Income Tax Appellate Tribunal - Hyderabad
Dcit, Circle-8(1), Hyd, Hyderabad vs Ivax Paper Chemicals Lts., Hyd, ... on 25 April, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH "A", HYDERABAD
BEFORE SHRI D. MANMOHAN, VICE PRESIDENT
AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER
ITA Nos. 837, 838 & 839/Hyd/2016 and
C.Os. 38, 39 & 40/Hyd/2016
Assessment Years: 2009-10, 2010-11 & 2011-12
Dy. Commissioner of Income- vs. Ivax Paper Chemicals Ltd.,
tax, Circle - 8(1), Hyderabad. Hyderabad.
PAN - AAAC1 2693 G
(Appellant) (Respondent/Cross Objector)
Revenue by : Smt. Suman Malik
Assessee by : Shri A.V. Raghuram
Date of hearing 04/04/2018
Date of pronouncement 25/04/2018
O RDE R
PER S. RIFAUR RAHMAN, A.M.:
These appeals filed by the revenue are directed against the orders of CIT(A) - 2, Hyderabad, all are dated, 29/02/2016 for AYs 2009-10, 2010-11 & 2011-12 respectively. Assessee also filed Cross Objections against the said order of CIT(A) for the above three AYs. As identical issues are involved in these appeals of revenue, the same were clubbed and heard together and therefore, a common order is passed for the sake of convenience.
ITA No. 837/Hyd/2016 for AY 2009-102. The revenue has raised the following grounds of appeal:
" 1) The order of the CIT (A) is erroneous both on facts and law.2
ITA Nos. 837, 838 & 839 /Hyd/2016 & CO Nos. 38, 39 & 40/H/15 Ivax Paper Chemicals Ltd.
2) The CIT (A) erred in observing that the purchases and sales are directly linked unit wise. The CIT (A) should have appreciated the fact that the stock transfer admitted by the assessee itself shows that the purchases were not done unit wise.
3) The CIT (A) has erred in ignoring the provision of 80IB(13) read with 80IA(10) which were squarely applicable to the facts of the assessee's case as it had contrived to shift profits from other units to kathua unit to show inflated profits for kathua unit in order to reap the undue benefit of higher exemption Uls.80IB, thereby evading actual tax.
4) The CIT(A) erred in observing that the central excise refund is a capital receipt.
5) The CIT (A) should have upheld the decision of the assessing officer in treating the Central Excise refund as income from other sources.
6) The CIT(A) erred in observing deleted the interest paid on Service Tax treating as an allowable expenditure
7) The CIT (A) should have upheld the decision of the assessing officer since the payment of interest is penalty for violation of law as per the provisions of section 37(1) of the Income Tax Act.
2.1 Ground No. 1 is general in nature.
3. As regards ground No. 2 & 3 relating to 80IB deduction, the facts are, the assessee is engaged in the business of manufacturing and production of paper sizing chemicals, polymers, defoamers, biocides and cleaning chemicals. The assessee filed its return of income for the AY 2009-10 on 24/09/2009 declaring a total income of Rs. 3,88,72,399/-. Subsequently, the case was selected for compulsory scrutiny under CASS and notices u/s 143(2) of the Act, 1961 (in short 'the Act') were issued along with questionnaire, calling for certain information, which were duly served on the assessee. In response the said notices, the assessee filed the information.
3ITA Nos. 837, 838 & 839 /Hyd/2016 & CO Nos. 38, 39 & 40/H/15 Ivax Paper Chemicals Ltd.
