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TMI Blog2019 (8) TMI 1784X X X X Extracts X X X X X X X X Extracts X X X X ..... in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts by holding that excise refund being revenue receipt cannot be reduced from the cost of plant & machinery. 3. That the order passed by Ld. CIT(A) is perverse inasmuch as it has failed to appreciate the material facts and circumstances of the case as brought on record in the assessment order. 4. The order of the CIT (A) is perverse, erroneous and is not tenable on facts and in law. 5. That the grounds of appeal are without prejudice to each other. 6. The appellant craves leave to add, alter or amend any/ all of the grounds of appeal before or during the course of the hearing of the appeal. 2. Briefly stated facts of the case are that the assessee company has emerged as a result of the demerger of units of existing company M/s Dharmpal Satyapal Ltd. The assessee filed return of income for the assessment year 2012-13 on 29/09/2012 and for assessment year 2013-14 on 29/11/2013 declaring loss of Rs. 3,51,62,271/- and loss of Rs. 5,60,34,265/- respectively. In the scrutiny assessment completed under section 143(3) of the Income-tax Act, 1961 (for short 'the Act') for assessment years 2012-13 and 2013- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions. (ii) Based on the aforesaid observations of the Special Auditor, and in the light of provision of Section 43(1), Explanation 7A, A.O. was of the opinion that the actual cost of capital asset transferred to the appellant company, shall be taken to be same, as it would have been, if the demerged company had continued to hold the capital asset for the purpose of its own business. (iii) In the assessment order, A.O. has observed that the 'actual cost', as defined in Section 43(1) of the Act, has been stated to be 'actual cost means the actual cost of assets to the assessee as reduced by that portion of the cost thereof, as has been met directly or indirectly by any other person or authority'. In the assessment proceedings, the assessee submitted that the refund of excise duty paid on the manufacturing activities, carried out in the notified area, is to promote the industries in such area. However, A.O. was of the views that excise duty refund, has been invested in assets in the notified area and therefore, as per Explanation 7 A and 10 of Section 43(1) the Act, such refund of excise duty, has to be reduced from the cost of assets, on which depreciation has been claimed. (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on No. 8/2004 of Central Excise dated 02.01.2004) to the existing unit and the exemption of excise duty so granted, was to be utilized in the development of the state by setting up or by making investment in another unit in the same state or other notified state. The quantum of such excise duty collected, but not deposited with Govt., has been the part of revenue receipts duly credited in the P & L Account on year to year basis, on the sales affected by the entrepreneurs. Therefore, it is further submitted that the Special Auditor failed to appreciate the scheme of excise duty exemption notified by the Central Govt, and wrongly observed that investment in Plant & Machinery(P & M), was made out of the Govt., grant by the erstwhile company M/s Dharampal Satyapal Ltd. As per notification of the Central Govt., such excise duty payable, but is exempt in this notification, and same shall be utilized by the manufacturer, only for investment in: P & M in a manufacturing unit located in the concerned states, and/ or Infrastructure or civil works or social projects in such states. Therefore, the utilization of excise duty refunds, were meant not only for P&M, but also for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefits received by the Units'. The SLP preferred by revenue against this judgment to the Hon'ble Supreme Court, was dismissed, on the ground that refund of excise duty should not be excluded in arriving at profit derived from business for the purpose of claiming deduction u/s 80IB of the Act, as has been correctly held by the jurisdictional High Court. Therefore, the excise duty refund cannot be treated as capital receipt, in order to reduce the same from the cost of investment made in Plant & Machinery, as per section 43(1) of the Act. The AR has further submitted that the Hon'ble Supreme Court, in the above referred case of Commissioner of Income Tax Vs. Meghalaya Steels Ltd. [2016] 383 ITR 217 (SC), has also approved the decision of jurisdictional High Court in the case of CIT vs. Dharampal Premchand Ltd [2009] 317 ITR 353-Delhi H.C]. (viii) It has been further submitted by the AR that from the ratio of the aforesaid judgments, it is quite clear that, excise duty refund had direct nexus with the profits and gains of the business of the existing company before demerger, such excise duty refund constituted revenue receipts in the hand of the existing company. Consequently, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcise duty refund, is not in the form of capital subsidy or grant, which can be reduced from the cost of assets. Therefore, I agree with the argument of the appellant and in facts and circumstances as discussed above, with due respect, I differ from the findings of Ld.CIT(A) in the earlier Assessment years on the same issue and also, in view of the ratio laid down by Hon'ble Supreme Court, in the above referred case. Accordingly, findings of the A.O. are erroneous and therefore, disallowance of Rs. 3,54,15,791/-, is deleted. Accordingly, all the grounds, are hereby allowed for A.Y. 2012-13 & A.Y. 2013-14." 3. At the outset, before us the Ld. counsel of the assessee submitted that issue in dispute is covered by the order of the Tribunal in ITA No. 824/Del/2015 for assessment year 2011-12. The Ld. DR did not controvert above statement of Ld. counsel of the assessee. 4. We have heard the rival submission and perused the relevant material on record. The Tribunal while deciding the appeal of the Revenue as well as assessee in ITA No. 4876/Del/2014 and ITA No. 824/Del/2015 respectively for assessment year 2011-12 observed as under: "6. After considering the facts of the case an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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