Alpha Menthol, Jammu vs Department Of Income Tax

The Income Tax Officer, Vs. M/s Alpha Menthol Ward -1(1), Jammu Plot No.38, Phase-1, SICOP Indl. Complex, Gangyal, Jammu (Appellant) (Respondent)

Appellant by: Sh. Tarsem Lal, DR Respondent by: Sh. R.L. Gupta, Adv.

Date of hearing: 11.03.2015 Date of pronouncement: 11.03.2015

ORDER PER A.D.JAIN, JM:

This is Department's appeal for the assessment year 2009-10 against the

order dated 17.02.2014, passed by the learned CIT(A), Jammu, deleting the

addition/disallowance of Rs.1,73,84,024/- made by the AO u/s 80IB of the

Income Tax Act, 1961 (In short 'the Act'), on Central Excise Duty Refund,

treating it to be a revenue receipt not directly attributable to the industrial activities

of the assessee-firm.

2. The Assessing Officer made the disallowance in order to follow the

consistency of the stand as taken by the department in other cases. The Assessing 2 I.T.A. No. 300(Asr)/2014 Assessment Year: 2009-10

Officer observed that the decision in the case of 'M/s Shree Balaji Alloys and Ors.

Vs. CIT' , 333 ITR 335 (J&K), which has gone in favour of the assessee, had not

been accepted by the department and the department's Special Leave Petition was

hitherto pending before the Hon'ble Supreme Court.

3. The learned CIT(A) deleted the disallowance, following the

judgment of the Hon'ble J & K High Court, in the case of 'M/s. Shree

Balaji Alloys and others vs. CIT' (supra), where it has been held that

excise duty refund in pursuance to the incentive allowance by the

Government pertaining to industrial policy introduced in the State of J

& K is a capital receipt.

4. Challenging the impugned order, the learned DR has contended

that the learned CIT(A) has erred in deleting the addition correctly

made by the Assessing Officer by disallowing the deduction under

Section 80IB of the Act, on excise duty refund, treating it to be a

revenue receipt not directly attributable to the industrial activities of

the assessee; that while doing so, the learned CIT(A) has erred in

following the judgment of Hon'ble J & K High Court in the case of

'M/s. Shree Balaji Alloys and others vs. CIT' (supra), which decision

has not been accepted by the department and the appeal filed against

this decision before the Hon'ble Supreme Court is still pending; and 3 I.T.A. No. 300(Asr)/2014 Assessment Year: 2009-10

that the learned CIT(A) has erred in not appreciating the judgments of

the Hon'ble Supreme Court in 'Sahney Steel and Press Works Ltd. Vs.

CIT' , 228 ITR 253 (SC) and 'CIT Vs. Ponny Sugars and Chemicals

Ltd.' , 306 ITR 392 (SC); wherein, the Hon'ble Supreme Court has

held such receipts to be revenue receipts.

5. The learned Counsel for the assessee has relied on the impugned

order.

6. Having heard the Ld. DR and in the light of the material placed

on record, we are of the view that the issue at hand is squarely

covered in favour of the assessee by the decision of the Hon'ble

Jurisdictional High Court of Jammu and Kashmir in the case of 'M/s

Shree Balaji Alloys' (supra). 'M/s Shree Balaji Alloys' (supra), holds,

inter alia, that excise duty refund is a capital receipt. This judgment, it

is seen, has been passed after duly taking into consideration the cases

of 'Sahney Steel and Press Works Ltd.'(supra) and 'Ponny Sugars and

Chemicals Ltd.'(supra). The issue has been decided in favour of the

assessee following the case of 'Mepco Industries Ltd. Vs. CIT', 319

ITR 208 (SC), wherein, both 'Sahney Steel and Press Works

Ltd.'(supra) and 'Ponny Sugars and Chemicals Ltd.' (supra) were

considered.

4 I.T.A. No. 300(Asr)/2014

Assessment Year: 2009-10

7. As such, the department is wrong in contending that the learned

CIT(A) has erred in deciding the issue in favour of the assessee by

following the decision of the Hon'ble J & K High Court in the case of

'M/s. Shree Balaji Alloys and others vs. CIT' (supra), and that the

learned CIT(A) has erred in not appreciating the cases of 'Sahney

Steel and Press Works Ltd.'(supra) and 'Ponny Sugars and Chemicals

Ltd.' (supra).

8. We have also taken the above view, in similar facts and

circumstances, in 'Income Tax Officer, Ward-3, Pathankot vs. M/s.

T.K. Paper Mills, Chack Sakta, Kathua, H.O.- Pathankot', in ITA

No.106(Asr)/2014, for A.Y. 2010-11, vide order dated 05.08.2014.

9. For the above discussion, the grounds taken by the department

are found to be shorn of merit, and are, hence, rejected.

10. Therefore, finding no error, whatsoever therein, the learned CIT(A)'s order

under appeal is upheld.

11. In the result, the appeal filed by the Revenue is dismissed.

Order pronounced in the open court on 11th March, 2015.

Sd/- Sd/- (B.P. JAIN) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 11.03.2015 /PK/ 5 I.T.A. No. 300(Asr)/2014 Assessment Year: 2009-10

Copy of the order forwarded to:

1. The Assessee: M/s Alpha Mental, Plot No.38, Phase-1, SICOP Indl.

Complex, Gangyal, Jammu

2. Income Tax Officer, Ward-1(1), Jammu

3. The CIT(A)

4. The CIT

5. The SR DR, I.T.A.T., Asr True copy

By order

(Assistant Registrar) Income Tax Appellate Tribunal, Amritsar Bench: Amritsar.