Income Tax Appellate Tribunal - Kolkata
M/S Ankit Metal & Power Ltd., Kolkata vs The Acit- Rg-3, Kolkata, Kolkata on 6 September, 2017
1
ITA Nos.1233 & 1479/Kol/2014
M/s Ankit Metal & Power Ltd.
A.Yr.2010-11
IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH 'B' KOLKATA
[Before Hon'ble Shri A.T. Varkey, JM & Shri M. Balaganesh, AM ]
I.T.A No.1233/Kol/2014
Assessment Year: 2010-11
M/s Ankit Metal & Power Ltd. -versus- Addl CIT, Range-3 , Kolkata
(PAN:AAECA 5230 B)
(Appellant) (Respondent)
I.T.A No.1479/Kol/2014
Assessment Year : 2010-11
Addl CIT, Range-3, Kolkata -versus- M/s Ankit Metal & Power Ltd.
(PAN:AAECA 5230 B)
(Appellant) (Respondent)
For the Revenue: Shri David Z. Chowngthu, Addl. CIT Sr. DR
For the Assessee: Shri S.K. Tulsiyan, Advocate
Date of Hearing : 24.08.2017.
Date of Pronouncement : 06.09.2017
ORDER
Per M.Balaganesh, AM
1. These cross appeals by the assessee and as well as the Revenue arise out of the order of the Learned Commissioner of Income Tax (Appeals) -I, Kolkata [ in short the ld CITA] in Appeal No. 325/CIT(A)-I/Range-3/2012-13 dated 17.02.2014 against the order passed by the Addl CIT, Range-3, Kolkata [ in short the ld AO] under section 143(3) of the Income Tax Act, 1961 (in short "the Act") dated 24.01.2013 for the Assessment Year 2010-11.
2. At the outset, we find that there is a delay in filing the appeal by the Revenue for the assessment year 2010-11 by 5 days before us. We have gone through the 2 ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11 condonation petition explaining the reason for the delay. In view of the said reasons and in view of the concession given by the Ld. AR we hereby condone the delay of 5 days in filing the appeal by the Revenue for the assessment year 2010-11 and admit the appeal for adjudication.
2. Treatment of Interest Subsidy of Rs 4,52,33,330/- and Power Subsidy of Rs 4,81,63,649/-
The assessee company is a Public Limited Company registered under the Companies Act, 1956. It is engaged in the manufacturing of Sponge Iron, M/s Ingots & Billets, Steel Items and Ferro Alloys. It also has a captive power generating plant. For the Asst Year 2010-11, the assessee company filed its Return of Income on 12.10.2010 disclosing "NIL" income as per the normal computation and Rs. 17,69,51,366/- as Book Profit under MAT i.e. u/s 115JB of the Act. Subsequently, during the course of assessment proceedings, the assessee company filed an Revised Computation of its income under normal provisions as well as u/s 115JB of the Act vide its submission dated 22.11.2012. The same computation was filed again on 10.12.2012. The assessee company had revised the computation of income mainly, in order to claim deduction of Capital Receipts being Interest Subsidy and Power Subsidy amounting to Rs. 4,52,33,330/- and Rs. 4,81,63,439/- respectively and in order to comply with the provisions of Section 80A(6) read with Section 80IA of the Act. Thus, total income computed by the assessee company in the Revised Computation of Income is as under:
Normal Provisions of the Act : Rs. NIL Book Profit : Rs. 8,97,94,710/-
The assessee has computed the said income by deducting Capital Receipts being Interest and Power Subsidy amounting to Rs. 4,52,33,330 and Rs. 4,81,63,439/- respectively. The assessee treated the Interest Subsidy of Rs 4,52,33,330/- and 3 ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11 Power Subsidy of Rs 4,81,63,649/- as Capital Receipt in the revised computation filed before the ld AO during the course of assessment proceedings.
2.1. The assessee had made investment in Sponge Iron Plant and Mega Project (Induction manufacturing units Sponge Iron, Power, Billet) which made the assessee eligible for subsidy under the Scheme taken out by the Government of West Bengal, Commerce & Industries Department for making capital investments in backward area, namely, "Bankura". Subsidy for investment in Sponge Iron Plant was received by two modes, being Interest Subsidy (under WBIS-2000) amounting to Rs. 4.60 crore and State Capital Investment Subsidy (under WBIS- 2000) amounting to Rs. 2.50 crore in cash. Govt. of West Bengal for the Industrial development of the State of West Bengal formulated a scheme in the year 2000, as Incentive Scheme namely "the West Bengal Incentive Scheme, 2000", [Incentive Scheme approved by the Govt. of West Bengal for Large, Medium and Small Scale Industries and shall be valid for five years from 01.01.2000 to 31.12.2000] through Notification No. 91-CH/H/4F-54/2000. The West Bengal Incentive Scheme, 2000 was expressly for the purpose of attracting private investment in the State of West Bengal in the specified areas which are industrially backward. To promote industrialization, the Government offered various incentives/subsidies including 'State Capital Subsidy' and 'Interest subsidy' when a 'unit' was set up in any area specified in 'Group C' i.e. backward area as defined under the Scheme. At page 9 Para No. 7 of the Scheme, the areas of West Bengal have been segregated into 'Development Areas and Backward Areas' by grouping them into three Groups A,B & C, maximum Benefits in the form of Subsidy has been given to areas under 'Group C'. The assessee had received both the subsidies for setting up industry in 'Bankura', which falls under 'Group C' i.e. backward area. The subsidies were not in the nature of general assistance to the assessee to carry on 4 ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11 his business or trade more profitably but were for industrial development which clearly falls under the category of fixed capital incentive. The assessee received an eligibility Certificate from the Government of West Bengal wherein it received approval for Interest Subsidy. The assessee had filed original return of income treating the interest subsidy as revenue but during the assessment proceedings the assessee had rectified its mistake and claimed the subsidy as capital receipt by filing a Revised Computation of Income since the time limit for filing a Revised Return had lapsed. The ld AO however treated the interest subsidy as a revenue receipt and brought the same to tax.
