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Income Tax Appellate Tribunal, MUMBAI BENCH “E” MUMBAI
Before: SHRI ABY T VARKEY & SHRI OM PRAKASH KANT
CIT(A)’] for assessment year 2008 CIT(A)’] for assessment year 2008-09 and 2010-11 respectively. 11 respectively. Being identical issue involved in both these appeals, same were sue involved in both these appeals, same were sue involved in both these appeals, same were heard together and disposed off by way of this consolidated order heard together and disposed off by way of this consolidated order heard together and disposed off by way of this consolidated order for convenience and avoid repetition of facts. for convenience and avoid repetition of facts.
We take up the appeal of the Revenue for assessment year We take up the appeal of the Revenue for assessment year We take up the appeal of the Revenue for assessment year 2008-09. The grounds raised
by the R
09. The grounds raised by the Revenue are reproduced as evenue are reproduced as under:
1. Whether the CIT (A) erred on the facts and in the Whether the CIT (A) erred on the facts and in the Whether the CIT (A) erred on the facts and in the circumstances of the case and in law, in deleting an circumstances of the case and in law, in deleting an circumstances of the case and in law, in deleting an amount of Rs. 5,37,44,724/ amount of Rs. 5,37,44,724/- being disallowance of claim being disallowance of claim of sales tax incentive. of sales tax incentive.
2. Whether the CIT (A) erred on the facts Whether the CIT (A) erred on the facts and in the Whether the CIT (A) erred on the facts circumstances of the case and in law, in holding that circumstances of the case and in law, in holding that circumstances of the case and in law, in holding that Sales Tax was embedded in the Sales prices charged by Sales Tax was embedded in the Sales prices charged by Sales Tax was embedded in the Sales prices charged by the assessee and the same was in the nature of capital the assessee and the same was in the nature of capital the assessee and the same was in the nature of capital receipt. The Ld. CIT (A) ignored the fact that the assessee receipt. The Ld. CIT (A) ignored the fact that the assessee receipt. The Ld. CIT (A) ignored the fact that the assessee was legally required t was legally required to collect Sales Tax on the Sales o collect Sales Tax on the Sales made, yet it had worked out the notional Sales Tax so made, yet it had worked out the notional Sales Tax so made, yet it had worked out the notional Sales Tax so collected and had claimed the same as capital receipts. collected and had claimed the same as capital receipts. collected and had claimed the same as capital receipts. 3. Whether the CIT (A) erred on the facts and in the Whether the CIT (A) erred on the facts and in the Whether the CIT (A) erred on the facts and in the circumstances of the case and in law, in relying on the circumstances of the case and in law, in relying on the circumstances of the case and in law, in relying on the decisio decision of ITAT, Mumbai and the decision of Bombay n of ITAT, Mumbai and the decision of Bombay High Court (ITA No. 1299 of 2008) in the case of Reliance High Court (ITA No. 1299 of 2008) in the case of Reliance High Court (ITA No. 1299 of 2008) in the case of Reliance Industries Limited, even though subsequent to the Industries Limited, even though subsequent to the Industries Limited, even though subsequent to the Departmental appeal against the Order of High Court, the Departmental appeal against the Order of High Court, the Departmental appeal against the Order of High Court, the issue has been remitted back to the Bombay High Court issue has been remitted back to the Bombay Hig issue has been remitted back to the Bombay Hig
M/s Everest Industries Limited M/s Everest Industries Limited 3 & 1429/M/2020 ITA Nos. 1422 & 1429/M/2020 to decide afresh and the same is still pending for to decide afresh and the same is still pending for to decide afresh and the same is still pending for adjudication. adjudication.
At the outset, the Ld. Counsel of the assessee submitted that At the outset, the Ld. Counsel of the assessee submitted that At the outset, the Ld. Counsel of the assessee submitted that issue-in-dispute raised by the Revenue is covered by the order of dispute raised by the Revenue is covered by the order of dispute raised by the Revenue is covered by the order of the ITAT for assessment year 2010 the ITAT for assessment year 2010-11 in 11 in ITA No. 7791 of 2019 and 554 of 2020. Therefore, he submitted that order of the Ld. CIT(A) on 554 of 2020. Therefore, he submitted that order of the Ld. CIT(A) on 554 of 2020. Therefore, he submitted that order of the Ld. CIT(A) on the issue-in-dispute might be upheld. The Ld. Departmental dispute might be upheld. The Ld. Departmental dispute might be upheld. The Ld. Departmental Representative (DR) on the other hand, could not controvert the Representative (DR) on the other hand, could not controvert the Representative (DR) on the other hand, could not controvert the above facts.
the parties on the issue-in- 4. We have heard rival submission of We have heard rival submission of the parties on the issue dispute and perused the relevant material on record. In the grounds dispute and perused the relevant material on record. In the grounds dispute and perused the relevant material on record. In the grounds raised, the Revenue is aggrieved with the action of the Ld. CIT(A) in raised, the Revenue is aggrieved with the action of the Ld. CIT(A) in raised, the Revenue is aggrieved with the action of the Ld. CIT(A) in deleting an amount of ₹5,37,44,724/- which was claimed by the deleting an amount of which was claimed by the assessee as capital receipt assessee as capital receipt but held the Assessing Officer as revenue but held the Assessing Officer as revenue receipt. The Ld. CIT(A) in para 6.2 to 6.5 of the impugned order has receipt. The Ld. CIT(A) in para 6.2 to 6.5 of the impugned order has receipt. The Ld. CIT(A) in para 6.2 to 6.5 of the impugned order has reproduced factual reproduced factual background in respect of issue of sales tax background in respect of issue of sales tax incentive. The relevant paragraph incentive. The relevant paragraphs are reproduced as under: are reproduced as under:
“6.2 I have carefully 6.2 I have carefully considered the facts of the case, considered the facts of the case, findings of the A.O., submission of the appellant and findings of the A.O., submission of the appellant and findings of the A.O., submission of the appellant and material placed on record. material placed on record.
