TMI Blog2020 (3) TMI 964X X X X Extracts X X X X X X X X Extracts X X X X ..... he computation of income. We make it clear that purpose of an assessment framed under the provision of the Act is to determine the correct taxable income than that based on estopple only since the Income Tax Act does not involve adversarial proceedings as per in V.W. Narayen [ 1971 (8) TMI 91 - SUPREME COURT] , S.N. Swarnnamal vs. CED [ 1972 (4) TMI 13 - MADRAS HIGH COURT] State of Tamil Nadu vs Arulmurya Co [ 1982 (11) TMI 143 - MADRAS HIGH COURT] Whether the impugned sales tax incentive subsidy sum(s) received under Notification No. 1460 dated 27.05.1994 issued by the West Bengal Industrial Promotion (Assistance to Industrial Units) Scheme are in the nature of a capital or revenue subsidy? - We find this latter issue to be no more res integra since the CIT(A) has taken note of various judicial precedents; including that of hon'ble jurisdictional high court, that this subsidy gives rise to capital receipt only. We adopt the very reasoning mutatis mutandis and uphold the CIT(A) s findings under challenge granting relief to assessee. Sec 115JB MAT computation - CIT-DR fails to dispute that once the impugned subsidy scheme has been held as capital and not a reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28 30 31/Kol/2019 for assessment year(s) 2009-10 to 2013-14 seeks to revive the Assessing Officer s action disallowing assessee s PF ESI contribution(s) of ₹ 2,35,959/-, ₹ 4,76,320/-, ₹ 10,03,680/- ₹ 8,56,788/- (assessment year- wise); respectively for the sole reason that the same had been credited beyond the due date stipulated in the corresponding Acts. Learned CIT-DR fails to dispute the clinching fact that the assessee had very well credited the impugned sum(s) before the due date of filing return u/s 139(1) of the Act. That being the case, hon'ble jurisdictional high court s decision in Commissioner of Income Tax vs. M/s Vijay Shree Ltd. ITA No. 245 of 2011, GA No. 2607 of 2011 squarely covers the issue in assessee s favour. The Revenue s instant former substantive ground fails therefore. 3. Next comes Revenue s identical substantive grievance in all these six cases seeking to reverse the CIT(A) a action treating the assessee s sales tax incentive of ₹ 3,61,60,316/-, ₹ 4,33,03,650/-, ₹ 4,96,59,046/-, ₹ 6,81,12,811/-, ₹ 9,90,29,788/- ₹ 13,29,71,754/- (assessment year-wise); respectively as capital than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourage provide financial assistance to the industries in West Bengal to undertake expansion and modernisation and therefore same is for capital purpose and hence not chargeable to tax. In support of its claim the Ld. AR placed reliance upon the decision of the Hon'ble ble Calcutta High Court in the case of CIT -vs.- Rasoi Limited (2011) 335 ITR 438 (Cal)(HC) where the Hon'ble Court had analysed the identical scheme as one in the case of appellant and after analysing the scheme held that the subsidy provided by the Government under Industrial promotion scheme of 1994 is for capital purpose and hence, should be treated as capital receipt and not chargeable to tax. The AR also cited another decision of the Jurisdictional HC rendered in the case of Manmohan Kedia -vs.- ITO (2014) [2014-LL-0829-36] wherein also the Court has allowed the claim of the assessee after following the decision of the division bench in the case of Rasoi Limited (supra) 6.4 The appellant also placed reliance on the following judicial pronouncements in support of his claim which are cited as under: Sahney Steel and Press Works Ltd. [1977] 228 ITR 253 (SC) CIT vs. Ponni Sugars and Chem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal should not be prevented from considering question of law arising in assessment proceeding although not raised earlier. 6.5.2 Similarly the Jurisdictional High Court in the case of Mayank Poddar (HUF) - vs.- CWT (2004) 262 ITR 633 (Cal) while deciding the identical issue under the Wealth Tax Act has observed that if in law the assessee was not liable to be assessed on a capital gains arising on transfer of agricultural land then the assessee claim for its non assessability cannot be denied merely because in the return filed the assessee had mistakenly offer to pay tax on such income. From the above decisions of the Apex Court and Jurisdictional HC, it appears that the ratio laid down in the above decisions have decided the matter once for all. Further the only point which needs to be kept in mind is that the claim lodged vide the additional ground must be legal in nature. The claim of exclusion of sales tax incentive treating the same as capital receipt both under normal as well as MAT provision is purely legal in nature and does not require any further enquiry on facts. 