2.2. As regards Power Subsidy of Rs 4,81,63,649/-, the same has been granted by virtue of the scheme framed by the West Bengal Govt. under the West Bengal Incentive to Power Intensive Industries Scheme 2005 (hereinafter referred to WBIPS 2005) expressly for the purpose of attracting private investment in the State of West Bengal in the specified areas which are industrially backward. Originally Govt. of West Bengal had granted concessional power tariff for new, expanding and sick and closed industrial consumers of Durgapur Projects Ltd and West Bengal State Electricity Board (WBSEB). Subsequently, this concession was withdrawn. But in order to continue with the growth, the Government introduced a new Scheme with the following objectives:
"And whereas, there has been robust growth and resurgence in the industrial scenario/investment in the State and the State Government is desirous of continuing all efforts to attract entrepreneurs for setting up industries in the State, especially in the backward areas,"
"And whereas the State Government has decided to provide incentives to power intensive industries to new and expanding industries in certain designated areas by way of reimbursement of part of the net energy charges for a certain period by the State Government as per details formulated in Part B of the Scheme".5
ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11 2.2.1. Thus, with the above objectives the Government of West Bengal formulated a new scheme named West Bengal Power Intensive Industries Scheme 2005 (WBIPS 2005). The purpose of the Scheme is clearly laid out above and it is only for promoting industries in the State of West Bengal. This it clearly falls under the category of fixed capital intensive.
2.2.2. The very motive of this subsidy was the promotion of industries in this part of the country and to generate employment opportunities. Another important point to be noted here is that has it not been for this subsidy, the assessee would not have set up any industry in the first place.
2.2.3. The Government of West Bengal for the Industrial Development of the state of West Bengal formulated a scheme in the year 2005 as Incentive Scheme namely "West Bengal Incentive to Power Intensive Industries Scheme 2005", [Incentive Scheme approved by the Govt. of West Bengal for Large and Small Scale Industries and shall be valid for five years or 31.03.2009 whichever is earlier] through Notification No. 276-CI/O/Incentive/052/05/I dated 19th May, 2005.
2.2.4. The assessee had accounted subsidy amounting to Rs. 4,81,63,649/- by deducting it from the power expenses subsequently during the assessment proceedings a revised computation was filed in order to claim the subsidy as a Capital Receipt in order to rectify the mistake committed in the Return of Income. The ld AO observed that the subsidy is computed as a deduction from electricity bills and hence it is for the purpose of running the business profitably. Accordingly by placing reliance on the following decisions , he treated the power subsidy to be a revenue receipt and brought the same to tax :-
a) Sahney Steel and Press Works Ltd vs CIT - 228 ITR 253 (SC) 6 ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11
b) CIT vs S.K.Kumar Tyre Mfg. Company - 131 Taxman 207 (MP)
c) CIT vs Premier Proteins Ltd - 144 Taxman 147 (MP)
d) CIT vs Neo Sack Ltd - 148 Taxman 603 (MP) 2.3. The assessee with regard to the interest subsidy submitted as under:-
a) Subsidy for investment in Sponge Iron Plant was received by two modes, being Interest "Subsidy (under WBIS-2000) amounting to RsA.60 crore and State Capital Investment Subsidy (under WBIS-2000) amounting to Rs.2.50 crore in cash.
b) The Govt. of West Bengal for the Industrial development of the state of West Bengal formulated a scheme in the year 2000, as Incentive Scheme namely "the West Bengal Incentive Scheme, 2000", [Incentive Scheme approved by the Govt.
of West Bengal for Large, Medium and Small Scale Industries and shall be valid for five years from 01.01.2000 to 31.12.2000] through Notification No.91- CHIH/4F-54/2000.
The purpose of the scheme is clearly spelled out in the Foreword of the Scheme as " West Bengal Incentive Scheme had an attractive provision of Sales Tax related by way of "remission" of "deferment". But in pursuance of the National Policy, the State Govt. had to discontinue the Sales Tax related Incentives from I" January, 2000. However, as there is a strong need for fiscal support for the promotion of industry in the State, the State Govt. decided to introduce the West Bengal incentive Scheme,2000, with different and new features, quite attractive for industries in large, medium, small scale and tourism sectors. "
7ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11
c) Also, this scheme was specifically to promote industrialization in the backward areas. This is evident from the fact that the districts have been grouped as 'A', 'B' & 'C' and maximum incentives are given for setting up industry in the Group C region i.e. the backward areas. It is pertinent to quote Para 7 of the Scheme:
7. CLASSIFICATION OF DEVELOPED AREAS AND BACKWARD AREAS:
7.1 For the purpose of determination of types and quantum of incentive available under this scheme for the approved projects, according to their location, the State shall be classified in the following groups:
Group A- Calcutta Municipal Corporation Group B- Howrah, Hooghly .....
Group C- Murshidabad, Birbhum, Purulia, Bankura, Malda, Coochbehar, North Dinajpur, Jalpaiguri and Darjeeling districts.
7.2 ..... "
Group A comprised of the developed areas, Group B comprised of semi- developed/developing areas and Group C comprised of backward areas.
A further perusal of the scheme would reveal that higher incentives have been given for setting up industry in the backward areas.
d) The nature of incentives/subsidies granted by the Government under any Scheme to any enterprise would totally depend upon the salient features of the Scheme. The purpose for which the incentive/subsidy is given under the Scheme is the determining factor to lay down the nature of the incentive/subsidy. If an incentive/subsidy is given as a general assistance to the assessee to carry on his business or trade, it would be an operational incentive and thus a trading receipt in the hands of the assessee. However if the object of the subsidy, irrespective of its source, is to enable the assessee to acquire new plant and machinery for further expansion of its manufacturing capacity or for setting up a new unit, the entire subsidy must be held to be a capital receipt. The incentives/subsidies, depending upon the purpose for which they are granted, fall under two categories namely:
(i) operational incentives/subsidies which are given to the assessee to carry on his 8 ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11 business or trade and;
(ii) fixed capital incentives/subsidies which are given to the assessee to set up a new unit or to expand its existing unit.
e) The West Bengal Incentive Scheme, 2000 was expressly for the purpose of attracting private investment in the State of West Bengal in the specified areas which are industrially backward. It was certainly not in the nature of a general assistance to the assessee to carry on his business or trade more profitably but was for industrial development which clearly falls under the category of fixed capital incentive.
f) It is to be noted here that it is the object for which the subsidy/assistance is given which determines the nature of the incentive subsidy. The form of the mechanism through which the subsidy is given is irrelevant.
g) To promote industrialization, the Government encouraged private sector investment in the State of West Bengal by offering various incentives/subsidies. The Government gave 'State Capital Subsidy' and 'Interest Subsidy' when a unit is set-up in any area specified in 'Group C' as defined under the Scheme.
h) The very motive of this subsidy was the promotion of industries in this part of the country and to generate employment opportunities. Another important point to be noted here is that had it not been for this subsidy, the assessee would not have set up any industry in the first place. The application of these funds is neither material nor relevant for deciding the character of the incentive subsidy.
9ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11
i) The assessee company draws full support from the decision of the Supreme Court in the following cases:
Sahney Steel and Press Works Ltd. Vs. Commissioner of Income-tax [1997] 228 ITR 253 (SC) C.I.T. vs Ponni Sugars and Chemicals Ltd. [2008] 306 ITR 392 (SC ) Commissioner of Income-tax v. Rasoi Ltd.[2011] 335 ITR 438 (CAL) (Revenue SLP dismissed) 2.4. The assessee with regard to the power subsidy submitted as under:-
In connection to the above it was submitted that the decisions by the Hon'ble Madhyapradesh High Court in the case of CIT vs S.K.Kumar Tyre Manufacturing Company reported in 131 Taxman 207 (MP) , CIT vs Premier Proteins Ltd reported in 144 Taxman 147 (MP) and CIT vs Neo Sack Ltd reported in 148 Taxman 603 (MP), were rendered in connection with some other Power subsidy Scheme given by the State of Madhya Pradesh. The details and objectives of the Scheme have not been discussed in any of the judgments and hence the ratio cannot be applied to the case of the assessee without ensuring that the facts were similar. Further, in the case of the assessee the State Government under the 'West Bengal Incentive to Power Intensive Industries Scheme, 2005', had actually granted the subsidy with the sole intention of attracting private investment in the state of West Bengal in the specified areas which are industrially backward and hence, the same was of the nature of non-taxable Capital receipt. Thus, according to the purpose test laid out by various Courts and Tribunals the subsidy should be treated as revenue in spite of the fact that its computation is based on the power 10 ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11 consumed by the assessee. It is well established from submission of the assessee as enunciated above that once the purpose of a subsidy is established; the mode of computation is not relevant. Further, the decisions of the Hon'ble Supreme Court in the case of Sahney Steel and Press Works Ltd. Vs. Commissioner of Income-tax [1997] 228 ITR 253 (SC) ; CIT. vs Ponni Sugars and Chemicals Ltd. [2008] 306 ITR 392 (SC) and the decision of the Hon'ble Calcutta High Court against which SLP has been dismissed in the case of Commissioner of Income-tax v. Rasoi Ltd.[2011] 335 ITR 438 (Cal) have precedence over the decision of a non jurisdictional High Court. It is reiterated that the Scheme was expressly for the purpose of attracting private investment in the State of West Bengal in the specified areas which are industrially backward. The mode of computation/form of subsidy is irrelevant. The mode of giving incentive is re-imbursement of energy charges. The nature of subsidy depends on the purpose for which it is given. Hence the assessee draws support from the decisions already discussed earlier as the same principle will apply here. It is also pertinent to mention here that the assessee has set-up industry in the backward region and is eligible to receive reimbursement of energy charges (25%) for a period of 5 years whereas for Group B areas and no incentive was given to units in Group A areas. Thus, the entire reason behind receiving the subsidy is setting-up of Plant in the backward region of West Bengal, namely, Bankura.
2.5. The ld CITA in the aforesaid facts and circumstances and duly appreciating the purpose of the subsidy scheme directed the ld AO to treat the interest and power subsidy as a capital receipt. He placed reliance on the decision of the Hon'ble Bombay High Court in the case of CIT vs Pruthvi Brokers & Shareholders (P) Ltd reported in 349 ITR 336 (Bom), which confirmed the view that an additional claim of deduction or exemption can be made by an assessee 11 ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11 otherwise than by filing a revised return, such additional claim can be made by the assessee before the appellate authorities. Therefore, the appellate authorities including the ld CITA have jurisdiction and therefore, discretion to entertain a new claim. The ld CITA further observed that in this case, the claim had already been made before the ld AO but was rejected and considering the above discussion, the claim of deduction as above on Interest and Power Subsidy by the assessee, which had been made before the ld AO otherwise than by way of filing of revised return is being considered and is being decided on its merits. The ld CITA also observed that the claim of the assessee to treat the said subsidies as capital receipt on merits going by the purpose of the scheme. Aggrieved, the revenue is in appeal before us on the following ground:-
1. That on the facts and circumstances of the case, the Ld. CIT(A) is not justified in deleting additions on Interest subsidy of Rs. 4,52,33,330/- and Power subsidy of Rs. 4,81,63,649/- holding these subsidies as capital in nature, relying on the decisions of the Hon'ble Supreme Court in the case of M/s Sahney Steel & Press Works Ltd. vs. CIT. 228 ITR 253 (SC). The Assessing Officer treated the same as revenue in nature, relying upon a number of case decisions e.g. CIT vs. Neo Sacks Ltd. (2005) 144 Taxmann 147 (MP) etc., including the decision of the Hon'ble Supreme Court in the case of M/s Sahney Steel & Press Works Ltd. vs. CIT 228 ITR 253 (SC), as favourable to the department.
2.6. We have heard the rival submissions and perused the materials available on record including the paper book filed by the assessee comprising of various documents relevant to the receipt of subsidy among others. We find that the issue under dispute is squarely covered by the decision of the Hon'ble Supreme Court in the case of CIT vs Ponni Sugars and Chemicals Ltd reported in 306 ITR 392 (SC) wherein it was held as under:-
"The character of the receipt in the hands of the assessee has to be determined with respect to the purpose for which the subsidy is given. In other words, in such cases one has to apply the 'purpose test'. The point of time when the subsidy is paid is not relevant. The source is immaterial; the form of subsidy is also 12 ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11 immaterial. The main eligibility condition in the scheme in the instant case was that the incentive must be utilized for repayment of loans taken by the assessee for setting up of new units or for substantial expansion of its existing units. On that aspect there was no dispute. If the object of the subsidy scheme was to enable the assessee to run the business more profitably, then the receipt was on revenue account. On the other hand, if the object of the assistance under the subsidy scheme was to enable the assessee to set up a new unit or to expand its existing units, then the receipt of the subsidy was on capital account. Therefore, it is the object for which the subsidy/assistance is given which determines the nature of the incentive subsidy. The form of the mechanism through which the subsidy is given is irrelevant."