In the instant case, the Hon'ble ITAT in vide Order dated In the instant case, the Hon'ble ITAT in vide Order dated In the instant case, the Hon'ble ITAT in vide Order dated 15.09.2017 restored the issue to the file of the AO stating 15.09.2017 restored the issue to the file of the AO stating 15.09.2017 restored the issue to the file of the AO stating that the AO should comp that the AO should compare the 1979 Scheme of Government 1979 Scheme of Government of Maharashtra with that of New Package Scheme of of Maharashtra with that of New Package Scheme of of Maharashtra with that of New Package Scheme of M/s Everest Industries Limited M/s Everest Industries Limited 4 & 1429/M/2020 ITA Nos. 1422 & 1429/M/2020 Incentive, 1993. The AO passed order u/s 143(3) r.w.s. 254, Incentive, 1993. The AO passed order u/s 143(3) r.w.s. 254, Incentive, 1993. The AO passed order u/s 143(3) r.w.s. 254, in the A.Y. 2008 in the A.Y. 2008-09, holding the sales tax incentives as 09, holding the sales tax incentives as revenue in nature and held that, revenue in nature and held that,
"In "In ITAT ITAT the the issue issue of of sales sales tax tax incentive incentive of of Rs.5,37,44,724/ Rs.5,37,44,724/- claimed as capital receipt was set claimed as capital receipt was set aside to the file of the A0 for fresh adjudication with a aside to the file of the A0 for fresh adjudication with a aside to the file of the A0 for fresh adjudication with a direction 10 compare the sales tax incentive scheme of direction 10 compare the sales tax incentive scheme of direction 10 compare the sales tax incentive scheme of 1979 availed by Reliance Industries Limited and the 1979 availed by Reliance Industries Limited and the 1979 availed by Reliance Industries Limited and the New Package Sche New Package Scheme of Incentive 1993 which is me of Incentive 1993 which is availed by the assessee. availed by the assessee. However, the issue of sales However, the issue of sales tax incentive claimed as capital receipt, allowed by the tax incentive claimed as capital receipt, allowed by the tax incentive claimed as capital receipt, allowed by the Hon'ble ITAT in the case of Reliance Industries Limited, Hon'ble ITAT in the case of Reliance Industries Limited, Hon'ble ITAT in the case of Reliance Industries Limited, has been sent back to the Hon'ble Bombay High Court has been sent back to the Hon'ble Bombay High Court has been sent back to the Hon'ble Bombay High Court by the by the Hon'ble Supreme Court with a direction to Hon'ble Supreme Court with a direction to decide whether sales tax incentive is a capital receipt decide whether sales tax incentive is a capital receipt decide whether sales tax incentive is a capital receipt or not. Accordingly, the issue has not yet 113Th or not. Accordingly, the issue has not yet 113Th or not. Accordingly, the issue has not yet 113Th arrained finality. The case of the assessee for AY. arrained finality. The case of the assessee for AY. arrained finality. The case of the assessee for AY. 2003-04 has been clubbed with the appeal periding in 04 has been clubbed with the appeal periding in 04 has been clubbed with the appeal periding in the case of Reliance Industries in the Hon'ble Bombay case of Reliance Industries in the Hon'ble Bombay case of Reliance Industries in the Hon'ble Bombay High Court. High Court. Accordingly, since the Income Tax the Income Tax Department has not accepted the view of the Tribunal Department has not accepted the view of the Tribunal Department has not accepted the view of the Tribunal both in case of Reliance both in case of Reliance Industries and the assessee Industries and the assessee and filed further appeals before the and filed further appeals before the Hon'ble High Cour Hon'ble High Court and these appeals are still pending with the Hon'ble and these appeals are still pending with the Hon'ble and these appeals are still pending with the Hon'ble High Court, the contention of the assessee to claim High Court, the contention of the assessee to claim High Court, the contention of the assessee to claim sales tax incentive as capital receipt is not tenable and sales tax incentive as capital receipt is not tenable and sales tax incentive as capital receipt is not tenable and hence disallowed, in view of the detailed discussion hence disallowed, in view of the detailed discussion hence disallowed, in view of the detailed discussion
M/s Everest Industries Limited M/s Everest Industries Limited 5 & 1429/M/2020 ITA Nos. 1422 & 1429/M/2020 made by the A0 in the assessment order made by the A0 in the assessment order passed w/s passed w/s 143(3) dated 23.12.2010 " 143(3) dated 23.12.2010 "
On perusal of the above paragraphs, it is clear that the AO On perusal of the above paragraphs, it is clear that the AO On perusal of the above paragraphs, it is clear that the AO did not compare the terms and conditions of the Sales Tax did not compare the terms and conditions of the Sales Tax did not compare the terms and conditions of the Sales Tax Incentive Scheme of 1979 availed by Reliance Industries Ltd. Incentive Scheme of 1979 availed by Reliance Industries Ltd. Incentive Scheme of 1979 availed by Reliance Industries Ltd. with the New Package Scheme of Incentiv with the New Package Scheme of Incentives, 1993 which es, 1993 which was availed by the appellant company. Thus, the directions was availed by the appellant company. Thus, the directions was availed by the appellant company. Thus, the directions of Hon'ble Mumbai ITAT as per order dated 15.09.2017 were of Hon'ble Mumbai ITAT as per order dated 15.09.2017 were of Hon'ble Mumbai ITAT as per order dated 15.09.2017 were not followed by the AO in the right earnest. The AO thereafter not followed by the AO in the right earnest. The AO thereafter not followed by the AO in the right earnest. The AO thereafter proceeded to make an addition of Rs.5,37,44,724/ proceeded to make an addition of Rs.5,37,44,724/ proceeded to make an addition of Rs.5,37,44,724/- on account of Sale Tax Incentives as revenue receipts on the of Sale Tax Incentives as revenue receipts on the of Sale Tax Incentives as revenue receipts on the ground that the decision of Hon'ble Mumbai High Court in the ground that the decision of Hon'ble Mumbai High Court in the ground that the decision of Hon'ble Mumbai High Court in the case of Reliance industries Ltd. had not attained finality. case of Reliance industries Ltd. had not attained finality. case of Reliance industries Ltd. had not attained finality.
