DCIT, Cir-11(1), Kolkata, Kolkata v. M/s. Emami Biotech Ltd., Kolkata

ITA 2564/KOL/2019 | 2014-2015
Pronouncement Date: 26-03-2021 | Result: Dismissed

Appeal Details

RSA Number 256423514 RSA 2019
Assessee PAN AABCN7953M
Bench Kolkata
Appeal Number ITA 2564/KOL/2019
Duration Of Justice 1 year(s) 3 month(s) 15 day(s)
Appellant DCIT, Cir-11(1), Kolkata, Kolkata
Respondent M/s. Emami Biotech Ltd., Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 26-03-2021
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 26-03-2021
Last Hearing Date 11-03-2021
First Hearing Date 11-03-2021
Assessment Year 2014-2015
Appeal Filed On 11-12-2019
Judgment Text
I.T.A. NOS.2563&2564/KOL/2019 M/S EMAMI AGROTECH LIMITED ASSESSMENT YEARS: 2013-14 & 2014-15 1 B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [ BEFORE SHRI J. SUDHAKAR REDDY AM AND SHRI A. T. VA RKEY JM ] I.T.A. NOS.2563&2564/KOL/2019 ASSESSMENT YEARS:2013-14 & 2014-15 DCIT CIRCLE-11(1) KOLKATA V. M/S EMAMI AGROTECH LIMITED. (PAN:AABCN7953M) APPELLANT RESPONDENT DATE OF HEARING 11.03.2021 DATE OF PRONOUNCEMENT 26.03.2021 FOR THE APPELLANT SHRI IMOKABA JAMIR CIT FOR THE RESPONDENT SHRI A.K. TIBREWAL FCA ORDER PER SHRI A. T. VARKEY JM: THIS IS AN APPEAL PREFERRED BY THE REVENUE AGAINST THE SEPARATE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(APPEALS)-4 KOLKATA DATE D 19.09.2019 AND 20.09.2019 RESPECTIVELY FOR ASSESSMENT YEAR 2013-14 AND 2014-1 5 RESPECTIVELY. 2. GROUND NOS.1 AND 2 ARE AS UNDER: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT(A) HAS ERRED IN ALLOWING GOVERNMENT SUBSIDY BY TREATING THE SAME AS CAPITAL IN NATURE RS.43 08 97 000/- UNDER NORMAL PROVISION OF THE ACT. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) HAS ERRED IN ALLOWING GOVERNMENT SUBSIDY BY TREATING THE SAME AS CAPITAL IN NATURE RS.43 08 97 000/- UNDER PROVISION OF SECTION 115JB OF THE ACT. 3. THE AFORESAID GROUNDS ARE REGARDING THE DELETION OF GOVERNMENT SUBSIDY TREATING THE SAME AS REVENUE IN NATURE OF RS.43 08 97 000/-. I.T.A. NOS.2563&2564/KOL/2019 M/S EMAMI AGROTECH LIMITED ASSESSMENT YEARS: 2013-14 & 2014-15 2 4. BRIEF FACTS AS PER THE ASSESSEE WHICH HAS BEEN T AKEN BY THE LD. CIT(A) WHICH IS AS UNDER: 1.1 THE RESPONDENT HAS OBTAINED INCENTIVE IN THE F ORM OF SALES TAX ASSISTANCE OF RS.29 40 26 606/- IN A.Y. 2013-14 AS INDUSTRIAL PRO MOTIONAL ASSISTANCE (IPA) UNDER 'THE WEST BENGAL INCENTIVE SCHEME (WBIS) 2004' ISSUED VI DE NOTIFICATION NO. 134-CI/O/ INCENTIVE/17/03/I DATED 24.03.2004. THE SAID INCENT IVE HAS BEEN GRANTED TO ENCOURAGE ADDITIONAL INVESTMENTS FOR SETTING UP AND/OR EXPANS ION AND MODERNIZATION OF THE INDUSTRIAL UNDERTAKING LOCATED AT THE RESPECTIVE PLACE TO ACCE LERATE THE DEVELOPMENT OF THE BACKWARD AREA OF THE STATE AND TO CREATE LARGE SCALE EMPLOYM ENT OPPORTUNITIES. THE COMPANY HAS RECEIVED SALES TAX ASSISTANCE BEING CAPITAL RECEIP T FOR EXPANSION OF EXISTING INDUSTRIAL UNDERTAKING INVOLVING HUGE CAPITAL OUTLAY. SIMILARL Y COMPANY HAS ALSO SET UP A NEW PLANT AT KRISHNAPATNAM ANDHRA PRADESH AND IS ELIGIBLE FOR I NCENTIVES IN THE FORM OF SALES TAX INCENTIVE ETC AS PER THE SCHEME OF ANDHRA PRADESH GOUT. KNOWN AS 'INDUSTRIAL INVESTMENT PROMOTION POLICY (1IPP) 2010-2015' OF RS. 13 68 70 416/- FOR ITS NEW UNIT INVOLVING HUGE CAPITAL OUTLAY. 1.2 THE ABOVE INCENTIVES WERE SET OFF AGAINST SALES TAX LIABILITY PAYABLE TO GOVERNMENT AND ACCORDINGLY CREDITED TO PROFIT AND LOSS ACCOUNT IN THE BOOKS OF ACCOUNTS. SINCE THE SAID INCENTIVES HAVE BEEN GRANTED WITH THE OBJECTIVE OF SETTING UP OF INDUSTRIES IN BACKWARD AREAS THE AMOUNT EQUIVALENT TO SALES TAX EXEMPTION AVAIL ED DURING THE YEAR WOULD CONSTITUTES CAPITAL RECEIPTS IN THE HANDS OF THE APPELLANT AND SHOULD NOT BE TAXABLE. HOWEVER WHILE FILING ORIGINAL AS WELL AS REVISE RETURN OF INCOME BY AN INADVERTENT ERROR THE ABOVE AMOUNT BEING CAPITAL RECEIPT WHICH WAS CREDITED TO P&L WAS NOT E XCLUDED FROM COMPUTATION OF TOTAL INCOME UNDER THE NORMAL PROVISIONS AS WELL AS NOT EXCLUDED FROM BOOK PROFIT UNDER SECTION 115JB AND HAS BEEN OFFERED TO TAX. THE SAME WAS CONSIDERE D AND EXCLUDED FROM COMPUTATION BOTH UNDER NORMAL PROVISION AND UNDER U/S 115JB THROUGH LETTER OF MODIFICATION IN THE RETURN OF INCOME ON 12.08.2015. 5. THE A.O DID NOT ACCEPT THE CONTENTION OF THE ASS ESSEE THAT THE SALES TAX ASSISTANCE GIVEN BY THE STATE GOVT. AS INCENTIVE IS A CAPITAL RECEIPT AND NOT TAXABLE AND HE HELD IT AS A REVENUE RECEIPT AND DID NOT A LLOW THE CLAIM OF THE ASSESSEE. 6. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFOR E THE LD. CIT(A) WHO DELETED THE ADDITION BY TAKING NOTE OF THE ORDERS OF HIS PR EDECESSOR FOR A.Y 2011-12 WHEREIN THE LD. CIT(A) HAS HELD THAT SALES TAX INCENTIVE EN JOYED BY THE ASSESSEE WAS FOR SETTING UP INDUSTRY IN THE BACKWARD AREAS IN THE STATE AND HENCE IT IS A CAPITAL RECEIPT NOT TAXABLE AS PER THE PROVISIONS OF THE ACT. THEREAFTE R THE LD. CIT(A) FOLLOWED THE VIEW OF HIS PREDECESSOR FOR A.Y 2011-12 AND GAVE RELIEF TO THE ASSESSEE. 