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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI RAJENDRA, AM & SHRI AMARJIT SINGH, JM
आयकर अपील सं/ 4374/Mum/2015 (िनधा�रण वष� / Assessment Year: 2011-12 & 2012-13) बनाम/ Dy. Commissioner of M/s. Dicitex Furnishings Income Tax 9(3)(1) Ltd. Vs. 301-B, 3rd Floor, 418, Aayakar Bhavan, 4th Floor, M.K.Marg, M Building, Mumbai – 400 020 Palm Court Complex, Malad Link Road, Malad – West, �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAACD7780R (अपीलाथ� /Appellant) (��थ� / Respondent) .. Revenue by: Shri Rajguru M. V. Assessee by: Shri Hariom Tulsiyan & Shri Rahul Bagaria सुनवाई की तारीख / Date of Hearing: 24.03.2017 घोषणा की तारीख /Date of Pronouncement: 24.03.2017 आदेश / O R D E R PER AMARJIT SINGH, JM:
The revenue has filed the above mentioned appeals against the order dated 03.12.2014 for the A.Y.2011-12 and 23.04.2015 for the A.Y.2012-13 passed by the Commissioner of Income Tax (Appeals)-16, Mumbai [hereinafter referred to as the “CIT(A)”].
&4374/M/2015 A.Y.2011-12 & 2012-13
The revenue has raised the following grounds:-
“1. Whether on the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by the AO on account of interest subsidy amounting to Rs.1,04,54,061/- treating the same as Capital receipt by relying on the Supreme Court decision in the case of Sahney Steel and Press Works Vs. CIT (228 ITR 253 (SC)), without countering the findings of the A.O. in para 5.5 of the Assessment order that assessee had received subsidy in the form of 5% reduction in the rate of interest and interest being a revenue expenditure allowable under the IT Act, any subsidy relating to interest is also to be treated as revenue item.
2. The appellant craves leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal
at any time before or at the time of hearing of the appeal.
3. The appellant prays that the order of the ld. CIT(A)-16, Mumbai on the above grounds be set aside and that of the assessing officer be restored.”
3. The brief facts of the case are that the assessee company filed the return of income for the A.Y.2011-12 on 29.09.2011 declaring total loss to the tune of (-)Rs.34,15,123/-. The return was processed u/s.143(1) of the Income Tax Act, 1961 (in short “the Act”). The case was selected for scrutiny. Thereafter notice u/s.143(2) of the Act was issued on 31.07.2012 which was served upon the assessee. Thereafter, the case was assigned to the present Assessing Officer by virtue of letter no.CIT-8/Assignment of cases/2013-14 dated 11.07.2013 by the CIT-8. Subsequently, fresh notice u/s.142(1) of the Act was issued alongwith a detailed questionnaire and the same was served upon the assessee. During the year under consideration, the assessee company was engaged in the primary business of manufacturing and trading of cloth and yarn. During the year under assessment, it was observed by the Assessing Officer that the assessee has &4374/M/2015 A.Y.2011-12 & 2012-13 availed technology upgradation fund scheme (hereafter referred as TUFS) formulated by the Government of India and received interest subsidy of Rs.1,04,54,061/- which was claimed as capital receipt by transferring the same to the Capital Reserve account of TUF interest. The notice was given to the assessee asking to explain why interest subsidy of Rs.1,04,54,061/- should not be treated as revenue receipt instead of capital receipt. Thereafter, the Assessing Officer relied upon the number of authorities mentioned in the assessment order and treated the TUFS to the tune of Rs.1,04,54,061/- as revenue receipt and assessed the income to the tune of Rs.70,38,940/-. Book profit u/s.115JB of the Act was assessed to the tune of Rs.83,66,337/-. The assessee was not satisfied with the order passed by the Assessing Officer, therefore, filed an appeal before the CIT(A) and the CIT(A) treated the TUFS to the tune of Rs.1,04,54,061/- as capital receipt. Hence feeling aggrieved the revenue has filed the present appeal before us.
