THE ASSISTANT COMMISSIONER OF INCOME TAX, SRINAGAR vs. M/S JAMMU & KASHMIR CEMENT LTD, SRINAGAR

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A. No. 629/(Asr)/2016 Assessment Year: 2012-13

Assistant Commissioner of Vs. Jammu & Kashmir Cements Income Tax, Circle-3, Ltd. Nawai Subh Complex, Srinagar Zero Bridge, Srinagar, Kashmir [PAN: AAACJ 6799A] (Appellant) (Respondent)

Appellant by : Sh. A. N. Mishra (D.R.) Respondent by: Sh. R. L. Gupta (Adv.) Date of Hearing: 16.05.2018 Date of Pronouncement: 24.05.2018

ORDER Per Sanjay Arora, AM: This is an Appeal by the Revenue directed against the Order by the Commissioner of Income Tax (Appeals), Jammu ('CIT(A)' for short) dated 19.07.2016, partly allowing the assessee’s appeal contesting its assessment u/s. 143(3) of the Income Tax Act, 1961 ('the Act' hereinafter) dated 20.03.2015 for the Assessment Year (AY) 2012-13.

2 ITA No. 629/Asr/2016 (AY 2012-13) Asst. CIT v. Jammu & Kashmir Cements Ltd. 3. The facts of the case in brief are that the assessee company, returning nil income on 29.09.2012, was observed during the course of the assessment proceedings by the Assessing Officer (AO) to have claimed deduction u/s. 80IB of the Act qua the following incomes, aggregating to Rs.2,07,10,531/-, disclosed per its profit and loss (P&L) account for the relevant year accompanying its return of income:

Particulars Amount (Rs.)

Other Income 5,66,783/-

Interest on FDR 1,85,82,243/-

Interest on Margin Money 1,3,07,169/-

Claim for Insurance 2,54,336/-

The same were clearly not derived from the assessee’s industrial undertaking manufacturing cement. Accordingly, the claim of deduction u/s. 80IB, eligible at 100% of the relevant income, was disallowed qua the said incomes, computing the assessee’s income at Rs.207.11 lacs. Reliance for the purpose was placed by the AO on several decisions, including by the Apex Court and the Hon'ble jurisdictional High Court, in support of his case that the impugned incomes were not derived from the assessee’s industrial undertaking. In appeal, while the ld. CIT(A) agreed with the AO in principle, he held that in-as-much as the assessee had, on account of loss of Rs.1,54,53,278/- from its’ industrial undertaking, i.e., disregarding the impugned incomes credited to the P&L A/c, the disallowance u/s. 80IB is to be reduced by the said amount. The relevant part of his order reads as under: (at pages 6-7 of his order) ‘However, the argument of the appellant that if other income of Rs.2,07,10,531/- are not considered as derived from industrial undertaking and separated from profit derived from

3 ITA No. 629/Asr/2016 (AY 2012-13) Asst. CIT v. Jammu & Kashmir Cements Ltd. industrial undertaking, it would give rise to a loss of Rs.1,54,53,278/- from industrial undertaking which should be allowed to be set off against the other incomes in the nature of interest income, margin money, insurance claim etc. The appellant’s contention seems to be genuine. Therefore, it is held that the addition of Rs.2,07,10,531/- be reduced to Rs.1,54,53,278/- and allowed to be set off against the income earned from the industrial activities. The appellant, therefore, is entitled to get a relief of Rs.52,57,253/-.’ 4. We have heard the parties, and perused the material on record. We are completely unable to understand the Revenue’s grievance. The ld. counsel for the assessee, Shri R.L. Gupta, Advocate, would adduce the assessee’s return of income (copy on record), disclosing a gross total income (GTI) at Rs.52,57,253/-, on which therefore deduction u/s. 80IB had been claimed by the assessee per its return of income. How, we wonder, then, could the Revenue be aggrieved by the impugned order? The assessee having claimed deduction u/s. 80IB only at Rs.52.57 lacs (as stated, on account of loss of Rs.154.53 lacs on the operation of its industrial undertaking), the ld. CIT(A) has sought to restrict the disallowance u/s. 80IB thereto. In fact, as apparent, there has been an omission on the part of the ld. CIT(A) in-as-much as he states of having allowed relief of Rs.52.57 lacs. He having taken cognizance of the set-off of Rs.154.53 lacs (against the impugned incomes of Rs.207.11 lacs), claimed by the assessee and not disputed by AO, the relief in fact allowed by him is for the said amount, i.e., Rs.154.53 lacs. Rather, we cannot help adding that the assessment at Rs.207.11 lacs, i.e., as against at Rs.52.57 lacs, as well as the filing of the instant appeal by the Revenue, can only be depreciated and reveals a perfunctory manner in which the assessments are made, and the appeals preferred, by it. We, accordingly, find no reason for interference, except that the word ‘to’ be read as ‘by’ in the penultimate sentence of the last para, reproduced (supra), and the amount ‘Rs.52,57,253/-‘ in the following sentence be read as ‘Rs.1,54,53,278/-. We decide accordingly.

4 ITA No. 629/Asr/2016 (AY 2012-13) Asst. CIT v. Jammu & Kashmir Cements Ltd. 5. In the result, the Revenue’s appeal is dismissed. Order pronounced in the open court on May 24, 2018

Sd/- Sd/- (N. K. Choudhry) (Sanjay Arora) Judicial Member Accountant Member Date: 24.05.2018 /GP/Sr. Ps. Copy of the order forwarded to: (1) The Appellant: Assistant Commissioner of Income Tax, Circle-3, Srinagar (2) The Respondent: Jammu & Kashmir Cements Ltd. Nawai Subh Complex, Zero Bridge, Srinagar, Kashmir (3) The CIT(Appeals), Jammu (4) The CIT concerned (5) The Sr. DR, I.T.A.T