TRISHUL HI -TECH INDUSTRIES,GUWAHATI vs. DCIT, CENTRAL CIRCLE-2, PATNA

The only issue raised in the appeal by the assessee is against the order of Ld. CIT(A) upholding the assessment order wherein the AO has denied deduction claimed u/s 80IC of the Act in respect of aggregating sums of Rs. 7,17,27,768/- in respect of transport subsidy, central interest subsidy, power subsidy and central excise refund on the ground that the same were not derived from manufacturing activities and thus the deduction claimed is totally illegal, illegitimate.

The facts in brief are that the assessee is engaged in the business of manufacturing M.S. Ingots, Bars and Section etc in the North Eastern Region and this is the 4th year of manufacturing. The assessee has claimed deduction u/s 80IC of the Act in respect of profit and gains derive from its industrial undertaking on the same lines as claimed in the earlier years. The case of the assessee was selected for scrutiny and statutory notices were duly issued and served upon the assessee during the assessment proceedings. During the assessment proceedings, the Ld. AO observed upon examination of books of accounts that the assessee has claimed deduction in Trishul Hi-Tech Industries A.Y. 2006-07 respect of subsidies aggregating to Rs. 7,17,27,768/- on account of transport subsidy, central interest subsidy, power subsidy and central excise refund. The AO noted in the assessment order that the similar claim in respect of subsidies was rejected in earlier assessment years by treating the same as revenue receipts to which the provisions section 80IB/80IC of the Act were not applicable and the appeal of the assessee was also dismissed by ld. CIT(A) by following the decision of Apex Court in the case of Sahney Steel and Press Works Ltd. As reported in 228 ITR 253 (SC). The appeal of the assessee for the instant year was also dismissed by the Ld. CIT(A) by giving the same reasons that the subsidy amounting to Rs. 7,17,27,768/- does not qualify u/s 80IC of the Act.

At the outset the ld. AR submitted that the issue in respect of transport subsidy, central interest subsidy, power subsidy and central excise refund has been settled and decided in favour of the assessee in assessee’s own case in & 215/Gau/2007 for A.Y. 2003-04 & 2004-05 and in ITA No. 167/Gau/2008 for A.Y. 2005-06 vide dated 18.11.2013 by the coordinate bench of the Tribunal. The ld. AR submitted that the coordinate bench has followed the decisions of Guwahati High Court in the case of CIT vs Meghalaya Steels Ltd. in ITA No. 07/2010 reported in 356 ITR 235(Guh) . The Ld. AR submitted that the said decision of Guwahati High Court has been affirmed by the Hon’ble Apex Court in the case of CIT vs Meghalaya Steels Ltd. reported in (2016) 383 ITR 217. The Ld. AR, therefore, prayed that since the issue has been settled by the Hon’ble Apex Court by holding that subsidies were rin the nature re-imbursement to the assessee for elements of cost relating to manufacture or sale of their products and therefore was having direct nexus with the cost incurred by the assessee. The ld AR , therefore, prayed that the appeal of the assessee may kindly be allowed. The Ld. DR, on the other hand, relied on the order of the authorities below.

After hearing rival contentions of the parties and perusing the material on record including the decision of the coordinate bench from A.Y. 2003-04 to 2005-06

In the result, the appeal of assessee is allowed. Order is pronounced in the open court on 16th February, 2022.