6.3 Here it is pertinent to mention that in appellant's own 6.3 Here it is pertinent to mention that in appellant's own 6.3 Here it is pertinent to mention that in appellant's own case, the Hon'ble ITAT fo case, the Hon'ble ITAT for A.Y. 2003-04 has allowed the 04 has allowed the appeal on this issue holding sales tax incentive to be capital appeal on this issue holding sales tax incentive to be capital appeal on this issue holding sales tax incentive to be capital in nature.
Further, the then CIT(A) has also allowed the appeals on this Further, the then CIT(A) has also allowed the appeals on this Further, the then CIT(A) has also allowed the appeals on this issue in favour of the appellant company for A. Y. 2007 issue in favour of the appellant company for A. Y. 2007 issue in favour of the appellant company for A. Y. 2007-08, 2008-09 and for A.Y. 2009 09 and for A.Y. 2009-10 vide order dated 09.11.2012 vide order dated 09.11.2012 and 31.03.2015 respectively. and 31.03.2015 respectively.
6.4 Subsequently while disposing the appeal of the appellant Subsequently while disposing the appeal of the appellant Subsequently while disposing the appeal of the appellant company for AY company for AY 2009-10, the Hon'ble Mumbai ITAT vide its 10, the Hon'ble Mumbai ITAT vide its order dated 30.01.2018 in order dated 30.01.2018 in ITA Nos.3804&3849/Mum/2015 order dated 30.01.2018 in ITA Nos.3804&3849/Mum/2015 again remanded the matter to again remanded the matter to the Assessing Officer and he the Assessing Officer and he was directed to compare the scheme deliberated upon by the was directed to compare the scheme deliberated upon by the was directed to compare the scheme deliberated upon by the M/s Everest Industries Limited M/s Everest Industries Limited 6 & 1429/M/2020 ITA Nos. 1422 & 1429/M/2020 Tribunal in the case of Reliance Industries Ltd. and the Tribunal in the case of Reliance Industries Ltd. and the Tribunal in the case of Reliance Industries Ltd. and the scheme of 1993 applicable availed by the appellant. scheme of 1993 applicable availed by the appellant. scheme of 1993 applicable availed by the appellant.
The set aside assessment for A.Y. 2009 The set aside assessment for A.Y. 2009-10 was completed 10 was completed by the AO on 28.12.2018 us 143(3) r.w.254 of the Act with the AO on 28.12.2018 us 143(3) r.w.254 of the Act with the AO on 28.12.2018 us 143(3) r.w.254 of the Act with the following findings in para 3.2 & the following findings in para 3.2 & 3.3.
"3.2 I have considered the facts of the case and the have considered the facts of the case and the submission made by the assessee. submission made by the assessee. The issue of Sales The issue of Sales Tax Incentive of Rs.5,83,36,300/ Tax Incentive of Rs.5,83,36,300/-claimed as capital claimed as capital receipt was set aside to the file of the Assessing eceipt was set aside to the file of the Assessing eceipt was set aside to the file of the Assessing Officer with a limited purpose for comparing the sales Officer with a limited purpose for comparing the sales Officer with a limited purpose for comparing the sales tax incentive scheme of 1979 availed by Reliance tax incentive scheme of 1979 availed by Reliance tax incentive scheme of 1979 availed by Reliance Industries Limited and the New package scheme of Industries Limited and the New package scheme of Industries Limited and the New package scheme of incentives 1993 which is availed by the assessee. It is incentives 1993 which is availed by the assessee. It incentives 1993 which is availed by the assessee. It seen that the comparison between the two schemes seen that the comparison between the two schemes seen that the comparison between the two schemes has already been made by the Hon'ble ITAT in has already been made by the Hon'ble ITAT in has already been made by the Hon'ble ITAT in assessee's own case for AY 2003 assessee's own case for AY 2003-04 in its order dated 04 in its order dated 04.12.2009 and held that both 04.12.2009 and held that both the schemes are similar the schemes are similar and identical. Accordingly, by placing reliance on the and identical. Accordingly, by placing reliance on and identical. Accordingly, by placing reliance on ITAT Order for AY 2003 ITAT Order for AY 2003-04,it is held that both the 04,it is held that both the schemes are similar and identical. schemes are similar and identical.
