Income Tax Appellate Tribunal - Chandigarh
Acit, Chandigarh vs Green Field Enterprises, Chandigarh on 2 June, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, CHANDIGARH
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER
AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER
ITA No.1114/Chd/2016
(Assessment Year : 2012-13)
The A.C.I.T., Vs. M/s Green Field Enterprises,
Circle 5(1), SCO 36, 1st Floor, Sector 26,
Chandigarh. Chandigarh.
PAN: AAGFG6666C
(Appellant) (Respondent)
Appellant by : Shri Manjit Singh, DR
Respondent by : Shri T.N. Singla
Date of hearing : 22.05.2017
Date of Pronouncement : 02.06.2017
O R D E R
PER ANNAPURNA GUPTA, A.M. :
Th i s a p p e a l h a s b e e n f i l ed b y t h e R e v e n u e a ga i n s t the o r d er of CI T( A p p e a l s ) - 2 , Ch a n d i g a r h d a t ed 9 . 8 . 2 0 16 r e l a t i n g t o a s se ss m e n t y e ar 2 0 1 2- 1 3 .
2. Th e g r o u n d s r a i se d b y r e ve n u e are a s u n d er :
"1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing appeal of the assessee without appreciating the facts of the case.
2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the excise duty refund of Rs. 1,65,02,244/- received by the assessee constituted a capital receipt not liable to tax under the provisions of Income Tax Act, 1961.
3. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the addition of Rs. 11,22,561/- on account of Rebate & Discount relates to purchase of material which was shown on the credit side of the profit & Loss account and the assessee is eligible for deduction u/s 80IB.
4. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the addition of 2 Rs. 77,249/- on account of interest received on FDRs which was shown on the credit side of the profit & Loss account and the assessee is liable for deduction u/s 80IB.
5. It is prayed that the order of the Ld. CIT(A) be set aside and that of the Assessing Officer may be restored.
6. The appellant craves leave to add or amend any grounds of appeal before the appeal is heard or disposed off."
3. G r o u n d N o s . 1, 5 a n d 6 b e i n g g e n e r a l i n n a t u re n e e d n o a d j u d i ca t i o n a n d a r e , t h e r e f o r e, n o t b e i n g d e a l t w i t h b y us .
4. G r o u n d N o . 2 r a i s e d b y t h e R e v e nu e i s a g a i n st t he a c t i o n o f th e Ld . CI T( A p p e a l s ) i n h o l d i n g th e e x c i s e du t y refund r e c e i ved by th e as s e s s e e , a m o un t i n g to R s . 1 , 6 5 , 02 , 2 4 4 /-, as being c a pi t a l in n a t u re and thus d e l e t i n g t he a dd i t i o n m a d e b y t h e A s s e s s i n g O f f i c e r by t r e a t i n g t he s a me as r e v e n u e a n d f u r t h e r n o t el i g i b l e f o r d e d u c t i o n u / s 80 I B o f th e I n co me Ta x A c t , 1 9 6 1 .
5. Brief f ac t s r el ev a n t to the i ssu e are t ha t t he a s s e s s e e ha d c l a i m e d d e d uc t i o n o f R s . 1 , 6 5, 0 2 ,2 4 4 / - u /s 8 0 I B o f t h e I n co m e Ta x A c t , 19 6 1 ( i n s h o rt ' th e A c t ') on e x c i s e d ut y r e f un d . Th e A s s e s si n g O f f i ce r d i sa l l o w e d t h e claim, holding t h a t i t c a n n o t b e s a i d t o b e d e r i v ed f r o m t h e business of t he assessee, w hi c h is a p r e r eq u i s i t e for c l a i m i n g t h e s a i d d e d u ct i o n , s i nc e i t s s o u r ce w as n o t f r om t h e i n d u s tr i a l un d e r t a k i ng o f th e a s s e s s ee b u t t h e s c h e m e o f t h e Ce n t r a l G ov e r n m e n t .