Respectfully following the same, we hold that the ld CITA had rightly directed the ld AO to treat the interest subsidy of Rs 4,52,33,330/- as a Capital Receipt on the basis of the 'Purpose Test'.
2.7. With regard to the treatment of power subsidy, we find that the issue under dispute is squarely covered by the Third Member decision of this tribunal in the case of Shyam Steel Indsutries Ltd vs DCIT reported in (2016) 74 taxmann.com 217 (Kolkata - Trib.) (TM ) dated 19.5.2016, wherein it was held that the Power Subsidy received by assessee from State Government under Power Intensive Industries Scheme, 2005 , for setting up of a new industrial unit in backward area was capital receipt and thus, not liable to tax. This decision was rendered by the Third member by following the decisions of Hon'ble Supreme Court in the case of Ponni Sugars supra and Hon'ble Jurisdictional High Court in the case of CIT vs Rasoi Ltd reported in 335 ITR 438 (Cal). Respectfully following the same, we hold that the ld CITA had rightly directed the ld AO to treat the power subsidy of Rs 4,81,63,649/- as a Capital Receipt.
2.8. Accordingly the Ground No. 1 raised by the revenue is dismissed.
13ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11
3. Treatment of Interest Subsidy of Rs 4,52,33,330/- and Power Subsidy of Rs 4,81,63,649/- for the purpose of book profits u/s 115JB of the Act The assessee credited the interest subsidy of Rs 4,52,33,330/- and power subsidy of Rs 4,81,63,649/- (by deducting it from power charges) in the profit and loss account and the said accounts were duly approved by the shareholders in the annual general meeting of the assessee company. The assessee pleaded before the ld AO by way of a revised computation filed during the assessment proceedings that the said subsidies ought not to have been credited in the profit and loss account as the same are capital receipts. The assessee pleaded that the said subsidies does not constitute income u/s 2(24) of the Act and prayed for exclusion of the same from the book profits u/s 115JB of the Act for which a revised computation was duly filed by the assessee before the ld AO. The ld AO however, did not accept to this contention of the assessee on the ground that the said subsidies are revenue receipts and hence the same would retain the same character for the purpose of computation of book profits u/s 115JB of the Act also.
3.1. The ld CITA though held that the power subsidy and interest subsidy are to be treated as capital receipts, since they were voluntarily credited by the assessee in the profit and loss account and that the said accounts were approved by the shareholders of the assessee company, the same cannot be subject matter of any modification in the light of decision of the Hon'ble Supreme Court in the case of Apollo Tyres Ltd vs CIT reported in 255 ITR 273(SC) and accordingly upheld the action of the ld AO in this regard. Aggrieved, the assessee is in appeal before us on the following grounds:-
2a) On the facts and circumstances of the case, the Learned A.O., after holding that Interest and Power Subsidies received by the assessee company from the Government are Capital in nature and hence not to be included in the total income of the assessee company, erred in opining that 14 ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11 since these receipts are credited in the profit and loss account of the assessee company, they are to be considered as Book Profit within the meaning of Section 115JB of the Income Tax Act, 1961, for MAT purpose; neglecting thereby to take into account that these 'receipts', not constituting 'income' of the assessee company, even if included in the profit and loss account, could not be considered to give a fair and true picture of the accounts of the assessee company.
2b) On the facts and circumstances of the case, the Learned AO erred in confirming the action of the AO in considering the Interest and Power Subsidy amounts for computation of 'Book Profit' under Section 115JB of the Act.
3.2. We have heard the rival submissions. We find that the issue under dispute is squarely covered by the decision of this tribunal in the case of Krishi Rasayan Exports Pvt Ltd vs ACIT in ITA No. 883/Kol/2014 for Asst Year 2010-11 dated 8.3.2017 wherein the ground raised before this tribunal was as under:-
"1.That the Learned Commissioner of Income Tax (Appeals) -XII, Kolkata was not justified in upholding the action of the Learned Additional CIT Range -12 , in denying deduction while computation of Book Profits under section 115JB for Interest Subsidy of Rs 1,88,90,893/- & Customs Duty Refund Rs 3,00,15,964/-."
This Tribunal held as under:-
"17. We have heard the submission of the learned counsel for the assessee. As far as the excluding the subsidies in question from computation of book profit u/s 115JB of the Act is concerned, the provisions of section 115JB of the Act have to be looked at. Section 115JB of the Act provides that notwithstanding anything contained in any other provision of the Act, where in the case of an assessee, being a company, the income-tax, payable on the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 2001, is less than seven and one half percent of its book profit, such book profit shall be deemed to be the total income of the assessee and the tax payable by the assessee on such total income shall be the amount of income tax at the rate of seven and one half percent. The assessee being a company the provisions of Section 115JB of the Act were applicable. Every assessee, being a company, shall, for the purposes of Section 115JB of the act, prepare its profit and loss account for the relevant previous year in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956 (1of 1956). In so preparing its books of accounts including 15 ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11 profit and loss account, the company shall adopt the same accounting policies, accounting stand and method and rates for calculating depreciation as is adopted while preparing its accounts that are laid before the company at its annual general meeting in accordance with provisions of Section 210 of the Companies Act. Explanation below Section 115JB of the Act provides that for the purposes of Section 115JB of the Act, "book profit" means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (2), as increased by---- certain items debited in the profit and loss account in arriving at the net profit and reduced by ---- certain items that are credited in the profit and loss account. In other words, all that one has to do, while computing book profits is to take the profit as per profit and loss account prepared in accordance with Companies Act, 1956 and make additions or subtraction as is given in the explanation to Section 115JB(2) of the Act.
18. We have already seen that the issue whether subsidies in question can be regarded as income at all is no longer res integra and has been concluded by the Hon'ble Jammu & Kashmir High Court in the case of Balaji Alloys (supra). In the aforesaid decision the Hon'ble J & K High Court on identical facts held that excise duty subsidy and interest subsidy were capital receipts not chargeable to tax. In view of the aforesaid decision of the Hon'ble High Court rendered on identical facts as that of the Assessee's case, there can be no doubt that subsidies in question does not have any character of income.
