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2018 (3) TMI 944

he CESTAT even if be treated as income u/s 41(1) still the net income would be zero since the liability lies to the assessee with the consumer welfare fund subsisted till the Hon’ble Supreme court settled the issue [2002 (9) TMI 4 - SUPREME Court]. Hence, the assessee requires to transfer this amount to consumer welfare fund but not to the income account of the assessee. Therefore, receipt held by the assessee is in fiduciary capacity till such time the issue is finally settled at the level of Hon’ble Supreme Court and he cannot be held to be owner of the asset. - Therefore, we hold that in view of the peculiar circumstances exist in the assessee’s case by virtue of the order for the Dy. Commissioner of Customs and Central Excise with regard to the entitlement of the Central Excise refund the same is crystalised in the year of final settlement by Hon’ble Supreme Court, accordingly we hold that the assessee has rightly offered the central excise refund as income for the assessment year 2013-14 and the order of the Commissioner of Income Tax is unsustainable. Accordingly, we set aside the order of the Principal Commissioner of Income Tax passed u/s 263 of the act and allow the ap .....

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before the A.O. In the absence of any positive indication or material evidence on record, it is only assumption of the assessee that the A.O. did examine the issue and applied his mind. Accordingly, rejected the ground of objection raised by the assessee on jurisdiction issue holding that there was no application of mind. On merits, the assessee argued that mere receipt of refund from Central Excise Department does not mean that the liability has ceized to exist and can be brought to tax u/s 41(1) of the Act . In the assessee s case the entitlement of receipt is in dispute, hence the refund is taxable or not can be decided only in the year in which the matter is finally settled by Hon ble Supreme Court and accordingly offered to tax in the assessment year 2013-14. The Ld. PCIT placing reliance on the Hon ble Supreme Court decision in the case of Polyflex (I) Limited Vs. CIT (2002) 257 ITR 343 held that the excise duty refund pursuant to the decision of Cegat shall be subject to tax u/s 41(1) of the Act and possibility of refund being set at naught on the future date will not be relevant consideration. Accordingly, held that the central excise duty refund received by the assessee i .....

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o consumer welfare fund established u/s 12C of the Central Excise Act, 1944. vi. Vide order dated 6.8.2010, the Commissioner held that the assessee is entitled for refund of ₹ 27,82,86,041/- being paid through PLA. This order was upheld by CESTAT vide order dated 7.2.2011 and they have ordered for the interest as well. In pursuance of the order of the CESTAT, the assessee received the refund during the financial year 2010-11 relevant to the assessment year 2011-12 and sum of ₹ 32,06,00,767/- being the refund of the duty amounting to ₹ 27,82,86,041/- and interest thereon. vii. The assessee kept this amount as a liability in the books of account as the dispute regarding whether the assessee is entitled for refund or not has not attained finality in as much as the revenue preferred further appeal to the Hon ble High Court of A.P. viii. The order of the CESTAT was upheld by the Hon ble High Court vide order dated 11.8.2011 and the SLP filed by the revenue stood dismissed by the Hon ble Supreme Court on 27.2.2012. ix. After communication of the order of the Hon ble Supreme Court in April, 2012, the assessee transferred in to the profit and loss account, the amount show .....

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passed an order in the case of assessee stating that the refund should go to the consumer welfare fund. Though the refund was issued in 2010-11, the issue with regard to the entitlement of refund whether it should go to consumer welfare fund or to the assessee was in dispute till such time, the matter was finally settled by Hon ble Supreme Court. In the case of Polyflex (I) Ltd. (supra), the issue with regard to the crediting of the central excise duty refund to consumer welfare fund is not involved. Hence, argued that the facts of the Hon ble Supreme Court are not applicable to the assessee s case. Further, the Ld. A.R. submitted that the assessee had already admitted the income during the financial year 2012-13, relevant to the assessment year 2013-14. By taking up the case for revision u/s 263 of the Act, the PCIT has directed the A.O. to tax the central excise refund but no direction was given for the assessment year 2013-14 in which the assessee had already admitted the income, which amounts to double taxation of the same amount twice, once in the assessment year 2011-12 and second time in the assessment year 2013-14. The revision sought to be made by the Commissioner of Incom .....

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Ld. PCIT. In the assessee s case, the issue with regard to the entitlement of refund was set at rest by Hon ble Supreme Court by an order in Feb 12 which was received by the assessee in April, 2012 and immediately on receipt of order of the Supreme Court, the Ld. A.R. stated that the assessee has reversed the liability shown under the head CBEC to the income account and accordingly offered to tax. In the facts and circumstances unless Hon ble Supreme Court settles the issue, the assessee cannot become the absolute owner to offer the same as income. The income accrues to the assessee when it is available to the assessee unconditionally without any further liability attached with the same. Till such time issue is settled by the Hon ble Supreme Court, it is not clear whether the assessee is entitled for refund or the assessee has to pass on the benefit to the consumer welfare fund. Therefore, we are of the considered opinion that the assessee becomes absolute owner of the receipt of central excise duty refund only after rendering the judgement by the Hon ble Supreme Court. Hon ble Bombay High Court with regard to the year of allowability of expenditure in the case of Triveni Industrie .....

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ise disputes as to the year in which the deduction should be allowed. The question as to the year in which a deduction is allowable may be material when the rate of tax chargeable on the assessee in two different years is different; but in the case of income of a company, tax is attracted at a uniform rate, and whether the deduction in respect of bonus was granted in the asst. yr. 1952-53 or in the asessment year corresponding to the accounting year 1952, that is in the asst. yr. 1953- 54, should be a matter of no consequence to the Department; and one should have thought that the Department would not fritter away its energies in fighting matters of this kind. But, obviously, judging from the references that come up to us every now and then, the Department appears to delight in raising points of this character which do not affect the taxability of the assessee or the tax that the Department is likely to collect from him whether in one year or the other. 13. The aforesaid observations of the Bombay High Court were reiterated by this Court in the case of CIT vs. Shri Ram Pistons & Rings Ltd. (2008) 220 CTR (Del) 404, as under: Finally, we may only mention what has been articulate .....

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not fritter away its energies in fighting matters of this kind. But, obviously, judging from the references that come up to us every now and then, the Department appears to delight in raising points of this character which do not affect the taxability of the assessee or the tax that the Department is likely to collect from him whether in one year or the other. 10. Accordingly, the questions raised for our consideration do not give rise to any substantial question of law. 10. Hon ble Supreme Court in the case of CIT Vs. Excel Industries Ltd. (2013) 358 ITR 295 (SC) held that when the rate of tax remained the same in the present assessment year as well as the subsequent assessment year, the revenue has not been deprived of any tax. For the sake of convenience, we extract relevant paragraph of the Hon ble Supreme Court which reads as under: 32. Thirdly, the real question concerning us is the year in which the assessee is required to pay tax. There is no dispute that in the subsequent accounting year, the assessee did make imports and did derive benefits under the advance licence and the duty entitlement pass book and paid tax thereon. Therefore, it is not as if the Revenue has been d .....

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