DCIT, Hyderabad v. M/s GVK Industries Ltd.,, Secunderabad

ITA 1580/HYD/2008 | 2006-2007
Pronouncement Date: 30-03-2012 | Result: Partly Allowed

Appeal Details

RSA Number 158022514 RSA 2008
Assessee PAN AAACG7499J
Bench Hyderabad
Appeal Number ITA 1580/HYD/2008
Duration Of Justice 3 year(s) 5 month(s) 10 day(s)
Appellant DCIT, Hyderabad
Respondent M/s GVK Industries Ltd.,, Secunderabad
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 30-03-2012
Date Of Final Hearing 19-05-2011
Next Hearing Date 19-05-2011
Assessment Year 2006-2007
Appeal Filed On 20-10-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B HYDERABAD BEFORE SHRI D.KARUNAKARA RAO ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY JUDICIAL MEMBER ITA NO. ASSESSMENT YEAR APPELLANT RESPONDENT 1659/HYD/2008 1660/HYD/2008 2002-03 2006-07 M/S. G.V.K. INDUSTRIES LTD. SECUNDERABAD. (PAN AAACG 7499 J) ASST. COMMISSIONER OF INCOME-TAX CIRCLE 2(2) HYDERABAD 1579/HYD/2008 1580/HYD/2008 2002-03 2006-07 DY. COMMISSIONER OF INCOME-TAX CIRCLE 2(2) HYDERABAD M/S. G.V.K. INDUSTRIES LTD. SECUNDERABAD. (PAN AAACG 7499 J) ASSESSEE BY : SHRI V.SIVAKUMAR AR RESPONDENT BY : SHRI C.R.PATI CIT - DR DATE OF HEARING 6 .0 3.2012 DATE OF PRONOUNCEMENT .03.2012 O R D E R PER D.KARUNAKARA RAO ACCOUNTANT MEMBER: THERE ARE FOUR APPEALS UNDER CONSIDERATION. THESE ARE CROSS- APPEALS FOR THE ASSESSMENT YEARS 2002-03 AND 2006- 07. THEY ARE DIRECTED AGAINST A COMMON ORDER OF THE CIT(A)-III HYD DATED 25.8.2008. SINCE COMMON ISSUES ARE INVOLVED THESE APPEALS ARE BEING DISPOSED OF IN THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. WE SHALL FIRST TAKE UP FOR CONSIDERATION THE CROSS APPEALS FOR THE ASSESSMENT YEAR 2002-03. ASSESSEES APPEAL ITA NO.1659/HYD/2008: 2. THERE ARE THREE GROUNDS IN THIS APPEAL OF THE A SSESSEE. GROUNDS NO.1 AND 3 ARE GENERAL AND DO NOT CALL FOR SEPARATE ADJUDICATION AND THAT LEAVES THE SINGULAR GROUND NO.2 FOR CONSID ERATION AND IT HAS THREE SUB-GROUNDS AND THEY READ AS UNDER: ITA NO.1659/HYD/08 AND 3 OTHERS M/S. G.V.K. INDUSTRIES LTD. SECUNDERABAD. 2 2(A) THE CIT(A) GROSSLY ERRED IN CONFIRMING THE AC TION OF THE AO IN MAKING ADDITION OF RS 2 40 45 266/- REPRESENTING IN COME TAX RECEIVABLE FROM AP TRANSCO AS INCOME FOR THE AY 200 2-03 IGNORING THE SUBMISSIONS OF THE APPELLANT. (B) THE CIT(A) GROSSLY OUGHT TO HAVE SEEN THAT THE REIMBURSEMENT OF THE INCOME TAX IS DISPUTED BY AP TRANSCO AND SIN CE IT IS NOT REIMBURSED SO FOR THE SAID AMOUNT HAS NEITHER ACCRUED NOT CRYSTALISED AND THEREFORE CANNOT BE TAKEN AS THE APPELLANTS INCOME FOR THE AY 2002-03. (C) THE CIT(A) GROSSLY ERRED IN HOLDING THAT THE IN COME TAX RECEIVABLE FROM AP TRANSCO IS ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES BUT NOT AS INCOME FROM BUSINESS. 3. THE FIRST LIMB MENTIONED IN GROUND 2 VIDE THE SU B GROUNDS 2(A) AND 2(B) RELATES TO MAKING OF AN ADDITION ON ACCOUNT OF INCOME TAX RECEIVABLE FROM A.P. TRANSCO AS INCOME OF THE ASSESSMENT YEAR 2002-03 UNDER THE CORRECT HEAD OF INCOME. OTHER LIMB MENTIO NED IN SUB-GROUND 2(C) RELATES TO THE DECISION OF THE AO IN CHANGING THE HEAD OF INCOME IN THE RESPECT OF THE ABOVE RECEIPT AND TAXING THE SAM E UNDER THE HEAD INCOME FROM OTHER SOURCES. 4. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE T HAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF GENERATION OF ELECTRICIT Y AND SELLING THE SAME TO APTRANSCO A SUBSIDIARY OF APSEB. DURING THE ASS ESSMENT PROCEEDINGS AO MADE AN ADDITION OF RS 2 40 45 266/ - REPRESENTING THE INCOME TAX RECEIVABLE FROM AP TRANSCO. FACTUALLY THE POWER PURCHASE AGREEMENT PROVIDES FOR REIMBURSEMENT BY THE AP TRANSCO OF THE INCOME TAX PAYABLE TO THE ASSESSEE AND ACCORDINGLY THE ASSESSEE RAIS ED THE BILL IN RESPECT OF THE TAX PAID UNDER MAT PROVI SIONS ALSO AND THE AP TRANSCO REFUSED TO REIMBURSE THE SAME. OF COURSE T HERE IS NO DISPUTE ON THE TAX PAID UNDER NORMAL PROVISIONS. THUS THER E IS DISPUTE ON THE VERY PAYABILITY OF THE MAT SEGMENT OF TAX BY AP TRA NSCO TO THE ASSESSEE WHO OF COURSE INCESSANTLY DEMANDED FOR RE IMBURSEMENT AND THE MATTER REACHED THE JUDICIAL FORUM FOR ARBITRATI ON FIRST BEFORE THE APERC AND THEN TO THE AP HIGH COURT. THEREFORE ASS ESSEE HAS DISPUTED ITA NO.1659/HYD/08 AND 3 OTHERS M/S. G.V.K. INDUSTRIES LTD. SECUNDERABAD. 3 THE ISSUE AND THE IMPUGNED MAT WAS NEVER REIMBURSED TILL DATE AND THE ISSUE IS STILL PENDING FOR FINALITY. IGNORING THE A BOVE FACTS ON ACCRUAL BASIS THE AO TAXED THE SAME AND THE CIT(A) CONFIRM ED THE SAID DECISION. 5. AO IN TAXING THE SAID RECEIVABLE IGNORED THE ASS ESSEES ARGUMENT THAT THE SAID INCOME TAX (MAT) RECEIVABLE IS A DISP UTED ONE AND THE SAME HAS NEVER BEEN REIMBURSED TO THE ASSESSEE AT ALL. THE CIT(A) IGNORED THE FACT THAT THE SAID RECEIPT NEITHER ACCRUED NOR CRYSTALLIZED IN THE YEAR UNDER CONSIDERATION. UNDER THE FACTUAL MATRIX OF T HE ABOVE SHRI SHIV KUMAR LD COUNSEL FOR THE ASSESSEE AT THE VERY O UTSET NARRATED THE ISSUE AND MADE A MENTION THAT THERE IS A CASE FOR SETTING ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR ONE MORE ROUND OF PROCEEDINGS. FOR STRENGTHENING HIS ARGUMENTS LD C OUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE PAPER-BOOK FILED BEFORE US ON THE DAY OF HEARING ON THESE APPEALS VIZ. 6.3.2012 AND TOO K US THROUGH THE ANNEXURE TO THE SAID COVERING LETTER DATED 5.3.2012 . THE CONTENTS OF THAT COVERING LETTER ARE REPRODUCED HEREUNDER- PETITION SEEKING ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE OF INCOME TAX APPELLATE TRIBUNAL RULES 1963 THE ABOVE NUMBERED APPEAL HAS BEEN FILED BY THE ASSE SSEE. THE ASSESSEE IS CONTESTING THE DECISION OF THE CIT(A) WHO HELD THE RE IMBURSEMENT OF INCOME TAX TO WHICH THE ASSESSEE IS ENTITLED AS PER POWER PURCH ASE AGREEMENT BETWEEN THE ASSESSEE AND APSEB IS TO BE TREATED AS INCOME ACCRU ED TO THE ASSESSEE INSPITE OF THE FACT THAT THE LIABILITY PAY THE SAME HAS BEEN REPUDIATED BY THE APTRANSCO (ONE OF THE SUCCESSORS TOP APSEB) 2. THE ASSESSEE HAS FILED COPY OF A LETTER ISSUED BY APTRANSCO IN SUPPORT OF ITS CONTENTION AS PART OF THE PAPER BOOK FILED BY IT. APTRANSCO HAS ISSUED MORE THAN ONE LETTER