6. Th e matter wa s c a r r i ed in a pp e a l b ef o r e the L d . CI T( A p p e a l s ) , w h e r e th e as s e s se e a r g ue d th a t th e H o n 'b l e J a m m u & K a s hm i r H i g h C o u r t i n t h e c a s e of M / s S h re e 3 B a l a j i A l l o y s & Ot h e r s V s . CI T i n I TA N o . 2 o f 20 1 0 & O t h e r s dated 3 1 . 1 .2 0 1 1 had held that the excise d ut y r e f u nd received by t he assessee by virtue of the policy of G o v e r n m e nt o f J a m m u & K a s h m i r w a s a c a p i t a l re c e i p t a n d h e n c e n o t l i a b l e t o t a x i n t h e h a n d s o f t h e a s s es s e e . Th e assessee a l s o p o i n t e d ou t t h at t h i s d ec i s i o n h a s b e en u p h e l d b y t h e Ho n ' b l e A p e x Co ur t r e p o r t e d i n 13 8 D TR 3 6 . Th e a s s e s s e e a l s o s t a t e d t h a t th e I TA T, i n t h e a s s e s s e e's o w n c a s e f o r a s se s s m e n t y e a r 2 01 0 - 1 1 h a d h e l d th e r e f u n d o f t h e e x c i s e d u t y a s c a pi t a l i n na t u r e . Th e L d .CI T( A p p e a l s ) a f t e r c o n s i de r i ng t h e a s s e s s e e 's s u b m i s s i o ns d e l e t e d t he a d d i t i o n m a d e b y f o l l o w i n g t he o r d e r o f t h e I . T. A . T. i n a s s e s s e e 's o w n c a s e f o r a s s e ssm e n t y e ar 2 0 1 0-1 1 v i d e i t s o r d e r i n I TA N o. 97 1 / C h d / 2 01 3 d at e d 2 . 5 . 20 1 6 .
7. A g g r i e v e d b y t h e s a m e , t he R e ve nu e h a s n o w co m e u p i n a p p e a l b e fo r e u s . While the Ld. DR relied upon the o r d e r o f t h e A ss e s s i n g O f fi c e r a n d s t a t e d t h a t t h e e x c i s e d u t y r e f u n d re ce i p t w a s r e v en ue i n n a t u r e a n d h a v i n g n o d i r e c t ne x u s w i th t h e bu s i n e ss o f t h e a s s e s se e b u t h a v i n g b e e n e a r n ed b y t h e a s s e s se e o n a c c o u n t o f th e s c h e m e o f G o v e r n m e nt i n th i s r e g a r d, i t wa s n o t l i a bl e t o d e d u c t i o n u / s 8 0I B o f t h e A c t .
8. Th e L d . c o u ns e l f o r a s se s s e e , o n t h e ot h e r h a n d , r e l i e d u po n t h e or d e r o f t h e L d .CI T( A p p e a l s ) .
