TaxTMI 
TaxTMI 
2018 (3) TMI 944
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessment, the A.O. made the disallowance relating to the contribution of group gratuity fund to the LIC of India and completed the assessment. Subsequently, the Principal CIT has taken up the case for revision u/s 263 of the Act and found that the assessee had received a sum of Rs. 32,00,06,767/- consisting of excise duty of Rs. 27,82,86,041/- and interest thereon of Rs. 4,23,14,726/- as excise duty refund during the year under consideration but the assessee has not admitted the same to tax. Therefore, the Ld. PCIT held that the assessment made u/s 143(3) of the Act is erroneous and prejudicial to the interest of the revenue and accordingly issued the notice u/s 263 of the Act calling for the explanation of the assessee. During the revision proceedings, the assessee contested the show cause notice both on jurisdiction as well as on merits. The Ld.AR submitted before the PCIT with regard to jurisdiction that the AO has examined the issue during the assessment proceedings and allowed the deduction, hence there is no case for revision u/s 263 of I.T.Act. The PCIT considered the argument of the assessee, verified the records and held that while completing the assessment, the A.O.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ii. Assessee went on appeal before the Commissioner of Customs and Central Excise and the Ld. Commissioner vide order dated 6.5.2004 set aside the order passed by the Asst. Commissioner and held that the assessee is entitled for consequential relief. The assessee paid excise duty under protest from 25.7.1997 to 10.5.2004 and stopped payment of duty w.e.f. 11.5.2004. iii. The Hon'ble CESTAT vide order dated 12.4.2005 restored the order of the Asst. Commissioner and this order was upheld by the Hon'ble A.P. High Court vide order dated 15.9.2005. However, vide order dated 19.3.2007, the Hon'ble Supreme Court reversed the order of the Hon'ble High Court and CESTAT and upheld the order of the Commissioner, Customs and Central Excise. The review petition filed by the revenue was also dismissed on 19.3.2009. iv. Vide application dated 7.5.2008, the assessee requested for refund of excise duty paid under protest. The assessee requested for refund of Rs. 32,03,97,583/- consisting of Rs. 27, 83,24,027/- towards duty paid by cash and Rs. 4,46,35,804/- towards duty paid through Modvat credit. v. The Dy. Commissioner of Customs, Central Excise vide his order....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e information was disclosed in the return of income in the balance sheet and the A.O. has completed assessment after verification of the books of accounts and complete information filed by the assessee, the A.O. has considered the issue, hence, there is no error committed by the A.O. for revising the proceedings u/s 143(3) of the Act. 6. The assessee had already admitted the said receipt for the assessment year 2013-14 immediately after crystalisation of the liability. When the case was picked up for revision u/s 263 of the Act, the assessee had already admitted the income for the assessment year 2013-14 and paid the taxes. Therefore, there is no tax effect and the incidence is tax neutral, hence, argued that assessing officer was justified in accepting the contention of the assessee that the amount received during the financial year 2010-11 was in the nature of liability and the same assumed the character of income only in the year 2012-13 relevant to the A.Y. 2013-14. The Ld. A.R. further submitted that the Ld Principal Commissioner of Income Tax is not correct in placing reliance in the case of Polyflex (I) Ltd. (supra) of Hon'ble Supreme Court. The issue in the Polyflex (....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ders of the authorities below. In this case, the assessee had received the refund of Rs. 32,06,00,767/- during the financial year 2010-11 relevant to the assessment year 2011-12 in pursuance of the order of CESTAT. The Asst. Commissioner of Central Excise passed the order on 29.4.2010 holding that the assessee is otherwise eligible for refund but the assessee is not entitled to the refund since the assessee has not passed on the duty burden to the tax payers. Therefore, the Dy. Commissioner of Customs and Central Excise has ordered that the amount should be credited to the consumer welfare fund established u/s 12C of the Central Excise, 1944,hence, the dispute is not settled with the order of the CESTAT and the same is attached with the liability to pay the same to Consumer welfare fund. Since the revenue has preferred the appeal before the Hon'ble High Court of Andhra Pradesh and subsequently agitated the matter before the Hon'ble Supreme Court the dispute with regard to the entitlement of refund remained unsettled and continued till the matter was settled by Hon'ble Supreme Court in April, 2012 relevant to the assessment year 2013-14. The assessee has transferred the central exci....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e made, the making of such a provision by the assessee appears to be justified more so when the assessee had recognized gain as well on such project during this year itself. This appears to be in consonance with principle of matching cost and revenue as well. However, in the projected scenario of this case, after taking stock of the entire situation, we are of the opinion that it is not necessary to conclusively answer the aforesaid questions formulated. It is because of the reason that we find that the entire exercise is revenue neutral. It may be pointed out that it is a matter of record that against the provision of Rs. 139 lakhs, the assessee had to actually incur expenditure of Rs. 218.03 lakhs, i.e., more than the provision made. It is undisputed that the expenditure incurred by the assessee on the project is admissible deduction. The only dispute that the Revenue seeks to raise is regarding the year of allowability of expenditure. Considering that the assessee is a company assessed at uniform rate of tax, the entire exercise of seeking to disturb the year of allowability of expenditure is, in any case, revenue neutral. 12. We are reminded of the classic observations....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Builders (2015) 378 ITR 75 with regard to the dispute the year of permissible deductions held as under: "9. So far as the alternative submission made by Mr. Malhotra viz, the Link View Project should have also been brought to tax under the Project Completion Method is concerned, the same does not arise for our consideration as Commissioner in his order dated 27 March 2012 has specifically directed adoption of Percentage Completion Method of accounting to subject the income arising on Link Corner Project to tax. In any view of the matter, the profits on Link Corner Project has been offered to tax and accepted in the subsequent Assessment Year i.e. A. Y. 2008-09. In fact, this Court in CIT Vs. Nagri Mills Co. Ltd. (1958) 33 ITR 681 (Born), has observed as under: "We have often wondered why the IT authorities, in a matter such as this where the deduction is obviously a permissible deduction under the IT Act, raise disputes as to the year in which the deduction should be allowed. The question as to the year in which a deduction is allowable may be material when the rate of tax chargeable on the assessee in two different years is different; but in the case of income o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....preme court settled the issue. Hence, the assessee requires to transfer this amount to consumer welfare fund but not to the income account of the assessee. Therefore, receipt held by the assessee is in fiduciary capacity till such time the issue is finally settled at the level of Hon'ble Supreme Court and he cannot be held to be owner of the asset. Therefore, we hold that in view of the peculiar circumstances exist in the assessee's case by virtue of the order fo the Dy. Commissioner of Customs and Central Excise with regard to the entitlement of the Central Excise refund the same is crystalised in the year of final settlement by Hon'ble Supreme Court, accordingly we hold that the assessee has rightly offered the central excise refund as income for the assessment year 2013-14 and the order of the Commissioner of Income Tax is unsustainable. Accordingly, we set aside the order of the Principal Commissioner of Income Tax passed u/s 263 of the act and allow the appeal of the assessee. ITA No.239/Vizag/2017: 12. The assessee filed return of income in this case for the assessment year 2011-12 on 30.9.2011 and the assessment was completed u/s 143(3) of the Act by an order dated ....