J.K.Oil Industries,, Jammu vs Department Of Income Tax

The Deputy Commissioner of Vs. M/s. J.K Oil Industries, Income-tax, Circle-1 Industrial Area, Gangyal, 2nd Floor Aayakar Bhawan Jammu. Railhead Complex, Jammu (Appellant) (Respondent)

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

Date of hearing: 03.06.2015 Date of pronouncement: 04.06.2015 ORDER

PER A.D.JAIN (JM):

The first challange in Department's appeal for the assessment year

2008-09 is against the order of the CIT(A), Jammu, dated 26.03.2014,

deleting the addition/disallowance of Rs.1,50,113/- made by the AO u/s

80IB of the Income Tax Act, 1961 (in short, 'the Act') on 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

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Assessing 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) deleting the disallowance, following the

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

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pending; and 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. 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 decision of the Hon'ble Jurisdictional High Court

of Jammu and Kashmir, in the case of 'Shree Balaji Alloys' (supra). '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 case of 'Sahney Steel and Press Works Ltd.' (supra) and

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

considered.

6. 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 in the case Hon'ble J & K High Court, in the case of

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

CIT(A) has erred in not appreciating the case of 'Sahney Steel and Press

Works Ltd.,(supra) and 'Ponny Sugars and Chemicals Ltd.'(supra).

7. 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.

8. For the above discussion, ground nos. 1to3 taken by the department

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

9. Therefore, finding no error whatsoever therein, on this issue, the

learned CIT(A)'s order under appeal is upheld.

10. Aprops ground Nos. 4 & 5, the learned CIT(A) deleted the additions

of Rs.26,51,520/- and Rs.1,45,494/-, observing, inter alia, that these

additions were made on a protective basis, whereas no substantive addition

had been made in any other hand. Before us, the Department has not able

to controvert this position. Now, when there is no substantive addition

made, there is no scope for making any such addition on a protective basis.

Therefore, on this score also, there is no room for interference in the order

of the learend CIT(A). The same is hereby confirmed and Ground Nos. 4

& 5 are also rejected.

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11. In the result, the appeal field by the Department is dismissed.

Order pronounced in the open court on 04.06.2015.

Sd/- Sd/- (PRAMOD KUMAR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 04.06.2015 /PK/ Copy of the order forwarded to:

1. The Assessee: M/s. J.K. Oil Industries, Indusries Are, Gangyal, Jammu.

2. The Deputy Commissioner of Income-tax, Circle-1.

3. The CIT(A),

4. The CIT,

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

By order

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