7. AGGRIEVED THE REVENUE IS BEFORE US. WE HAVE HEAR D BOTH THE PARTIES AND PERUSED THE RECORDS. AT THE OUTSET THE LD. AR OF T HE ASSESSEE BROUGHT TO OUR NOTICE I.T.A. NOS.2563&2564/KOL/2019 M/S EMAMI AGROTECH LIMITED ASSESSMENT YEARS: 2013-14 & 2014-15 3 THAT IN ASSESSEES OWN CASE FOR A.Y 2011-12 THE TR IBUNAL HAS DECIDED THIS ISSUE IN ITS FAVOUR AND REFERRED TO PAGE 49 TO 75 OF THE PB. IT WAS ALSO POINTED OUT BY THE LD. AR THAT EARLIER THE ASSESSEES NAME WAS M/S EMAMI BIO TECH LTD AND IT GOT CHANGED M/S EMAMI AGROTECHPVT. LTD. HOWEVER THE PAN CONTINUED AS BEFORE WITHOUT ANY CHANGE AND WE NOTE IT AS THE SAME. THEREAFTER HE DREW OUR ATTENTION TO THE FOLLOWING RELEVANT PORTION OF THE ORDER OF THIS TRIBUNAL ON THIS ISSUE IN ASSESSEES OWN CASE IN ITA NO.1915/KOL/2017 FOR A.Y 2011-12 WHICH IS AS UNDER : 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS REGARDS THE PRELIMINARY OBJ ECTION RAISED ON BEHALF OF THE REVENUE CHALLENGING THE ACTION OF THE LD. CIT(APPEALS) IN E NTERTAINING THE NEW CLAIM MADE BY THE ASSESSEE FOR TREATING THE SUBSIDY IN QUESTION RECEI VED DURING THE YEAR UNDER CONSIDERATION AS CAPITAL RECEIPT NOT CHARGEABLE TO TAX IT IS OBSERV ED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BESIDES THE VARIOUS JUDICIA L PRONOUNCEMENTS CITED ON BEHALF OF THE ASSESSEE AND RELIED UPON BY THE LD. CIT(APPEALS) IN HIS IMPUGNED ORDER BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF DC IT VS.- INDIAN OIL PETRONAS PVT. LIMITED RENDERED VIDE ITS ORDER DATED 31.05.2018 IN ITA NO. 157/KOL/2017 WHEREIN IT WAS HELD BY THE TRIBUNAL BY RELYING ON THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LIMITED VS.- CIT (229 ITR 383) A S WELL AS THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF MAYNAKPODDAR (HU F) VS.- WTO (262 ITR 633) THAT HIS JURISDICTION WAS RIGHTLY EXERCISED BY THE LD. CIT(A PPEALS) IN ENTERTAINING THE ADDITIONAL GROUND RAISED BY THE ASSESSEE CLAIMING EXCLUSION OF CAPITAL SUBSIDY RECEIVED BY WAY OF SALES TAX REMISSION UNDER THE WEST BENGAL INCENTIVE SCHEM E. WE THEREFORE FIND THE OBJECTION RAISED ON BEHALF OF THE REVENUE IN THIS REGARD TO B E UNSUSTAINABLE AND OVERRULING THE SAME WE NOW PROCEED TO DECIDE THE ISSUE ON MERIT. 28. DURING THE YEAR UNDER CONSIDERATION THE ASSESS EE HAD RECEIVED INCENTIVE OF RS.24 94 66 520/- UNDER THE WEST BENGAL INCENTIVE S CHEME 2004 IN THE FORM OF REFUND OF SALES TAX PAID AND THE QUESTION THAT HAS ARISEN IS REGARDING THE TAXABILITY OF THE SAID AMOUNT UNDER THE INCOME TAX ACT 1961 WHICH DEPENDS ON TH E DETERMINATION OF THE CHARACTER OF THE AMOUNT WHETHER IT IS CAPITAL RECEIPT OR REVENUE RE CEIPT. THERE ARE VARIOUS JUDICIAL PRONOUNCEMENTS WHEREIN GUIDELINES OR CRITERIA HAVE BEEN LAID DOWN TO DETERMINE THE CHARACTER OF SUCH AMOUNTS RECEIVED AS INCENTIVES/SU BSIDIES. AS OBSERVED BY THE HONBLE SUPREME COURT IN THE CASE OF K.C.P. LIMITED VS.- C IT [245 ITR 431] IT IS NOT THE NAME GIVEN BY THE ASSESESE OR EVEN BY THE REVENUE OR ANYONE EL SE THAT MATTERS BUT IT IS TRUE CHARACTER OF THE RECEIPT THAT DETERMINES ITS TAXABILITY AND BEIN G REGARDED AS FALLING WITHIN THE CAPITAL FIELD OR OUT OF IT. AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF PONNY SUGAR & CHEMICALS LIMITED (SUPRA) THE NATURE OF THE RECEIPT OF THE I NCENTIVE HAS TO BE EXAMINED IN THE LIGHT OF THE OBJECT FOR WHICH SUCH INCENTIVE WAS PAID AND IF THE TRUE CHARACTER OF THE INCENTIVE IS TO ENABLE THE ASSESSEE TO MEET THE CAPITAL COST THEN THAT TR UE CHARACTER MUST BE GIVEN FULL RECOGNITION AND THE FACT THAT THE RECEIPT WAS SUBSEQUENT TO THE COMMENCEMENT OF PRODUCTION IS NOT TO BE ALLOWED TO STAND IN THE WAY IN ITS PROPER TREATMENT AS A RECEIPT IN THE CAPITAL FIELD MEANT TO MEET A CAPITAL COST. HONBLE SUPREME COURT HELD THA T IT THEREFORE CANNOT BE SAID THAT THE INCENTIVE GIVEN BEING POST PRODUCTION THOUGH MEANT EXCLUSIVELY FOR MEETING THE CAPITAL COST THE AMOUNT OF INCENTIVE WOULD BE A TRADING RECEIPT IN THE HANDS OF THE RECIPIENT. 29. IN THE CASE OF SAHANY STEEL & PRESS WORKS LIMIT ED (SUPRA) WHICH HAS BEEN RELIED UPON BY THE LD. REPRESENTATIVES OF BOTH THE SIDES IN SUPPOR T OF THEIR RESPECTIVE STAND ON THE ISSUE UNDER I.T.A. NOS.2563&2564/KOL/2019 M/S EMAMI AGROTECH LIMITED ASSESSMENT YEARS: 2013-14 & 2014-15 4 CONSIDERATION PAYMENTS HAD BEEN MADE POST PRODUCTI ON AND SINCE IT WAS IN NO WAY LINKED TO THE STEPS THAT HAD BEEN TAKEN BY THE ASSESSEE IN SE TTING UP THE INDUSTRY HONBLE SUPREME COURT HELD THAT THE INCENTIVE RECEIVED WAS REVENUE IN NATURE CHARGEABLE TO TAX. IT WAS HOWEVER CLARIFIED BY THE HONBLE SUPREME COURT THA T THE SUBSIDY IN THAT CASE HAD NOT BEEN GRANTED FOR BRINGING INTO EXISTENCE ANY NEW ASSET. IT WAS FURTHER CLARIFIED BY THE HONBLE SUPREME COURT THAT THE CHARACTER OF THE SUBSIDY IN THE HANDS OF THE RECIPIENT WHETHER REVENUE OR CAPITAL WILL HAVE TO BE DETERMINED BY HAVING RE GARD TO THE PURPOSE FOR WHICH THE SUBSIDY IS GIVEN. EXPLAINING FURTHER WITH ILLUSTRATION IT WAS OBSERVED BY THE HONBLE SUPREME COURT THAT IF THE SCHEME WAS THAT THE ASSESSEE WILL BE GIVEN R EFUND OF SALES TAX ON PURCHASE OF MACHINERY AS WELL AS ON RAW MATERIALS TO ENABLE THE ASSESSEE TO ACQUIRE NEW PLANTS AND MACHINERY FOR FURTHER EXPANSION OF ITS MANUFACTURING CAPACITIES I N BACKWARD AREAS THE ENTIRE SUBSIDY MUST BE HELD TO BE A CAPITAL RECEIPT IN THE HANDS OF THE ASSESSEE. AFTER TAKING NOTE OF BOTH THESE DECISIONS OF THE HONBLE SUPREME COURT IN THE CASE OF SAHANY STEEL & PRESS WORKS LIMITED (SUPRA) AND PONNY SUGAR & CHEMICALS LIMITED (SUPRA) HONBLE CALCUTTA HIGH COURT HAS HELD IN THE CASE OF RASOI LIMITED (SUPRA) THAT THE SUBSIDY RECEIVED BY THE ASSESSEE FROM THE GOVERNMENT OF WEST BENGAL UNDER THE SCHEME OF INDUS TRIAL PROMOTION FOR EXPANSION OF CAPACITIES MODERNISATION AND IMPROVING ITS MARKETI NG CAPABILITIES WAS A CAPITAL RECEIPT NOT CHARGEABLE TO TAX. 30. IN THE CASE OF K.M. SUGAR MILLS LIMITED (SUPRA) CITED BY THE LD. D.R. SUBSIDY WAS GIVEN TO THE ASSESSEE BY THE CENTRAL GOVERNMENT TO COMPENSAT E BURDEN ON ACCOUNT OF INTEREST STORAGE AND INSURANCE ETC. FOR HOLDING BUFFER STOCK OF SUGA R AND THE OBJECT THUS BEING TO COMPENSATE THE ASSESSEE IN RUNNING HIS BUSINESS IT WAS HELD B Y THE HONBLE ALLAHABAD HIGH COURT THAT THE SUBSIDY GIVEN WAS CLEARLY REVENUE IN NATURE. IN THE CASE OF KERACOL CHLORIDES LIMITED (SUPRA) CITED BY THE LD. D.R. SUBSIDY WAS GRANTED FOR PROD UCTION AND NOT FOR SETTING UP AN INDUSTRY AND