA NOS.614 615 & 63 5/JP/2010) FOLLOWING SHREE CEMENT LTD VS. ACIT (2015) 152 IT D 561 (JAIPUR) ACIT VS L. H SUGAR FACTORY LTD. (ITANOS. 417 41 8 418 & 339/ LKW/ 2013) (LUCKNOW ITAT) CIT VS BINANI INDUSTRIES LID.(ITANO.144/KOL/2013 ) (KOL ITAT) DCIT VS. M/S. GARWARE POLYESTER LTD. (ITA NO. 599 6/MUM/ 2013] (MUM ITAT) CIT VS. VEEKAYLAL INVESTMENT CO. (P) LTD. (2001) 249 ITR 597 (BOM) JSW STEEL LIMITED 37 KOPRAN PHARMACEUTITALSLTD-VS.DCIT(2009) 121 TTJ77 (MUM) HINDUSTAN SHIPYARD UD. VS. DCIT (2010) 130 TTJ 21 3 (VIZAG) DUKE OFFSHORE LTD. VS DCIT (2011) 45 SOT 399 (MU M) * B& B INFOTECH LTD. VS. ITO (ITA NO. 726/BANG/20 14) 45. THE LD. DR ON THE OTHER HAND STRONGLY SUPPORT ING ORDER OF THE LD.CIT(A) SUBMITTED THAT THE BOOK PROFIT AS REFERRE D U/S 115JB SHALL BE COMPUTED IRRESPECTIVE OF THE FACT THAT WHETHER P ARTICULAR RECEIPT IS TAXABLE UNDER THE INCOME TAX ACT OR NOT. HE FURTHE R SUBMITTED THAT AS PER THE RATIO LAID DOWN BY THE HONBLE SUPREME C OURT IN THE CASE OF APOLLO TYRES LTD. VS CIT (SUPRA) ONCE BOOKS OF ACCOUNTS OF THE ASSESEE ARE AUDITED AND APPROVED BY THE SHARE HOLDE RS IN THE ANNUAL GENERAL MEETING THEN THE LD. AO HAS LIMITED SCOPE TO ALTER THE BOOK PROFIT UNLESS OTHERWISE AS PROVIDED UNDER EXPLANATION (1) TO SECTION 115JB OF THE I.T.ACT 1961. THE ASSESEE CASE IS SQUARELY COVERED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF APOLLO TYRES VS CIT(SUPRA) AND HENCE THERE IS NO QU ESTION OF DEDUCTION OF SALES TAX SUBSIDY BEING CAPITAL RECEI PT FROM BOOK PROFIT COMPLETED U/S 115JB OF THE I.T.ACT 1961. 46. WE HAVE HEARD BOTH THE PARTIES PERUSED THE MAT ERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW ALONG WITH CASE LAWS CITED BY BOTH PARTIES. THE LIMITED I SSUE CAME UP FOR OUR CONSIDERATION FROM CROSS OBJECTION FILED BY THE ASSESEE IS WHETHER SALES TAX SUBSIDY BEING CAPITAL IN NATURE SHALL BE REDUCED FROM BOOK PROFIT COMPUTED U/S 115JB OF THE I.T.ACT 1961 OR NOT. WE FIND THAT THE COORDINATE BENCH OF ITAT MUMBAI TRIB UNAL IN ASSESEES OWN CASE FOR AY 2004-05 IN ITA.NO.923/BAN G/2009 HAD CONSIDERED AN IDENTICAL ISSUE AND HELD THAT WHERE A RECEIPT IS HELD TO JSW STEEL LIMITED 38 BE CAPITAL IN NATURE NOT CHARGEABLE TO TAX UNDER TH E NORMAL PROVISION OF THE ACT THE SAME CANNOT BE TAXED U/S 115JB OF T HE I.T.ACT 1961. 47. WE FURTHER NOTED THAT HONBLE KOLKATA HIGH COUR T IN THE CASE OF ANKIT METAL & POWER LTD. IN ITA NO. 155 OF 2018 HAD CONSIDERED AN IDENTICAL ISSUE AND AFTER CONSIDERING THE DECISI ON OF HONBLE SUPREME COURT IN THE CASE OF APOLLO TYRES LTD. VS. CIT (SUPRA) HELD THAT WHEN A RECEIPT IS NOT IN THE CHARACTER OF INCO ME AS DEFINED UNDER SECTION 2(24) OF THE I.T.ACT 1961 THEN IT C ANNOT FORM PART OF THE BOOK PROFIT U/S 115JB OF THE I.T.ACT 1961. THE HONBLE HIGH COURT FURTHER OBSERVED THAT SALES TAX SUBSIDY RECE IVED BY THE ASSESEE IS CAPITAL RECEIPT AND DOES NOT COME WITHIN DEFINITION OF INCOME UNDER SECTION 2(24) OF THE I.T.ACT 1961 AND WHEN A RECEIPT IS NOT A IN THE NATURE OF INCOME IT CANNOT FORM PART OF BOOK PROFIT U/S 115JB OF THE I.T.ACT 1961. THE COURT FURTHER OBSERVED THAT THE FACTS OF CASE BEFORE THE HONBLE SUPREME COURT IN T HE CASE OF APOLLO TYRES LIMITED (SUPRA) WERE ALTOGETHER DIFFERENCE W HERE THE INCOME IN QUESTION WAS TAXABLE BUT WAS EXEMPT UNDER A SPE CIFIC PROVISION OF THE ACT AND AS SUCH IT WAS TO BE INCLUDED AS A PART OF BOOK PROFIT BUT WHERE THE RECEIPT IS NOT IN THE NATURE OF INCOM E AT ALL IT CANNOT BE INCLUDED IN BOOK PROFIT FOR THE PURPOSE OF COMPU TATION U/S 115JB OF THE I.T.ACT 1961. 