6.5.3 During the course of hearing the Ld. AR had cited several cases laws of the Tribunals wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search as contained in section 153A of the Act. While reassessment u/s 147 limits the scope of the proceeding to only those incomes which escaped assessment as against section 153A which empowers the AO to assessee or reassess total income of the assessee. The AR further submitted that section 153A requires the AO to makes assessment afresh and compute 'total income' in respect of each of the relevant six assessment years. There is no specific restriction on the jurisdiction of the AO in not including any new income to such total income pursuant to search which was not added during the original assessment, in the like manner, there is no restriction on the assessee to claim any deduction which was not earlier claimed in the earlier proceeding. As regards the SC decision in the case of Sun engineering (supra) the AR submitted that in the said case the Hon'ble Supreme Court was considering the provisions of s.147 and it was held that once an assessment is validly reopened it is not open to an assessee to seek a review of concluded items unconnected with the escapement of income. Here it is pertinent to note that the conditions for taking action under s.147 vis-a-vis unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to tax only 'undisclosed income' and in case of present provision of section 153A the AO is required to assess or reassess 'total income'. This contrast difference explains that the present scheme of assessment as contained in section 153A is wide in its scope and empowers AO to add any other income or make any disallowance which was not made in the original assessment order. I found force in the contention of the Ld. AR that there is nothing in the present provision which restricts either AO or the assessee to make any new addition or lodger any claim in the captioned proceeding. I have gone through the decision of the Mumbai ITAT in the case of Eversmile Construction Co. Pvt. Ltd (supra) and found that the said decision exactly deals with the situation which is identical with the present case. Para 10 of the said decision is very much relevant and same is reproduced as under: 10. If any deduction is claimed by the assessee in the proceedings under s. 153A that cannot be rejected simply on the ground that it was not claimed in the original assessment or was disallowed. The starting point of assessment is the amount of income declared in the return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the course of search. As a logical extension it can be argued that no relief can be granted to the assessee unless it is linked to some incriminating materials found during the course of search. Therefore, there is contradiction in the judgments of Hon'ble Courts. On the one hand it is being held that no addition can be made in assessments made u/s 153A without reference to incriminating materials found during search, on the other hand the judgements cited above state that once a notice u/s.153A is issued, entire field is open and the assessee can make any claim which has not been made in the original return. Being bound by the judgements cited above the assessee's claim is being admitted. On a literal interpretation, the view held by Bombay High Court in B.G. Shirke [Supra] Mumbai ITAT in the case of M/s. Ever Smile Construction [Supra] seems to be more logical. Although it runs totally contrary the decisions rendered by courts in various cases when it comes to making addition in cases where search has taken place. Be that as it may, i hope that in future this conflicting view would be reconciled by higher judiciary. Meanwhile, in view of the decision cited by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Scheme is to promote industries in the state and to provide financial assistance for modernisation and expansion of capacities, therefore, the said incentive is granted for capital purpose and consequently capital receipt in nature. 6.5.9 The above view supported by the decision of the Jurisdictional High Court delivered in the case of CIT -vs.- Rasoi limited (2011) 335 ITR 438 (Cal) where the Hon'ble Court has held that that incentive provided by the Government under Industrial promotion scheme far capital purpose and hence, should be treated as capital receipt and not chargeable to tax. In the above case incentive was granted under the West Bengal Incentive Industrial Promotion (Assistance to Industrial Units) Scheme -1994. As rightly submitted by the AR of the appellant that the above Scheme is the earlier version of the present scheme floated by the Government of West Bengal in 2010 under which the appellant received the incentive. The above fact is clearly evident from the Circular No.2 dated 29-04-2010 issued by the Directorate of Commercial Tax, West Bengal. Further a comparative study of the preamble and objective of both the Scheme also suggest the same view. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee also seek exclusion of sales tax incentive under MAT provisions as specified u/s 115JB of the Act. The appellant in its submission stated that such incentive (capital receipts) which is granted for expansion and growth of industries does not contain any profit element and hence it is not an income u/s 2(24) of the Act. In this regard reliance was placed by the assessee on the judgement of Supreme Court in case of [Padmaraie R. Kadambande -vs.- CIT (1992) 195 ITR 877 (SC)] where it was held that Pure Capital receipts are not 'income' within the meaning of section 2(24) of the Act hence are not at all 'chargeable' under the I. T. Act. An identical view was taken by Mumbai ITAT in Shivalik Venture (P) Limited -vs.- DCIT (ITA No. 2008/Mum/2012). The assessee further cited that judgement of Jaipur Tribunal in ACIT -vs.- Shree Cement Ltd. (2014) 31 ITR 513(Jaipur) where it was held that Sales Tax Incentive needs to be excluded in computing Book Profit u/s 115JB since the same is in the nature of a capital receipt not liable to tax. 7.2 Apart from the above, a supplementary submission was also submitted by the assessee on 19-03-2019 on the aforesaid mentioned iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering the decision of the SC in the case of Apollo Tyres -vs.