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2016 (3) TMI 236 - ITAT AMRITSAR

2016 (3) TMI 236 - ITAT AMRITSAR - TMI - Excise duty refund, interest subsidy and insurance subsidy - Deductions u/s 80-IB - capital or revenue receipt - Held that:- Excise Duty refund, interest subsidy and insurance subsidy are to be treated as ‘capital receipt’ not liable to be taxed. See Shree Balaji Alloys v. CIT and Another [2011 (1) TMI 394 - Jammu and Kashmir High Court ] - Decided in favour of assessee - I.T.A. No 398(Asr)/2015, Cross Objection No. 23/Asr/2015, I.T.A. No.237(Asr)/2015, C .....

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volving a common issue in all the cases pertaining to different assessees. Therefore, for the sake of convenience, congruence and brevity, we are disposing of them by this common order. First we shall take up ITA No. 398/Asr/2015. I.T.A. No 398(Asr)/2015 [A.Y 2012-13] The department has filed the present appeal against the order of the CIT(A), Jammu, dated 06.05.2015 for the assessment year 2012-13 on the following grounds: 1. That whether the commissioner of Income Tax (Apppeals), Jammu was rig .....

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mp; Sawhney Steel and Press Works Ltd. wherein similar receipts were held to be revenue in nature as the same had been made after the industries had been set up and not for purpose of setting up of the industries. 3. Whether in law, the Commissioner of Income Tax (Appeals), Jammu was right in not appreciating and applying the purpose test as laid down by the judgments of the Hon ble Supreme Court, in the case of assessee, as the money received by the assessee on account of Central Excise was not .....

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eipt and not liable to be taxed. 3. On the other hand, the ld. DR has staunchly supported the assessment order, contending that the ld. CIT(A) has erred in placing reliance on the decision in the case of Shree Balaji Alloys v. CIT and Another (2011) 333 ITR 335 (J&K), ignoring the decision of the Hon ble Supreme Court in the case of Ponni Sugars and Chemicals Ltd [2008] 306 ITR 392 [SC] and Sahney Steel & Press Works Ltd [1997] 228 ITR 253 [SC]. 4. After hearing the parties and perusing .....

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ies Ltd Vs. CIT, reported in 319 ITR 208 [SC], wherein, considering both the cases of Sahney Steel and Press Works Ltd [supra] and Ponni Sugars and Chemicals Ltd [supra], it was observed that the nature of the subsidies in each of the three cases is separate and distinct. There is no straightjacket principle of distinguishing a capital receipt from a revenue receipt. It depends upon the circumstances of each case. In Shree Balaji Alloys [supra], the Hon'ble Jurisdictional High Court observed .....

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hemicals Ltd [supra] were in the context of the schemes peculiar to those cases and those observations of the Hon'ble Supreme Court in those two cases were observations made and not law laid down as such. The Hon'ble Jurisdictional High Court observed that the Tribunal had not dealt with that part of the J & K Scheme, whereby unemployment in the state had been intended to be eradicated, creating an atmosphere for accelerated industrial development, to create employment opportunities .....

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ther those were revenue receipts or capital receipts and the purpose underlying the incentives, was the determinative test. It was observed that the new industrial policy and other concessions for the State of Jammu and Kashmir had not been correctly appreciated by the Tribunal. It was further observed that a perusal of the Office Memorandum dated 14.06.2002, indicating the new industrial policy and other concessions for the State of Jammu and Kashmir makes it explicit that the concessions were .....

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nt was, as conveyed by the Hon ble Prime Minister at Srinagar on 19.4.2003, for creation of one lakh employment and self-employment opportunities in the State of Jammu and Kashmir. It was further observed that to achieve the said purpose and objective, it was, inter alia, provided in the central Excise Notifications, that the exemptions contained in the Notifications would be available only on production of a certificate from the General Manager of the concerned District Industries Centre to the .....

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Central Excise Notification Nos. 56 and 57 of November 11, 2002, makes it amply clear that acceleration of industrial development in the State of Jammu and Kashmir was with the object to generate employment and create opportunities for employment, which, so contemplated, was not only casual or temporary, but was of a permanent nature. It was held that thus, the paramount consideration of the Central Government in providing the incentives to the new industrial units and substantial expansion of .....