2.1 During the course of hearing, the details of accounts of various manufacturing units which are situated at Kallakal (Hyderabad), Kathua (J&K) and Kovai (Tamil Nadu), were called and verified. The AO observed that on the total income of Rs. 8,86,57,430/-, deduction u/s 80IB(4) was claimed at Rs. 4,97,85,031/- thereby declaring total income of Rs. 3,88,72,399/- with the total turnover of the assessee was Rs. 73,71,23,759/-. Assessee is in the business of manufacture of chemicals used in paper manufacturing industry and having a manufacturing unit at Kallakal, Hyderabad and has started a new unit at Kathua, Jammu in February, 2006. A new unit at Kovai, Tamilnadu commenced its commercial production during this year. Therefore, during the AY 2009-10, all the three units were operative. For this AY, on the profit of Kathua unit, 100% tax exemption u/s 80IB(4) of the Act is available to assessee. A brief gist of profit & loss A/c, separately drawn for three units for the year, as per return of income, is reproduced below:
Particulars As on As on As on
31/03/2009 31/03/2009 31/03/2009
Hyderabad Kathua Kovai
Sales 303841588 233770475 187188600
Other income 2548065 5258209 -
Expenditure
a) Raw material consumed 222319896 141068824 115381857
b) Manf. Expenses 14584858 9732954 5722554
c) Payments & provisions 21364358 5225384 2895487
to employees
d) Administrative selling 25162740 30440273 33551717
and other expenses
e) Auditor's remuneration 200000 - -
f) Financial charges 8810401 1156896 226786
g) Depreciation 3729904 1876403 1754247
Total (a) to (g) 296172157 189500733 159532647
Profit 11678604 49785031 30454587
Profit % 3.84 21.30 16.27
2.2 From the details furnished by the assessee, the Assessing
Officer came to a conclusion that there were transfer of finished goods from Kallakal Unit to Kathua Unit to the extent of Rs. 3,68,58,495/-. The Assessing Officer gave a finding that the Kathua 4 ITA Nos. 837, 838 & 839 /Hyd/2016 & CO Nos. 38, 39 & 40/H/15 Ivax Paper Chemicals Ltd.
Unit is making higher profit when compared to other two units. The Assessing Officer based on the above finding, doubted the correctness of the accounts drawn up by the assessee in respect of all the three units and redrew the profit and loss account of all the three units by debiting the expenses in proportionate to their turnover to all the units and calculated the profit of Kathua unit and granted exemption u/s 80IB of the Act.
2.3 The assessee opposed the above proposal and submitted as under:
a) There is a better production per kg at Khatua unit which has resulted increase of profit as this is a new unit
b) Since the sales of Kathua unit are in the close by areas, there are substantial savings in transportation cost.
c) Power subsidy, packaging expenses, repair & maintenance etc., is less at Kathua unit.
d) The transfer of stock from Kalakal to Kathua is of raw material only as these are used for production of various finished goods in conjunction with AKD Wax, Gum resin, starch, emulsifiers, salts, surfactants etc. None of the material dispatched from Kalakal to Khatua unit leave Kathua unit under same name.
2.4 However, the Assessing Officer rejected the contentions raised by the assessee on the ground that the Assessing Officer is empowered to do so under the provisions of section 80IA(10) of the Act and has redrawn the profit and loss account of all the three units by distributing the total expenditure of the three business units in equal proportion to all the three units and determined the profits of the Kathua unit at Rs. 2,59,28,952/-. The Assessing Officer in the process treated the amount of Rs. 52,58,209/- of PLA refund under the head income from other sources and did not consider the same for calculating the eligible profits under section 80IB of Kathua unit. The Assessing Officer rejected the contention of the assessee that PLA refund is business income on the ground that the deduction to be allowed under section 80IB is in respect of profits and gains derived 5 ITA Nos. 837, 838 & 839 /Hyd/2016 & CO Nos. 38, 39 & 40/H/15 Ivax Paper Chemicals Ltd.
from business. The Assessing Officer further held that the PLA refund has no business connection and therefore cannot be considered as business income for the purpose of calculating entitlement under section 80IB of the Act.
3. Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A).
4. The CIT(A) following the decision of the ITAT in AY 2008-09 in assessee's own case directed the AO to recalculate the 80IB deduction by excluding the purchase from the expenditure, which was adopted in the assessment order.
4.1 Aggrieved with the above order, revenue is in appeal.
5. The ld. DR relied on the order of AO.
6. The ld. AR submitted that the issue in dispute is squarely covered by the decision of the ITAT, Hyderabad in assessee's own case for AY 2008-09 and a copy of the same is filed on record.