3.3 However, the issue of sales tax incentive claimed 3.3 However, the issue of sales tax incentive claimed 3.3 However, the issue of sales tax incentive claimed as capital receipt, allowed by the Hon'ble ITAT in the as capital receipt, allowed by the Hon'ble ITAT in the as capital receipt, allowed by the Hon'ble ITAT in the case of Reliance Industries Limited, has been sent case of Reliance Industries Limited, has been sent case of Reliance Industries Limited, has been sent back t back to the Hon'ble Bombay High Court by the Hon'ble o the Hon'ble Bombay High Court by the Hon'ble Supreme Court with a direction to decide whether Supreme Court with a direction to decide whether Supreme Court with a direction to decide whether sales tax incentive is a capital receipt or not. sales tax incentive is a capital receipt or not. sales tax incentive is a capital receipt or not. Accordingly, the issue has not yet attained finality. Accordingly, the issue has not yet attained finality. Accordingly, the issue has not yet attained finality.
M/s Everest Industries Limited M/s Everest Industries Limited 7 & 1429/M/2020 ITA Nos. 1422 & 1429/M/2020
The case of the assessee for AY 2003 The case of the assessee for AY 2003-04 has been 04 has been clubbed clubbed with the appeal pending in case of Reliance with the appeal pending in case of Reliance Industries in Industries in the Hon'ble Bombay High Court. Industries in the Hon'ble Bombay High Court. the Hon'ble Bombay High Court. Accordingly since the Income Tax Department has not Accordingly since the Income Tax Department has not Accordingly since the Income Tax Department has not accepted the view of the Tribunal both in case of accepted the view of the Tribunal both in case of accepted the view of the Tribunal both in case of Reliance Industries and the assessee and filed further Reliance Industries and the assessee and filed further Reliance Industries and the assessee and filed further appeals be appeals before the Hon'ble High Court, the contention fore the Hon'ble High Court, the contention of the assessee to claim sales tax incentive as capital of the assessee to claim sales tax incentive as capital of the assessee to claim sales tax incentive as capital receipt is not tenable and hence disallowed". receipt is not tenable and hence disallowed". receipt is not tenable and hence disallowed".
6.5 It is noted that in the case of appellant for A.Y. 2003 6.5 It is noted that in the case of appellant for A.Y. 2003 6.5 It is noted that in the case of appellant for A.Y. 2003-04 in ITA 814/Mum/2007, it was held by the Hon'ble 814/Mum/2007, it was held by the Hon'ble Tribunal 814/Mum/2007, it was held by the Hon'ble that both the schemes are similar and identical and it was that both the schemes are similar and identical and it was that both the schemes are similar and identical and it was adjudicated by the Hon'ble ITAT that this issue is squarely adjudicated by the Hon'ble ITAT that this issue is squarely adjudicated by the Hon'ble ITAT that this issue is squarely covered by the decision of the Special Bench in the case of covered by the decision of the Special Bench in the case of covered by the decision of the Special Bench in the case of DCIT vs. Reliance Industries Ltd. (2004) 88 ITD 273 Reliance Industries Ltd. (2004) 88 ITD 273 Reliance Industries Ltd. (2004) 88 ITD 273 (Mum)(SB).”
4.1 The Ld. CIT(A) further referred to the finding of the Ld. CIT(A) The Ld. CIT(A) further referred to the finding of the Ld. CIT(A) The Ld. CIT(A) further referred to the finding of the Ld. CIT(A)- 3, Nashik to support his finding. The Ld. CIT(A) after comparing the 3, Nashik to support his finding. The Ld. CIT(A) after comparing the 3, Nashik to support his finding. The Ld. CIT(A) after comparing the Maharashtra Incentive Scheme, 1979 with Mah Maharashtra Incentive Scheme, 1979 with Maharashtra Incentive arashtra Incentive Scheme, 1993, followed Scheme, 1993, followed the decision of the Tribunal for AY the decision of the Tribunal for AY 2003-04 in and his predecessor in ITA No. 814/M/2007 and his predecessor and held held that the sale tax incentive received by the assessee under the “new package tax incentive received by the assessee under the tax incentive received by the assessee under the scheme 1993” is capital in nature. The Tribunal in ITA No. 779 capital in nature. The Tribunal in ITA No. 779 capital in nature. The Tribunal in ITA No. 7791 of 2019 and 534 of 2020 for assessment year 2010-11 has also 2019 and 534 of 2020 for assessment year 2010 2019 and 534 of 2020 for assessment year 2010 mentioned the facts and scheme under consideration as follows: mentioned the facts and scheme under consideration as follows: mentioned the facts and scheme under consideration as follows:
M/s Everest Industries Limited M/s Everest Industries Limited 8 & 1429/M/2020 ITA Nos. 1422 & 1429/M/2020 “9.1 On Grounds of appeal no. 1() to I(n) of the revenue ie,
1. On Grounds of appeal no. 1() to I(n) of the revenue ie,