THE SAME THEREFORE WAS TREATED AS REVENUE REC EIPT. IN THE CASE OF CHHINDWARA FUELS (SUPRA) CITED BY THE LD. D.R. THERE WAS NO REPRESE NTATION MADE ON BEHALF OF THE ASSESSEE AND IN THE VERY BRIEF ORDER PASSED EX-PARTE SUBSIDY RE CEIVED BY THE ASSESSEE FROM THE GOVERNMENT IN THE FORM OF SALES TAX REFUND WAS HELD TO BE A RE VENUE RECEIPT BY THE HONBLE CALCUTTA HIGH COURT MAINLY ON THE GROUND THAT THE SAME WAS RECEIV ED BY THE ASSESSEE AFTER PRODUCTION. IN SUPPORT OF THIS CONCLUSION RELIANCE WAS PLACED BY THE HONBLE CALCUTTA HIGH COURT ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F SAHANY STEEL & PRESS WORKS LIMITED (SUPRA). AS ALREADY NOTED BY US HONBLE SUPREME CO URT IN THE SUBSEQUENT DECISION RENDERED IN THE CASE OF PONNY SUGAR & CHEMICALS LIMITED (SUP RA) HAS HELD AFTER TAKING NOTE OF THEIR EARLIER DECISION RENDERED IN THE CASE OF SAHANY STE EL & PRESS WORKS LIMITED (SUPRA) THAT IF THE TRUE CHARACTER OF THE INCENTIVE IS TO ENABLE TH E ASSESSEE TO MEET THE CAPITAL COST THEN THAT TRUE CHARACTER MUST BE GIVEN FULL RECOGNITION AND T HE FACT THAT THE RECEIPT WAS SUBSEQUENT TO THE COMMENCEMENT OF PRODUCTION IS NOT TO BE ALLOWED TO STAND IN THE WAY OF ITS PROPER TREATMENT AS A RECEIPT IN THE CAPITAL FIELD MEANT T O MEET A CAPITAL COST. AS REGARDS THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF BHUS AN STEELS & STRIPS LIMITED (SUPRA) RELIED UPON BY THE LD. D.R. IT IS OBSERVED THAT THE OPERA TION OF THE JUDGMENT PASSED BY THE HONBLE DELHI HIGH COURT IN THE SAID CASE HAS BEEN STAYED B Y THE HONBLE SUPREME COURT BY THE INTERIM ORDER PASSED IN SLP NO. 30728 TO 30732/2017 . 31. THE POSITION THAT CLEARLY EMERGES FROM THE VARI OUS JUDICIAL PRONOUNCEMENTS CITED BY THE LD. REPRESENTATIVES OF BOTH THE SIDES AS DISCUSSED ABOVE IS THAT THE CHARACTER OF SUBSIDY IN THE HANDS OF THE RECIPIENT WHETHER CAPITAL OR REVENUE IS REQUIRED TO BE DETERMINED AFTER HAVING REGARD TO THE PURPOSE FOR WHICH THE SUBSIDY WAS GIV EN AND THE MODE AND SOURCE OF PAYMENT AS WELL AS THE POINT OF TIME WHEN THE SUBSIDY WAS PAID IS NOT RELEVANT. KEEPING THIS POSITION IN MIND LET US NOW SEE THE PURPOSE FOR WHICH THE SUBS IDY IN QUESTION WAS GIVEN TO THE ASSESSEE IN THE FORM OF SALES TAX REFUND UNDER THE WEST BENGAL INCENTIVE SCHEME 2004. AS PER THE WEST BENGAL INCENTIVE SCHEME 2004 NOTIFIED IN THE OFFIC IAL GAZETTE IT WAS MEANT TO EXTEND INCENTIVE FOR PROMOTION OF INDUSTRIES IN THE STATE OF WEST BENGAL AND THE SAME WAS APPLICABLE TO ALL LARGE/SMALL SCALE PROJECTS AND TOURISM UNITS IN LARGE/SMALL SCALE SECTOR TO BE SET UP I.T.A. NOS.2563&2564/KOL/2019 M/S EMAMI AGROTECH LIMITED ASSESSMENT YEARS: 2013-14 & 2014-15 5 AND ALSO EXPANSION PROJECT OF EXISTING UNITS ON OR AFTER 1S T APRIL 2004. THE OBJECT OF THE SAID SCHEME THUS WAS TO PROMOTE SETTING UP AND EXPANSION OF INDUSTRIES AND THE SUBSIDY WAS MADE AVAILABLE TO THE EXISTING INDUSTRIES FOR UNDERTAKIN G SUBSTANTIAL EXPANSION. UNDER THE SAID SCHEME MEGA PROJECTS WERE NOT ELIGIBLE FOR THE I NTEREST SUBSIDY AND IN LIEU THEREOF IPA WAS MADE AVAILABLE TO THEM @ 75% OF THE SALES TAX WHICH INCENTIVE WAS NOT TO EXCEED 100% OF THE FIXED CAPITAL INVESTMENT. THE SUBSIDY THUS W AS LINKED TO THE FIXED CAPITAL INVESTMENT MADE BY THE INDUSTRY AND IT WAS IN THE FORM OF REFU ND OF SALES TAX PAID. IN LINE WITH THIS SCHEME THE ASSESSEE-COMPANY MADE EXPANSION OF ITS EXISTING HALDIA MANUFACTURING UNIT SITUATED IN MIDNAPORE DISTRICT IN THE STATE OF WEST BENGAL INVOLVING HUGE CAPITAL OUTLAY OF RS.168 CRORES AND WAS ENTITLED TO IPA OF 75% OF SAL ES TAX PAID FOR A PERIOD OF 15 YEARS SUBJECT TO A MAXIMUM AMOUNT TO THE EXTENT OF 100% OF THE FI XED CAPITAL INVESTMENT I.E. RS.168 CRORES. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE C OMPANY WAS ELIGIBLE FOR THE SAID INCENTIVE TO THE EXTENT OF RS.24 94 66 520/- AND THE BENEFIT TO THAT EXTENT WAS AVAILED BY IT. 32. AT THE TIME OF HEARING BEFORE US THE LD. D.R. HAS SUBMITTED THAT THE OBJECT OF THE WEST BENGAL INCENTIVE SCHEME 2004 WAS ALTOGETHER DIFFER ENT FROM THE OBJECT OF THE WEST BENGAL INCENTIVE SCHEME OF 2000. HE HAS CONTENDED THAT THE VARIOUS DECISIONS RENDERED BY THE TRIBUNAL AND CITED BY THE LD. COUNSEL FOR THE ASSES SEE TREATING THE SUBSIDY UNDER THE 2000 SCHEME AS CAPITAL RECEIPT THUS ARE NOT APPLICABLE. HE HAS ALSO CONTENDED THAT THE OBJECT OF THE 2004 SCHEME NOT BEING VERY CLEAR THE INCENTIVE/SUB SIDY RECEIVED UNDER THE SAID SCHEME SHOULD BE TREATED AS REVENUE IN NATURE. WE ARE UNAB LE TO ACCEPT THESE CONTENTIONS OF THE LD. D.R. AS ALREADY NOTICED FROM THE RELEVANT SCHEME T HE OBJECT OF THE SCHEME WAS VERY CLEAR TO PROMOTE SETTING UP AND EXPANSION OF INDUSTRIES AND IT CANNOT BE SAID THAT THE SAID OBJECT WAS NOT CLEAR AS SOUGHT TO BE CONTENDED BY THE LD. D.R. EVEN THE OBJECT OF THE SCHEME OF 2004 CANNOT BE SAID TO BE ENTIRELY DIFFERENT FROM THE SC HEME OF 2000 INASMUCH AS THE INTENTION OF THE 2000 SCHEME WAS ALSO TO EXTEND INCENTIVE FOR PR OMOTION OF INDUSTRIES IN THE STATE OF WEST BENGAL AND THE SUBSIDY WAS MEANT FOR EXPANSION OF T HE CAPACITIES OF THE ELIGIBLE INDUSTRY THEIR MODERNISATION AND IMPROVING THE MARKETING CAP ABILITIES WHICH CANNOT BE SAID TO BE MATERIALLY DIFFERENT FROM THE SCHEME OF 2004. ON TH E OTHER HAND THERE IS SIMILARITY IN THE OBJECTS OF BOTH THESE SCHEMES INASMUCH AS IT WAS TO PROVIDE INCENTIVE FOR THE PURPOSE OF SETTING UP OF NEW UNITS AS WELL AS FOR THE EXPANSIO N OF THE EXISTING UNITS. 