7. Considered the rival submissions and perused the material on record. On similar set facts and ground raised in AY 2008-09, the coordinate bench has held as under:
21. The CIT(A) appeal in her order at para 4.7 observed that the AO is right in adopting the concept of pro-rata basis but the purchases were to be excluded since there are related sales and each unit has specific purchases as per their bills and account. Therefore, the AO was directed to recalculate allowances u/s. 80IB by excluding the purchases from the expenditure pro-rata adopted in the assessment order. The CIT(A) while observing as above, followed the order of the Tribunal in the case of Sealexcel (I) Pvt. Ltd. vs. ITO in ITA No. 3111/Mum/2007 & Anr., dated 20.5.2011 wherein held as follows:
"These two appeals filed by the assessee against two separate orders passed by the learned CIT(Appeals)XXIX, Mumbai dated 08-01-2007 and 23-11-2007 for assessment years 2003-04 and 2004-05 respectively involve some common issues and the same, therefore, have been heard together and are being disposed of by this single consolidated order.6
ITA Nos. 837, 838 & 839 /Hyd/2016 & CO Nos. 38, 39 & 40/H/15 Ivax Paper Chemicals Ltd.
2. First we shall take up the appeal of the assessee for assessment year 2003-04 being ITA No. 3111/Mum/2007, Ground No. 1 is general seeking no specific decision from us.
3. In ground No. 2 of this appeal, the assessee has challenged the action of the learned CIT(Appeals) in upholding the order of the AO allocating the expenses amounting to Rs. 3,89,818/- pertaining to Mumbai Unit to Banaskatha unit at Gujarat for the purpose of computing deductions u/s 80IB.
4. The assessee in the present case is a company which has two manufacturing units one at Mumbai and other at Banaskatha, Gujarat. The unit at Banaskatha, Gujarat is eligible for deduction u/s 80IB and while computing the profit of the said unit for the purpose of allowing deduction u/s 80IB, the AO deducted a sum of Rs. 3,89,818/- being allocation of expenses pertaining to Mumbai unit to Banaskatha unit on the ground that the expenses claimed in Mumbai unit included expenses relating to head office and registered office situated at Mumbai. Before the learned CIT(Appeals), it was submitted on behalf of the assessee that the expenses incurred in relation to head office and registered office at Mumbai were not towards the manufacturing activity of Banaskatha unit and the same being in the nature of indirect expenses, there was no reason to consider the same while determining the profit derived from the manufacturing unit at Banaskatha for the purpose of allowing deduction u/s 80IB. The learned CIT(Appeals) did not find merit in the stand taken by the assessee. According to him, the expenses incurred in relation to head office and registered office at Mumbai were partly attributable to Banaskatha unit and while computing the profit of the said unit eligible for deduction u/s 80IB, the same should have been taken into account. He, therefore, upheld the action of the AO in deducting the head office expenses while computing the profit of Banaskatha unit on prorate basis for the purpose of computing profit of the said unit eligible for deduction u/s 80IB.
5. We have heard the arguments of both the sides and also perused the relevant material on record. It is no doubt true that deduction u/s 80IA/80IB is allowable in respect of profit derived from the eligible undertaking as held by the coordinate bench of this Tribunal in the case of DCW Ltd. vs. Addl. CIT 37 SOT 322 relied upon by the learned counsel for the assessee. However, as held by another coordinate bench of this Tribunal in the case of ACIT vs. Asea Brown Boveri Ltd. 110 TTJ (Mum.) 502, the profit derived from the eligible undertaking for the purpose of deduction u/s 80IA/80IB are 7 ITA Nos. 837, 838 & 839 /Hyd/2016 & CO Nos. 38, 39 & 40/H/15 Ivax Paper Chemicals Ltd.
the net profits derived from the eligible undertakings and such net profit has to be worked out after deducting all expenses, direct or indirect. As further held by the Tribunal in the case of Asea Brown Boveri Ltd., head office expenses or expenses which are common to all the units will have to be spread over and charged against the receipts of all the units. Respectfully following the decision of the Tribunal in the case of Asea Brown Boveri Ltd. b(supra), we find no infirmity in the impugned order of the learned CIT(Appeals) upholding the action of the AO in allocating the head office expenses to Banaskatha unit in the ratio of turnover to work out the profit of the said unit eligible for deduction u/s 80IB and upholding the same on this issue, we dismiss ground No. 2 of the assessee's appeal."
