TMI Blog2021 (3) TMI 1160X X X X Extracts X X X X X X X X Extracts X X X X ..... 30 - CALCUTTA HIGH COURT] - We confirm the order of the Ld. CIT(A) and dismiss the ground of the Revenue. Interest on delay payment of excise duty and payment of service tax - HELD THAT:- We note that he Ld. CIT(A) has given relief to the assessee by relying on the decision of the Tribunal in the case of Narayani Ispat Pvt. Ltd. [ 2017 (10) TMI 67 - ITAT KOLKATA] which he did so correctly. And since the relief has been given by relying on the ratio of decision of the Tribunal in the case of Narayani Ispat Pvt. Ltd. (supra), we find no infirmity in the order of the ld. CIT(A), therefore, we confirm the order of the Ld. CIT(A) and dismiss the grounds of Revenue. Delay payment of lease rent - HELD THAT:- Since Revenue could not demonstrate that the interest on delay payment of lease rent of Haldia plant was in the nature of penalty or an infraction of law, the Ld. CIT(A) s view was plausible view and we find no infirmity in the order of the Ld. CIT(A) and so we confirm the order of the Ld. CIT(A), therefore, this ground of the Revenue is dismissed. Prior period expenses disallowance - CIT-A deleted the addition - HELD THAT:- According to the assessee, all these expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... romotional Assistance (IPA) under The West Bengal Incentive Scheme (WBIS) 2004 issued vide Notification No. 134-CI/O/ Incentive/17/03/I dated 24.03.2004. The said incentive has been granted to encourage additional investments for setting up and/or expansion and modernization of the industrial undertaking located at the respective place to accelerate the development of the backward area of the State and to create large scale employment opportunities. The company has received sales tax assistance, being capital receipt, for expansion of existing industrial undertaking involving huge capital outlay. Similarly, company has also set up a new plant at Krishnapatnam, Andhra Pradesh and is eligible for incentives in the form of sales tax incentive, etc as per the scheme of Andhra Pradesh Gout. known as Industrial Investment Promotion Policy (1IPP) 2010-2015 of ₹ 13,68,70,416/- for its new unit involving huge capital outlay. 1.2 The above incentives were set off against sales tax liability payable to Government and accordingly credited to profit and loss account in the books of accounts. Since the said incentives have been granted with the objective of setting up of industrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im made by the assessee for treating the subsidy in question received during the year under consideration as capital receipt not chargeable to tax, it is observed that this issue is squarely covered in favour of the assessee, besides the various judicial pronouncements cited on behalf of the assessee and relied upon by the ld. CIT(Appeals) in his impugned order, by the decision of the Coordinate Bench of this Tribunal in the case of DCIT vs.- Indian Oil Petronas Pvt. Limited rendered vide its order dated 31.05.2018 in ITA No. 157/KOL/2017, wherein it was held by the Tribunal by relying on the decision of the Hon ble Supreme Court in the case of National Thermal Power Co. Limited vs.- CIT (229 ITR 383) as well as the decision of the Hon ble Calcutta High Court in the case of MaynakPoddar (HUF) vs.- WTO (262 ITR 633) that his jurisdiction was rightly exercised by the ld. CIT(Appeals) in entertaining the additional ground raised by the assessee claiming exclusion of capital subsidy received by way of sales tax remission under the West Bengal Incentive Scheme. We, therefore, find the objection raised on behalf of the revenue in this regard to be unsustainable and overruling the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was further clarified by the Hon ble Supreme Court that the character of the subsidy in the hands of the recipient, whether revenue or capital, will have to be determined by having regard to the purpose for which the subsidy is given. Explaining further with illustration, it was observed by the Hon ble Supreme Court that if the Scheme was that the assessee will be given refund of sales tax on purchase of machinery as well as on raw materials to enable the assessee to acquire new plants and machinery for further expansion of its manufacturing capacities in backward areas, the entire subsidy must be held to be a capital receipt in the hands of the assessee. After taking note of both these decisions of the Hon ble Supreme Court in the case of Sahany Steel Press Works Limited (supra) and Ponny Sugar Chemicals Limited (supra), Hon ble Calcutta High Court has held in the case of Rasoi Limited (supra) that the subsidy received by the assessee from the Government of West Bengal under the Scheme of Industrial Promotion for expansion of capacities, modernisation and improving its marketing capabilities was a capital receipt not chargeable to tax. 30. In the case of K.M. Sugar Mills ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired to be determined after having regard to the purpose for which the subsidy was given and the mode and source of payment as well as the point of time when the subsidy was paid is not relevant. Keeping this position in mind, let us now see the purpose for which the subsidy in question was given to the assessee in the form of sales tax refund