ISSUE NO.1:-
Under this issue, the revenue has challenged the treatment of subsidy of Rs.1,04,54,061/- as capital receipt under the TUFS formulated by the Government of India. The learned representative of the revenue has argued that the CIT(A) has treated the said subsidy as capital receipt without counter finding of the Assessing Officer mentioned in para No.5.5, therefore, the finding of the CIT(A) on this issue is wrong against law and facts which is liable to be set aside. However, on the other hand learned representative of the assessee has placed reliance on the order passed by the CIT(A) in question. Before going further, it is necessary to advert the finding of the CIT(A) on record:- &4374/M/2015 A.Y.2011-12 & 2012-13
“4. After careful perusal of the assessment order and written submissions of the A/R of the appellant it has been observed that the issue is directly covered with the judgement of Punjab & Haryana High Court in the case of CIT Vs. Sham Lal Bansal (2011) 11 taxman.com 369 as the issue before the High Court was that whether subsidy received for repayment of loan taken for building and plant and machinery under TUFS scheme of Govt. is a capital or revenue receipt. Their lordship of Hon’ble Punjab & Haryana High Court has held while relying on the judgment of Hon’ble Supreme Court in the case of Ponni Sugar & Chemicals Ltd. (2008) 306 ITR 392 that the subject subsidy is a capital receipt. Hence, respectfully following the judgment of Sham Lal Bansal and Ponni Sugar & Chemicals Ltd. discussed supra it is held that the subsidy received by the appellant for repayment of loan in a capital receipt. The grounds of appeal no.1 being the only grounds of appeal is treated as allowed.”
5. On appraisal of the above mentioned findings, it is clear that the CIT(A) has passed the order on the basis of the finding of the judgment of Punjab & Haryana High Court in the case of CIT Vs. Sham Lal Bansal (2011) 11 taxman.com 369 has held while relying on the judgment of Hon’ble Supreme Court in the case of Ponni Sugar & Chemicals Ltd. (2008) 306 ITR 392 that the subsidy received for payment of loan taken for building and plan and machinery under TUFS scheme of the Government was a capital receipt. The Hon’ble Punjab & Haryana High Court has also &4374/M/2015 A.Y.2011-12 & 2012-13 relied upon the finding of the Hon’ble Supreme Court in the case of Ponni Sugar & Chemicals Ltd. (2008) 306 ITR 392. Subsequently, in case of the assessee’s own case the Hon’ble Income Tax Appellate Tribunal, Mumbai bench has also gave the finding in for A.Y.2012- 13 and ITA No.2147/Mum/2012 for A.Y.2011-12 dated 23.09.2016 in which the interest subsidy under the TUFS has treated as capital receipt. In an another case decided by the Hon’ble Income Tax Appellate Tribunal in ITA No.5644/Mum/2010 and ITA No.296&4154/Mum/2012 for A.Y.2005- 06, 2007-08 and 2009-10 dated 23.12.2015 in case titled as M/s. SVG Fashions Ltd. (Formerly known as Deepak Suitings Limited) Vs. DCIT 4(3), Mumbai, it is specifically held that the interest subsidy granted under TUF scheme was capital in receipt. In view of the said circumstances, we are of the view that the CIT(A) has passed the order in question judiciously and correctly which is not required to be interfere with at this appellate stage. Hence this issue is decided in favour of the assessee against the revenue.
ISSUE NO.2 & 3:-
Issue no.2 & 3 are formal in nature which nowhere require any adjudication.
In the result the appeal filed by the revenue is hereby Dismissed.
ITA NO.4374/MUM/2015:-
The revenue has raised the following grounds:- &4374/M/2015 A.Y.2011-12 & 2012-13 “1. Whether on the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by the AO on account of interest subsidy amounting to Rs.1,29,19,397/- treating the same as Capital receipt by relying on the Supreme Court decision in the case of Sahney Steel and Press Works Vs. CIT (228 ITR 253 (SC)), without countering the findings of the A.O. in para 5.5 of the Assessment order that assessee had received subsidy in the form of 5% reduction in the rate of interest and interest being a revenue expenditure allowable under the IT Act, any subsidy relating to interest is also to be treated as revenue item.
2. The appellant prays that the order of the ld. CIT(A)-16, Mumbai on the above grounds be set aside and that of the assessing officer be restored.
The appellant craves leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal.”
The brief facts of the case are quite similar to the facts of the case as mentioned in mentioned above, however the figures are different. Since the matter of controversy has already been adjudicated while deciding the issue no.1 in vide which the interest subsidy under TUF scheme formulated by the Government of India has been treated as capital in nature, therefore in view of the observations made in the above said appeal the present appeal is also hereby decided in favour of the assessee against the revenue.
In the result the appeal filed by the revenue is hereby Dismissed. &4374/M/2015 A.Y.2011-12 & 2012-13