ITO, NEW DELHI vs. M/S. SIGMA PLASTIC INDUSTRIES, NEW DELHI

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ITA 5209/DEL/2016Status: DisposedITAT Delhi18 September 2019AY 2012-132 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that excise duty refund and interest subsidy are profits derived from the industrial undertaking, as they have a direct nexus with manufacturing activities. This decision was based on precedents from the Delhi High Court and the Supreme Court.

What were the facts?

The assessee, a plastic manufacturing unit in Jammu & Kashmir, received an excise duty refund and interest subsidy from the state government. The revenue argued these were not derived from the industrial undertaking for Section 80IB deduction.

What were the issues?

Whether excise duty refund and interest subsidy are income derived from an industrial undertaking and eligible for deduction under Section 80IB of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 80IB

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI

Before: Sh. Amit ShuklaDr. B. R. R. Kumar

Hearing: 18.09.2019Pronounced: 18.09.2019

ORDER

Per Dr. B.R.R. Kumar, Accountant Member:

1.

The present appeal has been filed by the revenue against the order of the ld. CIT(A)-14, New Delhi dated 22.07.2016.

2.

Following grounds have been raised by the assessee: “1. On the facts and circumstances of the case and in law, the ld. CIT (A) is not justified in allowing the deduction u/s 80IB on Excise Duty Refund of Rs.81,04,941/- and interest subsidy of Rs.4,79,959/- by holding that these incomes were derived by the industrial undertaking, without appreciating the findings of the AO.

2. On the facts and circumstances of the case and in law, the ld. CIT (A) is not justified in holding that the Excise Duty Refund and interest subsidy are capital receipt and directed the AO to reduce the same from profit of the undertaking as well as from the deduction claimed u/s 80IB of the Act ignoring the fact that the assessee had shown the Excise duty refund and interest subsidy as Revenue receipt reflected in the profit and loss account.”

3. The only issue taken up by the revenue is whether excise duty refund and interest subsidy can be treated as income derived by the industrial undertaking and eligible for Section 80IB of the Act or not.

2 Sigma Plastic Industries 4. Facts of the issue are that the firm Sigma Plastic industries is a partnership concern and is having its Head Office at Delhi and manufacturing unit at IGC, SIDCO Industrial Area, Phase 1, Samba, Jammu & Kashmir. The firm has been manufacturing plastic compounds, PVC compounds and varieties of TPR compounds which are further used in manufacturing activities of pipe industries, rubber industries and quire industries. During the year under consideration, the company received the excise refund of Rs.81,04,941/- and interest subsidy of Rs.4,79,959/- as are incentive from Government of Jammu & Kashmir.

5.

At this juncture, we find that this issue has been examined by various Courts in a number of cases and came to a conclusion that the excise refund and interests subsidy can be treated as profits derived from industrial undertakings in view of the direct nexus with the manufacturing activities. Reliance is placed on the judgment of Hon’ble High Court of Delhi in the case of CIT vs Dharmapal Prem Chand 221 CTR 133 and judgment of Hon’ble Apex Court in the case of Meghalaya Steels Ltd. 356 ITR 235. Keeping in view, the judgment of the Apex Court, the appeal of the revenue is hereby dismissed.

6.

In the result, the appeal of the Revenue is dismissed. (Order Pronounced in the Open Court on 18/09/2019).

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