22. Being so, we do not find any infirmity in this part of CIT(A)'s order and the same is confirmed. Ground Nos. 2 and 3 are of the Revenue are rejected."
As the issue is identical in the AY under consideration, following the decision of the ITAT in AY 2008-09 in assessee's own case, we uphold the order of the CIT(A) and dismiss the grounds raised by the revenue.
8. As regards ground Nos. 4 & 5 regarding central excise refund, the AO observed that Assessee has shown other income of Rs. 52,58,209/- which is PLA refund received by Kathua unit. It is the Excise duty refund received at Kathua unit. Assessee has included this income in the business income and has claimed the same as deduction u/s. 80IB. Assessee was asked to explain as to why this amount should not be taxed as income from other sources and why it should not be considered for exclusion from total business income for the 80IB claim. Assessee in its reply dt. 23-11-2011 stated that Excise duty is part and parcel of manufacturing activity and it is only a refund of cash loss i.e. duty paid by the assessee on value addition.
8.1 After considering the submissions of the assessee, the AO observed that the deduction is to be allowable on profits and gains derived from any business. For claiming deduction u/s 80IB (4) of the 8 ITA Nos. 837, 838 & 839 /Hyd/2016 & CO Nos. 38, 39 & 40/H/15 Ivax Paper Chemicals Ltd.
Income Tax Act, 1961, it is to be first established that the profit and gains were derived from the industrial undertaking and it is just not sufficient that a commercial connection is established between the profits earned and the industrial undertaking. The industrial undertaking itself has to be the actual source of the receipt of the amount. The industrial undertaking has directly to yield the profit. It should be the direct source and not merely a means to earn the same. If any income arises not by virtue of the normal activity of the industrial undertaking but because of some Incentive Scheme of the Govt., then it is the scheme of the Govt., which is the direct source and not the industrial activity itself. In view of the above observations and referring to various case law, the AO disallowed the deduction to the extent of Rs. 52,58,208/- on account of central excise duty refund.
9. On appeal, the CIT(A) following the decision of the ITAT in 2008-09 in assessee's own case, deleted the disallowance made by the AO on account of central excise refund.
9.1. Aggrieved, revenue is in appeal.
10. Ld. DR relied on the order of AO while ld. AR submitted that the issue is squarely covered by the decision of ITAT in assessee's own case for AY 2008-09.
11. Considered the rival submissions and perused the material on record. In AY 2008-09, the coordinate bench has held as under:
23. Ground Nos. 3 and 4 of the Revenue appeal are as under:
(4) The CIT(A) erred in observing that the Central Excise refund is a capital receipt.
(5) The CIT(A) should have upheld the decision of the Assessing Officer in treating the central excise refund as income from other sources.9
ITA Nos. 837, 838 & 839 /Hyd/2016 & CO Nos. 38, 39 & 40/H/15 Ivax Paper Chemicals Ltd.
24. The CIT(A) observed in her order that the Central Excise Duty refund is a capital receipt and not derived from industrial undertaking. The CIT(A) had observed that on a similar issue the Tribunal Amritsar Bench in its order dated 26th November, 2009 in the case of Shree Balaji Alloys vs. ITO in ITA No. 255(ASR)/2009 has held Central Excise duty refund to be a revenue receipt and 'not derived' from industrial under taking. While delivering the said decision, the Tribunal has held that the expression "derived from" has been judicially defined by the Hon'ble Supreme Court in the case of Liberty India, having regard to the text and context of the statutory provisions of section 80lB of the IT Act, 1961. The Tribunal has further observed that the expression "derived from' cannot embrace incidental income such as Excise Duty refund and interest subsidy, as the same don't have first degree nexus with the 'operational profits' derived from the industrial undertaking.