under the West Bengal Incentive Scheme, 2004. As per the West Bengal Incentive Scheme, 2004 notified in the Official Gazette, it was meant to extend incentive for promotion of industries in the State of West Bengal and the same was applicable to all Large/Small Scale Projects and Tourism Units in Large/Small Scale Sector to be set up and also expansion project of existing Units on or after 1s t April, 2004. The object of the said Scheme thus was to promote setting up and expansion of industries and the subsidy was made available to the existing industries for undertaking substantial expansion. Under the said Scheme, Mega Projects were not eligible for the interest subsidy and in lieu thereof IPA was made available to them @ 75% of the sales tax, which incentive was not to exceed 100% of the fixed capital investment. The subsidy thus was lin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs Pvt. Limited (supra) cited by the ld. Counsel for the assessee. In the said case, industrial promotional assistance in the form of subsidy by way of refund of sales tax paid was received by the assessee under the same Scheme, i.e. West Bengal Incentive Scheme, 2004 and the issue raised was relating to the taxability of the subsidy received by the assessee. While deciding the said issue, the Tribunal took note of the object of the West Bengal Incentive Scheme, 2004, which was found to be to promote setting up and expansion of projects/industry and keeping in view the said object and the ratio laid down by the Hon ble Supreme Court in the case of CIT vs.- Ponny Sugar Chemicals Limited (supra) as well as in the case of CIT vs.- Chaphalker Brothers (supra), it was held by the Tribunal that the subsidy received by the assessee under the West Bengal Incentive Scheme of 2004 was capital in nature and the same could not be taxed as revenue receipt. 34. Having regard to all the relevant facts of the case and keeping in view the legal position emanating from the various judicial pronouncements discussed above, we are of the view that the subsidy in question received by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned order of the ld. CIT(Appeals) allowing the claim of the assessee for exclusion of the amount of subsidy in question while computing the book profit under section 115JB of the Act. Grounds No. 2 to 5 of the Revenue s appeal are accordingly dismissed. (Emphasis given by us) 8. Since no change of facts or law could be pointed out by the Revenue on this issue which has been decided in assessee s own case and the case law relied by the A.O in the case of Sahany Steel Press Works Limited (supra) has also been considered by the Tribunal in the above case of assessee on this issue, we respectfully follow the order of the Tribunal in assessee s own case for A.Y 2011-12 , we confirm the order of Ld. CIT(A) and dismiss both grounds of appeal. 9. Ground No.3 is against the action of the Ld. CIT(A) in allowing the employee s contribution to PF/ESI which was not paid before the due date. We note that the Ld. CIT(A) allowed the grounds of appeal of the assessee on this issue by relying on the decision of the Hon ble Jurisdictional High Court in the case of Vijay Shree Ltd. dated 07.09.2011 in ITAT No.245 of 2011 and the Ld. CIT(A) has held as under: Ground No.7 is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is ground is allowed. 14. We note that he Ld. CIT(A) has given relief to the assessee by relying on the decision of the Tribunal in the case of Narayani Ispat Pvt. Ltd., which he did so correctly. And since the relief has been given by relying on the ratio of the decision of this Tribunal in the case of Narayani Ispat Pvt. Ltd. (supra), we find no infirmity in the order of the ld. CIT(A), therefore, we confirm the order and dismiss the grounds of Revenue. 15. Ground No.6 7, the Ld. AR relied on the action of the A.O in deleting the action of Ld. CIT(A) of ₹ 10,662/- on account of delay payment of lease rent and in deleting addition of ₹ 63,579/- on account of delayed payment of service tax. The Ld. DR fairly submits that he could not trace out any addition made by the A.O or adjudicated by the Ld. CIT(A) on this issue, therefore, these two grounds are dismissed as infructuous. 16. Coming to the next appeal of the Revenue for A.Y 2014-15. Ground Nos.1 2 are same that of A.Y 2013-14 and therefore stands dismissed on the same reasoning given for A.Y 2013-14. 17. Ground No.3 is in respect of deletion of addition of ₹ 1,05,344/- on account of interest o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details of prior period expenses, it is seen that prior expenses relates to insurance claim, sponsorship, sponsorship fees, computer software and professional fees. During the course of assessment proceedings, the A/R of the assessee could not establish that the corresponding income has been recognized during the year under consideration. Since the prior period expenses are not allowable, the same is disallowed and added to the total income of the assessee company. 