Income Tax Appellate Tribunal - Chandigarh
Green Filed Enterprises, Chandigarh vs Department Of Income Tax on 2 May, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH,CHANDIGARH
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND Ms. ANNAPURNA GUPTA, ACCOUNTANT MEMBER
ITA No. 971/CHD/2013
Assessment Year: 2010-11
The ACIT, Vs M/s Green Field Enterprises,
Circle - 5(1), SCO 36, Sector 26,
Chandigarh . Sector 26,
Chandigarh .
PAN: AAGFG6666C
(Appellant) (Respondent)
Appellant by : Shri Sushil Kumar,CIT-DR
Respondent by : Shri T.N.Singla, C.A.
Date of Hearing : 27.04.2016
Date of Pronouncement : 02.05.2016
O R D E R
PER BHAVNESH SAINI,JM This appeal by Revenue has been directed against the order of CIT(Appeals), Chandigarh dated 31.07.2013 for assessment year 2010-11.
2. We have heard ld. Representatives of both the parties and perused the material available on record.
3. Ground Nos. 1 and 4 of the departmental appeal are general and need no adjudication.
4. On ground No. 2, revenue challenged the order of the ld. CIT(Appeals) in holding that Excise Duty refund of 2 Rs. 1,39,00,952/- received by the assessee constituted a capital receipt not liable to tax.
5. The brief facts of the issue are that assessee had claimed deduction of Rs. 1,39,00,952/- under section 80IB of the Act on Excise Duty received. The Assessing Officer questioned the assessee regarding the said claim. The Assessing Officer was not satisfied with the explanation of the assessee and disallowed deduction under section 80IB of the Act on Excise Duty received. During the course of appellate proceedings, the assessee submitted that deduction under section 80IB is allowable on Excise Duty received in view of the decision of ITAT Chandigarh Bench in the case of M/s Shivalik Agro Chemicals vide order dated 20.12.2011 in ITA 968/CHD/2010.
5(i) The ld. CIT(Appeals) noted that in preceding assessment year 2009-10 vide order dated 05.11.2012. Similar addition deleted by him by following decision of ITAT Chandigarh Bench in the case of M/s Shivalik Agro Chemicals (supra), accordingly, deleted the addition.
6. The ld. counsel for the assessee, at the outset submitted that in preceding assessment year 2009-10, the Revenue preferred appeal before the Tribunal in ITA 147/2013 and departmental appeal on the same issue have been dismissed.Findings in para 8 to 10 of the 3 order dated 06.04.2016 are reproduced as under :
8. We have heard the learned representatives of both the parties, perused the f indings of the authorities belo w and considered the material avail able on record.
The issue to be decided by us is whether the excise duty ref und can be treated as income derived f rom industrial activity f or the purposes of allowing deduction under section 80IB of the Act. On perusal of the judgment of the Gauhati High Court in the case of Meghalaya Steels Ltd. (supra), we see that the same issue has been decided by the Hon'ble High Court in favour of the assessee in following terms :
"17. Insofar as the second question is concerned, the central excise duty refund claimed by the assessee is on the basis of exemption notifications issued by the Ministry of Finance (Department of Revenue) being Notification No. 32 of 1999 and Notification No. 33 of 1999, both dt. 8th July, 1999. In terms of these notifications, a manufacturer is required to first pay the central excise duty and thereafter claim a refund on fulfilment of certain conditions. In the next month, after verification of the claim, the central excise duty so deposited is refunded to the assessee if the conditions laid down in the notifications are fulfilled. In the present case, there is no dispute that the assessee was entitled to the central excise duty refund.