33. IT IS PERTINENT TO NOTE THAT THE SIMILAR ISSUE HAD COME UP FOR CONSIDERATION BEFORE THE DELHI BENCH OF THIS TRIBUNAL IN THE CASE OF PEPSICO INDIA HOLDINGS PVT. LIMITED (SUPRA) CITED BY THE LD. COUNSEL FOR THE ASSESSEE. IN THE SAID CASE IND USTRIAL PROMOTIONAL ASSISTANCE IN THE FORM OF SUBSIDY BY WAY OF REFUND OF SALES TAX PAID WAS RECE IVED BY THE ASSESSEE UNDER THE SAME SCHEME I.E. WEST BENGAL INCENTIVE SCHEME 2004 AND THE ISSUE RAISED WAS RELATING TO THE TAXABILITY OF THE SUBSIDY RECEIVED BY THE ASSESSEE. WHILE DECIDING THE SAID ISSUE THE TRIBUNAL TOOK NOTE OF THE OBJECT OF THE WEST BENGAL INCENTIV E SCHEME 2004 WHICH WAS FOUND TO BE TO PROMOTE SETTING UP AND EXPANSION OF PROJECTS/INDUST RY AND KEEPING IN VIEW THE SAID OBJECT AND THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS.- PONNY SUGAR & CHEMICALS LIMITED (SUPRA) AS WELL AS IN THE CASE OF CIT VS.- CHAPHALKER BROTHERS (SUPRA) IT WAS HELD BY THE TRIBUNAL THAT THE SUBSIDY RECEIVED BY THE ASSESSEE UNDER THE WEST BENGAL INCENTIVE SCHEME OF 2004 WAS CAPITAL IN NATURE AND THE SAME COULD NOT BE TAXED AS REVENUE RECEIPT. 34. HAVING REGARD TO ALL THE RELEVANT FACTS OF THE CASE AND KEEPING IN VIEW THE LEGAL POSITION EMANATING FROM THE VARIOUS JUDICIAL PRONOUNCEMENTS DISCUSSED ABOVE WE ARE OF THE VIEW THAT THE SUBSIDY IN QUESTION RECEIVED BY THE ASSESSEE IN THE FORM OF REFUND OF SALES TAX UNDER THE WEST BENGAL INCENTIVE SCHEME 2004 WAS CAPITAL IN N ATURE AS THE PURPOSE OF THE SAME WAS FOR THE EXPANSION OF THE EXISTING INDUSTRY OF THE ASSES SEE. WE ALSO HOLD THAT MERELY BECAUSE THE SAID SUBSIDY WAS TO BE RECEIVED BY THE ASSESSEE ONL Y AFTER THE COMMENCEMENT OF PRODUCTION WOULD NOT CHANGE ITS CHARACTER WHICH OTHERWISE WAS CAPITAL IN NATURE. WE ACCORDINGLY UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) G IVING RELIEF TO THE ASSESSEE ON THIS ISSUE. I.T.A. NOS.2563&2564/KOL/2019 M/S EMAMI AGROTECH LIMITED ASSESSMENT YEARS: 2013-14 & 2014-15 6 35. AS REGARDS THE ISSUE RELATING TO THE TREATMENT TO BE GIVEN TO THE SALES TAX SUBSIDY WHILE COMPUTING THE BOOK PROFIT UNDER SECTION 115JB OF TH E ACT IT IS OBSERVED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAI NST THE REVENUE BY THE VARIOUS DECISIONS OF THE TRIBUNAL. IN ONE OF SUCH DECISIONS RENDERED IN THE CASE OF BENANI INDUSTRIES LIMITED (SUPRA) THE COORDINATE BENCH OF THIS TRIBUNAL HAS HELD THAT THE CAPITAL RECEIPT IN THE FORM OF SALES TAX INCENTIVE IS REQUIRED TO BE EXCLUDED WHIL E COMPUTING THE BOOK PROFIT UNDER SECTION 115JB OF THE ACT. IN ANOTHER DECISION RENDERED IN T HE CASE OF BRICKSALE INDIA LIMITED (SUPRA) IT WAS HELD BY THE MUMBAI BENCH OF THIS TRIBUNAL TH AT THE AMOUNTS WHICH ARE NOT TAXABLE IN THE NORMAL COMPUTATION CANNOT BE INCLUDED WHILE COM PUTING THE BOOK PROFIT BECAUSE SUCH AMOUNTS DO NOT REALLY REFLECT A RECEIPT IN THE NATU RE OF INCOME AND CANNOT FORM PART OF THE BOOK PROFIT. 36. AT THE TIME OF HEARING BEFORE US THE ONLY CONT ENTION RAISED BY THE LD. D.R. IS THAT IT IS NOT VERY CLEAR AS TO WHETHER IN THE CASES DECIDED BY TH E TRIBUNAL AND RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE THE AMOUNT IN DISPUTE WAS CREDITED TO THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE AS IN THE PRESENT CASE. HOWEVER AS PO INTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE FROM THE RELEVANT PORTION OF THE ORDERS OF THE TRIBUNAL THE AMOUNTS IN DISPUTE WERE CREDITED BY THE ASSESSEES IN THE PROFIT & LOSS ACCO UNT AND THE FACTUAL POSITION IN THE SAID CASES THUS WAS SIMILAR TO THAT OF THE ASSESSEE. AS FURTHER POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE A NOTE NO. 20 WAS GIVEN BY THE ASSESSEE-C OMPANY AS NOTES TO ACCOUNTS FORMING PART OF ITS ANNUAL ACCOUNTS POINTING OUT SPECIFICALLY TH AT IT WAS ENTITLED FOR SALES TAX INCENTIVE OF RS.2494.67 LAKHS UNDER THE WEST BENGAL INCENTIVE SC HEME 2004. WE THEREFORE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(APPE ALS) ALLOWING THE CLAIM OF THE ASSESSEE FOR EXCLUSION OF THE AMOUNT OF SUBSIDY IN QUESTION WHIL E COMPUTING THE BOOK PROFIT UNDER SECTION 115JB OF THE ACT. GROUNDS NO. 2 TO 5 OF THE REVENUE S APPEAL ARE ACCORDINGLY DISMISSED. (EMPHASIS GIVEN BY US) 8. SINCE NO CHANGE OF FACTS OR LAW COULD BE POINTED OUT BY THE REVENUE ON THIS ISSUE WHICH HAS BEEN DECIDED IN ASSESSEES OWN CAS E AND THE CASE LAW RELIED BY THE A.O IN THE CASE OF SAHANY STEEL & PRESS WORKS LIMIT ED (SUPRA) HAS ALSO BEEN CONSIDERED BY THE TRIBUNAL IN THE ABOVE CASE OF ASS ESSEE ON THIS ISSUE WE RESPECTFULLY FOLLOW THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y 2011-12 WE CONFIRM THE ORDER OF LD. CIT(A) AND DISMISS BOTH GROUNDS O F APPEAL. 9. GROUND NO.3 IS AGAINST THE ACTION OF THE LD. CIT (A) IN ALLOWING THE EMPLOYEES CONTRIBUTION TO PF/ESI WHICH WAS NOT PAID BEFORE TH E DUE DATE. WE NOTE THAT THE LD. CIT(A) ALLOWED THE GROUNDS OF APPEAL OF THE ASSESS EE ON THIS ISSUE BY RELYING ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF VIJAY SHREE LTD. DATED 07.09.2011 IN ITAT NO.245 OF 2011 AND THE LD. CIT( A) HAS HELD AS UNDER: GROUND NO.7 IS REGARDING DISALLOWING OF EMPLOYEE C ONTRIBUTION TO PF/ESI PAID ON OR BEFORE THE DUE DATE OF FILING RETURN OF RS.14 32 456/-. IT IS NOTED THAT THE SAME HAS BEEN PAID BEFORE THE DUE DATE OF FILING OF THE RETURN. THEREFORE FO LLOWING THE DECISION OF THE HONBLE I.T.A. NOS.2563&2564/KOL/2019 M/S EMAMI AGROTECH LIMITED ASSESSMENT YEARS: 2013-14 & 2014-15 7 JURISDICTIONAL HIGH COURT IN THE CASE OF VIJAY SHRE E LTD. DATED 07.09.2011 IN ITAT NO.245 OF 2011 AND GA NO.2607 OF 2011. THEREFORE THIS GROUND IS ALLOWED. 10. SINCE THE DECISION OF THE LD. CIT(A) IS BY RELY ING ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN VIJAY SHREE LT D. (SUPRA) AND THE REVENUE COULD NOT POINT OUT ANY CHANGE OF FACTS OR LAW WE RESPEC TFULLY FOLLOW THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN VIJAYSHREE LTD (SUPR A) AND CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS THE GROUND OF THE REVENUE. 