ACIT, Chandigarh v. M/s Shivalik Agro Chemicals, Chandigarh

ITA 894/CHANDI/2012 | 2009-2010
Pronouncement Date: 26-04-2014 | Result: Dismissed

Appeal Details

RSA Number 89421514 RSA 2012
Assessee PAN AALFS7372Q
Bench Chandigarh
Appeal Number ITA 894/CHANDI/2012
Duration Of Justice 1 year(s) 7 month(s) 27 day(s)
Appellant ACIT, Chandigarh
Respondent M/s Shivalik Agro Chemicals, Chandigarh
Appeal Type Income Tax Appeal
Pronouncement Date 26-04-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 26-02-2014
Date Of Final Hearing 24-02-2014
Next Hearing Date 24-02-2014
Assessment Year 2009-2010
Appeal Filed On 30-08-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA JUDICIAL MEMBER ITA NO.894 /CHD/2012 ASSESSMENT YEAR : 2009-10 THE A.C.I.T. VS. M/S SHIVALIK AGRO CHEMICALS CIRCLE 2(1) NEELAM CINEMA COMPLEX CHANDIGARH. SECTOR 17-E CHANDIGARH. PAN: AALFS7372Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI J.S.NAGAR DR RESPONDENT BY : NONE DATE OF HEARING : 24.02.2014 DATE OF PRONOUNCEMENT : 26.02.2014 O R D E R PER SUSHMA CHOWLA J.M. : THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME-TAX (APPEALS) CHANDIGARH DA TED 14.06.2013 RELATING TO ASSESSMENT YEAR 2009-10 AGAINST THE ORD ER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 (IN SHOR T THE ACT). 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD.CIT(APPEALS) IN APPEAL NO.689/11-12 HAS ERR ED IN DELETING THE FOLLOWING ADDITIONS: 1. THE LD. CIT(A) HAS ERRED IN THE DELETING THE ADDITI ON OF RS.1 46 78 308/- MADE BY THE A.O. BY HOLDING THAT EXCISE DUTY REFUND WAS CAPITAL RECEIPT AND WAS NOT TO BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. 2. THE APPELLANT CRAVES TO ADD OR AMEND ANY GROUND/GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OFF. 2 3. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE CANCELLED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 2. DESPITE SERVICE OF NOTICE NONE APPEARED ON BEHAL F OF THE ASSESSEE. HOWEVER FROM THE PERUSAL OF THE RECORD WE FIND THA T THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDERS OF THE TRIB UNAL IN EARLIER YEARS. 3. WE PROCEED TO DECIDE THE PRESENT APPEAL AFTER HE ARING THE LEARNED D.R. FOR THE REVENUE. THE ISSUE ARISING IN THE PR ESENT APPEAL IS IN RELATION TO ASSESSIBILITY OF EXCISE DUTY REFUND IN THE HANDS OF THE ASSESSEE. THE ASSESSEE DURING THE YEAR UNDER CONSI DERATION HAD REFLECTED EXCISE DUTY REFUND OF RS.1 46 78 308/- ON WHICH IT HAD CLAIMED DEDUCTION UNDER SECTION 80IB OF THE ACT. THE PLEA OF THE ASSESSEE THAT THE EXCISE DUTY REFUND WAS IN EXTRICABLY LINKED TO THE MANUFACTURING PROCESS OF THE ASSESSEE WAS REJECTED AND CONSEQUENT LY DEDUCTION UNDER SECTION 80IB OF THE ACT WAS DENIED TO THE ASSESSEE. 4. BEFORE THE CIT (APPEALS) THE PLEA OF THE ASSESSE E WAS THAT FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE JAMMU & KASHMIR HIGH COURT IN M/S SHREE BALAJIT ALLOYS & OTHERS [239 CTR (J&K) 70] THE CHANDIGARH BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.968/CHD/2010 RELATING TO ASSESSMENT YEAR 2007-08 VIDE ORDER DATED 20.12.2011 HAD HELD THE SAID RECEIPTS TO BE CAPITAL RECEIPTS IN THE HANDS OF THE ASSESSEE WHICH WERE NOT INCLUDIBLE IN THE H ANDS OF THE ASSESSEE. THE CIT (APPEALS) FOLLOWING THE SAME HELD THAT THE ASSESSING OFFICER WAS NOT RIGHT IN DISALLOWING THE DEDUCTION UNDER SE CTION 80IB OF THE ACT ON THE EXCISE DUTY REFUND AND CONSEQUENTLY DISALLOW ANCE MADE IN THIS REGARD WAS DELETED. 5. THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2007-08 (SUPRA) HAD HELD AS UNDER: 3 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. THE ISSUE RAISED VIDE GROUND NO.3 BY THE ASSESSEE W AS IN CONNECTION WITH THE ADDITION MADE BY THE AUTHORITIE S BELOW ON ACCOUNT OF EXCISE DUTY REFUND BY HOLDING THAT IT HA D NO NEXUS WITH THE MANUFACTURING ACTIVITIES CARRIED ON BY THE ASSE SSEE AND HENCE NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB OF TH E ACT. THE ASSESSEE HAS RAISED AN ALTERNATE PLEA BY WAY OF ADD ITIONAL GROUND OF APPEAL NO.1 WHEREIN IN VIEW OF THE RATIO LAID DO WN BY JAMMU & KASHMIR HIGH COURT IN M/S SHREE BALAJI ALLOYS & OTH ERS (SUPRA) IT IS CLAIMED THAT THE SAID EXCISE DUTY REFUND IS A CA PITAL RECEIPT AND HENCE NOT INCLUDIBLE AS INCOME OF THE ASSESSEE. TH E ADDITIONAL GROUND OF APPEAL NO.1 BEING PURELY LEGAL IS ADMITTE D FOR ADJUDICATION. 16. FIRST WE TAKE UP ADDITIONAL GROUND OF APPEAL RA ISED BY THE ASSESSEE. THE ASSESSEE HAD SET UP MANUFACTURING UN IT AND STARTED COMMERCIAL PRODUCTION AT SAMBA WHICH IS BACKWARD A REA OF STATE OF JAMMU & KASHMIR. THE ASSESSEE HAD CLAIMED DEDUC TION UNDER SECTION 80IB OF THE ACT ON THE PROFITS EARNED FROM THE SAMBA MANUFACTURING UNIT AND AS THE ASSESSEE WAS FOUND TO HAVE FULFILLED ALL CONDITIONS LAID DOWN UNDER SECTION 80IB OF THE ACT THE SAID DEDUCTION WAS ALLOWED BY THE ASSESSING OFFICER. HO WEVER THE ASSESSING OFFICER HELD THAT A SUM OF RS.139.80 LACS BEING EXCISE DUTY REFUND RECEIVED BY THE ASSESSEE WAS NOT ELIGIB LE FOR THE SAID DEDUCTION UNDER SECTION 80IB OF THE ACT AS THE SAM E WAS NOT DERIVED FROM THE INDUSTRIAL UNDERTAKING. SIMILAR I SSUE OF RECEIPT OF EXCISE DUTY REFUND AROSE BEFORE THE HON'BLE JAMM U & KASHMIR HIGH COURT IN BUNCH OF APPEALS WITH LEAD ORDER IN M /S SHREE BALAJI ALLOYS & OTHERS VS. CIT IN ITA NO.2 OF 2010 & OTHER S. THE HON'BLE COURT VIDE ORDER DATED 31.1.2011 AFTER CONS IDERING THE SCHEME FORMULATED BY THE STATE GOVERNMENT HAD ALSO REFERRED TO THE RATIOS LAID DOWN BY THE HON'BLE SUPREME COURT I N SAWHNEY STEEL & PRESS WORKS LTD. & OTHERS VS. CIT [228 ITR 253(SC)] AND CIT VS. PONNI SUGARS & CHEMICALS LTD. [306 ITR 392 (SC)] AND HELD THAT IN CONTEXT OF THE RESPECTIVE INCENTIVE SC HEMES IN THE TWO CASES THE SUBSIDY IN SAWHNEY STEEL & PRESS WORKS L TD. & OTHERS (SUPRA) WAS HELD TO BE REVENUE RECEIPT WHEREAS THE SUBSIDY IN PONNI SUGARS & CHEMICALS LTD.(SUPRA) WAS HELD TO BE CAPITAL RECEIPT. FURTHER SUPPORT WAS TAKEN FROM THE LATER DECISION OF THE HON'BLE SUPREME COURT IN M/S MEPCO INDUSTRIES LTD. MADURAI VS. CIT & ANOTHER 2009 (97) SUPREME 564 WHEREIN SIMIL AR PRINCIPLE HAD BEEN HELD AND IT HAS ALSO BEEN LAID DOWN THAT T HE NATURE OF THE SUBSIDY IN EACH OF THE CASES WAS SEPARATE AND DISTI NGUISHED. IT WAS FURTHER HELD THAT THERE IS NO STRAIGHT JACKET PRINCIPLE OF DISTINGUISHING A CAPITAL RECEIPT FROM A REVENUE REC EIPT. THE HON'BLE JAMMU & KASHMIR HIGH COURT FURTHER OBSERVED THAT TO DETERMINE THE NATURE AND INTENT OF THE INCENTIVES A S TO WHETHER THOSE WERE REVENUE RECEIPTS THE PURPOSE UNDERLYING THE INCENTIVES WAS THE DETERMINATIVE TEST. ON CONSIDERING THE