Jhelum Industries, Jammu vs Department Of Income Tax

This is Department's appeal for the assessment year 2010-11 against the order of the CIT(A), Jammu, dated 24.07.2014, deleting the addition/disallowance of Rs.19,58,256/- 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.

1.1 The notice sent to the assessee by RPAD has been duly served and the acknowledgment receipt has been received in the Registry. However, none has come present before us on behalf of the assessee. We are, therefore, proceeding to decide the appeal, having heard the ld. DR. 2 ITA No.608(Asr)/2014

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 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.

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

that excise duty refund and interest subsidy 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 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 3 ITA No.608(Asr)/2014

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 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. None appeared on behalf of the assessee.

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 decision of the

Hon'ble Jurisdictional High Court of Jammu and Kashmir, in the

case of in the case of 'Shree Balaji Alloys' (supra). 'Shree Balaji

All).oys' (supra), holds, inter alia, that excise duty refund is a

capital receipt. This judgment, it is seen, has been passed after 4 ITA No.608(Asr)/2014

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.

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 in the case Hon'ble J & K High

Court, in the case of 'M/s. 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.

5 ITA No.608(Asr)/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 department is dismissed.

Order pronounced in the open court on 19th February, 2015.

Sd/- Sd/- (B.P. JAIN) (A.D.JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 19th February, 2015 /SKR/ Copy of the order forwarded to:

1. The Assessee:M/s. Jhelum Industries, Samba, Jammu.

2. DCIT, Cir-1, Jammu

3. The CIT(A), Jammu

4. The CIT, Jammu

5. The SR DR, ITAT, Amritsar.

True copy By order

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