IN SUCCESSIVE YEARS RETURNING THE BILLS SUBMITTED BY THE ASSESSEE WITHOUT PAYMENT BASED ON THE EARLIER LETTER DATED 2 0.11.2003 ISSUED BY IT. IT IS SUBMITTED THAT THESE DOCUMENTS PROPOSED TO BE FILED BE FORE THE HONBLE INCOME TAX APPELLATE TRIBUNAL AS ADDL. EVIDENCE CONSTITUTE VITAL EVIDENCE TO SHOW THE APTRANSCO REPEATEDLY DECLINED TO PAY THE AMOUNTS OF I NCOME TAX REIMBURSABLE TO THE ASSESSEE AS PER POWER PURCHASE AGREEMENT WITH APSEB. THE ASSESSEE SUBMITS THAT COPIES OF TWO BILLS SUBMITTED BY THE A SSESSEE AND COPIES OF LETTERS ISSUED BY APTRANSCO AS PER TABLE GIVEN BELOW ARE PROPOSED TO BE INTRODUCED AS ADDITIONAL EVIDENCE . THE ASSESSEE PRAYS THAT THE UNDERMENTIONED DOCUMENTS MAY KINDLY BE ADMITTED AS ADDL. EVIDENCE AND TAKEN INTO ACCOUNT WHILE ADJUDICATING THE APPEAL. S N DESCRIPTION SHEET NOS. 3. COPY OF AP TRANSCO LETTER DATED 9-4-2002 1 5 COPY OF AP TRANSCO LETTER DATED 16.8.2005 2 6 COPY OF AP TRANSCO LETTER DATED 19.8.2005 3 ITA NO.1659/HYD/08 AND 3 OTHERS M/S. G.V.K. INDUSTRIES LTD. SECUNDERABAD. 4 7 C OPY OF AP TRANSCO LETTER DATED 6.7.2006 4 8 COPY OF AP TRANSCO LETTER DATED 12.9.2006 5 9 COPY OF AP TRANSCO LETTER DATED 01/03.12.2007 6 10 COPY OF AP TRANSCO LETTER DATED 17/19.4.2008 7 COPY OF ASSESSEES LETTER DATED 2.9.2006 WITH ENCLO SURES 8 TO 10 12. COPY OF ASSESSEES LETTER DATED 30.6.2006 WITH ENCLOSURES 11 TO 15 .. 6. TAKING CUE FROM THE ABOVE EXTRACT LEARNED COUNS EL MENTIONED THAT THE ENCLOSURES TO THE SAID LETTER CONSTITUTES ADDITIONAL EVIDENCE AND THESE AUXILIARY DOCUMENTS ARE DIRECTLY LINKED TO TH E ISSUE OF ACCRUAL OF IMPUGNED INCOME TAX RECEIVABLE. FURTHER HE MENTION ED THAT THE SAID INFORMATION IS SET TO GO INTO THE ROOT OF THE MATTE R AND STRENGTHEN THE PAPERS ALREADY ON THE RECORDS OF THE AO. AS PER THE COUNSEL THESE PAPERS SHALL HELP IN ADJUDICATION OF THE ISSUE PROPERLY. F URTHER HE MENTIONED THAT THE ADMISSION OF THE ABOVE DOCUMENTS DOES NOT REQUIRE ANY INVESTIGATION INTO THE FACTS. IN FACT THEY ONLY C ONTRIBUTE TO THE RENDERING OF THE JUSTICE IN PROPER PERSPECTIVE. FURTHER THE LEARNED COUNSEL TOOK US THROUGH THE CONTENTS OF THE RELEVANT PARAGRAPHS OF THE ORDER OF THE CIT(A) AND MENTIONED THAT THE FIRST APPELLATE AUTHO RITY ERRONEOUSLY HELD THAT THE MATTER IS NOT SUB-JUDICE. IN THIS REGARD LEARNED COUNSEL MENTIONED THAT THE CIT(A) IS FACTUALLY INCORRECT A S THE ASSESSEE CARRIED THE MATTER TO THE APERC AND THEN TO THE AP HIGH COU RT. CONSEQUENTLY THE MATTER IF PENDING IN DISPUTE NOW AS STATED BY T HE COUNSEL AT BAR. IN THIS REGARD THE LEARNED COUNSEL PRAYED FOR GRANT O F ONE MORE CHANCE TO BE GIVEN BY REMITTING THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH PERMISSION TO FILE THE RELEVANT CORRESPONDENCE/DOCU MENTS. 7. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REP RESENTATIVE FOR THE REVENUE OPPOSED VEHEMENTLY NOT ONLY THE ADM ISSION OF THE ADDITIONAL EVIDENCE BUT ALSO FOR THE PROPOSAL FOR SETTING ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER. DR IS OF THE FIRM VIEW THAT THE INCOME TAX RECEIVABLE WHETHER IT IS A TAX PAID UNDER NORMA L PROVISIONS OR UNDER THE MAT PROVISIONS CONSTITUTES A TAXABLE RECEIPT I N THE HANDS OF THE ASSESSEE. ITA NO.1659/HYD/08 AND 3 OTHERS M/S. G.V.K. INDUSTRIES LTD. SECUNDERABAD. 