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ch would provide additional permanent source of employment to the unemployed in the State of Jammu and Kashmir were, in fact, in the nature of creation of new assets of industrial atmosphere and environment, having the potential of employment generation to achieve a social object. Such incentives, designed to achieve a public purpose, cannot, by any stretch of reasoning, be construed as production or operational incentives for the benefit of the assessee alone. 7. It was further held that lookin .....

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erved that making of additional provision in the scheme, that incentives would become available to the industrial units entitled thereto, from the date of commencement of the commercial production, and that these were not required for creation of new assets, cannot be viewed in isolation, to treat the incentives as production incentives, as held by the Tribunal, for the measure so taken appears to have been intended to ensure that the incentives were made available only to the bonafide industria .....

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he statutory notification too, that the incentives were provided with the object of creating avenues for perpetual employment, to eradicate the social problem of unemployment in the State by accelerated industrial development. It was on the basis of the above detailed in-depth consideration and deliberation of the matter, that the Hon'ble Jurisdictional High Court decided the matter in favour of the assessee, holding the Excise Duty refund, interest subsidy and insurance subsidy to be capita .....

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or Tribunal. Pendency of the said SLP notwithstanding, it is the decision of the Hon'ble Jurisdictional High Court, which, as of now, holds the field. It is, therefore, opined that to be in line with the prescribed judicial discipline, we need to and must follow Shree Balaji Alloys [supra] and this is what the ld. CIT(A) has, and in our considered opinion, correctly, done. Moreover no decision contrary to Shree Balaji Alloys [supra] has been successfully pleaded by the department before us, .....

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in the case of Shree Balaji Alloys [supra] rendered by the Hon'ble Jurisdictional High Court. 10. The above said, if we are permitted to say so in the higher wisdom of their Lordships of the Hon'ble Jurisdictional High Court, it may also be registered that it has nowhere been the case of the department that the finding of the Hon'ble Jurisdictional High Court in Shree Balaji Alloys [supra] to the effect that the generation of employment through acceleration of industrial development .....

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ate of Jammu and Kashmir and that, therefore, these incentives, in fact, are in the nature of creation of new assets of industrial atmosphere and environment, having the potential of employment generation. That such object is a social object, cannot be denied. It is as a natural corollary to this proposition, that it has been held that it cannot be said that the incentives in question are incentives, productional or operational in nature, designed for the benefit of the assessee alone. 11. The r .....

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12. In view of the above, since we are of the considered opinion that the issue involved in the present case is similar to the one which the Hon ble High Court of Jammu & Kashmir has decided in favour of the assessee, in the case of Shree Balaji Alloys v. CIT and Another (2011) 333 ITR 335 (J&K) by holding that the Excise Duty refund, interest subsidy and insurance subsidy are to be treated as capital receipt not liable to be taxed, we, therefore, respectfully following the decision of .....

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amp; 395(Asr)/2015, 472 & 473(Asr)/2015, 267(Asr)/2015, 396(Asr)/2015, 321(Asr)/2015, 296(Asr)/2015, 320(Asr)/2015 and 397(Asr)/2015, the facts and circumstances being exactly similar to those in the case of M/s Singla Cables, in ITA No.398(Asr)/2015 and, therefore, our findings in ITA No.398(Asr)/2015 will apply, mutatis mutandis, to these appeals also. Accordingly, all these appeals filed by the department stand dismissed. 15. In ITA nos.472 & 473(Asr)/2015, in the case of M/s. J.K. Pe .....

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. Thus, the appeal of the revenue is dismissed. 17. As regards the appeal in ITA No.237(Asr)/2015 (Kashmir Steel Rolling Mills), the issues raised by the Revenue in Ground nos. 1(a) & 1(c) have also been decided by us hereinabove, in ITA No. 398(Asr)/2015 and the finding given therein will apply, mutatis mutandis, to these issues also. Accordingly, Ground nos. 1(a) & 1(c) are dismissed. 18. Concerning Ground no. 1(b), the Revenue has contended that the ld. CIT(A) has not appreciated the .....

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year 2007-08 in ITA No.130(Asr)/2014, dated 16.01.2015. The relevant findings given by the Tribunal in para 9 of the said order are extracted below, for the sake of ready reference: 9. In the facts and circumstances and in view of the decision of the Hon ble Punjab & Haryana High Court in the case of CIT vs. Smt. Aruna Luthra (supra), the decision of the Hon ble Kerala High Court, in the case of Kil Kotagiri Tea and Coffee Estates Co. Ltd. (supra) and also in the case of Supreme Industries .....

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