The Income-tax Officer, Pathankot v. M/s. Bharat Udyog SICOP, Industrial Estate, Pathankot

ITA 322/ASR/2011 | 2008-2009
Pronouncement Date: 06-03-2011 | Result: Dismissed

Appeal Details

RSA Number 32220914 RSA 2011
Bench Amritsar
Appeal Number ITA 322/ASR/2011
Appellant The Income-tax Officer, Pathankot
Respondent M/s. Bharat Udyog SICOP, Industrial Estate, Pathankot
Appeal Type Income Tax Appeal
Pronouncement Date 06-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 06-03-2011
Date Of Final Hearing 06-03-2012
Next Hearing Date 06-03-2012
Assessment Year 2008-2009
Appeal Filed On 01-06-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU JUDICIAL MEMBER AND SH. B.P.JAIN ACCOUNTANT MEMBER I.T.A. NO.322(ASR)/2011 ASSESSMENT YEARS:2008-09 PAN;AAHFB2895H THE INCOME-TAX OFFICER VS. M/S. BHARAT UDYOG SIC OP WARD-1 PATHANKOT. KATHUA (APPELLANT) (RESPONDENT) APPELLANT BY: SH. TARSEM LAL DR RESPONDENT BY: NONE DATE OF HEARING :06/03/2012 DATE OF PRONOUNCEMENT:06/03/2012 ORDER PERBENCH; THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER OF THE CIT(A) AMRITSAR DATED 22.03.2011 WHERE THE FOLLOW ING GROUNDS HAVE BEEN RAISED: 1 ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN ALLOWING RELIEF ON ACCOUNT OF DEDUCTION U/ S 80IB ON CENTRAL EXCISE DUTY REFUND BY RELYING UPON ORDERS OF HON'BL E HIGH COURT IF J&K JAMMU WHICH HAS BEEN DELIVERED NOT ON MERITS O F THE ISSUE BUT HOLDING THE RECEIPT TO BE A CAPITAL RECEIPT ONLY BE CAUSE THE POLICY UNDER WHICH THE SAME WAS PAID ENVISAGED TACKLING TH E UNEMPLOYMENT 2 IN THE STATE WHICH CANNOT BE SAID TO BE A GOOD TEST FOR DECIDING WHETHER A RECEIPT IS A TRADING RECEIPT OR A CAPITAL RECEIPT. 2. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN FACTS AND CIRCUMSTANCES AND IN LAW IN NOT APPRECIATING THE JUDGMENTS OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF PONNI SUGAR & SAWHNEY STEEL AND PRESS WORKS LTD WHEREIN THE HON'BLE SUPREME COURT HAD HELD SUCH RECEIPTS TO BE THE REVE NUE RECEIPTS IN AS MUCH AS IN THAT CASE PAYMENTS WERE MADE ONLY AFTER THE INDUSTRIES HAD BEEN SET UP AND PAYMENTS WERE NOT MADE FOR PURPOSE OF SETTING UP OF INDUSTRIES. 3. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN FACTS AND CIRCUMSTANCES AND IN LAW IN NOT CONSIDERING THE DECISION IN THE CASE OF SEAHAM HARBOUR DOCK COMPANY WHICH LAYS DOWN TWO IMPORTANT TESTS FOR DETERMINING WHETHER RE CEIPTS IS A TRADING RECEIPT OR A CAPITAL RECEIPT. 4. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN FACTS AND CIRCUMSTANCES AND IN LAW IN NOT APPRECIATING AND APPLIED THE PURPOSE TEST AS LAID DOWN BY THE JUDGME NTS OF THE HON'BLE SUPREME COURT. IN THE CASE OF ASSESSEE THE MONEY RECEIVED BY THE ASSESSEE ON ACCOUNT OF REFUND OF CENTRAL EXCISE WAS NOT SUPPOSED TO BE SPENT IN A PARTICULAR MANNER FOR PURPOSE OF SUBS TANTIAL EXPANSION OF THE INDUSTRY. 5. THE APPELLANT CRAVES TO AMEND OR ADD ANY ONE OR MORE GROUNDS OF APPEAL. 2. AT THE TIME OF HEARING NEITHER THE ASSESSEE NO R ANY AUTHORIZED REPRESENTATIVE APPEARED ON BEHALF OF THE ASSESSEE. NOTICE OF HEARING WAS SENT TO THE ASSESSEE BY REGISTERED AD POST FOR TODAY I.E . 