9. H a v i n g h e ar d t he r i v a l c o n te n t i o n s , w e f i n d n o m e r i t i n t he p r es e n t g r o u nd r a i s e d b y t h e R ev en u e . Th e i s s u e i n t h e p r es e n t g r ou n d p er ta i n i n g to t h e n at u r e o f t h e 4 s u b s i d y r e c e i v e d i n t he f or m of e x c i s e du t y re f u nd w h e t he r c a p i t a l o r re v e nu e a n d i t s d e d uc t i b i l i t y u / s 8 0I B , w e f i nd t h a t t he s a me h as a t t a i n e d fi n a l i t y i n vi e w o f t he d e c i s i o n of t h e H o n ' b l e A p e x C o u r t i n t h e c a s e o f M / s S hr e e B a l a ji Alloys & O t h ers ( s u p r a) and in the case of CI T Vs. M e g h a l a y a S t e e l s 3 8 3 I TR 2 1 7 ( S C) . Th e H o n ' b l e Ap e x C o u rt i n t h e c as e o f M / s S h r e e B a l a j i A l l o y s & O t he r s ( s u p ra) d i s m i s s e d t h e ap p e a l o f t h e R ev e n u e a g ai n s t th e o r d e r of t h e H o n ' b l e J am m u & K a s h m i r H i g h C o u r t f ol l o w i n g i t s d e c i s i o n r e n d e red i n t h e c a s e o f CI T V s . M e g h al a y a S t e el s (supra). Th e H on ' b l e J am m u & K a s h m i r H i g h C ou r t h a d i n t u r n h e l d t h at E x c i s e d u t y Re fu n d w a s c a p i ta l i n n a t u r e s i n c e i t w a s g r an t e d t o a c h i ev e t h e p u r po s e o f ac c e l e r a t i o n o f i n d us t r i a l d ev e l o p m e n t i n t he S t a t e a n d g e ne r a t i o n of e m p l o y m e nt w h i ch w e r e pu b l i c p ur p o s e s an d t h us c o u l d n ot b e c o n s t r u ed a s o p e r a t i o n al i n ce n t i v e s . Th u s i t i s s e t t l e d t h a t s u b s i d y r e ce i v e d b y w a y o f r e f u n d o f e xc i se d u t y f o r s e t t i n g up n e w i n d u s t r i al u n d ert a k i n g i s a c ap i t a l r e c ei p t a n d n o t ta x a b l e a s i n c o m e.
10. I n v i e w o f t h e s am e , w e fi n d n o re a s o n t o i n t e rf e re i n t h e o r d e r o f t h e L d . CI T( A p p ea l s ) d e l e t i n g the a d d i t i o n made on ac c o un t of e x ci s e du t y r e f u nd a mo u n t i n g to R s . 1 , 6 5 , 02 , 2 4 4 /-. G r o u nd N o .2 r a i s e d by t h e R ev e n u e i s, t h e r e f o r e, d i s mi ss e d i n t he a b o ve t e r m s .
11. G r o u n d N o . 3 r a i s e d b y t h e R e v e nu e i s a g a i n st t he a c t i o n o f t he L d. CI T( A p p e a l s ) i n d e l e t i n g t he ad d i t i o n o f R s . 1 1 , 2 2 ,5 6 1 / - m a d e o n a c c o un t o f r eb a t e and d i s c o u nt 5 relating to p u rc h a s e of m a t e ri a l and holding that t he a s s e s s e e i s e l i g i bl e f o r de d u c t i on u / s 8 0I B o n t h e s a m e .
12. Brief facts r el at i n g to the i s su e are that t he a s s e s s e e h a d c l a i m e d d e du c t i o n u / s 8 0I B o n re b a t e a nd discount a m o un t i n g to Rs . 1 1, 2 2 , 5 6 1 / -. Th e A s s e s s i ng O f f i c e r d e n i e d t he s a m e f o r t h e r e a s o n t h a t r e c e i v i n g r e b a te a n d d i s c o u n t w as n o t t h e p r i m a r y b u s i n e s s o f t he a s s e s s ee a n d , t h e r e f or e , t h e r e w a s n o d i r e c t n e x u s o f th e i n c o m e a r i s i n g o n a cc o un t o f r e b a t e a nd d i s c o u n t w i t h t he b u s i n e s s a c t i v i t y o f t he a s s e s s e e a n d t hu s t h e a s s e s s e e w a s n ot e n t i t l e d t o cl a i m d e d u c t i o n u / s 8 0 I B o f t h e A c t o n a c c o u nt o f t h e s am e .