11. GROUND NO.4 IS AGAINST THE ACTION OF THE LD. CI T(A) IN ALLOWING INTEREST OF RS.18 846/- ON DELAY PAYMENT OF EXCISE DUTY. THE LD . CIT(A) HAS GIVEN RELIEF TO THE ASSESSEE BY RELYING ON THE DECISION OF THE TRIBUNAL IN THE CASE OF NARAYANI ISPAT PVT. LTD. (2127/KOL/2014) AS UNDER: GROUND NO.8 IS REGARDING DISALLOWING INTEREST OF R S.18 846/- ON DELAY PAYMENT OF EXCISE DUTY. THIS GROUND IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE ITAT IN THE CASE OF NARAYANIISPATPVT. LTD. (2127/KO L/2014). THEREFORE THIS GROUND IS ALLOWED. 12. WE NOTE THAT HE LD. CIT(A) HAS GIVEN RELIEF TO THE ASSESSEE BY RELYING ON THE DECISION OF THE TRIBUNAL IN THE CASE OF NARAYANI IS PAT PVT. LTD. WHICH HE DID SO CORRECTLY. AND SINCE THE RELIEF HAS BEEN GIVEN BY R ELYING ON THE RATIO OF DECISION OF THE TRIBUNAL IN THE CASE OF NARAYANI ISPAT PVT. LTD. (S UPRA) WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) THEREFORE WE CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS THE GROUNDS OF REVENUE. 13. GROUND NO.5 IS AGAINST THE ACTION OF THE LD. CI T(A) IN ALLOWING INTEREST OF RS.1 76 515/- ON DELAY PAYMENT OF SERVICE TAX. WE N OTE THAT LD. CIT(A) HAS GIVEN RELIEF TO THE ASSESSEE BY RELYING ON THE DECISION O F THE TRIBUNAL IN THE CASE OF NARAYANI ISPAT PVT. LTD. (2127/KOL/2014) AS UNDER: GROUND NO.10 IS REGARDING DISALLOWING INTEREST OF RS.1 76 515/- ON DELAY PAYMENT OF SERVICE TAX. THIS GROUND IS SQUARELY COVERED IN FAVOUR OF T HE ASSESSEE BY THE DECISION OF HONBLE ITAT IN THE CASE OF NARAYANIISPATPVT. LTD. (2127/KOL/201 4). THEREFORE THIS GROUND IS ALLOWED. I.T.A. NOS.2563&2564/KOL/2019 M/S EMAMI AGROTECH LIMITED ASSESSMENT YEARS: 2013-14 & 2014-15 8 14. WE NOTE THAT HE LD. CIT(A) HAS GIVEN RELIEF TO THE ASSESSEE BY RELYING ON THE DECISION OF THE TRIBUNAL IN THE CASE OF NARAYANI IS PAT PVT. LTD. WHICH HE DID SO CORRECTLY. AND SINCE THE RELIEF HAS BEEN GIVEN BY R ELYING ON THE RATIO OF THE DECISION OF THIS TRIBUNAL IN THE CASE OF NARAYANI ISPAT PVT. LT D. (SUPRA) WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) THEREFORE WE CONFIRM THE ORDER AND DISMISS THE GROUNDS OF REVENUE. 15. GROUND NO.6&7 THE LD. AR RELIED ON THE ACTION OF THE A.O IN DELETING THE ACTION OF LD. CIT(A) OF RS.10 662/- ON ACCOUNT OF D ELAY PAYMENT OF LEASE RENT AND IN DELETING ADDITION OF RS.63 579/- ON ACCOUNT OF DELA YED PAYMENT OF SERVICE TAX. THE LD. DR FAIRLY SUBMITS THAT HE COULD NOT TRACE OUT ANY A DDITION MADE BY THE A.O OR ADJUDICATED BY THE LD. CIT(A) ON THIS ISSUE THEREF ORE THESE TWO GROUNDS ARE DISMISSED AS INFRUCTUOUS. 16. COMING TO THE NEXT APPEAL OF THE REVENUE FOR A. Y 2014-15. GROUND NOS.1 & 2 ARE SAME THAT OF A.Y 2013-14 AND THEREFORE STANDS DISMISSED ON THE SAME REASONING GIVEN FOR A.Y 2013-14. 17. GROUND NO.3 IS IN RESPECT OF DELETION OF ADDITI ON OF RS.1 05 344/- ON ACCOUNT OF INTEREST ON DELAY PAYMENT OF EXCISE DUTY WHICH IS A LSO COVERED IN FAVOUR OF ASSESSEE BY OUR DECISION FOR A.Y 2013-14 AND THEREFORE ON TH E SAME REASONING THIS GROUND OF THE REVENUE IS DISMISSED. 18. GROUND NO.4 IS AGAINST THE ACTION OF THE LD. CI T(A) IN DELETING AN ADDITION OF RS.10 662/- ON ACCOUNT OF DELAY PAYMENT OF LEASE RE NT. THE LD. CIT(A) HAS GIVEN RELIEF TO THE ASSESSEE BY HOLDING AS UNDER: GROUND NO.5 IS REGARDING DISALLOWING INTEREST OF R S.10 740/-. THE A.O HAS DISALLOWED PENALTY OF RS.78/-. THE SAME HAS ALREADY BEEN OFFER ED TO TAX BY ASSESSEE. THE REMAINING PART IS INTEREST OF RS.10 662/- ON DELAY PAYMENT OF LEAS E RENT. THE COMPANY HAS SUOMOTO DISALLOWED TOWARDS PENALTY PAYMENT OF RS.78/- AND T HE REMAINING AMOUNT IS RS.10 662/- WHICH IS INTEREST TOWARDS DELAYED PAYMENT OF LEASE RENT OF HALDIA PLANT. THE LEASE RENT OF HALDIA PLANT WAS DELAYED AND HENCE ASSESSEE HAD TO PAY INTEREST ON THE LEASE RENT. IT IS NOT IN THE NATURE OF PENALTY OR ANY INFRACTION OF LAW AND HENCE ALLOWABLE. I.T.A. NOS.2563&2564/KOL/2019 M/S EMAMI AGROTECH LIMITED ASSESSMENT YEARS: 2013-14 & 2014-15 9 19. SINCE REVENUE COULD NOT DEMONSTRATE THAT THE IN TEREST OF RS. 10 662/- ON DELAY PAYMENT OF LEASE RENT OF HALDIA PLANT WAS IN THE NA TURE OF PENALTY OR AN INFRACTION OF LAW THE LD. CIT(A)S VIEW WAS PLAUSIBLE VIEW AND W E FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND SO WE CONFIRM THE ORDER OF THE LD. CIT(A) THEREFORE THIS GROUND OF THE REVENUE IS DISMISSED. 20. GROUND NO.5 IS AGAINST THE ACTION OF THE LD. CI T(A) IN DELETING THE ADDITION OF RS.63 579/- AS INTEREST ON DELAY PAYMENT OF SERVICE TAX. THIS ISSUE HAS BEEN ALREADY DECIDED BY US TAKING NOTE THAT LD. CIT(A) HAS FOLL OWED THE DECISION OF THIS TRIBUNAL IN THE CASE OF NARAYANI ISPAT PVT. LTD. (SUPRA) AN D GIVEN RELIEF TO THE ASSESSEE. THEREFORE WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND WE CONFIRM THE ORDER OF THE LD. CIT(A). THEREFORE THIS GROUND OF THE REVENUE IS DISMISSED. 21. GROUND NO.6 IS AGAINST THE ACTION OF THE LD. CI T(A) IN ALLOWING THE PRIOR PERIOD EXPENSES OF RS.3 92 427/-. THE A.O HAS DISALLOWED R S.3 92 467/- BY OBSERVING AS UNDER: ON PERUSAL OF THE TAX AUDIT REPORT [COLUMN 27(B) O F FORM 3CD] IT IS NOTICED THAT THE AUDITOR HAS POINTED OUT THE PRIOR PERIOD EXPENSES O F 3 92 427/-. HOWEVER THE ASSESSEE HAS NOT DISALLOWED THE PRIOR PERIOD EXPENSES OF RS.3 92 427 /- IN THE COMPUTATION OF TOTAL INCOME. ON PERUSAL OF THE DETAILS OF PRIOR PERIOD EXPENSES IT IS SEEN THAT PRIOR EXPENSES RELATES TO INSURANCE CLAIM SPONSORSHIP SPONSORSHIP FEES COM PUTER SOFTWARE AND PROFESSIONAL FEES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A/ R OF THE ASSESSEE COULD NOT ESTABLISH THAT THE CORRESPONDING INCOME HAS BEEN RECOGNIZED DURING THE YEAR UNDER CONSIDERATION. SINCE THE PRIOR PERIOD EXPENSES ARE NOT ALLOWABLE THE SAME I S DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE COMPANY. 