Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (5) TMI 929 - AT - Income TaxAllowability of excise duty refund - whether the excise duty refund can be treated as income derived from industrial activity for the purposes of allowing deduction under section 80IB ? - Held that:- As decided in Commissioner of Income-tax Versus Meghalaya Steels Ltd. [2010 (9) TMI 679 - GAUHATI HIGH COURT ] the Central Board of Excise and Customs in its Circular dt. 19th Dec., 2002 clarified that the refund is not on account of excess payment of excise duty but is basically designed to give effect to the exemption and to operationalise the exemption given by the notifications. In that sense, the central excise duty refund does not appear to bear the character of income since what is refunded to the assessee is the amount paid under the modalities provided by the Department of Revenue for giving effect to the exemption notifications. There is also nothing to suggest that the assessee has recovered or passed on the excise duty element to its customers. Even assuming the refund does amount to income in the hands of the assessee, it is a profit or gain directly derived by the assessee from its industrial activity. The payment of central excise duty has a direct nexus with the manufacturing activity and similarly, the refund of the central excise duty also has a direct nexus with the manufacturing activity. The issue of payment of central excise duty would not arise in the absence of any industrial activity. There is, therefore, an inextricable link between the manufacturing activity, the payment of central excise duty and its refund. In the circumstances, we are of the opinion that question must be answered in the affirmative, in favour of the assessee and against the Revenue Addition on account of assumptions of less wages shown in Profit & Loss account - Held that:- From the details filed before us, we see that there is a vast difference between the amount of machinery installed by the assessee with that of M/s Industrial Equipment Company. The contention of the assessee that M/s Industrial Equipment Company is more labour intensive, therefore, pays more wages and since the operation of the assessee are automated which require lesser labour, seems to be a correct explanation. Further, at the lower level, nobody pained to quantify the said difference because of the difference in the model of the business carried on by M/s Industrial Equipment Company and that of the assessee. If the Assessing Officer had to make a comparison, it is a trite law that the apples are to be compared with apples and not with oranges. We are not in agreement with the way the estimation has been made by the Assessing Officer or even by the CIT (Appeals). The books of account have not been rejected, comparison of wages paid with wages paid in earlier or preceding year has also not been made. No material or evidence has been brought on record to rebut the explanation filed by the assessee. The contention of the assessee that the provisions of ESI and PF Act are applicable to it which have been complied with by it diligently, has also not been verified. Thus we direct the Assessing Officer to delete the disallowance - Decided in favour of the assessee
|