13. Before the Ld . CI T( A p p e a l s ) , the a s s e s see c o n t e n d e d t h a t r e b a t e a n d di s co u n t h a s b e en re c e i v e d b y t h e a s s e s se e o n p u r c h a s e s m a d e b y i t i n i ts u n i t s e t u p i n J a m m u & K a s h mi r , w h i c h w a s e l i g i b l e t o c l a i m d ed u c t i o n of its profits u/s 80IB, a nd the assessee had instead of d e d u c t i n g t h i s am o u n t f r o m pu r ch a s e s h a d s ho w n t h e s a m e s e p a r a t e l y o n t he c r e d i t si d e o f t h e P r o f i t & L o ss A c c o u n t. Th e a s s e s s e e sub m i t t e d t h a t t he s e a m o un t s w er e d i r e ct l y r e l a t e d t o t h e p ur c h a s e a n d t h u s h a d d i r e c t n e x us w i t h t h e i n c o m e e a r n e d fr o m t h e e l i g i b l e b u s i n e s s o f t h e a s s e s s e e . Th e a s s e s s e e c on t e n d e d t ha t i t w a s , t h e r ef o r e , e l i g i b l e to claim de d u c t i o n o n ac c o u n t of the same. It was also p o i n t e d o ut b y th e a s s e s s ee t h a t s i m i l a r d i s a l l o wa n c e m a de i n a s s e s sm e n t y ea r 2 0 1 0 - 11 i n t he c a s e of t h e a s se s s e e h a d been d e l e te d by the I . T. A . T. vide its or d er in I TA 6 N o . 9 7 1 / C hd / 2 0 13 dated 2. 5 . 20 1 6 . Th e l ea r n e d CI T (Appeals) af t e r c o n s i d e r i ng the a s s e s s e e 's s u b m i s s i ons d e l e t e d t h e d i s a l l o w a n c e m a d e rel y i n g u p on t h e de c i s i o n o f t h e I . T. A . T. i n a s s e s s e e ' s o w n a ss e s s e e f or a s s e ss m e n t y e ar 2010-11.
14. B e f o r e us , t h e l ea r n e d D .R . r e l i ed u p o n th e o r der o f t h e A s s e s s i ng O f f i c e r , w h i l e t h e L d . c o u n s e l f o r t h e a s s e s s e e r e l i e d up o n t h e or d e r of t h e l e a r ne d CI T (A p p e a l s ) .
15. H a v i n g h e a r d b o th t h e p a r t i e s , w e f i n d n o me r i t i n t h e g r o u n d ra i s ed b y t h e R e v en ue . U n d i s p ut e d l y, i d e n t i c al i s s u e o f a l l o w a nc e o f d ed u c t i on u / s 8 0I B o n re b a t e s an d d i s c o u n t s e a rn ed b y t h e a s s e s s ee o n p u r c h a se s m a d e b y i t h a d a r i s en i n t he c a s e o f t h e a ss e s s e e i n a s s e s sm e n t y e ar 2 0 1 0 - 1 1 w he r e i n t h e I . T. A . T. h a d h e l d t h a t t h e a s se s s e e w a s e n t i t l e d t o d e du ct i o n o n t h e s a m e. No change in facts have b e e n b r o u g h t to o u r n o t i c e b y t h e l e a r n e d D .R. f r o m t h e a s s e s s m e nt y e a r 2 0 1 0 - 1 1 . I n v i e w o f t h e sa m e , s i n c e t h e i s s u e h a s a l r e ady b e e n d ec i d e d by t h e I . T. A . T. , on i d e n t i ca l s e t o f f a c t s i n as s e s s m e n t y ea r 2 0 1 0 - 1 1 , i n f a vou r o f t h e a s s e s s e e , w e s e e n o r e a s o n t o i n t e r f e r e i n t h e o rd e r o f t h e l e a r n e d CI T ( A p pe a l s ) w h o h a s al l o w e d t h e a s s es s ee ' s a p p e a l b y f o l l o w i n g t h e d e c i s i o n o f t h e I . T. A . T. i n a s s e s s e e ' s o wn c a s e i n a s s e s sme n t y e a r 2 0 1 0 -11 . In view of the same g r o u n d N o. 3 r a i se d b y t h e R e v e nue i s d i sm i s s e d.
16. G r o u n d N o . 4 r a i s e d b y t h e R e v e nu e i s a g a i n st t he a c t i o n o f t h e l e ar n e d CI T ( A p p e a l s ) i n d e l e t i ng t he a d d i t i o n m a d e b y t h e A s se s s i n g O f f i ce r o f R s . 7 7 , 2 4 9 / - o n a c c o u n t o f 7 i n t e r e s t r e ce i v e d o n F D R s b y d e n y i n g d e d u c t i on u / s 8 0 I B o n the same.
