TaxTMI 
TaxTMI 
2007 (6) TMI 237
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....e revenue and same are pending before the Hon'ble High Court. 2. Deleting the addition of Rs. 30,25,135 made by the Assessing Officer under section 40A(9) of the Act on account of employees welfare including payments made to the staff recreation clubs, without appreciating the facts that the orders relied upon by him have not been accepted by the revenue and same are pending before the Hon'ble High Court. 3. Law to allow depreciation on water installation, water works and water distribution system at the rate of 25 per cent as applicable to plant and machinery as against 10 per cent. allowed by the Assessing Officer applicable to 'building' as well and tube wells, the water works and water installation system are part of buildings and not 'plant and machinery'. The CIT(A) failed to appreciate that order relied upon by him have not been accepted by the revenue and same are pending before the Hon'ble High Court. 4. Deleting addition of Rs. 79,69,280 on account of excess price realized under the Sugar Incentive Scheme, without appreciating the fact that the orders relied upon by him have not been accepted by the revenue and appeal has been filed in ITAT against those orders. ....
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....ited, this appeal may be kept pending. 2.3 The learned counsel opposed the proposal of the learned DR. It was pointed out that in the case of Popular Jewellers, the quantum appeal was pending before the High Court for the same year for which the penalty proceedings came up before the Tribunal. Even in that case, the application of the assessee was not accepted by the High Court. In this case the revenue has challenged the findings of the Tribunal on quantum in earlier years, but the order of the Tribunal has not been stayed by the High Court. Therefore, it will not be appropriate to keep the appeal pending as each year is a separate year. On merits, reliance was placed on the orders of Hon'ble ITAT in ITA Nos. 4426 (Delhi)/2004, 9 (Delhi)/1999 and 3559 (Delhi)/2000 for assessment years 2001-02, 1993-94 and 1996-97 respectively. In the combined order for assessment years 1993-94 and 1996-97 dated 8-7-2005, a copy of which was placed on record, the issue was decided in favour of the assessee by relying on orders in ITA Nos. 4430 (Delhi)/1991, 5696 (Delhi)/1992 and 3926 (Delhi)/1994 for assessment years 1986-87, 1987-88 and 1988-89. This order was followed in ITA No. 4426 (Delhi)/2....
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....fter. Thus, ground is treated as allowed for statistical purpose. 5. Ground No. 3 is against deduction of depreciation at the rate of 25 per cent on water installation, water works and water distribution system as against the deduction of 10 per cent allowed by the Assessing Officer by treating these works as 'buildings'. 5.1 The arguments of the learned DR and the learned counsel for keeping the appeal pending on this issue and deciding the appeal respectively are the same as mentioned in ground No. 1. As mentioned in ground No. 1, we proceed to decide the issue on merits. The learned counsel pointed out that this issue is covered in ITA Nos. 909 (Delhi)/99 and 3599 (Delhi)/2000 for assessment years 1993-94 and 1996-97 in favour of the assessee. Paragraph 22 of that order deals with the controversy at hand. It is mentioned that the issue was decided in favour of the assessee in ITA No. 4430 (Delhi)/1991 for assessment year 1986-87 and while passing that order the Tribunal had relied on an earlier order for assessment years 1984-85 and 1985-86. After considering the issue, it was pointed out that the controversy in assessment year 1984-85 was limited only to bore-well, which ....
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....e Products [2001] 251 ITR 427, in which it was held that the amount of subsidy received as incentive for production or running of an industry was of revenue nature. TheHon'ble Courtanswered this question in favour of the revenue and against the assessee. On the basis of this decision, the case of the learned DR was that since the sale proceeds of the sugar related to stock-in-trade of the assessee, therefore, the excess price realized in view of exemption under the Sugar Incentive Scheme was of revenue nature. He referred to the order of Hon'ble Tribunal, Delhi Bench 'G' in the case of Jt. CIT v. Dalmia Cement (Bharat) Ltd. [2005] 97 ITD 78, being the decision in the case of the assessee. In paragraph 35 of the order, it was mentioned that considering the legal position as enumerated above by theHon'ble Apex Court, we are of the view that the learned CIT (Appeals) erred in not determining the further question as to whether and to what extent the view held by him would affect the assessee's tax liability. It was further mentioned that the view of the Assessing Officer was that the amount in question represented trading receipt of the assessee. He was not faced with the question whet....
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....essment year 1972-73 was fixed at Rs. 120.30 per quintal. On a Writ Petition, the Hon'ble Andhra Pradesh High Court passed an interim order under which the assessee was permitted to sell sugar at the rate prevailing prior to the aforesaid fixation of price. The assessee sold sugar at the rate of Rs. 131 per quintal and thereby collected additional amount of Rs. 14,96,130. The writ petition was finally discussed on18-2-1971and, therefore, the interim order got vacated automatically. However, there was no order that the excess-amount collected by the assessee would be refunded to the purchaser. Thus, the dismissal of the writ petition had the effect that the assessee could not sell sugar at a rate higher than the notified rate as the interim order was vacated. From1-4-1976. The Levy Sugar Price Equalization Fund Act, 1976, came into force which provided that excess amount collected from the purchasers shall be credited to the Fund irrespective of the fact whether such collections were made prior to the enactment or subsequent to it. The ITO treated the impugned amount of Rs. 14,96,130 as the trading receipt for computation of income for assessment year 1972-73. The Tribunal held that....