NE W INDUSTRIAL POLICY FORMULATED IN THE STATE OF JAMMU & KASHMIR A ND THE OBJECT BEHIND THE FORMULATION OF SUCH POLICY BY THE CENTRA L GOVERNMENT THE COURT HELD THAT THE FINDING OF THE TRIBUNAL THA T EXCISE DUTY REFUND INTEREST SUBSIDY AND INSURANCE SUBSIDY WERE PRODUCTION INCENTIVES HENCE REVENUE RECEIPTS CANNOT BE SUSTAI NED BEING AGAINST THE LAW LAID DOWN BY THE HON'BLE SUPREME CO URT OF INDIA IN SAWHNEY STEEL & PRESS WORKS LTD. & OTHERS (SUPRA ) AND PONNI 4 SUGARS & CHEMICALS LTD. (SUPRA). THE COURT THUS HE LD THAT THE SAID INCENTIVES WERE CAPITAL RECEIPTS IN THE HANDS OF THE ASSESSEE. 17. IN THE FACTS OF THE PRESENT CASE BEFORE US THE EXCISE DUTY REFUND RECEIVED BY THE ASSESSEE WAS IN LIEU OF THE INCENTIVE SCHEME PROMULGATED IN THE STATE OF JAMMU & KASHMIR WHICH W AS CONSIDERED AT LENGTH BY THE HON'BLE JAMMU & KASHMIR HIGH COURT IN M/S SHREE BALAJI ALLOYS & OTHERS (SUPRA). FOLLO WING THE ABOVE SAID RATIO LAID DOWN BY THE HON'BLE JAMMU & KASHMIR HIGH COURT WE HOLD THAT THE EXCISE DUTY REFUND OF RS.139.80 LA CS WAS CAPITAL RECEIPT IN THE HANDS OF THE ASSESSEE AND WAS NOT TO BE INCLUDED AS INCOME OF THE ASSESSEE DURING THE YEAR UNDER CONSID ERATION. IN VIEW THEREOF WE ALLOW ADDITIONAL GROUND OF APPEAL NO.1. RAISED BY THE ASSESSEE. 18. AS WE HAVE HELD THE SAID RECEIPTS TO BE CAPITAL IN NATURE AND HENCE OUTSIDE THE PURVIEW OF TAX WE ARE NOT ADDRES SING THE ISSUE RAISED VIDE GROUND NO.3 BY THE ASSESSEE AS TO WHETH ER THE SAID EXCISE DUTY REFUND IS DERIVED FROM THE MANUFACTURIN G ACTIVITIES CARRIED ON BY THE ASSESSEE AND HENCE ELIGIBLE FOR D EDUCTION UNDER SECTION 80IB OF THE ACT. GROUND NO.3 RAISED BY THE ASSESSEE IS THUS DISMISSED IN LIMINE. 5. FOLLOWING THE SAME REASONING WE ARE OF THE VIEW THAT THE SAID EXCISE DUTY REFUND IS NOT INCLUDIBLE IN THE HANDS O F THE ASSESSEE AS PROFITS OF THE BUSINESS BEING CAPITAL RECEIPTS AS H ELD BY THE HON'BLE JAMMU & KASHMIR HIGH COURT IN M/S SHREE BALAJIT ALL OYS & OTHERS (SUPRA). THE INDUSTRIAL UNIT OF THE ASSESSEE IS AL SO ESTABLISHED IN THE STATE OF JAMMU & KASHMIR AND HENCE THE DECISION OF THE HON'BLE JAMMU & KASHMIR HIGH COURT IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE BEFORE US AS THE SCHEME OF CENVAT IS IDENTICA L. SINCE THE SAID RECEIPTS ARE TO BE TREATED AS CAPITAL RECEIPTS IN T HE HANDS OF THE ASSESSEE THE SAME ARE TO BE EXCLUDED FROM THE PROFITS OF THE BUSINESS AND DEDUCTION UNDER SECTION 80IB OF THE ACT IS THUS ALL OWABLE ON SUCH REDUCED PROFITS OF BUSINESS. IN VIEW THEREOF WE F IND NO MERIT IN THE ORDER OF THE CIT (APPEALS) TO THIS EXTENT THAT THE ASSESSING OFFICER WAS NOT RIGHT IN DISALLOWING DEDUCTION UNDER SECTION 80 IB OF THE ACT ON EXCISE DUTY REFUND. MODIFYING THE SAID DIRECTIONS OF THE CIT (APPEALS) WE HOLD THAT THE PROFITS OF BUSINESS HAVE TO BE REC OMPUTED AFTER EXCLUDING EXCISE DUTY REFUND WHICH IS ASSESSABLE A S CAPITAL RECEIPTS IN 5 THE HANDS OF THE ASSESSEE AND CONSEQUENTLY NO ADDIT ION IS WARRANTED ON ACCOUNT OF EXCISE DUTY REFUND OF RS.1.46 CRORES. T HE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE THUS DISMISSED. 6. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF FEBRUARY 2014. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 26 TH FEBRUARY 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR ITAT CHANDIGARH