17. Brief f ac t s r el ev a n t to the i ssu e are t ha t t he a s s e s s e e h a s sh o w n i n co m e f ro m i n t e re s t o n F D R s a nd i n t e r e s t f ro m o t he r s t o t a l l i n g R s .2 , 2 0 , 8 3 4 /- . Th e A s s e s s i n g O f f i c e r s h o w c au s e d t h e a s s e sse e a s t o w h y t he d e d u c t i o n u / s 8 0I B b e n o t d i s a l l o w e d o n th e i n t e r e s t i n c om e s i n c e i t w a s n o t p r o f i t f ro m e l i g i b l e b u si n e s s I n t h e a b se n c e o f a n y e x p l a n a t i o n o f f er e d b y t h e a s s es s e e t h e A s s e s si n g O f f i c e r d i s a l l o we d d ed uc t i o n un d e r s e ct i o n 8 0I B o n t he i n t e re s t i n c o m e a nd m a de a d d i t i on o f Rs .2 , 2 0 , 8 3 4 /- .
18. B e f o r e t h e l e a rn e d C I T ( A p p e al s ) , t h e a s s e s s ee c o n t e n d e d t h a t o u t o f th e t o ta l i n t e r e st c r e di te d t o t he P r o f i t a n d L o s s A c c o u n t o f Rs . 2 ,2 0 , 8 3 4 / - , R s . 6 8 ,2 2 0 / - w as i n t e r e s t r e c ei v e d o n F DR s a nd R s . 1 , 5 2 , 61 4 / - wa s i n t er e s t r e c e i v e d f r o m o th e r s o u rc e s . Th e a s s e s se e s ub mi t t e d th a t n o d e d u c t i o n u /s 8 0 I B h a d b e e n c l a i m e d o n R s . 1, 4 3 , 5 8 5 / -. Th e learned CIT (Appeals) after considering a s s e s s e e 's s u b m i s s i on s a n d a f t e r p er u s i n g th e c o m p u ta t i o n o f i n c o m e found that t he assessee had not claimed ded u c t i o n on i n t e r e s t i n c o m e o f R s . 1 , 4 3, 5 8 5 / -. H e , t h er e f o r e, d i r e c t ed t h e A s s e s s i n g Of f i c e r t o a l l o w de d u c t i o n a s p e r l a w a f t e r d u e v e r i fi c a t i on .
19. Before us, the l e a r n ed D . R. argued that t he l e a r n e d CI T ( A p pe a l s ) h a d e r re d i n a l l o w i n g d ed u ct i o n u n d e r s e c t i o n 80I B o n th e i n t e r es t a m oun t i n g t o R s . 7 7 ,24 9 / - . 8
20. Th e L d . c o u n s e l f o r t h e a s s e s se e , o n t h e o t h er h a n d , po i n t e d ou t t h a t t h e l e arn e d CI T ( A pp e a l s ) h a d n o t allowed the as s e s s e e d e d u c ti o n on the i nt e r e s t of R s . 7 7 , 2 4 9/ - b u t h a d i n f a c t d i re c t e d t h e A s s e ssi n g O f f i c e r t o a l l o w d e d uc t i o n o n t h e s a m e u n d e r s e c t i on 8 0 I B o f t he A c t a s p e r l a w a ft e r d u e v e r i f i c a t i o n . Th e L d . c o u ns e l f o r t he a s s e s s e e d r e w ou r a t t en t i o n t o th e o r d er o f t h e l e a r n e d CI T ( A p p e a l s ) g i v i ng t h e a f o r es a i d di re c t i o n s at p a r a 8. 3 .
