TMI Blog2020 (12) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... dicial pronouncement referred by the Ld. Counsel in the case of Hon'ble Bombay High Court in the case of Sesa Goa Ltd. [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] . And Circular of the CBDT Circular No. 91/58/66-ITJ(19) DT. 18th May, 1967. This issue is restored to the file of the Assessing Officer for deciding afresh after considering the direction laid down in the above referred judicial pronouncement and Circular of the CBDT. Therefore, this ground of appeal of the assessee is allowed for statistical purposes. - ITA No. 2316/AHD/2018 - - - Dated:- 24-11-2020 - IN THE ITAT, AHMEDABAD BENCH, AHMEDABAD ITA No. 2316/AHD/2018 Mahavir Prasad, Member (J) And Amarjit Singh, Member (A) For the Appellant : Vartik Choksi, AR For the Respondents : Lalit P. Jain, Sr. D.R. ORDER Mahavir Prasad, Member (J) 1. This appeal filed by the Assessee is directed against the order of the Commissioner of Income Tax ('hereinafter called CIT(A)') order no. CIT(A)-2/10/210/AC. Cir. (2)(1)(2)/2017-18 order dated 19/09/2018 arising out of assessment order dated 15/11/2017. Assessee has taken following grounds of appeal: 1. In law and in the facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing officer and Ld. CIT(Appeal) has erred in not allowing deduction for education cess and higher education cess as allowable expenditure u/s. 40(a)(ii) of the I.T. Act, 1961 in view of the CIRCULAR F. No. 91/58/66-ITJ(19) DT. 18TH MAY, 1967; while assessing the total income of the appellant. Hon'ble ITAT may direct for allowing deduction for education cess and higher education cess as allowable expenditure in view of the binding CBDT circular and in view of decision of Hon'ble Rajasthan HC in the case of Income Tax Appeal No. 52/2018 Pr. Commissioner of Income Tax Vs. M/s. Chambal Fertilizers And Chemicals Ltd. 2. In law and in the facts and circumstances of the appellant's case, Hon'ble ITAT may direct the Ld. Assessing officer to reduce the book profit as computed u/s. 115JB by capital receipt inform of interest subsidy in total for ₹ 5,97,54,154/- (₹ 5,77,14,810 and ₹ 20,39,344) received by the appellant under Technology Upgradation Fund Scheme (TUFS). 3. The fact in brief is that return of income was filed by the assessee on 28the November, 2014 declaring total income of ₹ 209885380/-. The assessment u/s. 143(3) r.w.s. 144C of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edabad in assessee's own case in assessment year 2012-13 vide ITA No. 1843/Ahd/2016 vide order dated 20/02/2019 has admitted similar additional ground of appeal. 10. Ld. Counsel has also submitted that the Hon'ble Supreme Court in the case of Goetze (India) Ltd. vs. CIT (2006) 284 ITR 323 has only negated the jurisdiction of the Assessing Officer and the judgment does not impinge on the power of the Tribunal u/s. 254 of the Act. 11. After referring the aforesaid judicial pronouncement, the ld. Counsel has submitted that claim of the assessee that book profit u/s. 115JB is required to be reduced by capital receipt in the form of interest subsidy to the amount of ₹ 59754154/- and submitted that an identical issue has been adjudicated in favour of the assessee by Hon'ble Calcutta High Court in the case of PCIT vs. Ankit Metal Power Ltd. (2019) 109 Taxmann.com 93. 12. On the other hand, Ld. Departmental Representative has submitted that in view of the decision of Hon'ble Supreme Court in the Case of Goetze India Ltd. (supra), the additional claim of the assessee without filing revised return of Income should not be entertained. 13. Heard both sides t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported in 17 DTR 241, wherein it is held as under- When the assessee having fully furnished the documents and submitted form No. 10CCB during the assessment proceedings, claiming the deduction under section 80-IB which was not claimed in the return, the deduction is admissible even in absence of revised return. The Hon'ble High Court held that there was no requirement for filing of any revised return. Hon. High Court has further considered the decision of the Hon'ble Goetz (India) Ltd. v. CIT (284 ITR 323) (SC) and after considering the decision of SC the High Court has held that when the assessee has filed form No. 10CCB during the assessment proceedings, the claim is admissible and CIT(A) has rightly allowed the claim of the assessee and we find that there is no requirement of filing any revised return. 28. Learned counsel for the department submitted that in view of the decision of the Supreme Court in the case of Goetze (India) Ltd. (supra), the assessee could not have maintained additional claim that too at an appellate stage without revising the return. 29. On the other hand learned counsel Mr. B.S. Soparkar for the assessees referring to various deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Income-tax Officer. 32. In case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC) when the question of law was raised for the first time before the Tribunal though facts were already on record, the Supreme Court observed that there is no reason why the assessee should be prevented from raising such a question before the Tribunal for the first time so long as the relevant facts are on record in respect of the item concerned. There is no reason to restrict the power of the Tribunal in such appeal only to decide the grounds which arise from the order of Commissioner (Appeals). The Tribunal should not be prevented from considering the questions of law arising in assessment proceedings although not raised earlier. 