22. THE THE LD. CIT(A) HAS DECIDED THE ISSUE AS UND ER: ON THIS ISSUE THE AO HAS SIMPLY STATED THAT THE AR OF THE ASSESSEE COULD NOT ESTABLISH THAT THE CORRESPONDING INCOME HAS BEEN RECOGNIZED DURING THE YEAR UNDER CONSIDERATION. IN INCOME TAX THE ALLOWANCE OF ANY EXPENDITURE IS TO BE CONS IDERED WHETHER IT HAS BEEN INCURRED WHOLLY AND SOLELY FOR THE PURPOSES OF THE BUSINESS OF THE ASSESSEE OR NOT. THE ASSESSEE HAS ALREADY EXPLAINED THAT THE DOCUMENTS WERE RECEIVED LATE. TH E AO HAS NEITHER DOUBTED THE GENUINENESS OF THE VOUCHERS NOR ANY DOUBT HAS BEEN CASTED ABOUT THE NON-BUSINESS PURPOSES OF THESE EXPENDITURE VIS--VIS ASSESSEE'S BUSINESS. THEREFOR E THEY HAVE TO BE ALLOWED. NOW THE QUESTION REMAINS WILL THEY BE ALLOWED IN RESPECT OF A.Y. 2013-14 OR A.Y. 2014-15? THE AO IS DIRECTED TO ALLOW THEM IN THE YEAR THEY HAVE BEEN C LAIMED. I.T.A. NOS.2563&2564/KOL/2019 M/S EMAMI AGROTECH LIMITED ASSESSMENT YEARS: 2013-14 & 2014-15 10 23. HAVING HEARD BOTH SIDES WE NOTE THAT ALTHOUGH THE EXPENDITURE PERTAINS TO EARLIER YEARS BUT THE SAME HAS BEEN CRYSTALLIZED DU RING THE PREVIOUS YEAR RELEVANT TO A.Y 2014-15 ONLY AND HENCE ACCORDING TO ASSESSEE TH E SAME HAS BEEN CLAIMED AS DEDUCTIBLE EXPENDITURE. THE ASSESSEE ALSO EXPLAINED THAT LATE SUBMISSION OF BILLS BY THE PARTIES DISPUTES OVER THE BILLS SETTLED IN THE CUR RENT YEAR SHORT PROVISIONING OF EXPENSES WAS AMONG OTHERS THE REASONS FOR WHICH E XPENSES RELATED TO EARLIER YEARS WERE ACCOUNTED FOR BY THE ASSESSEE DURING THE CURRE NT FINANCIAL YEAR. IT HAS BEEN TAKEN NOTE BY THE LD. CIT(A) THAT NONE OF THE EXPENDITUR E HAS BEEN FOUND BOGUS OR NON- DEDUCTIBLE UNDER ANY PROVISION OF THE ACT. ACCORDIN G TO THE ASSESSEE ALL THESE EXPENSES ARE GENUINE EXPENDITURE OTHERWISE DEDUCTIB LE FROM THE INCOME OF THE ASSESSEE. IT IS ALSO NOTED THAT FOR THE AY 2013-14 & AY 2014-15 THE ASSESSEE HAS PAID TAX UNDER MAT AND THE TAX RATE UNDER MAT IS SAME FO R BOTH THE YEAR HENCE IT IS NOTED THAT THE ASSESSEE WILL NOT GAIN ANY BENEFIT BY DEFE RRING THE TAX LIABILITY. THE ASSESSEE HAD RELIED ON THE DECISION OF HONBLE DELHI HIGH CO URT IN THE CASE OF CIT VS. VISHNU INDUSTRIAL GASES (P) LTD. (IT REF. NO.229 OF 1998 A ND CIT VS. SHRI RAM PISTONS & RINGS LTD. (2008) 220 CTR (DEL) 404. IT WAS HELD BY THE HONBLE DELHI HIGH COURT THAT UNLESS IT IS NOTICED THAT THE ASSESSEE HAS DEL IBERATELY CLAIMED PRIOR PERIOD EXPENSES BY DELIBERATE DEFERMENT TO REDUCE TAX LIABILITY IN THE SUBSEQUENT YEARS THERE IS NO REASON TO DISALLOW THE PRIOR PERIOD EXPENSES IN A S UMMARY MANNER. IN THE LIGHT OF THE AFORESAID DISCUSSION WE FIND NO INFIRMITY IN THE O RDER OF THE LD. CIT(A) AND WE CONFIRM THE ORDER OF THE LD. CIT(A) THEREFORE THI S GROUND OF THE REVENUE IS DISMISSED. 24. THUS THE APPEAL OF REVENUE ARE DISMISSED. 25. THE LD. AR HAS BROUGHT TO OUR NOTICE THAT THE A SSESSEE HAS PREFERRED A PETITION UNDER RULE 27 OF INCOME TAX APPELLATE TRIBUNAL RULE S 1963 FOR A.YS 2013-14 AND 2014-15. SINCE THE AVERMENTS IN BOTH THE YEARS ARE THE SAME WE REPRODUCE THE SUBMISSION OF THE ASSESSEE FOR A.Y 2013-14 WHICH IS AS UNDER: THIS HUMBLE PETITION UNDER RULE 27 OF THE INCOME TA X APPELLANT TRIBUNAL RULES 1963OF THE PETITIONER MOST HUMBLY AND RESPECTFULLY SHEWETHS I.T.A. NOS.2563&2564/KOL/2019 M/S EMAMI AGROTECH LIMITED ASSESSMENT YEARS: 2013-14 & 2014-15 11 1. THE INCOME TAX APPEAL BEARING ITA NO. 2563/KOL/2019 HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER PASSED BY LD. CIT(A)-4 KOLKATA O N 19 TH SEPTEMBER 2019. THE SAID APPEAL IS FIXED FOR HEARING BEFORE HONBLE B BENCH ON 7 TH DECEMBER 2020. 2. THE FACTS OF THE CASE ARE THAT THE RESPONDENT ASSES SEE HAD RECEIVED VARIOUS INCENTIVES/SUBSIDIES AS DETAILED HEREIN BELOW FRO M WEST BENGAL GOVERNMENT AND ANDHRA PRADESH GOVERNMENT. ELECTRICITY DUTY RS. 2 07 09 740 SALES TAX INCENTIVE RS.43 08 97 000 3. THE RESPONDENT ASSESSEE COMPANY CLAIMED BEFORE THE ASSESSING OFFICER THAT THESE INCENTIVES/SUBSIDIES WERE RECEIVED BY IT UNDER SCHE MES FORMULATED BY GOVERNMENT OF WEST BENGAL AND GOVERNMENT OF ANDHRA PRADESH FOR IN DUSTRIAL DEVELOPMENT IN THE RESPECTIVE STATES. IT WAS CLAIMED THAT THE SAID INC ENTIVES/SUBSIDIES WERE CAPITAL RECEIPT IN NATURE AND WERE NOT LIABLE TO BE TAXED UNDER INC OME TAX ACT 1961. 4. THE LD. ASSESSING OFFICER DISAGREED WITH THE RESPON DENT ASSESSEE AND HELD THAT THE AFORESAID INCENTIVES/SUBSIDIES WERE REVENUE RECEIPT S CHARGEABLE TO TAX AND COMPLETED THE ASSESSMENT VIDE ASSESSMENT ORDER DATED 21 ST DECEMBER 2016 PASSED U/S 143(3) R.W.S 144C(3) OF THE INCOME TAX ACT 1961. 5. THE ASSESSEE COMPANY FILED AN APPEAL AGAINST THE SA ID ASSESSMENT ORDER BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 4 KOLKATA A GAINST THE DISALLOWANCE OF THE CLAIM OF RS.43 08 97 000 WHO ALLOWED THE SAID CLAIM OF THE ASSESSEE COMPANY VIDE HIS ORDER DATED 19 TH SEPTEMBER 2019 IN APPEAL NO. 812/CIT(A)-4/2 016-1 7. 6. THE REVENUE HAS FILED THE APPEAL AGAINST THE AFORES AID RELIEF ALLOWED BY LD. CIT(A)-4 KOLKATA. THE RESPONDENT ASSESSEE DID NOT FILE ANY A PPEAL AGAINST THE ORDER PASSED BY LD. CIT(A) AND/OR CROSS OBJECTION AGAINST THE APPEA L FILED BY REVENUE. 7. THE RESPONDENT ASSESSEE SUBMITS THAT THE INCENTIVE OF RS.2 07 09 740 IN RESPECT OF WAIVER OF ELECTRICITY DUTY ALLOWED TO THE RESPONDEN T ASSESSEE COMPANY IN PURSUANCE TO THE WEST BENGAL INCENTIVE SCHEME 2004 IS ALSO A CAPITAL RECEIPT NOT CHARGEABLE TO TAX. HOWEVER THIS CLAIM OF THE ASSESSEE COMPANY RE MAINED DISALLOWED BY THE LD. ASSESSING OFFICER AND UNCONTESTED BEFORE LD. CIT(A) . 