1. On Grounds of appeal no. 1() to I(n) of the revenue ie, "Sales Tax Incentive under New Pachion Scheme of "Sales Tax Incentive under New Pachion Scheme of "Sales Tax Incentive under New Pachion Scheme of Incentives (PSI), 1993. [Rs.2,23,927341 Incentives (PSI), 1993. [Rs.2,23,927341-1, the Learned 1, the Learned Counsel for the Assessee Counsel for the Assessee drew the attention of the Bench drew the attention of the Bench with respect to the brief facts of the case are that the with respect to the brief facts of the case are that the with respect to the brief facts of the case are that the assessee company had set assessee company had set-up. a manufacturing unit in up. a manufacturing unit in backward area of Nashik, Maharashtra. The assessee backward area of Nashik, Maharashtra. The assessee backward area of Nashik, Maharashtra. The assessee company is having. Ius manufacturing unit of Asbestos company is having. Ius manufacturing unit of Asbestos company is having. Ius manufacturing unit of Asbestos cement sheets and accessories at Lakhmapur, Nasik. The heets and accessories at Lakhmapur, Nasik. The heets and accessories at Lakhmapur, Nasik. The said unit at Lakhmapur was eligible for sales tax incentive said unit at Lakhmapur was eligible for sales tax incentive said unit at Lakhmapur was eligible for sales tax incentive as per the Government of Maharashtra resolution vie as per the Government of Maharashtra resolution vie as per the Government of Maharashtra resolution vie Industries, Energy and Labour Notification No. Industries, Energy and Labour Notification No. Industries, Energy and Labour Notification No. IDL/ IDL/ IDL/ 1088/6603/1&D 1088/6603/1&D-8 dated 30-9-1988 which was ext 1988 which was extended further w.e.f. 1 further w.e.f. 1-10-1993. Under the said scheme, the 1993. Under the said scheme, the assessee company was not required to pay (1) Sales Tax assessee company was not required to pay (1) Sales Tax assessee company was not required to pay (1) Sales Tax "LST" and CST, additional sales tax, purchase tax, turnover "LST" and CST, additional sales tax, purchase tax, turnover "LST" and CST, additional sales tax, purchase tax, turnover tax payable on sale of finished products or purchase of tax payable on sale of finished products or purchase of tax payable on sale of finished products or purchase of material. Based on the sai material. Based on the said scheme, Sicom Ltd, the d scheme, Sicom Ltd, the implementing agency has certified that the assessee implementing agency has certified that the assessee implementing agency has certified that the assessee company was eligible for incentives under the scheme and company was eligible for incentives under the scheme and company was eligible for incentives under the scheme and issued eligibility certificate No. issued eligibility certificate No. FINC()/1993/EXEMPTION/ FINC()/1993/EXEMPTION/ EC-4498 dated 1 4498 dated 1-1-2002, effective from 1-1-2002 to 31 2002 to 31-1- 2016 i.e., for 169 months granting sales tax exemption of Rs. ., for 169 months granting sales tax exemption of Rs. ., for 169 months granting sales tax exemption of Rs. 17,30,13,750/ 17,30,13,750/- for additional investment of Rs. 18.90 crores for additional investment of Rs. 18.90 crores made at the factory at Lakhmapur. In terms of the said made at the factory at Lakhmapur. In terms of the said made at the factory at Lakhmapur. In terms of the said scheme, during the previous year i.e., for the A. Y. 2010 scheme, during the previous year i.e., for the A. Y. 2010 scheme, during the previous year i.e., for the A. Y. 2010-11 the assessee company avai the assessee company availed the said incentives/subsidy led the said incentives/subsidy on account of sales tax aggregating to Rs. 6,74, 12,461/ on account of sales tax aggregating to Rs. 6,74, 12,461/ on account of sales tax aggregating to Rs. 6,74, 12,461/-. In the return of income the assessee company excluded the the return of income the assessee company excluded the the return of income the assessee company excluded the M/s Everest Industries Limited M/s Everest Industries Limited 9 & 1429/M/2020 ITA Nos. 1422 & 1429/M/2020 above subsidy on account of sales tax incentive in computing above subsidy on account of sales tax incentive in computing above subsidy on account of sales tax incentive in computing the total income under normal provisions of th the total income under normal provisions of th the total income under normal provisions of the Act. The assessee took this said exclusion as capital receipt, however, assessee took this said exclusion as capital receipt, however, assessee took this said exclusion as capital receipt, however, the Revenue treated this amount as revenue receipt and the Revenue treated this amount as revenue receipt and the Revenue treated this amount as revenue receipt and added back to the total income of the assessee company. added back to the total income of the assessee company. added back to the total income of the assessee company.”