5 8. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND THE DOCUMENTS FILED BEFORE US. WE H AVE ALSO CONSIDERED THE WRITTEN SUBMISSIONS ON THE MERITS OF THE ISSUE FILED BEFORE US. ON CONSIDERATION WE FIND IT RELEVANT TO FIRST ADJUDIC ATE IF THE ADDITIONAL EVIDENCES SHOULD BE ENTERTAINED AND THE CONSEQUENCE S OF THE SAID DECISION THEREOF. WITHOUT GOING INTO THE MERITS OF THE ISSUE THE PRELIMINARY MATTER TO BE DECIDED RELATES TO THE ADM ISSIBILITY OF THE IMPUGNED ADDITIONAL EVIDENCE AND THE REQUEST OF THE ASSESSEES COUNSEL FOR SETTING ASIDE THE MATTER TO THE FILE OF THE ASS ESSING OFFICER. IN THIS REGARD WE HAVE EXAMINED THE ADDITIONAL EVIDENCES F URNISHED BEFORE US. THESE PAPERS CONSTITUTE THE CORRESPONDENCE THAT TOO K PLACE BETWEEN THE ASSESSEE AND THE APTRANSCO. FURTHER THERE IS CATEG ORICAL SUBMISSION BY THE LD COUNSEL THAT THE MATTER IS SUB-JUDICE UNLIKE THE WAY THE CIT(A) MISTAKENLY CONCLUDED STATING THAT THERE IS NO DISPU TE ON THE ISSUE OF REIMBURSEBILITY OF THE MAT PAID BY THE ASSESSEE. CO NSIDERING THE NATURE OF THE PAPERS FILED BEFORE US WE FIND THAT THE SAI D DOCUMENTS DO NOT REQUIRE ANY INVESTIGATION INTO THE BASIC FACTS OF T HE ISSUE AS THEY ARE MERELY THE CORRESPONDENCE BETWEEN THE ASSESSEE AND THE APTRANSCO. IN FACT THESE DOCUMENTS WILL HELP IN ARRIVING AT A RIGHT DECISION REGARDING THE ACCRUAL OR OTHERWISE OF THE RECEIVABLE. CONSID ERING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF NTPC (299 ITR 383) WE ARE OF THE OPINION THAT THE PAPERS FILED BEFORE US SHOULD BE ADMITTED . 9. THE OTHER LIMB OF THE PRAYER RELATES TO IS THE R EQUEST FOR REMANDING TO THE AO IS TO BE ALLOWED OR NOT. IN THIS REGARD WE FIND THAT THE SAME SHOULD BE CONSIDERED FAVORABLY CONSIDERING THE PRIN CIPLES OF NATURAL JUSTICE. IN THIS VIEW OF THE MATTER WE SET ASIDE T HE IMPUGNED ORDER OF THE CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AS SESSING OFFICER FOR DECIDING THE ISSUE DULY CONSIDERING AMONG OTHER T HINGS THE ADDITIONAL EVIDENCE FILED BEFORE US IN ACCORDANCE WITH LAW A ND GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. ITA NO.1659/HYD/08 AND 3 OTHERS M/S. G.V.K. INDUSTRIES LTD. SECUNDERABAD. 6 10. REGARDING THE ISSUE RELATING TO THE CORRECT HEAD OF INCOME (SUB GROUND 2C) THE ASSESSEE CLAIMED THAT THE SAID INCO ME TAX RECEIVABLE IN PRINCIPLE IS A BUSINESS RECEIPT AND ACCORDINGLY IT SHOULD BE DEALT UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFE SSION. ASSESSE RELIES HEAVILY ON THE PURCHASE PRICE AGREEMENT AND VARIOUS CLAUSES EMBEDDED IN IT. ON THE OTHER HAND THE AO IS OF THE VIEW THE SAID INCOME IS NOT ONLY ACCRUED BUT ALSO IT IS UNRELATED TO THE BUSINESS OF THE ASSESSEE IE POWER GENERATION AND TRANSMISSION. THEREFORE IT IS TAXAB LE UNDER HEAD INCOME FROM OTHER SOURCES. SRI SHIV KUMAR LD COUNSEL FOR THE ASSESSEE MADE EXHAUSTIVE SUBMISSION ON THE MERITS OF DECISION OF THE AO ON THIS ISSUE AND FINALLY MENTIONED THAT THIS ISSUE SUCCEEDS THE CORE ISSUE IE WHETHER THE SAID INCOME TAX RECEIVABLE INDEED IS CHARGEAB LE TO TAX AT ALL OR NOT. HE ALSO SUBMITTED THAT THE ISSUE RAISED IN GROUND 2 (C) IS CONTINGENT ON THE DECISION ON THE SAID CORE ISSUE RAISED IN SUB G ROUND 2(A) AND 2(B). LD DR RELIED HEAVILY ON THE ORDERS OF THE AO AND THE C IT(A). 11. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDER S AND THE WRITTEN SUBMISSIONS OF THE PARTIES. IT IS TRUE THAT THE ISS UE OF HEAD OF INCOME SUCCEEDS THE ISSUE OF CHARGEABILITY OF A RECEIPT IE INCOME TAX RECEIVABLE FROM THE APTRANSCO. ON THE ISSUE OF CHARGEABILITY WE HAVE SET ASIDE THE RELEVANT SUB GROUNDS 2(A) AND 2(B) OF THIS APPE AL. THEREFORE WE AGREE WITH THE VIEW OF LD COUNSEL THAT SUB-GROUND 2 (C) MUST ALSO BE SET ASIDE FOR FRESH LOOK INTO ALL THE ISSUES RAISED IN THE GROUNDS AND IN THE ARGUMENTS BEFORE US. IN THAT SENSE OF THE MATTER IN OUR OPINION THIS ISSUE IS CONSEQUENTIAL TO THE CORE ISSUE OF TAXABI LITY OF THE SUM OF THE INCOME TAX RECEIVABLE. ACCORDINGLY ALL THE SUB-GR OUNDS EXTRACTED ABOVE ARE SET ASIDE . 12. IN THE RESULT ASSESSEES APPEAL FOR ASSESSMEN T YEAR 2002-03 IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.1659/HYD/08 AND 3 OTHERS M/S. G.V.K. INDUSTRIES LTD. SECUNDERABAD. 7 REVENUES APPEAL ITA NO.1579/HYD/2008 13. GROUNDS NO.1 AND 5 IN THIS APPEAL OF THE REVEN UE ARE GENERAL IN NATURE AND THEREFORE THEY DO NOT CALL FOR SPEC IFIC ADJUDICATION. 14. GROUND NO.2 RELATES TO THE ACTION OF CIT(A) IN ENTERTAINING AN ADDITIONAL GROUND WHICH WAS NOT RAISED BEFORE THE ASSESSING OFFICER. ACCORDING TO THE REVENUE THE ADMISSION OF SUCH ADD ITIONAL GROUND AND ADJUDICATION THEREON IS NOT PROPER. IN THIS REGARD LEARNED COUNSEL FOR THE ASSESSEE MENTIONED THAT THE CIT(A) IS FREE TO ENTER TAIN ANY ISSUE WHICH WAS NOT RAISED BEFORE THE ASSESSING OFFICER AND THE REFORE THE SAME IS PROPER. 15. WE HEARD THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AND THE PAPER BOOK FILED BEFORE US. ON FINDING THAT THE IMPUGNED CLAIM IS NOT MADE IN THE ORIGINAL RETURN OR BY WAY OF FILING THE REVISED RETURN THE AO DENIED THE CLAIM AND THE CIT(A) ENTERTAINED AND ADJUDICATED THE ISSUE WITH WHICH TH E REVENUE IS AGGRIEVED IN THE PRESENT APPEAL. FOR THIS THE CIT(A) RELIED ON THE B INDING JUDGMENT IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT 284 ITR 323 (SC). IN THIS REGARD WE HAVE PERUSED THE RELEVANT PORTIONS OF THE JUDGMENT AND THE RELEVANT PORTIONS IE PARA 17 ON PAGE 4 OF THE JUDGMENT OF THE SUPREME COURT ARE EXTRACTED AS UNDER. 