21. W e h a v e h e a r d th e r i v a l c o n te n t i o n s . We a r e n o t in a g r e e m e n t wi t h t h e c o n t e nt i on r a i s e d b y t h e Ld . D R . On p e r u s a l o f th e or d e r o f t h e l e a rn e d CI T ( A p p e a l s ) w e f i n d t h a t t h e l e a r n ed C I T ( A p p e a l s ) a f t e r g i v i n g a c a t e g o r i cal f i n d i n g t h a t o u t o f th e t ot a l i n te r e s t cr e d i t ed t o t h e P r o f i t a n d L o s s A c co un t o f R s . 2 , 20 , 8 34 / - , t he a s se s s ee h a d n o t c l a i m e d d ed u c t i o n u n d e r s ec t i on 8 0I B o f R s. 1, 4 3 , 5 8 5 / -, d i r e c t e d t h e A ss e s s i n g Of f i c e r t o a l l o w d e d u c ti o n u n d e r s e c t i o n 8 0I B a s p e r l a w a f te r d ue v e r i fi c a t i on . The r e l e va n t p o r t i o n of t h e CI T( A ) o r d e r i s as u n d e r :
"8.3 The submission of the appellant have been considered. On perusal of computation of income, it is seen that assessee has already deducted interest income of Rs. 1,43,585/- to arrive at the deduction u/s 80IB. Therefore, AO is directed to allow the deduction u/s 80IB as per law after due verification. Ground of appeal no 6 is allowed."
22. It is e v i de n t from the above that t he L d . CI T( A p p e a l s ) h a d o n l y a d j u di ca t e d t h e i s s ue be f o r e i t t o t h e e x t e n t o f R s .1 , 4 3 , 5 8 5 /- . Th e r e f o r e t h e c o n t en ti o n o f t h e L d . D R t h a t t he a s s e s s e e h as b ee n a l l o w e d d ed uc t i o n u / s 9 8 0 I B o n t h e b a l a n c e p o r t i o n of R s . 7 7 , 2 4 9 / - , w e f i n d i s i n c o r r e c t. A t t h e s a m e t i m e w e fi n d t h a t t h e L d. Co u n s e l f o r the assessee has m i s c o n s tr ue d the f i n d i n gs of the L d . CI T( A p p e a l s ) t o m e a n t h a t th e e n t i re i s su e h a s b ee n r e s t o r e d t o t h e As s e s s i n g O f f i c e r t o d e c i d e a s p e r l a w , s i n c e t h e L d . CI T( A p pe al s ) h a s n o po w e rs t o se t a si d e a ca s e t o t h e A O , a s p e r t h e pr o v i s i o n s of s e c t i o n 2 5 1 ( 1 ) o f t h e A c t , w h i ch d e a l w i t h p o w e rs o f t h e CI T( A ) ' s. B u t , w e m a y ad d i n t h e s a m e b r e a th , t ha t i t c a n no t b e d e n i e d t ha t t he b a l a n c e i n t e r e s t i n c om e o f R s . 77 , 2 4 9 /- ha s n o t b e e n d e al t w i t h by the Ld. CI T( A p p e a l s ) . W e t h e r efo r e r e s t o r e t h e i s s u e o f a l l o w a n c e o f d e du c t i o n u / s 8 0I B o n t h e i n t e r e s t i n c o m e o f R s . 7 7 , 2 4 9/ - b a c k t o t he f i l e o f t he CI T( A p p e a l s) to d e c i d e i t afresh by pa s si n g a s p e a ki n g order a f t er gi v i n g due o p p o r t u n i t y o f he a r i n g t o t h e as se s s e e .
23. G r o u n d o f a pp ea l N o . 4 o f th e R e v e n u e i s pa r t l y a l l o w e d f o r s ta t i s t i c a l p ur p o s e s.
24. I n t h e r es u l t , t he a p p e a l o f t h e R e v e n u e i s p a r tl y allowed.
O r d e r p r on o u n c ed i n t h e o p e n cou r t .
Sd/- Sd/-
(SANJAY GARG) (ANNAPURNA GUPTA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 2 n d June, 2017
*Rati*
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A)
4. The CIT
5. The DR
Assistant Registrar,
ITAT, Chandigarh
10