8. THE RESPONDENT ASSESSEE COMPANY MOST HUMBLY AND RES PECTFULLY SUBMITS THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE COMPANY BY THE FOLLOWING TWO JUDGEMENTS OF HONBLE CALCUTTA HIGH COURT. (I)PCIT KOLKATA VS. ANKIT METAL & POWER LTD. [2019 ] 109 TAXMANN.COM 93 DT. OF JUDGMENT . 09.07.2019 (II)PCIT KOLKATA VS. SHYAM STEEL INDUSTRIES LTD. [ 2018] 93 TAXMANN.COM 495 DT. OF JUDGMENT 07.05.2018 9. THE ASSESSEE COMPANY HAD RECEIVED EXEMPT INCOME OF RS.5 83 965 BY WAY OF DIVIDEND. THE ASSESSEE COMPANY INADVERTENTLY OFFERED SUOMOTU DISALLOWANCE OF RS.7 56 363 U/S 14A OF THE INCOME TAX ACT 1961. THE LD. ASSESSING OFFICER MADE FURTHER DISALLOWANCE OF RS.33 54 567. THE LD. CIT(A) ON APPEAL BEFORE H IM ALLOWED RELIEF OF RS.33 54 567. I.T.A. NOS.2563&2564/KOL/2019 M/S EMAMI AGROTECH LIMITED ASSESSMENT YEARS: 2013-14 & 2014-15 12 10. THE ASSESSEE COMPANY SUBMITS THAT THE DISALLOWANCE U/S 14A CANNOT BE MORE THAN THE AMOUNT OF THE EXEMPT INCOME. THIS LAW IS WELL SETTL ED BY THE JUDGEMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT V. CARAF BU ILDERS & CONSTRUCTIONS (P.) LTD. [2019] 101 TAXMANN.COM 167 (DELHI). SLP FILED BY REVENUE A GAINST THIS JUDGEMENT WAS DISMISSED BY HONBLE SUPREME COURT IN [2019] 112 TA XMANN.COM 322 (SC) 11. THE ASSESSEE COMPANY SUBMITS THAT THE MISTAKE OR IN ADVERTENCE ON THE PART OF THE ASSESSEE WHEREBY AN INCOME NOT TAXABLE IS WRONGLY O FFERED FOR TAX WILL NOT OPERATE AS ANY KIND OF ESTOPPEL AGAINST THE ASSESSEE REGARDLES S WHETHER THE REVISED RETURN WAS FILED OR NOT. IN SUCH A CASE THE REVENUE IS OBLIGED TO ASSESS THE CORRECT INCOME. IN SUPPORT OF THE AFORESAID CLAIM THE ASSESSEE COMPANY REFERS TO AND RELIES ON THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF PR. CIT VS. GREENLAND INFRACON P. LTD. IN R/TAX APPEAL NO. 239 OF 2019 (JUDGEMENT DATED 09 .07.2019). THE RELEVANT PORTION OF THE JUDGEMENT IS QUOTED HEREUND ER. 6. THE TRIBUNAL ALSO CONCURRED WITH THE FINDINGS R ECORDED BY THE CIT(A) THAT THE MISTAKE OR INADVERTENCE ON THE PART OF THE ASSESSEE WHEREBY AN INCOME NOT TAXABLE IS WRONGLY OFFERED FOR TAX WILL NOT OPERATE AS ANY KIND OF ESTOPPEL AGAINST TH E ASSESSEE REGARDLESS WHETHER THE REVISED RETURN WAS FILED OR NOT. IF THE ASSESSEE IS IN A POSITION TO SHOW THAT IT HAS BEEN OVER ASSESSED ON ACCOUNT O F HIS OWN MISTAKE THE REVENUE IS OBLIGED TO ASSESS T HE CORRECT INCOME. 7. HAVING REGARD TO THE CONCURRENT FINDINGS RECORDE D BY THE TWO REVENUE AUTHORITIES WE ARE NOT INCLINED TO DISTURB SUCH FINDINGS.' 12. THE RESPONDENT ASSESSEE COMPANY PRAYS THAT IT MAY K INDLY BE PERMITTED TO RAISE THE FOLLOWING GROUNDS IN ACCORDANCE WITH RULE 27 OF THE INCOME TAX APPELLATE TRIBUNAL RULES 1963. 1. THAT THE SUM OF RS.2 52 17 603/- RECEIVED BY THE ASSESSEE COMPANY TOWARDS WAIVER OF ELECTRICITY DUTY BE HELD TO BE CAPITAL RECEIPT NOT CHARGEABLE TO TAX. 2. THAT THE DISALLOWANCE U/S 14A OF THE ACT BE LIMI TED TO THE AMOUNT OF DIVIDEND INCOME CLAIMED TO BE EXEMPT. 26. FOR A.Y 2014-15 AVERMENTS WERE THE SAME EXCEPT FIGURES IN THE PRAYER WHICH IS AS UNDER: 1.THAT THE SUM OF RS.2 52 17 603/- RECEIVED BY THE ASSESSEE COMPANY TOWARDS WAIVER OF ELECTRICITY DUTY BE HELD TO BE CAPITAL RECEIPT NOT CHARGEABLE TO TAX. 2.THAT THE DISALLOWANCE U/S 14A OF THE ACT BE LIMIT ED TO THE AMOUNT OF DIVIDEND INCOME CLAIMED TO BE EXEMPT. 27. FOR ADJUDICATING THESE TWO ISSUES UNDER RULE 27 OF THE INCOME TAX APPELLATE RULES 1963 IT WILL BE USEFUL FOR US TO REFER TO TH E RULE 27 WHICH READS AS UNDER:- RULE 27. RESPONDENT MAY SUPPORT ORDER ON GROUNDS DE CIDED AGAINST HIM. THE RESPONDENT THOUGH HE MAY NOT HAVE APPEALED M AY SUPPORT THE ORDER APPEALED AGAINST ON ANY OF THE GROUNDS DECIDED AGAINST HIM. I.T.A. NOS.2563&2564/KOL/2019 M/S EMAMI AGROTECH LIMITED ASSESSMENT YEARS: 2013-14 & 2014-15 13 28. THE LD. D.R OPPOSING THE RULE 27 OF THE INCOME TAX APPELLATE TRIBUNAL RULES (HEREINAFTER REFERRED TO THE RULES) POINTED OUT THA T AS PER THIS RULE THE RESPONDENT IN THIS CASE THE ASSESSEE EVEN THOUGH HAD NOT FILED A NY APPEAL OR CROSS-OBJECTION IT (ASSESSEE) MAY SUPPORT THE ORDER OF LD. CIT(A) ON A GROUND DECIDED AGAINST IT BY THE LD. CIT(A). THEREFORE ACCORDING TO LD. D.R THE AS SESSEE COULD HAVE SUPPORTED THE ORDER OF LD. CIT(A) ON ANY OF THE GROUNDS DECIDED A GAINST IT BY THE LD. CIT(A) AND IN THIS CASE IT IS VERY CLEAR THAT THE ASSESSEE HAS NO T CONTESTED BEFORE THE LD. CIT(A) THE CLAIM OF DISALLOWANCE OF INCENTIVE OF RS. 2 07 09 7 40/- IN RESPECT OF WAIVER OF ELECTRICITY DUTY BY THE STATE OF WEST BENGAL AS PER WEST BENGAL INCENTIVE SCHEMES 2004. SO ACCORDING TO LD. D.R SINCE THE ISSUES/NEW GROUNDS RAISED IN THIS RULE 27 APPLICATION HAS NOT AT THE FIRST INSTANCE BEEN AGIT ATED BEFORE THE LD. CIT(A) HE WONDERED AS TO HOW RULE 27 CAN BE PRESSED INTO FOR ADMISSION OF TWO NEW GROUNDS AND HOW IT CAN BE SAID TO SUPPORT THE DECISION OF L D. CIT(A). ACCORDING TO LD. D.R IF THE ASSESSEE HAD ANY GRIEVANCE IN RESPECT OF TWO GR OUNDS (NEW) THEN THE ASSESSEE OUGHT TO HAVE FILED AN APPEAL OR CROSS-OBJECTION RA THER THAN FILING RULE 27 APPLICATION WHICH IN NOT CORRECT AT ALL. SO HE OBJECTS TO THE A DMISSION OF TWO NEW GROUNDS UNDER RULE 27 OF THE RULES. ON THE OTHER HAND THE LD. A. R SUBMITTED THAT THE ISSUES RAISED ARE NO LONGER RES-INTEGRA AND THEREFORE THESE ARE LEGAL ISSUES WHICH SHOULD BE ADMITTED FOR INTEREST OF JUSTICE AND TECHNICALITIES SHOULD N OT COME IN THE WAY OF SUBSTANTIAL JUSTICE AND THE COUNSELS OMISSION NOT TO FILE APPE AL/C.O SHOULD NOT DEPRIVE THE ASSESSEE OF THE SUBSTANTIAL JUSTICE. 29. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS. WE NOTE THAT THE REVENUE HAS PREFERRED AN APPEAL AGAINST THE ORDER O F LD. CIT(A) DATED 19.09.2019 AND 20.09.2019 FOR AY 2013-14 AND AY 2014-15 RESPECTIVE LY. HOWEVER THE ASSESSEE DID NOT PREFER ANY CROSS APPEAL OR CROSS OBJECTION AGAI NST THE IMPUGNED ORDER OF LD. CIT(A). HOWEVER THE ASSESSEE HAS PREFERRED AN APPL ICATION UNDER RULE 27 OF THE RULES PRAYING FOR PERMITTING IT TO RAISE TWO GROUNDS IN A CCORDANCE WITH RULE 27 OF THE RULES. 1. THAT THE SUM OF RS.2 52 17 603/- RECEIVED BY THE ASSESSEE COMPANY TOWARDS WAIVER OF ELECTRICITY DUTY BE HELD TO BE CAPITAL RECEIPT NOT CHARGEABLE TO TAX. I.T.A. NOS.2563&2564/KOL/2019 M/S EMAMI AGROTECH LIMITED ASSESSMENT YEARS: 2013-14 & 2014-15 14 2. THAT THE DISALLOWANCE U/S 14A OF THE ACT BE LIMI TED TO THE AMOUNT OF DIVIDEND INCOME CLAIMED TO BE EXEMPT. IN PARA 7 OF ITS PETITION PREFERRED UNDER RULE 27 W HICH IS REPRODUCED AT PAGE 10 AND 11 OF THIS ORDER IT CAN BE NOTED THAT THE ASSESSEE HAD RECEIVED INCENTIVE OF RS. 2 07 09 740/- IN RESPECT OF WAIVER OF ELECTRICITY D UTY FROM THE GOVT. OF WEST BENGAL UNDER WEST BENGAL INCENTIVE SCHEME 2004 WHICH ACCO RDING TO ASSESSEE IT HAD CLAIMED AS A CAPITAL RECEIPT WHICH IS NOT CHARGEABL E TO TAX. HOWEVER ACCORDING TO THE ASSESSEE THIS CLAIM WAS DISALLOWED BY AO AND THE A SSESSEE DID NOT CONTEST THE ACTION OF AO BEFORE THE LD. CIT(A). ACCORDING THE ASSESSEE THE QUESTION WHETHER THE INCENTIVE RECEIVED BY THE ASSESSEE COMPANY TOWARDS WAIVER OF ELECTRICITY DUTY IS A CAPITAL RECEIPT OR NOT IS NO LONGER RES-INTEGRA AFTER THE DECISION OF HONBLE CALCUTTA HIGH COURT IN ANKIT METAL & POWER LTD. AND SHYAM ST EEL INDUSTRIES LTD. (SUPRA) AND SINCE THE ISSUE HAS BEEN SETTLED BY THE HONBLE JUR ISDICTIONAL HIGH COURT THAT THIS RECEIPT IS A CAPITAL RECEIPT AND IS NOT CHARGEABLE TO TAX THIS GROUND OF APPEAL RAISED THROUGH RULE 27 IS PURELY A LEGAL ISSUE AND IT SHOU LD BE ADMITTED BY THIS TRIBUNAL EVEN THOUGH IT HAS NOT BEEN RAISED BEFORE THE LD. CIT(A) . WE DONT COMPLETELY AGREE WITH THE SAID CONTENTION OF THE ASSESSEE; THOUGH WE AGRE E THAT A LEGAL ISSUE CAN BE RAISED BEFORE THIS TRIBUNAL EVEN IF IT HAS NOT BEEN RAISE D BEFORE THE LOWER AUTHORITIES I.E. A LEGAL ISSUE CAN BE RAISED FOR THE FIRST TIME BEFORE THIS TRIBUNAL. HOWEVER WE ARE AWARE OF OUR LIMITATION TOO. WE ARE VERY MUCH AWARE THAT WE ARE A CREATURE OF THE STATUTE AND DERIVE OUR POWER FROM THE ACT [CHAPTER (XX) TO SEC TION 252 TO 255 OF THE ACT]. AS PER SECTION 252 OF THE ACT THE CENTRAL GOVERNMENT HAS BEEN EMPOWERED TO CONSTITUTE THIS TRIBUNAL CONSISTING OF AS MANY JUDICIAL AND ACCOUNT ANT MEMBER; AND THE TRIBUNAL TO EXERCISE THE POWERS AND DISCHARGE THE FUNCTION CONF ERRED ON IT BY THIS ACT. SO WE DERIVE THE POWER FROM THE ACT AND OBLIGED TO DISCHA RGE THE FUNCTION WHICH IS SPECIFICALLY CONFERRED ON US BY THIS ACT AND RULES FRAMED BY THERE UNDER. AND IN EXERCISE OF THE POWERS CONFERRED BY SUB-SECTION (5) OF SECTION 255 OF THE ACT THE TRIBUNAL HAS FRAMED THE INCOME TAX APPELLATE TRIBUN AL RULES 1963 THE RULES TO REGULATE THE PROCEDURE OF THE TRIBUNAL. BY VIRTUE OF THE PROVISIONS OF THE ACT AND RULES IF THE ASSESSEE /REVENUE IS AGGRIEVED BY THE ORDER OF LD. CIT(A) THEN EITHER PARTIES CAN PREFER AN APPEAL OR CROSS OBJECTION BEF ORE THIS TRIBUNAL AND RULE 27 CAN BE I.T.A. NOS.2563&2564/KOL/2019 M/S EMAMI AGROTECH LIMITED ASSESSMENT YEARS: 2013-14 & 2014-15 15 USED BY THE RESPONDENT (IN THIS CASE THE ASSESSEE) THOUGH IT (ASSESSEE) HAS NOT FILED AN APPEAL OR CROSS OBJECTION STILL CAN SUPPORT THE AC TION ORDER OF LD. CIT(A) ON ANY GROUNDS DECIDED AGAINST IT BY THE LD. CIT(A). WE FI ND THAT THE ISSUE REGARDING INCENTIVE WHICH THE ASSESSEE RECEIVED TOWARDS WAIVE R OF ELECTRICITY DUTY OR DISALLOWANCE U/S 14A OF THE ACT WAS NOT RAISED AS A GROUND BY THE ASSESSEE BEFORE THE LD. CIT(A) AND THEREFORE IT IS DIFFICULT TO COMPREH END AS TO HOW THE PROVISION OF RULE 27 CAN COME TO THE AID OF THE ASSESSEE FOR ADMISSIO N AS NEW GROUNDS OF APPEAL WHICH ARE NOT EVEN PURE LEGAL ISSUE BUT IT IS ISSUES WHIC H ARE MIXED QUESTION OF FACTS AND LAW. AND IT HAS TO APPRECIATED THAT SINCE WE ARE A CREAT URE OF THE ACT WE DO NOT ENJOY THE INHERENT POWER OF COURT OR CONSTITUTIONAL COURTS. A ND EVEN THOUGH THE ISSUES RAISED MAY BE NO LONGER RES-INTEGRA HOWEVER SINCE OUR POWERS ARE LIMITED AND WITHOUT T HE ASSESSEE PREFERRING ANY APPEAL OR CROSS OBJECTION W E ARE UNABLE TO ADMIT THESE TWO GROUNDS FOR ADJUDICATION UNDER RULE 27. AND MOREOVE R WE NOTE THAT THE DECISION RELIED UPON BY THE ASSESSEE OF THE HONBLE CALCUTTA HIGH C OURT IN THE CASE OF M/S SHYAM STEEL INDUSTRIES LTD. WAS DATED 07.05.2018 AND IN T HE CASE OF M/S ANKIT METAL & POWER LTD. WAS DATED 09.07.2019 AND THE IMPUGNED O RDER OF LD. CIT(A) BEFORE US ARE DATED 19.09.2019 AND 20.09.2019 FOR AY 2013-14 & 20 14-15 RESPECTIVELY. SO EVEN THE ASSESSEE COULD HAVE RAISED IT BEFORE THE LD. CI T(A) AS AN ADDITIONAL GROUND OR PREFERRED AN APPEAL/ CO BEFORE THIS TRIBUNAL. HOWEV ER THE ASSESSEE HAS NOT BOTHERED TO FILE AN APPEAL OR CROSS OBJECTION THROUGH WHICH IT COULD HAVE RAISED THESE GROUNDS. SO THEREFORE THE APPLICATION OF ASSESSEE UNDER RUL E 27 FOR ADMISSION OF NEW GROUNDS CANNOT BE ADMITTED. SO THE RULE 27 APPLICATIONS AR E DISMISSED FOR BOTH YEARS. 30. IN THE RESULT BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 26.03.202 1. SD/- SD/- (J.SUDHAKAR REDDY) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26.03.2021 RS I.T.A. NOS.2563&2564/KOL/2019 M/S EMAMI AGROTECH LIMITED ASSESSMENT YEARS: 2013-14 & 2014-15 16 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT- DCIT CIRCLE-11(1) KOLKATA 2. RESPONDENT M/S EMAMI AGROTECH LIMITED. 687 AN ANDAPUR EM BYEPASS KOLKATA 700107. 3. THE CIT(A)- 4 KOLKATA (SENT THROUGH E-MAIL) 4. CIT- KOLKATA 5. DR KOLKATA BENCHES KOLKATA (SENT THROUGH E-MAI L) //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT KOLKATA BENCHES KOLKATA