19. When a receipt is not in the character of income, can it form part of the book profits for the purpose of Sec.115JB of the Act, is the question that arises for consideration. The ITAT Kolkata Bench in the case of Binani Industries Ltd. ITA NO.144/Kol/2013 order dated 2.3.2016 reported in (2016) 178 TTJ 0658 (Ko1) :
(2016) 137 DTR 0185 (Kol)(Trib) had to deal with a case where the question was as to whether receipts on account of forfeiture of share warrants amounting to Rs.
12,65,75,000/-, being a capital receipt, would be liable for taxation u/s 115JB. The Tribunal after referring to several decisions on the issue viz., the Hon'ble Apex Court in case of Indo Rama Synthetics (I) Ltd vs CIT 330 ITR 336 (SC), Apollo Tyres Ltd. 2SS ITR 273 (SC), Special Bench ITAT in the case of Rain Commodities Ltd. Vs. DCIT (2010) 131 TTJ (Hyd)(SB) S14, ITAT Lucknow Bench in the case of ACIT vs. L.H.Sugar Factory Ltd and vice versa in ITA Nos. 417,418 & 339/LKW /2013 dated 9.2.2016 and decision of Mumbai ITAT in the case of Shivalik Venture (P) Ltd. Vs. DCIT (201S) 173 TTJ (Mumbai) 238 dated 19.8.201S, came to the conclusions:-
(i) the object of Minimum Alternate Tax (MAT) provisions incorporated in Sec.l1sJB of the Act was to bring out real profit of companies and the thrust was to find out real working results of company.16
ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11
(ii) Inclusion of receipt which are not in the nature of income in computation of book profits for MAT would defeat two fundamental principles, it would levy tax on receipt which was not in nature of income at all and secondly it would not result in arriving at real working results of company. Real working result could be arrived at only after excluding this receipt which had been credited to Profit and loss account and not otherwise.
(iii) There was a disclosure of the factum of forfeiture of share warrants amounting to Rs. 12,65,75,000/- by the assessee in its notes on accounts vide Note No. 6 to Schedule 11 of Financial Statements for year ended 31.03.2009. Profit and loss account prepared in accordance with Part II and III of Schedule VI of Companies Act 1956, included notes on accounts thereon and accordingly in order to determine real profit of assessee, adjustment need to be made to disclosures made in notes on accounts forming part of profit and loss account of Assessee. Profits arrived after such adjustment, should be considered for purpose of computation of book profits u/s 115JB of the Act and thereafter, AO had to make adjustments for addition/ deletions contemplated in Explanation to Section 115JB of the Act.
20. The Tribunal in the aforesaid decision made a reference to the decision of the Special Bench of the ITAT in the case of Rain Commodities (supra) which in turn was based on the ratio laid down in the decision of the Hon'ble Supreme Court in the case of Apollo Tyres Ltd. (supra) as a case in which the income in question was taxable but was exempt under a specific provision of the Act and but for the exemption, the income would be chargeable to tax and such items of income should also be included as part of the book profits. But where a receipt is not in the nature of income at all it cannot be included in book profits though it is credited in the profit and loss account. The Bench followed the decision of the Lucknow Bench in the case of L.H. Sugar Factory Ltd. (supra), where receipts on account of carbon credits which were capital receipts not chargeable to tax and hence not in the nature of income were held not included in the book profits. The Bench also referred to the decision of the Mumbai Bench of the ITAT in the case of Shivalik Venture Pvt. Ltd. (supra) which was a case where the question was whether profits arising on transfer of a capital asset by a company to its wholly owned subsidiary company which is not treated as income" u/s 2(24) of the Act and since it does not form part of the total income u/s 10 of the Act and therefore does not enter into computation provision at all under the normal provisions of the Act, the same should be considered for the purpose of computing book profit u/s 115JB of the Act. The Mumbai Bench held as follows:
"26. We shall now examine the scheme of the provisions of sec. 115JB of the Act. It is pertinent to note that the provisions of sec. 10 lists out various types of income, which do not form part of Total income. All those items of receipts shall otherwise fall under the definition of the term "income" as defined in sec. 2(24) of the act, but they are not included in total income in view of the provisions of 17 ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11 sec. 10 of the Act. Since, they are considered as "incomes not included in total income" for some policy reasons, the legislature, in its wisdom, has decided not to subject them to tax u/s 115JB of the Act also, except otherwise specifically provided for. Clause (ii) of Explanation 1 to sec. 115JB specifically provided that the amount of income to which any of the provisions of section 10 (other than the provisions contained in clause (38) thereof) is to be reduced from the Net Profit, if they are credited to the profit and loss account. The logic of these provisions, in our view, is that an item of receipt which falls under the definition of "income"
are excluded for the purpose of computing "Book Profit", since the said receipts are exempted u/s 10 of the Act while computing total income. Thus, it is seen that the legislature seeks to maintain parity between the computation of "total income" and "book profit", in respect of exempted category of income. If the said logic is extended further, an item of receipt which does not fall under the definition of "income" at all and hence falls outside the purview of the computation provisions of Income Tax Act, cannot also be included in "book profit" u/s 115JB of the Act. Hence, we find merit in the submissions made by the assessee on this legal point."
21. The admitted factual and legal position in the present case is that subsidies in question is not in the nature of income. Therefore they cannot be regarded as income even for the purpose of book profits u/s 115JB of the Act though credited in the Profit and loss account and have to be excluded for arriving at the book profits u/s 115JB of the Act. We hold accordingly and confirm the order of the CIT(A) in this regard. In light of the aforesaid discussion, we are of the view that the subsidies in question should be excluded for the purpose of determination of book profits u/s 115JB of the Act. We hold accordingly and allow Gr.No.1 raised by the Assessee."
3.2.1. In the instant case also, we find that the assessee company in its 'Notes on Accounts' under the caption 'Significant Accounting Policies' (Schedule 19 of the Annual Report) enclosed in page 106 of the Paper Book with regard to the treatment of subsidy had reported as under:-
"7. Subsidy
a) The company is registered under the West Bengal Incentive Scheme, 2000 & 2004 of the Director of Industries, Government of West Bengal.
Under the said scheme the Company is entitled to receive Capital Investment Subsidy. Employment Generation Subsidy, Remission of Stamp Duty & Registration Fee. These shall be accounted for in the year of receipt and/or crystallization.
18ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11
b) The Company has been granted eligibility certificate under the West Bengal Incentives to Power Intensive Industries Scheme, 2005, promulgated by the Department of Commerce & Industries, Government of West Bengal vide notification no. 276-CI/O/Incentive/052/05/I dated 19.05.2005, effective from 1st April, 2004, under the said scheme, the company is entitled to receive incentive on energy charges, which has been accounted for in the books on actual basis."
3.2.2. Hence the profit and loss account and balance sheet prepared in accordance with Part II and III of Schedule VI of Companies Act, 1956 including the Notes on Accounts are to be considered together for the purpose of computation of book profits u/s 115JB of the Act. In the instant case, we have already held that the receipt of interest subsidy and power subsidy are to be held as capital receipts and hence it could be safely concluded that they are receipts which do not fall under the definition of 'income' u/s 2(24) of the Act at all and thereby the same cannot be included in the book profit u/s 115JB of the Act.
3.2.3. In view of our aforesaid findings and respectfully following the co-ordinate bench decision of this tribunal supra , we hold that the interest and power subsidy would have to be excluded while computing the book profits u/s 115JB of the Act. Accordingly, the Grounds 2a) and 2b) raised by the assessee are allowed.
4. Disallowance u/s 35D of the Act on account of Public issue and preliminary expenses The assessee had gone for an IPO in the month of July, 2007 (i.e. A.Y. 2008-09) and issued 1.19 crores Equity Shares of Rs. 10 each at a premium of 26 each through book building process. It had incurred expenses to the tune of Rs. 2,65,59,527/- incidental to the IPO. The said expense were in the nature specified in Section 35D of the Act and so the assessee claimed 1/5th of the expenses being 19 ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11 Rs. 53,11,905/- as deduction u/s 35D. Out of Rs. 2,65,59,527/- expenses disallowed by the Ld. AO to the tune of Rs. 1,93,38,935/-. Thus, 1/5th of Rs. 1,93,38,935/- being Rs. 38,67,787/- was disallowed by the Ld. AO and added to the total income of the assessee. The assessee had filed an appeal before the Ld. CIT(A) vide order dated 11.01.2012, the said appeal was disposed off whereby addition to the tune of Rs. 1,45,69,195/- was deleted by the Ld. CIT(A). Therefore, the total expenses amounting to Rs. [2,65,59,527 - (1,93,38,935 - 1,45,69,195)] Rs. 2,17,89,787/- are eligible for deduction u/s 35D of the Act. Thereby, Public issue to the tune of Rs. 43,57,957/- (1/5th ) were eligible for deduction. The assessee in A.Y. 2010-11 had claimed Preliminary expenses to the tune of Rs. 6,28,209/- and Public issue expenses to the tune of Rs. 53.11905/- in the original return of Income. In the revised computation of Income, this claim for Public Issue Expenses was reduced to Rs. 43,57,957/- as allowed by the Ld. CIT(A). The copy of the said order was submitted before the Ld. AO. Further, the Tribunal vide order dated 06.01.2014 confirmed the relief allowed by the Ld. CIT(A) to the assessee on this issue vide para no. 10 of the Tribunal order. The Ld. AO failed to appreciate the fact that the Ld. CIT(A) had passed the order for A.Y. 2008-09 granting partial relief to the assessee. Instead the Ld. AO followed the assessment order of A.Y. 2009-10 and disallowed Rs. 38,67,787/- out of Preliminary and Public Issue expenses and limited the amount of deduction to Rs. 20,72,327/- (Rs. 59,40,114 less Rs. 38,67,787/-). In connection to the above, it was submitted before the Ld. CIT(A) that the assessee claimed Rs. 49,89,166/- (Rs. 6,28,209 + 43,57,957/-) being the total deduction allowable u/s 35D consequent to the order passed by the Ld. CIT(A) which was further confirmed by the Tribunal. The Ld. CIT(A) in its order dated 17.02.2014 for A.Y. 2010-11 at Para 7.2, page 35 has stated that "it is seen that the issue covered by the decision of CIT(A)-1, Kolkata in A.Y. 2008-09 and it has been mentioned by the CIT(A)-I in his order dated 20 ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11 11.01.2012 para 7.2 that the expenditure claimed was in the nature of payments towards Underwriting commission and brokerage to certificates fees and the payments to the extent of Rs. 1,43,94,195/- and Rs. 1,75,000/- paid to Chartered Capital for Underwriting commission and to R.K. Kothari as Fees for Certification Work for Prospectus respectively were allowable for the purpose of deduction u/s 35D, therefore, it is seen that out of the claim originally disallowed by AO i.e. Rs. 1,93,38,935/- (i.e. 1/5th of this amount claimed u/s 35D which Rs. 38,67,787/-) was disallowed in the Assessment order for A.Y. 2008-09, an amount of Rs. 1,43,94,195/- has been allowed by the CIT(A) in his above order. Therefore, following the order of my predecessor CIT(A), the AO is accordingly directed to allow the benefit of the claim u/s 35D of the I.T. Act, 1961 to the assessee in the current year on the same basis." Thus, the Ld. CIT(A) has correctly appreciated the facts of the case of the assessee in the light of the decision of his predecessor for A.Y. 2008-09 and thus has accordingly allowed relief to the assessee by allowing deduction to the tune of Rs. 38,67,787/- u/s 35D of the I.T. Act, 1961. However, the Department has failed to appreciate the fact that the Ld. CIT(A) on the same issue has passed favourable order in A.Y. 2008-09 in the case of assessee company.
4.2. Aggrieved, the revenue is in appeal before us on the following ground:-
2. That on the facts and circumstances of the case, the Ld. CIT(A) is not justified in allowing relief to the assessee against disallowance made by the AO of Rs.38,67,787/- u/s 35D of the I.T. Act, 1961 on Public Issue and preliminary issue expenses.
4.3. We have heard the rival submissions. We find that the issue under dispute is covered by the decision of this tribunal in assessee's own case for the Asst Year 2008-09 supra which has been relied upon by the ld CITA. Hence we do not find any infirmity in the order of the ld CITA. Accordingly we direct the ld AO to 21 ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11 grant deduction u/s 35D of the Act to the tune of Rs 49,86,166/- as claimed by the assessee in the revised computation of income in accordance with the tribunal order for the Asst Year 2008-09. Accordingly, Ground No. 2 raised by the revenue is dismissed.
