Supreme Sulfonators Pvt. Ltd., Kolkata vs Assessee

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IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA 'SM C' BENCH, KOLKATA

Before Shri George Mathan, Judicial M ember

I.T .A. No . 119 /KOL/ 2 0 15 Assess ment year : 2005 -2 00 6

M/s. Sup reme S ulfona tors Pv t. Ltd.,...................................A pp ella nt 72, Cotton S tree t, 2 n d Floor, Kol ka ta -700 007 [PA N : AA FCS 1 120 F]

-Vs.- A ssista nt Commissi one r of Inc ome Ta x,............. .............. ...Re sp ond en t Circle-9, Kolka ta , P-7, C howring hee Squa re, Kol ka ta -700 069

Appeara nces by : Shri Soumitr a Choud hur y, Advocate, f or the as s es s ee Shri Rajesh Ku mar, JCIT, Sr. D.R., for th e Depart ment

Dat e of concluding t he hearin g : Feb ruary 27, 2015 Dat e of pr onouncing th e order : Feb ruary 27, 2015

Per Ge orge M athan:

This is an app eal filed by the assess ee a gain st th e order of ld. Commissioner of Income Ta x (App ea ls)-VII I, Kolk ata in Appeal No. 434/CIT(A)-VII I/Kol/07-08 dated 27.10.2014 fo r the asse ss ment yea r 2005-06.

2. Sh ri Soumit ra Choud hury, Advocate, represent ed on behalf of the as se sse e and Sh ri R ajesh Kumar, JCIT, Sr. D.R. rep re sen ted on beh alf of the Rev enu e.

3. At the ti m e of hearin g, it was submitt ed b y the ld. A.R. that the as se sse e i s a Comp any wh ich i s d oin g th e business of manuf actu re of Acid Slurry and Sp ent Acid. It was th e submission th at the asses see h ad received int erest subsidy of Rs.7,90, 909/- durin g th e relevant a ss ess men t year. Ld. A.R. placed before me the copy of the Articles of A gre emen t I . T. A . N o. 1 19 / KOL ./ 20 1 5 As ses sm e nt y e ar : 20 05 - 20 0 6

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mad e on 10.03.20 05 between the assessee and the Go verno r of the State of West Be ngal, wherein it is speci fied that as per the backwa rd /operation al area of the St ate Subsidy Scheme bein g W est Beng al Inc entive Scheme for Cotta ge & S mall Scale In dust ri e s, 2000, the Government h ad agreed to grant an am ount of Rs.7,90,9 09/- as inc entive under the sanction Ord er No. 109/EST T dated 08 .02.2005 of the General Manager, Dist rict In dust ri e s Cent re, H ooghly . It was the submis sion by the ld. A.R. that the Asse ssin g Offi cer on the gro und that as per the Sub sidy S cheme, the subsidy was supp o sed to b e 50% of the total interest paid held that the total interest p aid bein g an a mount of Rs.23,82,572/-, 50% of the sam e came to Rs.11,91,286/- and as th e a ssess ee was following me rc antile system of acco un ting, the diffe ren ce between the subsidy as pe r the Sch em e and the subs idy as received by the assess ee, to the extent of Rs.4,00,377/- was t reat ed as inco me of th e ass es see. It wa s the su bmi ssion that the subsidy g ran te d b y the Stat e Govern ment vari ed year to yea r and it is only on the basis of the Articl es of th e A gre emen t that the actual subsidy is paid taking into consideratio n the S anction Orde r i s sued by the G ene ral Man ager, District Industri es Cent re, Hoo ghly.