25. She had also observed that the income of Rs. 1,09,26,502 attributable to the receipt of Excise duty refund received by the assessee cannot be considered for the computation of deduction u/s, BOlB of the IT Act, 1961. Therefore, the assessee is not eligible for deduction u/s. 80lB(4) of the IT Act, 1961 on profit attributable to Central Excise duty refund. Accordingly, she had disallowed the deduction to the extent of Rs. 1,09,26,502 and directed to add to the returned income of the assessee as 'Income from other sources'. Against this, the Revenue is in appeal before us.
26. The learned DR relied on the judgement of Hon'ble Supreme Court in the case of Liberty India vs. CIT (317 ITR 21B) wherein the Apex Court held that DEPB/Duty Drawback are incentives which flow from the scheme framed by the Central Government or from section 75 of the Customs Act, 1962. Hence, incentives are for profits derived from the eligible business and, therefore, DEPB benefits/Duty Drawback receipt do not form part of net profit of the industrial undertaking for the purpose of section 801A/80IB of the Act.
27. On the other hand, the learned AR relied on the order of the Bombay Bench of the Tribunal in the case of Total Packaging Services (supra) wherein held that income from MODVAT credit is derived from industrial undertaking as contemplated in section 80IB(1) of the Act. He also relied on the order of the Tribunal in the case of ]K Aluminium Co., in ITA No. 3303/Del/2010 for A.Y. 2007-08 order dated 29.4.2011 wherein the Tribunal held that refund of Excise Duty is to be considered for deduction u/s, 801B of the Act as it is derived from industrial undertaking and the judgement Supreme Court in the case of Liberty India (cited supra) was on the issue of DEPB/Duty Drawback which was on incentive issue and was not concerned with the refund of amount paid. The AR relied on the following case-law:
1. Noorul Islam Educational Trust vs. CIT & Others, 332 ITR 97 (Mad) 10 ITA Nos. 837, 838 & 839 /Hyd/2016 & CO Nos. 38, 39 & 40/H/15 Ivax Paper Chemicals Ltd.
2. M/s. JK Aluminium Co. vs. ITO, in ITA No. 3303IDell2010 order dated 29th April, 2011.
3. Waterfall Estates Ltd. vs. CIT, 132 CTR 495 (SC)
4. CIT vs. Rasoi Ltd., 11 taxmann.com 220 (Cal.)
28. We have heard both the parties and perused the material on record. In our opinion, this issue is squarely covered by the judgement of Delhi Court in the case of CIT vs. Dharam Pal Prem Chand Ltd. (317 ITR 353) wherein it was held that the assessee being entitled to exemption of Excise Duty, Excise Duty paid from current account and refunded in the next month would not make it any the less income derived from the industrial undertaking eligible for deduction u/s. 80IB of the Act. Being so, we are completely in agreement with the order of the CIT(A) on this issue. Ground Nos. 4 and 5 of the Revenue are rejected."
Following the said decision of the coordinate bench in AY 2008-09, we uphold the order of CIT(A) and dismiss the grounds raised by the revenue on this issue.
12. As regards ground Nos. 6 & 7 relating to addition of Rs. 4,35,957/- towards interest paid on delayed payments towards service tax, FBT, income tax etc., the AO noticed from the record that an amount of Rs. 4,35,957/- was paid towards interest on delayed payments towards service taxes, FBT, Income tax, etc. The AO observed that the same cannot be considered as allowable expenditure as per section 37(1) of the Act which says that 'any expenditure incurred by an assessee for any purpose which is an offence shall not be deemed to have been incurred for the purpose of business and no deduction/allowance shall be made. He, accordingly, disallowed the said amount.