5. Disallowance of Donation, Membership and Subscription Expenses The assessee had claimed deduction of Rs. 4,93,828/- on account of Donation, Membership and subscription. Out of the said amount Rs. 1,00,000/- pertained to the payment made to Bengal Tennis Association and Rs. 1,40,828/- pertained to payments made for miscellaneous memberships and puja subscription. The ld AO disallowed the sum of Rs 2,40,828/- as not incurred for the purpose of business of the assessee. The assessee submitted that the payment to Bengal Tennis Association is for the welfare of the employees and the assessee has taken a corporate membership for recreation of the employees and it is solely for the purpose of increasing the efficiency of the employees and thus is directly related to the business of the assessee. The ld CITA appreciated the facts of the case and allowed relief by deleting the disallowance to the tune of Rs 1,00,000/- towards subscription of the club. However, he sustained the disallowance of remaining sum of Rs 1,40,828/- made by the ld AO. Aggrieved, both the assessee as well as the revenue are in appeal before us on the following ground:-
I.T.A No. 1233/Kol/20144. On the facts and circumstances of the case, the learned CIT(A), after holding that contributions made to different clubs for Puja Celebrations are out of business necessity, however, erred in confirming the action of the AO in disallowing the amount of Rs. 1,40,828/- explained by the assessee company towards that purpose, on the alleged ground of lack of details and evidences of such expenses.
I.T.A. No. 1479/Kol/2014
3. That on the facts and circumstances of the case, the Ld. CIT(A) is not justified in confirming disallowance of Rs. 1,40,828/- only, out of 22 ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11 disallowance of Rs. 2,40,828/- on Donation, Membership & Subscription, admitting fresh evidences from the assessee in contravention to Rule 46A of the I.T. Rules and without giving a finding as to what prevented the taxpayer to adduce evidences before the Assessing Officer.
5.1. We have heard the rival submissions. During the course of hearing, the ld AR stated that he is not pressing Ground No. 4 of assessee's appeal. The same is reckoned as a statement from the Bar and accordingly the Ground No. 4 of assessee's appeal is dismissed as not pressed.
5.2. With regard to revenue's appeal, we find from the paper book of the assessee that no fresh evidences were filed by the assessee before the ld CITA and hence there is no violation of Rule 46A of the IT Rules. We find that on merits, the issue is covered by the decision of Hon'ble Delhi High Court in the case of CIT vs Samtel Colour Limited reported in (2010) 326 ITR 425 (Del) and Hon'ble Supreme Court in the case of CIT vs United Glass Manufacturing Company Ltd in Civil Appeal No. 30146/2008 dated 13.9.2012 (SC) , wherein it was held that the subscription and admission fee paid towards corporate membership to club was an expenditure incurred wholly and exclusively for the purposes of the business of the assessee and not towards capital account as it only facilitated the smooth and efficient running of a business enterprise and did not add to the profit-earning apparatus of a business enterprise. Accordingly, the Ground No. 3 raised by the revenue is dismissed.
6. Disallowance of Interest on borrowed funds and allocation of the same to Work in Progress During the course of assessment proceedings, it was noticed by the Ld. AO that capital work in progress was shown at Rs. 18,92,27,762/- in the Balance Sheet of 23 ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11 the assessee company. The assessee had provided details of Capital Work in Progress as required by the Ld. AO. Item-wise details along with bills etc were also produced by the assessee. Even the details and breakup of preoperative expenses were provided to the Ld. AO. The assessee has transferred interest to the tune of Rs. 61.07 lacs to Capital Work In Progress. The same shall be evident from the perusal of Note No. B(3) "Notes to Accounts" of the Annual Accounts. The ld AO assumed that the assessee had not capitalized any interest expenditure and computed proportionate interest expenses to be allocated to Work in Progress to the tune of Rs 58,32,922/- worked out as under:-
13,25,81,156 [Interest] X 18,92,27,762 [Capital- Work-In-Progress] 431,08,41,042 [Total Assets] 6.1. The assessee submitted before the ld CITA that it had already capitalized interest to the Work in Progress to the tune of Rs 61,06,768/- which is an amount exceeding as that computed by the ld AO and hence there is no need to make further disallowance thereon. The ld CITA after considering the facts of the case granted relief to the assessee by observing as under:-
"It is seen that the AO has allocated proportionate amount of interest to the Work-in-Progress, however, from the details filed in Appeal it is clear that the assessee has already allocated interest charges of Rs. 61.07 lacs. This is also mentioned in the Note No. B(3) 'Notes on Accounts' of the Annual Accounts that interest of Rs. 61.07 lacs was transferred to Capital Work-in-Progress. Therefore, the AO has made a double disallowance on this account which from the above circumstances and facts is not justified, accordingly, the disallowance of Rs. 58,32,922/- is deleted."
6.2. Aggrieved, the revenue is in appeal before us on the following ground:-
4. That on the facts and circumstances of the case, the Ld. CIT(A) is not justified in deleting disallowance of Rs. 58,32,922/- non-capitalisation of interest on capital Work-in-Progress, admitting fresh evidences from the assessee in contravention to Rule 46A of the I.T. Rules and without giving a 24 ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11 finding as to what prevented the taxpayer to adduce evidences before the Assessing Officer.
6.3. We have heard the rival submissions. We find that the assessee had given the entire details of capital work in progress item wise and head wise in the manner called for by the ld AO. We find that the details of pre-operative expenses (i.e revenue expenses capitalized to work in progress which admittedly included interest on secured and unsecured loans to the tune of Rs 61,06,768/-) are enclosed in page 375 of the Paper Book. The ld DR stated that the ld CITA appreciated the additional evidences filed before him by the assessee and without seeking for a remand report from the ld AO, granted relief to the assessee thereby violating provisions of Rule 46A of the Rules. He prayed for setting aside of this issue to the file of the ld AO for re-verification of the claim of the assessee. In response to this, the ld AR stated that no additional documents/ evidences were filed before the ld CITA. The ld CITA just verified the Notes on Accounts enclosed along with the return of income and appreciated the facts of the case and granted relief and as such there was no violation of Rule 46A of the Rules.