48. WE FURTHER NOTED THAT THE ITAT SPECIAL BENCH OF KOLKATA TRIBUNAL IN THE CASE OF SUTLEJ COTTON MILLS LTD. V S. ACIT (1993) (45 ITD 22) HELD THAT A PARTICULAR RECEIPT WHICH IS A DMITTEDLY NOT AN INCOME CANNOT BE BROUGHT TO TAX UNDER THE DEEMING P ROVISIONS OF SECTION 115J OF THE ACT AS IT DEFIES THE BASIC INT ENTION BEHIND INTRODUCTION OF PROVISIONS OF SECTION 115JB OF THE ACT. THE ITAT JSW STEEL LIMITED 39 JAIPUR BENCH IN CASE OF ACIT VS. SHREE CEMENT LTD HAD CONSIDERED AN IDENTICAL ISSUE AND HELD THAT INCENTI VES GRANTED TO THE ASSESEE IS CAPITAL RECEIPT AND HENCE CANNOT BE PAR T OF BOOK PROFIT COMPUTED U/S 115JB OF THE ACT. SIMILARLY THE ITAT KOLKATA BENCH IN THE CASE OF SIPCA INDIA PVT.LTD. VS DCIT 186 TTJ 28 9 HAD CONSIDERED AN IDENTICAL ISSUE AND HELD THAT WHEN S UBSIDY IN QUESTION IS NOT IN THE NATURE OF INCOME IT CANNOT BE REGARDED AS INCOME EVEN FOR THE PURPOSE OF BOOK PROFIT U/S 115J B OF THE ACT THOUGH CREDITED IN THE PROFIT AND LOSS ACCOUNT AND HAVE TO BE EXCLUDED FOR ARRIVING AT THE BOOK PROFIT U/S 115JB OF THE ACT. 49. INSOFAR AS CASE LAWS RELIED UPON BY THE DEPART MENT WE FIND THAT ALL THOSE CASE LAWS HAVE BEEN EITHER CONSIDERE D BY THE TRIBUNAL OR HIGH COURT AND CAME TO CONCLUSION THAT IN THOS E CASES THE CAPITAL RECEIPT IS IN THE NATURE OF INCOME BUT BY A SPECIFIC PROVISION THE SAME HAS BEEN EXEMPTED AND HENCE THE CAME TO THE CONCLUSION THAT ONCE PARTICULAR RECEIPT IS ROUTED THROUGH PROFIT AND LOSS ACCOUNT THEN IT SHOULD BE PART OF BOOK PROFIT AND CANNOT BE EXCLUDED WHILE ARRIVING AT BOOK PROFIT U/S 115JB O F THE ACT 1961. 50. IN THIS VIEW OF THE MATTER AND CONSIDERING THE RATIO OF CASE LAWS DISCUSSED HEREINABOVE WE ARE OF THE CONSIDERED VIE W THAT WHEN A PARTICULAR RECEIPT IS EXEMPT FROM TAX UNDER THE INC OME TAX LAW THEN THE SAME CANNOT BE CONSIDERED FOR THE PURPOSE OF CO MPUTATION OF BOOK PROFIT U/S 115JB OF THE I.T.ACT 1961. HENCE W E DIRECT THE LD. AO TO EXCLUDE SALES TAX SUBSIDY RECEIVED BY THE ASS ESEE AMOUNTING TO RS. 36 15 49 828/- FROM BOOK PROFITS COMPUTED U/ S 115JB OF THE I.T.ACT 1961. JSW STEEL LIMITED 40 51. IN THE RESULT CROSS OBJECTION FILED BY THE ASS ESEE IS ALLOWED. 52. AS A RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED AND CROSS OBJECTION FILED BY THE ASSESEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 /11 /2019 SD/- ( PAWAN SINGH) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 29/11/2019 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER (ASSTT. REGISTRAR) ITAT MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) MUMBAI. 4. CIT 5. DR ITAT MUMBAI 6. GUARD FILE. //TRUE COPY//