13. Before the CIT(A), the assessee filed a copy of ledger account of 'interest paid' and submitted that the payment of interest on the amount outstanding does not amount to payment for infraction of law. He relied on the decision of the Hon'ble Supreme Court in the case of Mahalaxmi Sugar Mills Co. Vs. CIT, 123 ITR 429 wherein it was held that interest payable on tax would also be part of the tax.
11ITA Nos. 837, 838 & 839 /Hyd/2016 & CO Nos. 38, 39 & 40/H/15 Ivax Paper Chemicals Ltd.
14. The CIT(A) observed that it is seen from the interest paid ledger that Rs. 1,60,203/(Rs. 1,21,183 + Rs. 39,020/-) is paid towards delay in payment of Income Tax and FBT. The rest of the amount pertains to interest on account of delay in payment of service tax. As per the provisions of the Act, the interest partakes the character of tax and therefore cannot be allowed. However, the same is not the case with interest on service tax. Service Tax paid is an allowable expenditure. Therefore, payment of interest on account of delay in payment of service tax is an allowable expenditure. In view of the above observations, the CIT(A) directed the AO to allow interest paid on the service tax and restrict the disallowance towards interest payment on income tax and FBT i.e. Rs. 1,60,203/-.
15. The Ld. DR submitted that the CIT(A) should have upheld the decision of the AO since the payment of interest is penalty for violation of law as per the provisions of section 37(1) of the Act.
16. On the other hand, the ld. AR relied on the decision of the ITAT, Kolkata Bench in the case of DCIT Vs. M/s Narayani Ispat Pvt. Ltd. in ITA No. 2127/Kol/2014, order dated 30/08/2017.
17. Considered the rival submissions and perused the material on record. On similar issue, the coordinate bench of ITAT, Kolkata, has held as under:
"7. We have heard the rival contentions of both the parties and perused the material available on record. In the instant case, AO has disallowed the interestexpenses incurred by the assessee on account of late deposit of service tax and TDS after having reliance on the judgment of Hon'ble Supreme Court in the case of Bharat Commerce Industries Ltd. Vs. CIT (1998) (Supra). The relevant extract of the judgment reads as under:12
ITA Nos. 837, 838 & 839 /Hyd/2016 & CO Nos. 38, 39 & 40/H/15 Ivax Paper Chemicals Ltd.
During the year under consideration, the assessee failed to pay advance tax equivalent to 75 per cent of estimated tax. The Assessing Officer levied interest under section 215 as well as under section 139. The assessee claimed that since taxes which were payable were delayed, the assessee's financial resources increased which were available for business purposes. Hence, the interest which was paid to the Government was interest on capital that would be borrowed by the assessee otherwise. Hence, the amounts should be allowed as deduction. The revenue did not allow such deduction. The High Court affirmed the view.
On appeal to the Supreme Court :
HELD When interest is paid for committing a default in respect of a statutory liability to pay advance tax, the amount paid and the expenditure incurred in that connection is in no way connected with preserving or promoting the business of the assessee. This is not expenditure which is incurred and which has to be taken into account before the profits of the business are calculated. The liability in the case of payment of income- tax and interest for delayed payment of income-tax or advance tax arises on the computation of the profits and gains of business. The tax which is payable is on the assessee's income after the income is determined. This cannot, therefore, be considered as an expenditure for the purpose of earning any income or profits. Interest which is paid for delayed payment of advance tax on such income cannot be considered as expenditure wholly and exclusively for the purpose of business. Under the Act, the payment of such interest is inextricably connected with the assessee's tax liability. If income-tax itself is not permissible deduction under section 37, any interest payable for default committed by the assessee in discharging his statutory objection under the Act, which is calculated with reference to the tax on income, cannot be allowed as a deduction.
Therefore, it was to be held that deduction of interest levied under sections 139 and 215 would not be allowable under section 37.