22. The the Ld. CIT(A) has decided the issue as under: On this issue the AO has simply stated that the AR of the assessee could not establish that the corresponding income has been recognized during the year under consideration. In Income Tax, the allowance of any expenditure is to be considered whether it has been incurred wholly and solely for the purposes of the business of the assessee or not. The assessee has already explained that the documents were received late. The AO has neither doubted the genuineness of the vouchers nor any doubt has been casted about the non-business purposes of these expenditure vis- -vis assessee's business. Therefore, they have to be Allowed. Now the question remains w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. The Income Tax Appeal bearing ITA No. 2563/Kol/2019 has been filed by the Revenue against the order passed by Ld. CIT(A)-4, Kolkata on 19th September 2019. The said Appeal is fixed for hearing before Hon ble B Bench on 7th December 2020. 2. The facts of the case are that the Respondent Assessee had received various incentives/Subsidies, as detailed herein below, from West Bengal Government and Andhra Pradesh Government. Electricity Duty ₹ 2,07,09,740 Sales Tax Incentive ₹ 43,08,97,000 3. The Respondent Assessee Company claimed before the Assessing Officer that these Incentives/subsidies were received by it under Schemes formulated by Government of West Bengal and Government of Andhra Pradesh for industrial development in the respective states. It was claimed that the said Incentives/Subsidies were Capital receipt in nature and were not liable to be taxed under Income Tax Act, 1961. 4. The Ld. Assessing Officer disagreed with the Respondent Assessee and held that the aforesaid Incentives/Subsidies were Revenue receipts chargeable to tax and completed the Assessment vide Assessment Order dated 21st December, 2016 passed u/s 143(3) r.w.s 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estoppel against the assessee regardless whether the revised return was filed or not. In such a case the Revenue is obliged to assess the correct income. In support of the aforesaid claim the Assessee Company refers to and relies on the judgement of Hon ble Gujarat High Court in the case of Pr. CIT vs. Greenland Infracon P. Ltd. in R/Tax Appeal No. 239 of 2019 (Judgement dated 09.07.2019). The relevant portion of the judgement is quoted hereunder. 6. The Tribunal also concurred with the findings recorded by the CIT(A) that the mistake or inadvertence on the part of the assessee whereby an income not taxable is wrongly offered for tax, will not operate as any kind of estoppel against the assessee regardless whether the revised return was filed or not. If the assessee is in a position to show that it has been over assessed on account of his own mistake, the Revenue is obliged to assess the correct income. 7. Having regard to the concurrent findings recorded by the two Revenue authorities, we are not inclined to disturb such findings. , 12. The Respondent Assessee Company prays that it may kindly be permitted to raise the following grounds in accordance with Rule 27 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the admission of two new grounds under Rule 27 of the Rules. On the other hand, the Ld. A.R submitted that the issues raised are no longer res-integra and therefore these are legal issues which should be admitted for interest of justice and technicalities should not come in the way of substantial justice and the counsel s omission not to file appeal/C.O should not deprive the assessee of the substantial justice. 29. We have heard both the parties and perused the records. We note that the revenue has preferred an appeal against the order of Ld. CIT(A) dated 19.09.2019 and 20.09.2019 for AY 2013-14 and AY 2014-15 respectively. However, the assessee did not prefer any cross appeal or cross objection against the impugned order of Ld. CIT(A). However, the assessee has preferred an application under Rule 27 of the Rules praying for permitting it to raise two grounds in accordance with Rule 27 of the Rules. 1. That the sum of ₹ 2,52,17,603/- received by the Assessee Company towards waiver of Electricity Duty be held to be Capital Receipt not chargeable to tax. 2. That the disallowance u/s 14A of the Act be limited to the amount of dividend income claimed to be exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ross objection before this Tribunal and Rule 27 can be used by the respondent (in this case, the assessee), though it (assessee) has not filed an appeal or cross objection, still can support the action order of Ld. CIT(A) on any grounds decided against it by the Ld. CIT(A). We find that the issue regarding incentive which the assessee received towards waiver of electricity duty or disallowance u/s 14A of the Act was not raised as a ground by the assessee before the Ld. CIT(A) and therefore it is difficult to comprehend as to how the provision of Rule 27 can come to the aid of the assessee for admission as new grounds of appeal which are not even pure legal issue but it is issues which are mixed question of facts and law. And it has to appreciated that since we are a creature of the Act, we do not enjoy the inherent power of Court or Constitutional Courts. And even though the issues raised may be no longer res-integra, however since our powers are limited and without the assessee preferring any appeal or cross objection we are unable to admit these two grounds for adjudication under Rule 27. And moreover we note that the decision relied upon by the assessee of the Hon ble Calcu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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