06.03.2012. WE ARE OF THE OPINION THAT NO USEFUL PURPOSE WILL BE SERVED I F ANY NOTICE IS AGAIN ISSUED TO THE ASSESSEE AS THE SAME HAS ALREADY BEEN ADJUD ICATED BY THIS BENCH. WE THEREFORE PROCEED TO DECIDE THE CASE ON MERITS. 3 3. BRIEFLY STATED THE GROUNDS NO. 1 TO 5 REVOLVE A ROUND THE ISSUE OF EXCISE DUTY REFUND WHICH WAS CLAIMED AS EXEMPT IN V IEW OF SECTION 80IB OF THE INCOME-TAX ACT 1961 (IN SHORT THE ACT) BEING ALLOWABLE TO THE ASSESSEE. THE AO HAS NOT ALLOWED THE CLAIM OF THE ASSESSEE AND HELD THAT THE RECEIPTS ON ACCOUNT OF EXCISE DUTY REFUND GRANTED I N VIEW OF GOVERNMENT NOTIFICATION WAS NOT ELIGIBLE TO BE CONSIDERED FOR THE PURPOSE OF DEDUCTION U/S 80IB OF THE ACT. 4. ON APPEAL THE LD. CIT(A) FOLLOWING THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHREE BALA JI ALLOWS V. CIT AND ANOTHER (2011) 333 ITR 335 (J&K) HELD THAT THE EXCI SE DUTY REFUND IS TO BE TREATED AS CAPITAL RECEIPT AND NOT LIABLE TO BE T AXED. NOW THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL AGAINST THE ORDER OF TH E LD. CIT(A). 5. THE LD. DR RELIED UPON THE ORDER OF THE ASSES SING OFFICER. 6. AFTER HEARING THE LD. DR AND PERUSING THE MATERI AL AVAILABLE ON RECORD WE FIND THAT THE ISSUE IN DISPUTE IS SQUARE LY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHREE BALA JI ALLOWS V. CIT AND ANOTHER (2011) 333 ITR 335 (J&K). THE ISSUES BEFOR E THE HON'BLE JURISDICTIONAL HIGH COURT FOR DETERMINATION WERE A S UNDER:- (1) WHETHER THE AMOUNT OF EXCISE REFUND AND INTERES T SUBSIDY RECEIVED BY THE APPELLANTS-ASSESSEES IN PURSUANCE OF THE INCENTIVES ANNOUNCED AND SANCTIONED VIDE GOVERNMENT OF INDIA MINISTRY OF COMMERCE AND INDUSTRY (DEPARTMENT OF INDUSTRIAL POL ICY AND 4 PROMOTION)S OFFICE MEMORANDUM NO. 1(13)2000-NER D ATED JUNE 14 2002 AND CENTRAL EXCISE NOTIFICATION NOS. 56 AND 57 DATED NOVEMBER 14 2002 AND OTHER NOTIFICATION ISSUED ON THE SUBJECT PERTAINING TO THE INDUSTRIAL POLICY INTRODUCED IN T HE STATE OF JAMMU AND KASHMIR IS A CAPITAL RECEIPT AND THUS NOT LI ABLE TO TAX UNDER THE PROVISIONS OF THE ACT OR REVENUE RECEIPT AS OPINE D BY THE AUTHORITIES UNDER THE ACT? (2) WHETHER THE APPELLANTS-ASSESSEES ARE ENTITLED T O DEDUCTION UNDER SECTION 80IB OF THE ACT ON THE EXCISE DUTY RE FUND AND INTEREST SUBSIDY ETC. BEING THE INCOME DERIVED FROM THE IND USTRIAL UNDERTAKING IN CASE THE EXCISE REFUND AND INTEREST SUBSIDY WERE FOUND TO BE REVENUE RECEIPT. 7. THE HON'BLE HIGH COURT OF JAMMU AND KASHMIR WHIL E DECIDING THE MATTER HAS DISCUSSED THE SALIENT FEATURES OF THE NE W INDUSTRIAL POLICY AMENDMENTS INTRODUCED THERETO AND STATUTORY NOTIFIC ATION ETC. THE HON'BLE HIGH COURT FURTHER DISCUSSED THE DECISION OF HON'B LE SUPREME COURT IN THE CASE OF SAHNEY STEEL AND PRESS WORKS LTD (1997) 228 ITR 253 (S.C) AND OBSERVED AS UNDER:- 26 A PERUSAL OF THE OFFICE MEMORANDUM DATED JUNE 1 4 2002 INDICATING NEW INDUSTRIAL POLICY AND OTHER CONCESSI ONS FOR THE STATE OF JAMMU AND KASHMIR MAKES IT EXPLICIT THAT THE CONCE SSIONS WERE ISSUED TO ACHIEVE TWIN OBJECTS VIZ. (I) ACCELERATIO N OF INDUSTRIAL DEVELOPMENT IN THE STATE OF JAMMU AND KASHMIR WHIC H HAD BEEN FOUND LAGGING BEHIND IN SUCH DEVELOPMENT AND (II) GENERATION OF EMPLOYMENT IN THE STATE OF JAMMU & KASHMIR. 