D.C.I.T.,CIRCLE-3(1), KOLKATA, KOLKATA vs. M/S BRAHMAPUTRA CARBON LTD., KOLKATA

This appeal by the revenue against the order dated 29.07.2016 passed by the CIT(A) – 1, Kolkata for assessment year 2011-12.

The only issue is to be decided as to whether the CIT(A) is justified in allowing the deduction u/s 80IC of the Act in the facts and circumstances of the case.

The ld. DR relied on the order of AO.

The learned AR submits that the issue in question is regarding the excise duty refund is claiming allowance under section 80IC of the Act. The learned AR submits the issue is covered in assessee’s own

We find that the issue is covered by the order of this Tribunal in assessee’s own case, the relevant portion in para no 8 and 9 at page 30 and 31 of Paper Book is reproduced herein below: “8. The next issue in this appeal of assessee is against the order of CIT(A) directing the Assessing Officer to exclude excise duty refund from business income of the assessee while allowing the deduction u/s 80IC of the Act by treating the same as income from other sources. 9. We have heard the rival submissions and gone through facts and circumstances of the case. We find that the Assessing Officer as well as CIT(A) after considering the decision of Hon’ble Calcutta High Court in the case of CIT vs. Andaman Timber Industries Ltd. (2000) 242 ITR 204 (Cal) treated the excise duty refund as not derived from industrial undertaking of the assessee and not eligible for deduction u/s 80IC of the Act. We find that as referred by ld. Counsel for the assessee, this issue is squarely covered in favour of the assessee and against the revenue by the decision of Hon’ble Guwahati High Court in the case of CIT vs. Meghalaya Steels Ltd. (2011) 332 ITR 91(Gau) wherein it has been held as under: “The Central Board of Excise and Customs in its circular dated December 19,2002 clarified that the refund is not on account of excess payment of excise duty but is basically designed to give effect to the exemption and to operationalise the exemption give by the notifications. In that sense, the Central Excise duty refund does not appear to bear the character of income since what is refunded to the assessee is the amount paid under the modalities provided by the Department of Revenue for giving effect to the exemption notifications. There is also nothing to suggest that the assessee has recovered or passed on the excise duty element to its customers. Even assuming the refund does amount to income in the hands of the assessee, it is a profit or gain directly derived by the assessee from its Assessment Year: 2011-12 M/s. Brahmaputra Carbon Ltd. industrial activity. The payment of Central Excise duty has a direct nexus with the manufacturing activity. The issue of payment of Central Excise duty would not arise in the absence of any industrial activity. There is, therefore, an inextricable link between the manufacturing activity, the payment of Central Excise duty and its refund. In the circumstances, we are of the opinion that question no. 2 must be answered in the affirmative in favour of the assessee and against the Revenue.” As the issue is squarely covered in favour of assessee, we allow the claim of assessee. This ground of assessee’s appeal is allowed.”

In view of the above, we find no infirmity in the order of CIT(A). Therefore, grounds raised by the revenue is dismissed.

In the result, the appeal of the revenue is dismissed. Order Pronounced in the Open Court on 23rd March, 2018.