It was the submi ssion that in fact, in the immediately prec edin g as se ssm ent year, the actual int erest outgo in the cas e of the as se ssee was Rs. 15,81,818/- bu t the subsidy receiv ed wa s R s.1 0,09,245/- and the sa me had been offe red to ta x. Ho weve r, for the relevan t assessment year the interest exp enditure was Rs.23,82,5 72/- but the san ction o rd er wa s only for an amount of Rs.7,90 ,909/-. It was the submission th at the Sche me provided fo r 50% of th e in terest exp en diture. However, when co mputing the actu al subsidy, th e General Man ager, Dist rict Industri es Centre, Hooghly takes i nto consid eration va rio us sp ecification s fo r th e sanct ion of subsidy. It was the submis sion th at th e san ction ord er b ein g the quantifying ord er and th e asses see hav ing received Rs.7,90,909/-, the subsidy was li able to be fixed only Rs.7, 90,909/- as off ered by the as se sse e. It was the sub mi ssion tha t the addition as m ade by the I . T. A . N o. 1 19 / KOL ./ 20 1 5 As ses sm e nt y e ar : 20 05 - 20 0 6

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Assessing Of ficer a nd as confi rmed by the ld. CIT(Appeals ) was liable to be delet ed.

Ld. A.R. also filed an affidavit fo r condo nation of delay of 13 day s in filing th e app eal.

4. In reply, ld. Sr. D.R. did not rais e any se rious objection to the co ndonation of delay. Consequently th e delay in filin g the appe al is co ndoned and the app eal di sposed of on merit s.

5. In resp ect o f the i ssu e on me rit s, ld. Sr. D.R. submitted that as pe r the Sub sidy Scheme issu ed by the State of West Ben gal, the assessee was entitled to subsidy of 50% of the i nterest out go. It wa s th e submis sion that th e assessee i s fo llo win g me rc antile system of accountin g and co nsequently th e A sse ssin g Offic er and the ld. CIT(Ap p eal s) was ri ght in add in g th e diff erenc e of the ac cru ed subsidy as pe r the Sch eme and the actual subsidy receiv ed by the ass es see. H e v ehemently supported the order of th e A ss essin g Of ficer and ld. CI T(Appeal s).

6. I have considered the rival su bmission s. A perus al of the Articles of Agreement between the assessee and the Gov ern or of the S tate of West Beng al dat ed 10.03.2005 by which the a sse ss ee h as b een gra nted the incentive under th e West Ben gal Incen tive Sch em e fo r Co tt ag e & Small Sc ale Industri es, 2000 clea rly shows th at the s aid in centive is as p er the sanction order issu ed by the General M anag er, Di strict Indu st rie s Cen tre, Hooghly and i s in pu rsuan ce of the said application subject to the co ndition s laid do wn in the Sch eme an d the sanction me mo. In fact, as p er the said a greement and the sanction order, the as sessee was entitl ed to an amo unt of only Rs.7, 90,909/- and the asses see h as of fe red th e full amount to tax. Ad mittedly, the Scheme provides fo r 50% of the interest outgo. Howeve r, this Scheme is not the final autho rity. The Scheme only lays down the guidelin es. The final a uth ority is the General Manage r, Dist rict Indust ri es Cent re, Hooghly, who has to issue th e sanction o rde r.

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The s anction o rder bein g o nly fo r an a mount of R s.7,90 ,909/-, no furthe r amount can be as ses sed in the hands of the asses see. In these circu mstanc es, the As ses sin g Officer is directed to delet e the ad dition of the amount of Rs.4,00,377/- as mad e by the Asse ssin g Offi ce r rep resentin g th e diff eren ce of the int erest sub sidy.

7. In the result, the appeal filed by the ass eessee is allo wed.

Orde r p ronounced in th e open Co urt on 27 t h Feb rua ry, 2015.

Sd /-

George Mathan (Judicial M embe r) Kolkata, th e 27 t h day of Feb ruary , 2015

Co pies to : (1) M/s. Sup reme S ulfona tors Pv t. Ltd., 72, Cotton S tree t, 2 n d Floor, Kol ka ta -700 007

(2) A ssista nt Commissi one r of Inc ome Ta x, Circle-9, Kolka ta , P-7, C howring hee Squa re, Kol ka ta -700 069

(3) Comm iss ioner of Income-tax (Appeal s) (4) Com mis sioner of Incom e Tax (5) The Depar tmental R epr es entative (6) Guard Fil e By order

Assistant Registrar Income Tax App ellate Tribunal Kolkata ben ch es, Kolkata Laha/Sr. P.S.