27 AMENDMENT INTRODUCED TO THE OFFICE MEMORANDUM VI DE NOTIFICATION OF NOVEMBER 28 2003 OF THE GOVERNMENT OF INDIA 5 MINISTRY OF COMMERCE AND INDUSTRY (DEPARTMENT OF IN DUSTRIAL POLICY AND PROMOTION) ELOQUENTLY DEMONSTRATES THE CENTRAL GOVERENMENTS INTENTION IN EXTENDING THE INCENTIVES. THE GOVERNM ENTS OBJECTIVE AS CONVEYED BY THE HONBLE PRIME MINISTER A SRINAGAR O N APRIL 19 2003 WAS FOR CREATION OF ONE LAKH EMPLOYMENT AND SELF-EMPLOYMENT OPPORTUNITIES IN JAMMU AND KASHMIR STATE. 28 TO ACHIEVE THE PURPOSE AND OBJECTIVE REFERRED TO HEREINABOVE IT WAS INTER ALIA PROVIDED IN THE CENTRAL EXCISE NOT IFICATIONS THAT THE EXEMPTIONS CONTAINED IN THE NOTIFICATIONS WOULD BE AVAILABLE ONLY ON PRODUCTION OF CERTIFICATE FROM GENERAL MANAGER OF T HE CONCERNED DISTRICT INDUSTRIES CENTRE TO THE JURISDICTIONAL DE PUTY COMMISSIONER OF CENTRAL EXCISE OR THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE AS THE CASE MAY BE TO THE EFFECT THAT THE UNIT HAD CR EATED REQUIRED ADDITIONAL REGULAR EMPLOYMENT WHICH WOULD NOT HOW EVER INCLUDE EMPLOYMENT PROVIDED BY THE INDUSTRIAL UNITS TO DAIL Y WAGERS OR CASUAL EMPLOYEES ENGAGED IN THE UNITS. 29 A CLOSE READING OF THE OFFICE MEMORANDUM AND THE AMENDMENT INTRODUCED THERETO WITH PARAGRAPH NO. 3 APPEARING I N THE CENTRAL EXCISE NOTIFICATION NOS. 56 AND 57 OF NOVEMBER 11 2002 THUS MAKES IT AMPLY CLEAR THAT THE ACCELERATION OF DEVEL OPMENT OF INDUSTRIES IN THE STATE WAS CONTEMPLATED WITH THE OBJECT OF GENERATION OF EMPLOYMENT IN THE STATE OF JAMMU AND KASHMIR AND THE GENERATION OF EMPLOYMENT SO CONTEMPLATED WAS NOT ONLY CASUA L OR TEMPORARY; BUT WAS ON THE OTHER HAND OF PERMANENT NATURE. 30 CONSIDERED THUS THE PARAMOUNT CONSIDERATION OF THE CENTRAL GOVERNMENT IN PROVIDING THE INCENTIVES TO THE NEW I NDUSTRIAL UNITS AND SUBSTANTIAL EXPANSION OF THE EXISTING UNITS WAS TH E GENERATION OF EMPLOYMENT THROUGH ACCELERATION OF INDUSTRIAL DEVEL OPMENT TO DEAL WITH THE SOCIAL PROBLEM OF UNEMPLOYMENT IN THE STAT E ADDITIONALLY CREATING OPPORTUNITIES FOR SELF-EMPLOYMENT HENCE A PURPOSE IN PUBLIC INTEREST. 31 IN THIS VIEW OF THE MATTER THE INCENTIVES PROVI DED TO THE INDUSTRIAL UNITS IN TERMS OF THE NEW INDUSTRIAL PO LICY FOR ACCELERATED INDUSTRIAL DEVELOPMENT IN THE STATE FOR CREATION O F SUCH INDUSTRIAL ATMOSPHERE AND ENVIRONMENT WHICH WOULD PROVIDE ADD ITIONAL PERMANENT SOURCE OF EMPLOYMENT TO THE UNEMPLOYED IN HE STATE OF 6 JAMMU AND KASHMIR WERE IN FACT IN THE NATURE OF C REATION OF NEW ASSETS OF INDUSTRIAL ATMOSPHERE AND ENVIRONMENT H AVING THE POTENTIAL OF EMPLOYMENT GENERATION TO ACHIEVE A SOCIAL OBJECT . SUCH INCENTIVES DESIGNED TO ACHIEVE PUBLIC PURPOSE CANNOT BY ANY STRETCH OF REASONING BE CONSTRUED AS PRODUCTION OR OPERATIONA L INCENTIVES FOR THE BENEFIT OF ASSESSES ALONE. 