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....ecedence was the same as that of the order of the Special Bench of the Tribunal. Therefore, it was argued that the order should be followed. It was explained that it will be incorrect to say that the aforesaid order was based upon the decisions of High Courts and the orders of the Tribunal only. In this connection, a reference was made to paragraphs 29 and 30 of the order, in which the assessee had relied upon the decision of Hon'ble Supreme Court in the case of Sahney Steel & Press Works Ltd.; Calcutta High Court in the case of CIT v. Balrampur Chini Mills Ltd. [1999] 238 ITR 445 and the order of the Tribunal, Madras 'A' Bench in the case of Tamil Nadu Sugar Corpn. Ltd. v. ITO [1994] 48 ITD 345. Thus, it was argued that the decision of Hon'ble Supreme Court in the case of Sahney Steel & Press Works Ltd. was also considered by the Tribunal. 7.1 Further, he referred to the Statement of facts filed before the learned CIT(A), in which it was, inter alia, mentioned that the impugned amount was incentive received by it by way of higher free-sale quota of sugar produced by it in its new industrial unit, Ramgarh Chini Mills, Ramgarh, Uttar Pradesh, in accordance with clause 12 of Sugar....
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....bsp; 1.07 0.23 ------------------------------------------------------------- 1997 16.54 2.36 1.87 ------------------------------------------------------------- 1998 13.51 3.03 2.87 ------------------------------------------------------------- 1999 10.48 4.94 3.91 ------------------------------------------------------------- 2000 14.41 8.54 &....
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....the term-loan taken from the Central Financial Institutions out of the realization of sale of such quota. The Hon'ble Court referred to the decision of Hon'ble Apex Court in the case of Sahney Steel & Press Works Ltd., in which it was held that it is not the source from which the amount is paid to the assessee which determines the question whether the subsidy payment was of revenue or capital nature. This question will have to be determined by having regard to the purpose for which subsidy is given. If the subsidy is given for running day-today business, then it is a revenue receipt. However, if it is given to meet the capital cost of the asset, then it is a capital receipt. The facts were that the incentive was given for repayment of loan, which was taken for expansion of plant and machinery, a capital asset. Accordingly, following the decision in the case of Sahney Steel & Press Works Ltd., it was held that the receipt is capital in nature. The learned counsel pointed out that this decision has become final as the revenue has not filed any appeal against the decision of Hon'ble Calcutta High Court. Therefore this issue cannot be agitated by the revenue in any other case also. ....
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....ducts Ltd. [1973] 88 ITR 192, in which it was held that when a court finds that the language of a taxing provision is ambiguous or capable of more than one meanings, then, the court should adopt an interpretation which is favourable to the assessee, more particularly when it is in relation to the levy of a penalty. In view of this decision, his case was that it is not the latest but the favourable decision, which should be followed. 8. In the rejoinder, the learned DR referred to the utilization of the incentives over a number of years which has already been tabulated. It was pointed out that the repayment of loan of Rs. 7.23 crore was towards loan and interest. While there could be some ambiguity in respect of repayment of loan, there is no such ambiguity in respect of payment of interest, which is in the revenue field and, therefore, the incentive to that extent will be in the revenue field. It was reiterated that the decision of Third Member in the case of the assessee did not consider the decision in the case of Sahney Steel & Press Works Ltd. The case of Balrampur Chini Mills Ltd. laid down the test of the purpose for which the incentive is to be used. The order of the Trib....
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....t have utilized the corresponding sale proceeds in any manner it liked. In other words, such sale proceeds were a kind of obstructed receipt to be utilized for a specific purpose of repayment of loan. That was also done by the assessee. Therefore, there was a kind of overriding title of the banks and financial institutions in respect of the impugned receipt in the sense that they were to receive this amount for satisfaction of their debt advanced for purchase of machinery and plant by the assessee. Therefore, it can be concluded that the amount was utilized in the capital field. Needless to say that this view is supported by orders of Tribunal in earlier years as well as decisions in the case of Ponni Sugar & Chemicals Ltd. and Balrampur Chini Mills Ltd. In these cases, the courts had the benefit of arguments from both sides, while the decision in the case of Kisan Sehkari Chini Mills Ltd. was ex parte the assessee. In the case of Vegetable Products Ltd., theHon'ble Courtheld that in case of ambiguity, the same should be resolved in a manner beneficial to the assessee. Therefore, even if the decision of Hon'ble Allahabad High Court is taken as a good law, in view of the contrary de....