4.2 Thereafter, the Tribunal Thereafter, the Tribunal (supra) directed to delete the addition directed to delete the addition treating the sales tax incentive as capital receipt. The relevant reating the sales tax incentive as capital receipt. The relevant reating the sales tax incentive as capital receipt. The relevant finding of the Tribunal is reproduced as under: finding of the Tribunal is reproduced as under:
“12. We have heard the submissions of both the parties and 12. We have heard the submissions of both the parties and 12. We have heard the submissions of both the parties and perused the material available on record. We find that the perused the material available on record. We find that the perused the material available on record. We find that the present issue is fully co present issue is fully covered in assessee’s own case in vered in assessee’s own case in ITA.No.814/Mum/2007 for the A.Y. 2003 ITA.No.814/Mum/2007 for the A.Y. 2003-04 wherein the 04 wherein the Tribunal allowed relief in respect of the matter in issue. Tribunal allowed relief in respect of the matter in issue. Tribunal allowed relief in respect of the matter in issue. Further, the Special Bench of the Tribunal in the case of DCIT Further, the Special Bench of the Tribunal in the case of DCIT Further, the Special Bench of the Tribunal in the case of DCIT vs., Reliance Industries Ltd., [2004] 88 ITD 273 vs., Reliance Industries Ltd., [2004] 88 ITD 273 vs., Reliance Industries Ltd., [2004] 88 ITD 273 (Mum) held that sales tax subsidy received under the Package Scheme of that sales tax subsidy received under the Package Scheme of that sales tax subsidy received under the Package Scheme of Incentives, 1979 is for the purpose of industrial development Incentives, 1979 is for the purpose of industrial development Incentives, 1979 is for the purpose of industrial development of the backward districts as well as generation of of the backward districts as well as generation of of the backward districts as well as generation of employment, thus, establishing a direct nexus with the employment, thus, establishing a direct nexus with the employment, thus, establishing a direct nexus with the investment in fix investment in fixed capital assets and hence, a capital ed capital assets and hence, a capital receipt. Against this Special Bench order of the Tribunal, the receipt. Against this Special Bench order of the Tribunal, the receipt. Against this Special Bench order of the Tribunal, the Department filed an appeal before the Hon’ ble Department filed an appeal before the Hon’ ble High Court of High Court of Bombay Bombay Bombay which is which which is pending for adjudication. is pending for adjudication. pending for adjudication. In In In this this this connection, it is relevant to state that th connection, it is relevant to state that the Hon’ ble Supreme e Hon’ ble Supreme Court in the case of Union of India vs., Kamlakshi Finance Court in the case of Union of India vs., Kamlakshi Finance Court in the case of Union of India vs., Kamlakshi Finance Corporation Ltd., [1991] 55 ELT 433 (SC) has held that ‘ mere Corporation Ltd., [1991] 55 ELT 433 (SC) has held that ‘ mere Corporation Ltd., [1991] 55 ELT 433 (SC) has held that ‘ mere fact that the order of the appellate authority is not fact that the order of the appellate authority is not fact that the order of the appellate authority is not M/s Everest Industries Limited M/s Everest Industries Limited 10 & 1429/M/2020 ITA Nos. 1422 & 1429/M/2020 “acceptable” to the Department and is the subject matter of “acceptable” to the Department and is the subject matter of “acceptable” to the Department and is the subject matter of an appeal can furnish no ground for not following it unless appeal can furnish no ground for not following it unless appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. We its operation has been suspended by a competent court. We its operation has been suspended by a competent court. We find that since the order of the Special Bench of the Tribunal find that since the order of the Special Bench of the Tribunal find that since the order of the Special Bench of the Tribunal is still holds the field and in absence of any contrary decision is still holds the field and in absence of any contrary decision is still holds the field and in absence of any contrary decision brought to our notice by the Ld. D.R, and the order of the Ld. ur notice by the Ld. D.R, and the order of the Ld. ur notice by the Ld. D.R, and the order of the Ld. CIT(A) in deleting the addition made by the A.O. is in CIT(A) in deleting the addition made by the A.O. is in CIT(A) in deleting the addition made by the A.O. is in accordance with law, we find no reason to interfere with the accordance with law, we find no reason to interfere with the accordance with law, we find no reason to interfere with the order of the Ld. CIT(A) on this issue and, therefore, we hold order of the Ld. CIT(A) on this issue and, therefore, we hold order of the Ld. CIT(A) on this issue and, therefore, we hold that the amount of incentiv that the amount of incentive is not a revenue receipt, but, it is e is not a revenue receipt, but, it is a capital receipt and, therefore, we direct the A.O. to delete a capital receipt and, therefore, we direct the A.O. to delete a capital receipt and, therefore, we direct the A.O. to delete the addition. The Revenue fails in its grounds of appeal the addition. The Revenue fails in its grounds of appeal the addition. The Revenue fails in its grounds of appeal Nos.1(i) to 1(iv) and, therefore, the grounds on this issue are Nos.1(i) to 1(iv) and, therefore, the grounds on this issue are Nos.1(i) to 1(iv) and, therefore, the grounds on this issue are dismissed.”
4.3 Since, the Tribun Since, the Tribunal (supra) has allowed the sales tax incentive al (supra) has allowed the sales tax incentive received under the same scheme under which the assessee has received under the same scheme under which the assessee has received under the same scheme under which the assessee has received sales tax incentive in the year under consideration and received sales tax incentive in the year under consideration and received sales tax incentive in the year under consideration and therefore, issue-in-dispute being squarely covered by the order of dispute being squarely covered by the order of dispute being squarely covered by the order of the Tribunal (supra), ra), the grounds raised by the Revenue are he grounds raised by the Revenue are dismissed.