32 THUS LOOKING TO THE PURPOSE OF ERADICATION OF THE SOCIAL PROBLEM OF UNEMPLOYMENT IN THE STATE BY ACCELERATIO N OF THE INDUSTRIAL DEVELOPMENT AND REMOVING BACKWARDNESS OF THE AREA THAT LAGGED BEHIND IN INDUSTRIAL DEVELOPMENT WHICH IS C ERTAINLY A PURPOSE IN THE PUBLIC INTEREST THE INCENTIVES PROVIDED BY THE OFFICE MEMORANDUM AND STATUTORY NOTIFICATIONS ISSUED IN TH IS BEHALF TO THE APPELLANTS-ASSESSEES CANNOT BE CONSTRUED AS MERE P RODUCTION AND TRADE INCENTIVES AS HELD BY THE TRIBUNAL. 33. MAKING OF ADDITIONAL PROVISION IN THE SCHEME TH AT INCENTIVES WOULD BECOME AVAILABLE TO THE INDUSTRIAL UNITS ENT ITLED THERETO FROM THE DATE OF COMMENCEMENT OF THE COMMERCIAL PRODUCTI ON AND THAT THESE WERE NOT REQUIRED FOR CREATION OF NEW ASSETS CANNOT BE VIEWED IN ISOLATION TO TREAT THE INCENTIVES AS PRODUCTION IN CENTIVES AS HELD BY THE TRIBUNAL FOR THE MEASURE SO TAKEN APPEARS TO HAVE BEEN INTENDED TO ENSURE THAT THE INCENTIVES WERE MADE AVAILABLE O NLY TO THE BONA FIDE INDUSTRIAL UNITS SO THAT LARGER PUBLIC INTEREST OF DEALING WITH UNEMPLOYMENT IN THE STATE AS INTENDED IN TERMS OF THE OFFICE MEMORANDUM WAS ACHIEVED. 34. THE OTHER FACTORS WHICH HAD WEIGHED WITH THE T RIBUNAL IN DETERMINE THE INCENTIVES AS PRODUCTION INCENTIVES M AY NOT BE DECISIVE TO DETERMINING THE CHARACTER OF THE INCENTIVE SUBSI DIES WHEN IT IS FOUND AS DEMONSTRATED IN THE OFFICE MEMORANDUM AM ENDMENT INTRODUCED THERETO AND THE STATUTORY NOTIFICATION T OO THAT THE INCENTIVES WERE PROVIDED WITH THE OBJECT OF CREATING AVENUES F OR PERPETUAL EMPLOYMENT TO ERADICATE THE SOCIAL PROBLEM OF UNEM PLOYMENT IN THE STATE BY ACCELERATED INDUSTRIAL DEVELOPMENT. 8. THE HON'BLE JURISDICTIONAL HIGH COURT CONCLUDED AS UNDER:- 35 FOR ALL WHAT HAS BEEN SAID ABOVE THE FINDING O F THE TRIBUNAL ON THE FIRST ISSUE THAT THE EXCISE DUTY REFUND INTERE ST SUBSIDY AND 7 INSURANCE SUBSIDY WERE PRODUCTION INCENTIVES HENCE REVENUE RECEIPT CANNOT BE SUSTAINED BEING AGAINST THE LAW LAID DOW N BY THE HON'BLE SUPREME COURT OF INDIA IN SAHNEY STEEL CASE (1997) 228 ITR 253 AND PONNI SUGARS CASE (2008) 306 ITR 392. 36 THE FINDING OF THE TRIBUNAL THAT THE INCENTIVES WERE REVENUE RECEIPT IS ACCORDINGLY SET ASIDE HOLDING THE INCE NTIVES TO THE CAPITAL RECEIPT IN THE HANDS OF THE ASSESSES. 37 IN VIEW OF OUR ABOVE FINDING ON THE FIRST ISSUE THERE IS NO NEED TO OPINE ON THE SECOND ISSUE WHICH WAS RAISED IN T HE ALTERNATIVE. 9. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON'B LE JURISDICTIONAL HIGH COURT WE CONFIRM THE ORDER OF THE LD. CIT(A) IN HOLDING THAT THE EXCISE DUTY REFUND IS TO BE TREATED AS CAPITAL REC EIPT IN THE HANDS OF THE ASSESSEE AND NOT LIABLE TO BE TAXED. 10. IN THE RESULT THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 6TH MARCH 2012. SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 6TH MARCH 2012 /SKR/ COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE:M/S. BHARAT UDYOG SICOP KATHUA. 2. THE ITO WARD-1 PATHANKOT. 3. THE CIT(A) ASR. 4. THE CIT ASR. 5. THE SR DR ITAT ASR. TRUE COPY BY ORDER