6.3.1. We find from page 106 of the Paper Book in Notes on Accounts under the caption 'Significant Accounting Policies' and under the sub-heading 'Fixed Assets', the assessee had mentioned as under:-
2. Fixed Assets
a) .............
b) ...............
c) Interest on borrowing costs related to qualifying assets is worked out on the basis of actual utilization of funds out of project specific loans and / or other borrowings to the extent identifiable with the qualifying assets and are capitalized with the cost of qualifying assets. Incidental indirect expenses relating to the project are apportioned amongst the Fixed Assets 25 ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11 on the basis of their cost of erection / acquisition on commencement of commercial production.
6.3.2. We find from page 107 of the Paper Book in Notes on Accounts under the caption 'Significant Accounting Policies' and under the sub-heading 'Borrowing Costs, the assessee had mentioned as under:-
14. Borrowing Costs Borrowing costs and its related expenses that are directly attributable to the acquisition, construction or production of a qualifying asset is capitalized as part of the cost of that asset. Other borrowing costs are recognized as an expense in the period in which they are incurred.
6.3.3. We find from page 108 of the Paper Book in Notes on Accounts (B) in Note No.3, the assessee had mentioned as under:-
3. Interest of Rs 61.07 (P.Y. Rs 480.40 lacs) capitalized during the year as identified for acquisition & construction of qualifying assets and a sum of Rs 34.32 lacs (P.Y. Rs 179.87 lacs) transferred to pre-operative expenses as a borrowing cost.
6.3.4. From the aforesaid notes, we find that the assessee had duly disclosed its method of treating borrowing costs in its books of accounts vis-a-vis the amount of interest capitalised to the cost of relevant asset and interest transferred to pre-
operative expenses. All these facts are duly reflected in the Annual Report filed along with the return of income / filed during assessment proceedings, as the case may be. We find that the ld CITA had only appreciated these facts and evidences that are already available on record and had not adjudicated any fresh evidences without giving any opportunity to ld AO in terms of Rule 46A of the Rules. Hence the request of the ld DR on the ground of seeking one more opportunity to the ld AO for re-verification holds no water and is hereby rejected. We also hold that there is no violation of Rule 46A of the Rules in this regard. We find that the 26 ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11 assessee had correctly apportioned the interest on borrowed funds to the Work in Progress as is evident from the aforesaid facts and the ld AO had made this disallowance to the tune of Rs 58,32,922/- only on assumption of incorrect facts. Accordingly, we do not find any infirmity in the order of the ld CITA and hence the Ground No. 4 raised by the revenue is dismissed.
7. Relief u/s 91 of the Act - Rs 21,06,133/-
The assessee earned commission income to the tune of Rs. 6,36,48,612/- from the parties in Bhutan. The said commission was subjected to withholding tax as per the tax laws of Bhutan to the tune of Rs 21,06,133/- which are supported by TDS certificates issued by Bhutan Carbide and Chemicals Ltd (for Rs 11,309/-) and Bhutan Ferro Alloys Ltd (for Rs 20,94,824/-). The said taxes were deducted from the payments made to the assessee towards commission. The assessee, instead of claiming the same as 'Relief u/s 91 of the Act' , erroneously claimed as 'TDS' in the return of income. The ld AO without discussing anything on this issue in his order, failed to grant tax credit of Rs 21,06,133/- though the copy of TDS certificates were very much available before him.
7.1. Before the ld CITA, the assessee submitted that as per provisions of Section 91 of the Act, relief under Double Taxation Treaty between India and Bhutan should be given to the assessee at lower of the following rates:
a. Rate of tax of the other country or b. Indian rate of tax Accordingly, the assessee earned commission income from Bhutan Carbide & Chemicals Ltd. and Bhutan Ferro Alloys Ltd. on which TDS was deducted. The rate of tax deducted in Bhutan was 3% and the rate of tax in India is 30%, hence, the relief is equal to the tax deducted in Bhutan.27
ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11 7.2. The ld CITA appreciated the facts of the case and directed the ld AO to allow relief u/s 91 of the Act after due verification as per law. Aggrieved, the revenue is in appeal before us on the following ground:-
5. That on the facts and circumstances of the case, the Ld. CIT(A) is not justified in allowing relief to the assessee of Rs. 21,84,910/- u/s 91 of the I.T. Act, 1961, admitting fresh evidences from the assessee in contravention to Rule 46A of the I.T. Rules and without giving a finding as to what prevented the taxpayer to adduce evidences before the Assessing Officer.
7.3. We have heard the rival submissions. We find from page 104 of the Paper Book that the assessee had earned commission of Rs 6,36,48,612/- during the year which has been duly offered to tax by the assessee. We find that the assessee had submitted the TDS certificates issued by the Bhutan companies for Rs 21,06,133/-
before the ld AO which are enclosed in pages 376 to 389 of Paper Book. We find that there is absolutely no additional evidence filed before the ld CITA by the assessee. The ld CITA considered only the TDS certificates to the tune of Rs 21,06,133/- that are already available on record of the ld AO and considered the provisions of section 91 of the Act with reference to the facts of the case and directed the ld AO to grant relief thereon after due verification as per law. We do not find any infirmity in the order of the ld CITA in this regard. Accordingly, the Ground No. 5 raised by the revenue is dismissed.
8. During the course of hearing, the ld AR stated that the Grounds 3a) and 3b) raised by the assessee are not pressed. The same is reckoned as a statement from the Bar and accordingly the Grounds 3a) and 3b) raised by the assessee are dismissed as not pressed.
9. The Ground No. 6 raised by the revenue is general in nature and does not require any specific adjudication.
28ITA Nos.1233 & 1479/Kol/2014 M/s Ankit Metal & Power Ltd.
A.Yr.2010-11
10. The Ground Nos. 1 & 5 raised by the revenue are general in nature and does not require any specific adjudication.
11. In the result, the appeal of the revenue is dismissed and appeal of the assessee is partly allowed.
Order pronounced in the Court on 06.09.2017
Sd/- Sd/-
[A.T.Varkey] [ M.Balaganesh ]
Judicial Member Accountant Member
Dated : 06.09.2017
SB, Sr. PS
Copy of the order forwarded to:
1. M/s Ankit Metal & Power Ltd. 35, C.R. Avenue, Kolkata-700012.
2. ACIT, Range-3, Kolkata
3..C.I.T.(A)-I, Kolkata 4. C.I.T.- Kolkata.
5. CIT(DR), Kolkata Benches, Kolkata.
True copy By Order Senior Private Secretary Head of Office/D.D.O., ITAT, Kolkata Benches