In the above judgment, the claim of the assessee for interest expenses was denied as it defaulted to make the payment of advance tax as per the provisions of the Act. The advance tax is nothing but income tax only which the assessee has to pay on his income. In the instant case the default relates to the delay in the payment of advance tax and consequently interest was charged on the delayed payment of advance tax. In the above judgment the Hon'ble Apex Court held that as Income Tax paid by the assessee is not allowable deduction and therefore interest emanating from the delayed payment of income tax (advance tax) is also not allowable deduction. However the facts of the instant case before us are distinguishable as in the case before us the interest was paid for delayed payment of service tax & TDS. The interest for the delay in making the payment of service tax & TDS is compensatory in nature. As such the interest on delayed payment is not in the nature of penalty in the instant case on hand.
13ITA Nos. 837, 838 & 839 /Hyd/2016 & CO Nos. 38, 39 & 40/H/15 Ivax Paper Chemicals Ltd.
The issue of delay in the payment of service tax is directly covered by the judgment of Hon'ble Apex Court in the case of Lachmandas Mathura Vs. CIT reported in 254 ITR 799 in favour of assessee. The relevant extract of the judgment is reproduced below :
"The High Court has proceeded on the basis that the interest on arrears of sales tax is penal in nature and has rejected the contention of the assessee that it is compensatory in nature. In taking the said view the High Court has placed reliance on its Full Bench's decision in Saraya Sugar Mills (P.) Ltd. v. CIT [1979] 116 ITR 387 (All.) The learned counsel appearing for the appellant-assessee states that the said judgment of the Full Bench has been reversed by the larger Bench of the High Court in Triveni Engg. Works Ltd. v. CIT[1983] 144 ITR 732 (All.) (FB), wherein it has been held that interest on arrears of tax is compensatory in nature and not penal. This question has also been considered by this Court in Civil Appeal No. 830 of 1979 titled Saraya Sugar Mills (P.) Ltd. v. CIT decided on 29-2-1996. In that view of the matter, the appeal is allowed and question Nos. 1 and 2 are answered in favour of the assessee and against the revenue."
In view of the above judgment, there remains no doubt that the interest expense on the delayed payment of service tax is allowable deduction."
Since the issue under consideration is identical, following the said decision, we uphold the order of the CIT(A) and dismiss the ground raised by the revenue.
18. As the issue of section of 80IA(10) and issue of central excise refund raised in AY 2010-11 and 2011-12 are similar to the issues raised in AY 2009-10, following the conclusions drawn therein, we dismiss the grounds raised by the revenue on these issues.
19. As we have upheld the order of CIT(A) in revenue appeals, the COs raised by the assessee become infructuous, therefore, the same are dismissed as infructuous.
14ITA Nos. 837, 838 & 839 /Hyd/2016 & CO Nos. 38, 39 & 40/H/15 Ivax Paper Chemicals Ltd.
20. In the result, appeals of the revenue and COs of the assessee are dismissed.
Pronounced in the open Court on 25 th April, 2018.
Sd/- Sd/-
(D. MANMOHAN) (S. RIFAUR RAHMAN)
VICE PRESIDENT ACCOUNTANT MEMBER
Hyderabad, Dated: 25 th April, 2018
kv
Copy to:-
1) DCIT, Circle - 8(1), 6 th Floor, Room No. 605, Signature Towers, Kondapur, Hyd.
2) M/s Ivax Paper Chemicals Ltd., 6-3-248/B, Road No. 1, Banjara Hills, Hyd.
3) CIT(A) - 2, Hyderabad
4) Pr. CIT - 2, Hyd.
5) The Departmental Representative, I.T.A.T., Hyderabad.
6)) Guard File
S.No. De scri pti on Date Intls
1. Draft dictated on Sr.P.S./P.S
2. Draft placed before author Sr.P.S/PS
3 Draf t propo sed & pl ac ed b ef ore the se con d Mem ber JM/AM
4 Draf t di scu ssed/a ppr ov ed by sec on d Mem ber JM/AM
5 Approv ed Draft comes to the Sr.P.S./PS Sr.P.S./P.S
6. Kept for pronouncement on Sr. P.S./P.S.
7. Fi l e sent to the B enc h Cl erk Sr.P.S./P.S
8 Dat e o n whi ch f i l e goe s t o t he H ea d Cl erk
9 Date of Di sp atch of order