17. IN GOETZE (INDIA) LTD. VS. CIT (2006) 204 CTR (SC) 182 : (2006) 284 ITR 323 (SC) WHEREIN DEDUCTION CLAIMED BY WAY OF A LET TER BEFORE AO WAS DISALLOWED ON THE GROUND THAT THERE WAS NO PROVISIO N UNDER THE ACT TO MAKE AMENDMENT IN THE RETURN WITHOUT FILING A REVISED RE TURN. APPEAL TO THE SUPREME COURT AS THE DECISION WAS UPHELD BY THE TR IBUNAL AND THE HIGH COURT WAS DISMISSED MAKING CLEAR THAT THE DECISION WAS LIMITED TO THE POWER OF ASSESSING AUTHORITY TO ENTERTAIN CLAIM FOR DEDUCTION OTHERWISE THAN BY REVISED RETURN AND DID NOT IMPINGE ON THE POWER OF TRIBUNAL 16. IN VIEW OF THE ABOVE JUDGMENT OF THE APEX COURT IT IS EVIDENT THAT THE MAKING OF A NEW CLAIM IF ANY BEFORE THE AO IS REQUI RED TO BE DONE ONLY BY WAY OF FILING THE REVISED RETURN OF INCOME AND NOT BY WAY OF LETTERS OR BY WAY OF FILING REVISED COMPUTATION ETC. BUT WHEN COMES TO THE TRIB UNAL OR FOR THAT MATTER THE ITA NO.1659/HYD/08 AND 3 OTHERS M/S. G.V.K. INDUSTRIES LTD. SECUNDERABAD. 8 CIT(A) WHO IS ALSO NOT THE ASSESSING OFFICER BUT WHO IS THE APPELLATE AUTHORITY ASSESSEE DOES NOT HAVE TO INITIATE A NEW CLAIM BEFO RE THEM BY WAY OF FILING THE REVISED RETURN OF INCOME. AS SUCH THE RETURNS OR RE VISED RETURNS ARE FILED UNDER THE PROVISIONS OF SECTION 139 OF THE ACT AND IT IS DONE BEFORE THE AO AND NOT BEFORE THE FIRST OR SECOND APPELLATE AUTHORITIES IE CIT(A) IT AT OR HIGHER JUDICIARY. THERFORE IN OUR OPINION THE CIT(A) IS JUSTIFIED IN ENTERTAININ G AND ADJUDICATING AND THEREFORE THE GROUND RAISED BY THE REVENUE IS REQUIRED TO BE DISMISSED. ACCORDINGLY THE GROUND TWO OF THE REVENUES APPEAL IS DISMISSED . 17. GROUND NO.3 RELATES TO GRANTING OF DEDUCTIONS UNDER S.80IA IN RESPECT OF INCOME BROUGHT TO TAX UNDER S.41(1) OF T HE ACT. THE CASE OF THE REVENUE IS THAT THE CREDIT BROUGHT TO TAX UNDER S.41(1) BEING INSURANCE PREMIA ARE NOT DERIVED FORM THE MANUFAC TURING ACTIVITY OF THE UNDERTAKING. THEREFORE IN RESPECT OF SUCH DEEMED I NCOME ASSESSEE IS NOT ENTITLED FOR DEDUCTION UNDER S.80IA OF THE ACT. HE FURTHER MENTIONED THAT THE CIT(A) ERRONEOUSLY GRANTED RELIEF TO THE A SSESSEE BY NETTING THE RECEIPT UNDER S.41(1) AGAINST THE INSURANCE PREMIA PAID DURING THE YEAR RELYING ON THE DECISION OF THE SPECIAL BENCH(DELHI) OF THE TRIBUNAL IN THE CASE OF LALSON ENTERPRISES V/S. DCIT (89 ITD 25). 18. DURING THE PROCEEDINGS BEFORE US IN RESPONSE TO A QUERY FROM THE BENCH ABOUT THE APPLICABILITY OF THE DECI SION OF THE APEX COURT IN THE CASE OF LIBERTY INDIA LTD. V/S. CIT (317 ITR 218) THE LEARNED COUNSEL MENTIONED THAT THE RECEIPT INVOLVED IN THE PRESENT CASE BEING INSURANCE PREMIA PAID IS CONNECTED WITH THE MANUFA CTURING ACTIVITY OF THE UNDERTAKING AND THEREFORE THE SAME IS OPERATIONAL INCOME OF THE ASSESSEE AND CONSEQUENTLY THE SAID JUDGMENT OF T HE APEX COURT IS DISTINGUISHABLE ON FACTS. 19. WE PERUSED THE FACTS OF THE CASE AND ISSUES RAI SED BY THE PARTIES BEFORE US. ON UNDERSTANDING THE ISSUE WE FIND THAT THE ORDERS DO NOT SPEAK OF THE BASIC FINDINGS RELEVANT FOR ADJUDICATION OF THIS TAX REFU ND AND IF IT CONSTITUTES AN ELIGIBLE ITA NO.1659/HYD/08 AND 3 OTHERS M/S. G.V.K. INDUSTRIES LTD. SECUNDERABAD. 