TMI Blog2016 (10) TMI 1329X X X X Extracts X X X X X X X X Extracts X X X X ..... f the view that the claim of the assessee is required to be allowed in view of the binding decision GHATGE PATIL TRANSPORTS LTD. [ 2014 (10) TMI 402 - BOMBAY HIGH COURT] since the assessee has paid the employees contribution before the due date for filing return of income. Accordingly, we set aside the order passed by learned CIT(A) on this issue and direct the Assessing Officer to allow claim of the assessee. Characterization of income - Excise duty refund received by the assessee - revenue or capital receipt - HELD THAT:- According to Ld A.R, this issue is squarely covered by the decision rendered by Hon ble J K High Court in the case of Shree Balaji Alloys [ 2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT] . However, the Ld D.R submitted that there is some confusion about the quantum of deduction and also the parity of facts between the assessee s case and the case of Shree Balaji Alloys (supra) need to be examined. We find merit in the submissions of Ld D.R. Accordingly, in our view, this issue requires fresh consideration at the end of the Assessing Officer in order to find out parity of the facts between the assessee s case and the case of the Shree Balaji Alloys tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on claimed under the head provision of leave encashment . The AO disallowed the same by invoking the provisions of sec. 43B(f) of the Act. The Ld CIT(A) also confirmed the same. 4. Learned AR submitted that an identical issue was considered by the Coordinate Bench of the Tribunal in assessee s own case relating to A.Y. 2007- 08 in ITA No. 4061 4338/Mum/2011 and the Tribunal, vide its order dated 17.2.2016, restored this matter to the file of the Assessing Officer with the direction to decide the issue in the light of the decision rendered by Hon'ble Supreme Court in the case of M/s. Exide Industries Ltd. Another (SLP No.22889/2008). We noticed that Hon'ble Supreme Court has passed the following order in the SLP No.22889/2008:- Pending hearing and final disposal of the Civil Appeal, Department is restrained from recovering penalty and interest which has accrued till date. It is made clear that as far as the outstanding interest demand as of date is concerned, it would be open to the Department to recover that amount in case Civil Appeal of the Department is allowed. We further make it clear that the assessee would, during the pendency of this Civil Appeal, pay ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer did not accept the claim of the assessee and accordingly held that excise duty refund is a revenue receipt. The Assessing Officer also took the view that excise duty refund cannot be considered to be a profit derived from the manufacturing activity i.e. the first degree link is not available to this receipt. Accordingly the Assessing Officer, by placing reliance on the decision rendered by Hon'ble Supreme Court in the case of Liberty India Ltd. Vs. CIT (317 ITR 218), held that the assessee is not entitled to deduction u/s. 80IB of the Act. In the appellate proceedings, learned CIT(A) rejected the claim of the assessee that the excise duty refund was a capital receipt. However, he held that the assessee is entitled for deduction u/s. 80IB of the Act and in this regard the Ld CIT(A) placed reliance on the decision of Hon'ble Gauhati High Court rendered in the case of CIT Vs. Megalaya Steels Ltd. (356 ITR 235). 10. The Learned counsel appearing for the assessee submitted that identical issue was considered by Hon'ble J K High Court in the case of Shree Balaji Alloys (2011) 333 ITR 335 and Hon'ble High Court has held that excise refund received by that assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the execution of the contract, the assessee has valued its forward contracts as at the year end and has provided for the loss as per the Accounting principles and Accounting standards. The ld A.R submitted that the Hon ble Bombay High Court, in the case of CIT Vs. M/s D. Chetan Co. (ITA No.278 of 2014 dated 01-10-2016), has followed its decision rendered in the case of CIT Vs. Badridas Gauridas (P) Ltd (2004)(134 Taxman 376), wherein it was held that the forward contract in foreign exchange, when incidental to carrying on business of cotton exporter and done to cover up losses on account of differences in foreign exchange valuations, would not be speculative activity but a business activity. The Ld A.R submitted that the assessing officer has accepted the actual loss arising on maturity of the foreign exchange forward contracts, but disallowed the valuation made in respect of outstanding forward contracts. Since the forward contracts in foreign exchange has been held to be a business activity and since the Accounting standards and Accounting principles mandates revaluation of the outstanding contracts, the assessee has valued the forward contracts in foreign exchange and provid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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