- CIT (2002) 255 ITR 273 (SC). During the course of hearing the AR of the appellant was asked as to why the decision of Karnataka High Court delivered in the case of M/s B B Infratech Ltd -vs.- Income Tax Officer Ward 12(1) [ ITA No 172/2016] should be applied where the Hon' ble Court has relied upon the decision of SC in the case of Apollo Tyres (supra) and held that income in the nature of waiver of principle and interest by financial institutions credited to Profit and Loss account should not be excluded while computing book profit u/s 115J8 of the Act. The AR of the appellant submitted a detailed supplementary submission on this very aspect on the next date of hearing. The broad contentions of the appellant are summarized as under: 1. The decision of Karnataka HC in case of B B Infratech (supra) is on the waiver of interest and principle element of loan and not on incentive/subsidy which is altogether different in nature as the said receipt is capital receipt in nature having no element of profit or income embedded in it. 2. The decision of Rajasthan HC in the case of Shree Cement (supra) is directly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t u/s.115JB one view could be that Hon'ble Supreme Court in the case of Appolo Tyre vs. CIT 255 ITR 273 (SC), the Supreme Court has held that no item other than that mentioned in explanation one can be made in computing the book profit u/s.115JB. However, in view of the fact that the decisions of various High Courts cited above have considered the decision of Hon'ble Supreme Court and thereafter held that the assessee would be entitled to exclude sales tax subsidy in computation of book profit u/s.115JB. In view of the above discussion and following well defined principle of judicial discipline and hierarchy, I have no other option but to follow the decisions which are favorable to the assessee. 7.3.4 Therefore, respectfully following the judicial discipline as laid down in above decision of the ITAT and following the decision of Madras HC in the case of Metal Chromium (supra) and Rajasthan HC in the case of Shree Cement (supra), incentive in the form of sales tax incentive shall be excluded in computing book profit u/s 115JB of the Act. Therefore, this additional ground is also decided in favour of the appellant. 4. Learned CIT-DR referred to the relevant facts i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat only the last assessment year involved sec. 143(3) proceedings, scrutiny assessment(s) for AYs 2012-13 and 2013-14 were also pending as on the date of search i.e. 17/18.12.2014 since the Assessing Officer had issued the corresponding sec. 143(2) notice(s) on 24.12.2014 and 08.09.2014; respectively. The Revenue s case that the former five assessment year(s) upto assessment year 2013-14 involved unabated assessment 153A(1)(b) is not factual correct therefore since only AYs 2009-10 to 2011-12 contain abated proceedings. That being the case, we are of the opinion that it technical argument challenging correctness of the CIT(A) s action to have erred in admitting the assessee s additional ground to this effect carries no merit in assessment years in AYs 2012-13, 2013-14 and 2015-16 since involved abated assessment(s) for assessing not only the income under normal provisions but also that emanating from the alleged incriminating material found / seized during the course of search. 8. Coming to the former three assessment year(s) (2009-10, 2010-11 and 2011-12) as well, we see no substance in Revenue s above stated technical argument since the CIT(A) s detailed discussion not only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation as well going by the judicial precedents taken note of in the lower appellate discussion. We quote in Commissioner of Income Tax vs. K.Y. Pilliah Sons (1967) 63 ITR 411 (SC) that when this tribunal expresses its concurrence with the lower authorities conclusion in entirety, it may not take recourse to a detailed reasoning on its own. We thus uphold the CIT(A) s lower appellate findings on all these three aspects raised at Revenue s behest. Its first four appeal(s) IT(SS)A No. 27 to 30/Kol/2019 raising the foregoing two issue(s) only fail therefore. 11. The Revenue s third substantive grievance in IT(SS)A No. 31/Kol/2019 in assessment year 2013-14 is that the CIT(A) has erred in law and on facts in deleting excessive interest payment disallowance of ₹ 1,43,020/- made by the Assessing Office u/s 40A(2)(b) of the Act. We find that the assessee had paid the interest sum(s) @ 12% and 11% in case of related and unrelated parties; respectively. Ld CIT-DR fails to dispute that there is no discussion at all in the assessment order indicating any comparison of market rate of interest vis-a- vis assessee s interest @ 12% forming subject-matter of the impugned disallowance. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1700 1169.132 -530.868 172 -91309 5 Roll Safed champion 120 gm 3500 3378.645 -121.355 180 -21844 6 Raw Material RM AOS 65000 64888 -122 102 -11424 7 RM DOLAMITE 75324 73424 -1900 .32 -6080 Total -248781 27.02 The appellant submitted that the Ld. AO without giving any reasonable explanation has considered the method of categorization of stock as incorrect. The Ld. AO, on ad-ho ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