33. In case of Goetze (India) Ltd. (supra) the Supreme Court distinguished the judgment in the case of National Thermal Power Co. Ltd. (supra) on the ground that the same pertained to the power of the Tribunal under section 254 of the Act to entertain a point of law for the first time and commented that such decision does not relate to the power of the assessing officer to entertain a claim for deduction otherwise than by filing a revised retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of Goetze (India) Ltd. (supra) is confined to the powers of the assessing officer and accepting a claim without revised return. This is what Supreme Court observed in the said judgment while distinguishing the judgment in the case of National Thermal Power Co. Ltd.(supra) and that is how various High Courts have viewed the dictum of the decision in the case of Goetze (India) Ltd.(supra). When it comes to the power of Appellate Commissioner or the Tribunal, the Courts have recognized their jurisdiction to entertain a new ground or a legal contention. A ground would have a reference to an argument touching a question of fact or a question of law or mixed question of law or facts. A legal contention would ordinarily be a pure question of law without raising any dispute about the facts. Not only such additional ground or contention, the Courts have also, as noted above, recognized the powers of the Appellate Commissioner and the Tribunal to entertain a new claim for the first time though not made before the assessing officer. Income-tax proceedings are not strictly speaking adversarial in nature and the intention of the Revenue would be to tax real income. 39. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere under: 21.4 A legal issue also cropped up in the course of hearing as to whether additional ground could be raised in a cross objection filed by the assessee under s. 253(4) of the Act. On being enquired on this aspect of the matter, it was submitted on behalf of the assessee that there is no perceptible distinction between the position of law qua cross objection in the matter of filing additional ground. It was submitted that a cross objection has all the trappings of a regular appeal more so in the light of language employed under s. 253(4) of the Act. 21.5 We find ourselves in agreement with the propositions made on behalf of the assessee that in a cross objection, there is no bar to raise legal issues for the first time before ITAT. A cross objection is like an appeal. It has all the trappings of an appeal. It is filed in the form of memorandum and it is required to be disposed in same manner as an appeal. Even where the appeal is withdrawn or dismissed for default, cross objection may nevertheless be heard and determined. Cross objection is nothing but an appeal, a cross appeal at that. This apart, raising of additional ground would only enable the authority conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stry as per the scheme The object of the scheme was to enhance sustainable growth in value chain for overall growth of textile industry. Pursuant to TUFS, certain subsidy benefits by way of interest on reimbursement of loans taken from authorized agencies for investment in plant and machinery for spinning units and other machineries in textile industry was availed by textile sector. 11.3 In this background, it was contended on behalf of the assessee that the assessee herein was obtained subsidy by way of reimbursement of interest under the scheme. The assessee has treated the aforesaid interest reimbursement subsidy mistakenly as revenue receipt in the P L account and disclosed the same by way of net off from interest expenses. The taxable income was thus stated to be overstated to this extent. It was contended that the character of such subsidy in the hands of recipient assessee is capital in nature having regard to the purpose for which the subsidy was given i.e. acceleration of development of textile industry. 11.4 Reference was made to the notes forming part of the financial account detailing the interest subsidy aggregating to ₹ 2,16,45,161/- as reduced from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in total agreement with the contentions on behalf of the assessee for non chargeability of such capital receipts regardless of its treatment in books as revenue receipts. We are however conscious in same vain that the issue has I T been raised for the first time before the Tribunal. The Revenue authorities had no occasion to look into the relevant facts. We accordingly consider it expedient to restore the issue to the file of the AO for verification of relevant factual aspects towards quantum of receipt of interest subsidy and relevant documentation in this regard, if so considered necessary in the opinion of the AO The AO shall accordingly grant relief to the assessee in accordance with law in the light of our observations and shall exclude the subsidy from the ambit of taxation on being satisfied about the factual correctness on quantum of such subsidy. 