9 PROFIT OR INELIGIBLE ANCILLARY PROFIT IN VIEW OF THE SUPREME COURT DECISION IN THE CASE OF LIBERTY INDIA 217 ITR 218. IT IS ALSO EVIDE NT THAT THE AUTHORITIES AT RELEVANT POINT OF TIME DID NOT HAVE THE BENEFIT OF THE SAID JUDGMENT OF THE APEX COURT IN THE CASE OF LIBERTY INDIA (SUPRA) WHICH IS DATED AUGUS T 2009. WE HAVE ALSO PERUSED THE OPERATIONAL PORTION OF THE SAID DECISION GIVEN ON P AGE 219 OF THE REPORTED SAID ITR WHICH READS AS FOLLOWS:- INCENTIVE PROFITS ARE NOT PROFITS DERIVED FROM ELI GIBLE BUSINESS UNDER SECTION 80-IB: THEY BELONG TO THE CATEGORY OF ANCILLARY PRO FITS OF SUCH UNDERTAKING. PROFITS DERIVED BY WAY OF INCENTIVES SUCH AS DEPB/ DUTY DRAWBACK CANNOT BE CREDITED AGAINST THE COST OF MANUFACTURE OF GOODS D EBITED IN THE PROFIT AND LOSS ACCOUNT AND THEY DO NOT FALL WITHIN THE EXPRES SION PROFITS DERIVED FROM INDUSTRIAL UNDERTAKING UNDER SECTION 80-IB. 20. FROM THE ABOVE IT IS EVIDENT THAT EVERY RECEIP T OF THE INDUSTRIAL UNDERTAKING IS NOT AN ELIGIBLE PROFITS DERIVED FROM THE SAID UN DERTAKING. WITH THE CATEGORIZATION DONE BY THE SUPREME COURT BASED ON A LOGIC IE ELIGI BLE PROFITS AND INELIGIBLE ANCILLARY PROFITS THE SAID DISTINCTION HAS TO BE LOOKED INTO BY THE AO WHILE ADJUDICATING THE ISSUE. THE RECEIPT IN QUESTION BEING INSURANCE PREMIA PAID AND THE SAME IS OPERATIONAL INCOME OF THE ASSESSEE. DESPITE THE FI NDING OF THE REVENUE AUTHORITY THAT IT IS NOT DERIVED FROM THE BUSINESS OF THE UNDERTAKING THERE IS NO CLARITY AS TO WHETHER THE SAID INCOME FALLS AS OPERATIONAL INCOME OR INELIGIBLE ANCILLARY PROFIT WHICH IS THE EXPRESSION USED BY THE APEX COURT IN THE CASE OF LIBERTY INDIA (SUPRA). ACCORDINGLY THE A.O IS DIRECTED TO GATHER THE RELEVANT FACTS AND DECIDE TH E ISSUE AFRESH AFTER GRANTING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. ACCORDINGLY THIS PART OF THE GROUND IS SET ASIDE. 21. GROUND NO.4 OF THE REVENUE RELATES NETTING OF THE EXCESS PREMIUM RECEIVED AGAINST THE INSURANCE PREMIUM AMOU NT PAID DURING THE YEAR FOR TAKING INTO ACCOUNT ONLY THE DIFFERENTIAL AMOUNT FOR EXCLUSION FROM THE INCOME ELIGIBLE FOR RELIEF UNDER S.80IA OF THE ACT. WE FIND THAT THE CIT(A) HAS ACCEPTED THE PLEA OF THE ASSESSEE FO R THE BENEFIT OF NETTING RELYING ON THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF LALSONS ENTERPRISES (89 ITD 25). IN THE ABSENCE OF ANY DECISION TO TH E ITA NO.1659/HYD/08 AND 3 OTHERS M/S. G.V.K. INDUSTRIES LTD. SECUNDERABAD. 10 CONTRARY BROUGHT TO OUR NOTICE WE FIND NO INFIRMIT Y IN THE ORDER OF THE CIT(A) IN THIS BEHALF. WE ACCORDINGLY UPHOLD THE SA ME AND REJECT THE GROUND OF THE REVENUE IN THIS BEHALF. 22. IN THE RESULT REVENUES APPEAL IS PARTLY ALLOWED . 23. NOW WE MAY TAKE UP THE CROSS APPEALS FOR AY 2 006-07. ASSESSEES APPEAL : ITA NO.1660/HYD/2008 24. THERE ARE THREE GROUNDS RAISED IN THIS APPEA L. GROUNDS NO.1 AND 3 ARE GENERAL AND DO NOT CALL FOR SEPARATE ADJU DICATION. THAT LEAVES GROUND NO.2 FOR CONSIDERATION. THE SAID GROUND HAS THREE SUB-GROUNDS. THE FIRST ISSUE MENTIONED IN GROUNDS 2(A) 2(B) AND 2(C) RELATES TO THE DECISION OF THE AUTHORITIES IN MAKING ADDITION ON A CCOUNT OF INCOME TAX RECEIVABLE FROM A.P. TRANSCO AS INCOME OF THE ASSES SMENT YEAR 2002-03. 