18. The Central Board of Excise and Customs in its Circular dt. 19th Dec., 2002 clarified that the refund is not on account of 4 excess payment of excise duty but is basically designed to give effect to the exemption and to operationalise the exemption given by the notifications. In that sense, the central excise duty refund does not appear to bear the character of income since what is refunded to the assessee is the amount paid under the modalities provided by the Department of Revenue for giving effect to the exemption notifications. There is also nothing to suggest that the assessee has recovered or passed on the excise duty element to its customers. Even assuming the refund does amount to income in the hands of the assessee, it is a profit or gain directly derived by the assessee from its industrial activity. The payment of central excise duty has a direct nexus with the manufacturing activity and similarly, the refund of the central excise duty also has a direct nexus with the manufacturing activity. The issue of payment of central excise duty would not arise in the absence of any industrial activity. There is, therefore, an inextricable link between the manufacturing activity, the payment of central excise duty and its refund. In the circumstances, we are of the opinion that question No. 2 must be answered in the affirmative, in favour of the assessee and against the Revenue. "
9. Since we observe that the issue in question bef ore the Hon'ble Gauhati High Court was exactly same, which is there in the present appeal, respectfully f ollowing the same, we dismiss the appeal of the Department." 5
10. B e f o r e p a r t i n g , we wa n t t o a d d t h a t t h e j u d g me n t o f t h e H o n ' b l e S u p r e me C o u r t i n the case of CIT Vs. Meghalaya Steels Ltd. ( s u p r a ) , c o p y o f wh i c h wa s p r o v i d e d t o u s b y the learned counsel f or the assessee during the course of hearing, stating that the issue of excise duty ref und has been decided in f avour of the assessee in this j u d g me n t a r i s i n g o u t o f t h e j u d g me n t o f G a u h a t i H i g h Court in the case of Meghalaya Steels Ltd. (supra). We observe that in this case bef ore the Hon'ble Apex Court, the only issue d e c i d e d wa s i n r e s p e c t o f t h e a l l o wa b i l i t y o f transport subsidy, interest subsidy and p o we r s u b s i d y f o r t h e p u r p o s e s o f d e d u c t i o n under section 80IB of the Act and not that of excise duty ref und. Though no help of the s a i d j u d g me n t c a n b e t a k e n i n t h e p r e s e n t appeal, this also goes to show that the decision of the Gauhati High Court wi t h r e g a r d t o t h e e x c i s e d u t y r e f u n d h a s b e c o me f inal.
11. The appeal of the Department is dismissed."
7. On consideration of the rival submissions, we are of the view the issue is covered in favour of the assessee by order of ITAT Chandigarh Bench in the case of the same assessee for preceding assessment year 2009-10 in which the ld. CIT(Appeals) deleted similar addition vide order dated 05.11.2012 and his order has been confirmed by the Tribunal vide order dated 06.04.2016. Therefore, following the order of the Tribunal in the case of same 6 assessee for assessment year 2009-10, we dismiss this ground of appeal of the revenue.
8. On ground No. 3, revenue challenged the order of ld. CIT(Appeals) in holding that addition of Rs. 37,66,509/- on account of rebate and discount relates to purchase of material which was shown on the credit side of the Profit & Loss Account and assessee is eligible for deduction under section 80B of the Income Tax Act. 8(i) The brief facts of the issue are that assessee had claimed deduction under section 80IB on rebate and discount amounting to Rs. 37,66,509/-. The Assessing Officer did not allow deduction under section 80IB of the Act on the ground that it was not the business of the assessee to earn rebate and discount. The assessee submitted before ld. CIT(Appeals) that rebate and discount received by the assessee was on material purchases which was shown separately without deducting the same from the bill. According to him, amount was deducted from the purchases and was shown separately on the credit side of the Profit & Loss Account and since credits relate to material purchases, therefore, assessee is entitled for deduction under section 80IB of the Act. It was submitted that the predecessor of ld. CIT(Appeals) has allowed deduction under section 80IB on similar nature of rebate and discount in the case of sister concern of the assessee in assessment year 2005-06. 7
9. The ld. CIT(Appeals) found that impugned rebate and discount relates to purchase of material. The assessee has not deducted this amount from the purchases but has shown it separately on credit side of the Profit & Loss Account. Similarly, disallowance made under section 80IB of the Act on rebate and discount was allowed by the ld. CIT(Appeals) in the case of sister concern of the assessee M/s Industrial Equipment Co. in assessment year 2006-07 vide order dated 10.09.2007 and therefore, following the order of his predecessor, ld. CIT(Appeals) allowed this ground of appeal of the assessee.
10. The ld. counsel for the assessee, at the outset submitted that ITAT Chandigarh Bench in the case of M/s Industrial Equipment Co. in assessment year 2006- 07 in ITA 938/09 dismissed the departmental appeal vide order dated 15.10.2009, copy of the same is placed on record. He has, therefore, submitted that issue is covered in favour of the assessee.
11. After considering rival submissions, we are of the view the issue is covered in favour of the assessee by order of ITAT Chandigarh Bench in the case of M/s Industrial Equipment Co. (supra) in which the Tribunal has confirmed order of the ld. CIT(Appeals) dated 10.07.2009 followed by ld. CIT(Appeals). No infirmity in the order of the ld. CIT(Appeals) have been pointed out, 8 therefore, this ground of appeal of the departmental appeal has no merit. The same is, accordingly, dismissed.
12. In the result, departmental appeal is dismissed.
Order pronounced in the Open Court.
Sd/- Sd/- (ANNAPURNA GUPTA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 2nd May, 2016. 'Poonam' Copy to:
The Appellant, The Respondent, The CIT(A), The CIT,DR Assistant Registrar, ITAT/CHD