17. Further we have also gone through the decision of Hon'ble Calcutta High Court in the case of PCIT vs. Ankit Metal Power Ltd. (2019) 109 Taxmann.com 93. The relevant operative para of the order is reproduced here under: 5. The assessee had filed original return of income treating the interest subsidy as revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Tax related by way of 'remission of deferment . But in pursuance of the National Policy, the State Govt. had to discontinue the Sales Tax related Incentives from 1st January, 2000. However, as there is a strong need for fiscal support for the promotion of industry in the State, the State Government decided to introduce the West Bengal incentive Scheme, 2000, with different and new features, quite attractive for industries in large medium, small scale and tourism sectors. 4. APPLICABILITY OF THE 2000- SCHEME: The 2000 Scheme shall generally be applicable to all large, medium, cottage and small scale projects and to large/medium sector tourism units to be set up and also to expansion projects of existing units on or after the 1st January, 2000. The units may be in the private sector, co-operative sector, joint sector as also companies/undertakings owned or managed by the State Government. 9. It would thus be seen that the purpose/object of the West Bengal Incentive Scheme, 2000 was to encourage the setting up of new industrial units and expansion of existing industrial units. The receipt of interest subsidy was clearly on capital account. Similar is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned with respect to the purpose for which the subsidy is given. In other words, in such cases, one has to apply the purpose test. The point of time at which the subsidy is paid is not relevant. The source is immaterial. The form of subsidy is immaterial. The main eligibility condition in the scheme with which we are concerned in this case is that the incentive must be utilized for repayment of loans taken by the assessee to set up new units or for substantial expansion of existing units. On this aspect there is no dispute. It the object of the subsidy scheme was to enable the assessee to run the business more profitable then the receipt is on revenue account. On the other hand, if the object of the assistance under the subsidy scheme was to enable the assessee to set up a new unit or to expand the existing unit then the receipt of the subsidy was on capital account. Therefore, it is the object for which the subsidy assistance is given which determines the nature of the incentive subsidy. The form or the mechanism through which the subsidy is given are irrelevant. 21. A perusal of the judgments in Sahney Steel Press Works Ltd. (supra] and Ponni Sugars Chemicals Ltd. (supra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Supreme Court, various and High Courts including our Court the aforesaid subsidy should be treated as capital receipt in spite of the fact that computation of 'Power subsidy' is based on the power consumed by the assessee. It is well established from submission of the assessee as enunciated above that once the purpose of a subsidy is established; the mode of computation is not relevant as held in the decisions of the Hon'ble Supreme Court in the case of Sahney Steel Press Works Ltd. (supra), CIT v. Ponni sugars Chemicals Ltd. (supra) and the decision of our High Court in case of Rasoi Ltd. (supra) against which SLP has been dismissed. The mode of computation/form of subsidy is irrelevant. The mode of giving incentive is reimbursement of energy charges. The nature of subsidy depends on the purpose for which it is given. Hence the assessee draws support from the decisions already discussed earlier as the same principle will apply here. Thus, the entire reason behind receiving the subsidy is setting up of plant in the backward region of West Bengal, namely, Bankura. 25. Accordingly we hold the aforesaid incentive subsidies are 'capital receipts' and is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsidy as capital receipt under Technology Upgradation Fund Scheme for Textile and Jute Industries. 20. Since the additional ground of appeal of the assessee is allowed therefore, there is no need to consider the other grounds of appeal filed by the assessee on merit. Therefore such ground of appeal 1 to 1.3 can dismiss. 21. The assessee has also filed first additional ground of appeal stating that Ld. A.O. and CIT(A) has erred in not allowing deduction for education cess is allowable expenditure u/s. 40(a)(ii) of the I.T. Act. 22. During the course of appellate proceeding before us, the Ld. Counsel has referred CBDT Circular No. 91/58/66-ITJ(19) DT. 18th May, 1967. The Ld. Counsel has also submitted that identical issue was decided in favour of the assessee by Hon'ble Bombay High Court in the case of Sesa Goa Ltd. Vs. JCIT 117 Taxmann.com 96 (2020). It was further submitted by the ld. Counsel that identical claim was also allowed by Hon'ble Mumbai ITAT in the case of Voltas Ltd. Vs. ACIT in ITA No. 6612/Mum/2018 vide order dated 30.06.2020 and Delhi ITAT in the case of Mufg Bank Ltd. Vs. ACIT (International Taxation) in ITA No. 7895/Del/2019 dated 16/10/2020. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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