Now we take up the appeal of the Revenue in up the appeal of the Revenue in ITA No. take up the appeal of the Revenue in ITA No. 1429/M/2020 for assessment year 2010 1429/M/2020 for assessment year 2010-11wherein grounds raised 11wherein grounds raised by the Revenue are reproduced as under: by the Revenue are reproduced as under:
Whether the CIT (A) erred on the facts and in Whether the CIT (A) erred on the facts and in the Whether the CIT (A) erred on the facts and in circumstances of the case and in law, in holding the circumstances of the case and in law, in holding the circumstances of the case and in law, in holding the order passed u/s 143(3) r.w.s. 263 as void ab initio order passed u/s 143(3) r.w.s. 263 as void ab initio order passed u/s 143(3) r.w.s. 263 as void ab initio
M/s Everest Industries Limited M/s Everest Industries Limited 11 & 1429/M/2020 ITA Nos. 1422 & 1429/M/2020 without considering the fact that the ITAT's order without considering the fact that the ITAT's order without considering the fact that the ITAT's order quashing the order passed u/s 263 by the CIT quashing the order passed u/s 263 by the CIT quashing the order passed u/s 263 by the CIT u/s.263 of the Income Tax Act, 1961 has not attained u/s.263 of the Income Tax Act, 1961 has not attai u/s.263 of the Income Tax Act, 1961 has not attai finality? finality? 2. Whether the CIT (A) erred on the facts and in the Whether the CIT (A) erred on the facts and in the Whether the CIT (A) erred on the facts and in the circumstances of the case and in law, in holding the circumstances of the case and in law, in holding the circumstances of the case and in law, in holding the order passed u/s 143(3) r.w.s. 263 as void ab initio order passed u/s 143(3) r.w.s. 263 as void ab initio order passed u/s 143(3) r.w.s. 263 as void ab initio without deciding the specific grounds of appeal on without deciding the specific grounds of appeal on without deciding the specific grounds of appeal on merits? merits?
6. The issue-in-dispute in the grounds raised is that Revenue dispute in the grounds raised is that Revenue dispute in the grounds raised is that Revenue seeks to agitate the dismissal of seeks to agitate the dismissal of assessment order u/s order u/s 143 consequent to order u/s 263 consequent to order u/s 263, of the Act as the order u/s 263 as the order u/s 263 has been quashed by the ITAT. In our opinion, the foundation u/s quashed by the ITAT. In our opinion, the foundation u/s quashed by the ITAT. In our opinion, the foundation u/s 143(3) r.w.s. 263 was order u/s 263 of the Act, which was order u/s 263 of the Act, which has already was order u/s 263 of the Act, which been demolished, then , then the consequent order passed cannot survive. the consequent order passed cannot survive. The relevant finding of the Ld. CIT(A) on the issue-in-dispute is The relevant finding of the Ld. CIT(A) on the issue The relevant finding of the Ld. CIT(A) on the issue reproduced as under: reproduced as under:
“5. DECISION “5. DECISION During the appellate proceedings, th During the appellate proceedings, the appellant filed written e appellant filed written submission inter submission inter-alia, stating as under:
2.0 Further, it is submitted that the appellant had also Further, it is submitted that the appellant had also Further, it is submitted that the appellant had also filed an appeal before the Hon'ble Mumbai ITAT filed an appeal before the Hon'ble Mumbai ITAT filed an appeal before the Hon'ble Mumbai ITAT against order us 263 dated 25-11-2013, bearing ITA against order us 263 dated 25 2013, bearing ITA No. No. No. 532/Mum/2014. 532/Mum/2014. 532/Mum/2014. In In In the the the said said said appeal, appeal, appeal, the appellant was of the view that since the A0 has made appellant was of the view that since the A0 has made appellant was of the view that since the A0 has made
M/s Everest Industries Limited M/s Everest Industries Limited 12 & 1429/M/2020 ITA Nos. 1422 & 1429/M/2020 requisite enquires during the course of assessment requisite enquires during the course of assessment requisite enquires during the course of assessment proceedings and thereafter disallowed the claim, the proceedings and thereafter disallowed the claim, the proceedings and thereafter disallowed the claim, the order passed by the AO cannot be treated as order passed by the AO cannot be treated as order passed by the AO cannot be treated as erroneous and prejudicial to the interest of revenue. erroneous and prejudicial to the interest of revenu erroneous and prejudicial to the interest of revenu The case was extensively presented on facts, legal The case was extensively presented on facts, legal The case was extensively presented on facts, legal principles and also judicial supports and several principles and also judicial supports and several principles and also judicial supports and several submissions were filed to counter each & every submissions were filed to counter each & every submissions were filed to counter each & every contention contention contention of of of the the the Hon'ble Hon'ble Hon'ble Members Members Members and and and the the the Departmental Representative. Accordingly, the Hon Departmental Representative. Accordingly, the Hon Departmental Representative. Accordingly, the Hon 'ble ITAT after giving a patience hearing set aside the 'ble ITAT aft er giving a patience hearing set aside the order of Commissioner us 263 of the as being without order of Commissioner us 263 of the as being without order of Commissioner us 263 of the as being without authority of law and restored the Assessment Order authority of law and restored the Assessment Order authority of law and restored the Assessment Order u/s 143(3) dated 28-03-2013. However, the ITAT has u/s 143(3) dated 28 2013. However, the ITAT has not decided on merits of allowability of these subsidy not decided on merits of allowability of these subsidy not decided on merits of allowability of these subsidy since that may lead to influencing the adjudication ce that may lead to influencing the adjudication ce that may lead to influencing the adjudication pending before the CIT(A). pending before the CIT(A).
2.1 Hence, the appeal was decided in the favour of the 2.1 Hence, the appeal was decided in the favour of the 2.1 Hence, the appeal was decided in the favour of the appeal and the order ws 263 dated 25 appeal and the order ws 263 dated 25- -11-2013 is quashed. Therefore in the light of the aforesaid ITAT quashed. Therefore in the light of the aforesaid ITAT quashed. Therefore in the light of the aforesaid ITAT order, the present appe order, the present appeal filed before your goodself al filed before your goodself becomes infructuous." becomes infructuous."