25. EXCEPT FOR THE AMOUNT INVOLVED THIS ISSUE IS IDENTICAL TO THE ONE CONSIDERED BY US IN THE CONTEXT OF THE ASSESSE ES APPEAL FOR THE ASSESSMENT YEAR 2002-03 IN THE FOREGOING PARAS OF T HIS ORDER. IN THE CIRCUMSTANCES FOR THE DETAILED REASONS DISCUSSED I N PARAS ABOVE OF THIS ORDER THIS ISSUES FOR THE ASSESSMENT YEAR 2006-07 ALSO HAVE TO BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR FRES H CONSIDERATION CONSIDERING INTER ALIA THE ADDITIONAL EVIDENCE THAT THE ASSESSEE HAS FILED BEFORE US IN ACCORDANCE WITH LAW AND AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 26. THIS APPEAL OF THE ASSESSEE IS ALLOWED FOR STA TISTICAL PURPOSES. ITA NO.1659/HYD/08 AND 3 OTHERS M/S. G.V.K. INDUSTRIES LTD. SECUNDERABAD. 11 REVENUES APPEAL : ITA NO.1580/HYD/2008 27. IN THIS APPEAL ALSO GROUNDS NO.1 AND 5 ARE GE NERAL IN NATURE AND DO NOT CALL FOR SEPARATE ADJUDICATION. 28. GROUND NO.2 RELATES TO THE ACTION OF THE CIT(A) IN ENTERTAINING AN ADDITIONAL GROUND NOT RAISED BEFORE THE ASSESSING OFFICER. THIS GROUND IS SIMILAR TO THE ONE RAISED BY THE REVENUE FOR THE ASSESSMENT YEAR 2002-03. HENCE FOR THE REASONS DI SCUSSED WHILE DEALING WITH THE CORRESPONDING GROUND OF THE REVENU E IN ITS APPEAL FOR THE ASSESSMENT YEAR 2002-03 IN PARA HEREINABOVE T HIS GROUND OF THE REVENUE IS REJECTED . 29. GROUND NO.3 RELATES TO GRANTING OF DEDUCTIONS UNDER S.80IA IN RESPECT OF INCOME BROUGHT TO TAX UNDER S.41(1) O F THE ACT. THIS GROUND AGAIN IS SIMILAR TO THE ONE RAISED BY THE REVENUE ON THIS VERY ISSUE FOR THE ASSESSMENT YEAR 2002-03. HENCE FOR THE REASON S DISCUSSED WHILE DEALING WITH THE CORRESPONDING GROUND OF THE REVENU E IN ITS APPEAL FOR THE ASSESSMENT YEAR 2002-03 IN PARA HEREINABOVE T HIS GROUND OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 30. GROUND NO.4 RELATES TO NETTING OF THE EXCESS PREMIUM RECEIVED AGAINST THE INSURANCE PREMIUM AMOUNT PAID DURING THE YEAR FOR TAKING INTO ACCOUNT ONLY THE DIFFERENTIAL AMOUNT FO R EXCLUSION FROM THE INCOME ELIGIBLE FOR RELIEF UNDER S.80IA OF THE ACT. THIS GROUND AGAIN IS SIMILAR TO THE ONE RAISED BY THE REVENUE ON THIS VE RY ISSUE FOR THE ASSESSMENT YEAR 2002-03. HENCE FOR THE REASONS DI SCUSSED WHILE DEALING WITH THE CORRESPONDING GROUND OF THE REVENU E IN ITS APPEAL FOR THE ASSESSMENT YEAR 2002-03 IN PARA HEREINABOVE T HIS GROUND OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.1659/HYD/08 AND 3 OTHERS M/S. G.V.K. INDUSTRIES LTD. SECUNDERABAD. 12 31. IN THE RESULT REVENUES APPEAL FOR THE ASSESS MENT YEAR 2007-08 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 32. TO SUM UP APPEALS OF THE ASSESSEE FOR ASSESSM ENT YEAR 2002-03 AND 2006-07 ARE ALLOWED FOR STATISTICAL PUR POSES AND APPEALS OF THE REVENUE FOR ASSESSMENT YEARS 2002-03 AND 2006-0 7 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 30.03.2012 SD/- SD/- (SAKTIJIT DEY) (D.KARUNAKARA R AO ) JUDICIAL MEMBER. ACCOUNTANT MEMBER. DT/- 30TH MARCH 2012 COPY FORWARDED TO: 1. M/S. G.V.K. INDUSTRIES LTD. 1546-159 PAIGAH HOU SE S.P.RAOD SECUNDERABAD. 2. DY./ A SST . COMMISSIONER OF INCOME - TAX CIRCLE 2(2) HYDERABAD 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS) - III HYDERABAD COMMISSIONER OF INCOME-TAX II HYDERABAD 5 . THE DEPARTMENTAL REPRESENTATIVE ITAT HYDERABAD B.V.S.