6.2 While passing order of the CIT u/s 263 the Hon'ble 6.2 While passing order of the CIT u/s 263 the Hon'ble 6.2 While passing order of the CIT u/s 263 the Hon'ble Tribunal, 'E' Bench. Tribunal, 'E' Bench. Mumbai in its Order dated Mumbai in its Order dated 21.08.2019 has held as under: 21.08.2019 has held as under:
"29. Since in the present case the assessing officer "29. Since in the present case the assessing officer "29. Since in the present case the assessing officer has already analysed one aspect of the matter which has already analysed one aspect of the matter which has already analysed one aspect of the matter which was pending before the CIT(A), the matter cannot be was pending before the CIT(A), the matter cannot be was pending before the CIT(A), the matter cannot be M/s Everest Industries Limited M/s Everest Industries Limited 13 & 1429/M/2020 ITA Nos. 1422 & 1429/M/2020 again relooked by the Commissioner on any other again relooked by the Commissioner on any other again relooked by the Commissioner on any other aspect as the order of the assessing officer gets aspect as the order of the assessing officer gets aspect as the order of the assessing officer gets merged with the order of CIT(A) in view of the decision erged with the order of CIT(A) in view of the decision erged with the order of CIT(A) in view of the decision of the Hon'ble Bombay High Court as above. Thus, of the Hon'ble Bombay High Court as above. Thus, of the Hon'ble Bombay High Court as above. Thus, the Commissioner had no power to touch upon the the Commissioner had no power to touch upon the the Commissioner had no power to touch upon the issues of treatment of sales tax and excise duty issues of treatment of sales tax and excise duty issues of treatment of sales tax and excise duty incentives in the impugned proceedings us 263 of the incentives in the impugned proceedings us 263 of the incentives in the impugned proceedings us 263 of the Act.
We make it clear that since the matter on the 30. We make it clear that since the matter on the 30. We make it clear that since the matter on the issue of excise duty exemption and sales lax incentive issue of excise duty exemption and sales lax incentive issue of excise duty exemption and sales lax incentive is pending before the CIT(A), we are restricting is pending before the CIT(A), we are restricting is pending before the CIT(A), we are restricting ourselves to the validity of proceedings us 263 of the ourselves to the validity of proceedings us 263 of the ourselves to the validity of proceedings us 263 of the Act and are not discussing the merits of the issue as Act and are not discussing the merits of the Act and are not discussing the merits of the doing so may lead to influencing the adjudication doing so may lead to influencing the adjudication doing so may lead to influencing the adjudication pending before the CIT(A). As such, we are not pending before the CIT(A). As such, we are not pending before the CIT(A). As such, we are not expressing any opinion on the merits of the case. expressing any opinion on the merits of the case. expressing any opinion on the merits of the case.
In light of our above discussion, we hold the 31. In light of our above discussion, we hold the 31. In light of our above discussion, we hold the Commissioner has wrongly assumed jurisdiction on Commissioner has wrongly assumed jurisdiction on Commissioner has wrongly assumed jurisdiction on the above issue w's 263 of the Act and we thus the above issue w's 263 of the Act and we thus the above issue w's 263 of the Act and we thus vacate the order of the Commissioner us 263 of the vacate the order of the Commissioner us 263 of the vacate the order of the Commissioner us 263 of the Act as being without authority of law and restore the Act as being without authority of law and restore the Act as being without authority of law and restore the assessment order dated 28.03.2013 (supra) qua the assessment order dated 28.03.2013 (supra) qua the assessment order dated 28.03.2013 (supra) qua the aforesaid issues." aforesaid issues." In view of the above order the Hon'ble Tribunal, the In view of the above order the Hon' ble Tribunal, the order passed u/s 143(3) r.w.s. 263, challenged before order passed u/s 143(3) r.w.s. 263, challenged before me, become void ab initio. As far as Appeal pending me, become void ab initio. As far as Appeal pending me, become void ab initio. As far as Appeal pending before the CIT (Appeal) on the issue of excise duty before the CIT (Appeal) on the issue of excise duty before the CIT (Appeal) on the issue of excise duty exemption and sales tax incentive is concerned the exemption and sales tax incentive is concerned the exemption and sales tax incentive is concerned the same has been adjudicated by CIT (Appeal)-3, Nasik same has been adjudicated by CIT (Appeal) same has been adjudicated by CIT (Appeal)
M/s Everest Industries Limited M/s Everest Industries Limited 14 & 1429/M/2020 ITA Nos. 1422 & 1429/M/2020 vide his Order dated 16.10.2019. Accordingly, vide his Order dated 16.10. 2019. Accordingly, grounds of appeal are allowed.” grounds of appeal are allowed 6.1 In view of above, we do not find any infirmity in the finding of In view of above, we do not find any infirmity in the finding of In view of above, we do not find any infirmity in the finding of the Ld. CIT(A) on the issue the Ld. CIT(A) on the issue-in-dispute. Accordingly, dispute. Accordingly, the grounds raised by the Revenue are dismissed. raised by the Revenue are dismissed.
In the result, both the appeal In the result, both the appeals filed by the Revenue are s filed by the Revenue are dismissed.