AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (7) TMI 1476
X X X X Extracts X X X X
X X X X Extracts X X X X
.... given in form of excise duty rebate to be used for repayment of loan taken for purchase of plant and machineries, whereas in assessee's case the issue pertains to the receipt of certain percentage as interest subsidy incentive. Revenue is placing reliance on Sahney Steel & Press Works Ltd vs CIT (SC) (1997) 228 ITR 253 and The JCIT vs. Colourman Dyechem Pvt. Ltd. (Gujarat HC)2015 ITL 1036. (iii) Whether on the facts and circumstances of the case and in law, Ld. CIT(A) erred in giving relief to the assessee without appreciating the fact that the Finance Bill 2015 has been enacted to further enlarge the scope of the definition of 'Income' by inserting clause (xviii) to Sec. 2(24) to provide that any subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement received from the Central Government or State Government or any authority or body or agency in cash or kind shall be treated as income of the assessee. As evident, the revenue is aggrieved by the fact that certain subsidy received by the assessee has been held by Ld. CIT(A) to be capital receipt not chargeable to tax. 1.2 The Ld. Authorized Representative for Assessee (....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y from AY 2016-17. Aggrieved, the revenue is in further appeal before us. 3. We find that Ld. CIT(A) has followed appellate orders for AYs 2012-13 to 2014-15 while adjudicating the issues. The revenue challenged the appellate orders for AYs 2012-13 to 2014-15 before this Tribunal vide ITA Nos.6197 to 6199/Mum/2017 common order dated 07/09/2020 wherein the appeals of the revenue were dismissed by the coordinate bench with the following observations: - 3.3. We find from the above that the ld. CIT(A) had categorically made it clear that the aforesaid subsidies were given to the assessee for promoting capacity expansion, globalization of textile trade and employment generation and would be squarely governed by the ratio decidendi laid down by the Hon'ble Supreme Court in the case of Ponni Sugars & Chemicals Ltd. vs. CIT reported in 306 ITR 392 and accordingly, held that the subsidies received by the assessee in the instant case would be capital receipts not chargeable to tax. We find that the ld. CIT(A) had also observed that by this treatment of subsidy as capital receipts, the assessed income would become below returned income which is permissible as the legitimate cla....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ere not contested before lower authorities. For the same, the assessee has also preferred an application under Rule-27 of the Appellate Tribunal Rules. In this application, the assessee has raised additional grounds of appeal seeking similar relief with respect to issues which were not contested before lower authorities. Issue of Condonation of Delay 5.1 The registry has noted a delay of 633 days in the cross-objection, the condonation of which has been sought by the assessee on the strength of condonation petition which is supported by the affidavit of the director of the assessee. During hearing, Ld. AR submitted that the notice of appeal filed by the Department was received on 06/11/2019 which is evident from the acknowledgement of the appeal filed by the department. The Ld. AR further submitted that after receipt of notice, the cross-objection was filed by the assessee on 05/01/2021. However, due to inadvertent error, while filing the memorandum of cross-objection, the date of receipt of notice was incorrectly mentioned as 14/03/2019 as a result of which the period of delay was incorrectly determined as 633 days. Considering the correct date as 06/11/2019, the period of d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....was sent to the tax consultant for further advice / necessary action. In the meantime, the department filed an appeal against appellate order. At that point of time, the regular tax consultant advised that there was no action required to be taken since the appellate order was in assessee's favor. However, later on, during March, 2020 and just before the period of Covid-19 Pandemic started, the assessee had to meet his counsel in respect of its group concern's case. At that time, he advised that a decision was rendered by Hon'ble Bombay High Court on 28/02/2020 in the case of Sesa Goa v. JCIT (117 taxmann.com 96) wherein the amount of education-cess paid by the assessee was held to be an allowable deduction. On further perusal of the relevant documents, it was also noted that over and above the various subsidies received and disputed in the impugned order by the Ld. Assessing Officer, even the incentives under Focus Market Scheme (FMS) Scheme were taxed as revenue receipt though the same represented capital receipt not chargeable to tax. The counsel also brought to the notice of the respondent the decision of Hon'ble Rajasthan High Court in the case of Pr. CIT Vs. Nitin Spinners Ltd....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y the assessee. It was the submission of Ld. CIT-DR that it was only after the favorable decision rendered by the Hon'ble Courts, the assessee decided to agitate the issues in the cross-objections. The Ld. CIT-DR submitted that the facts of all these issues are not available on record and therefore, the same ought not to have been admitted by the Bench. The Ld. CIT-DR also submitted that it is the duty of the assessee to explain the delay and that the discretion to condone the delay should be exercised judicially. There should be a sufficient cause for condonation of delay and the same should reflect bona-fide of the assessee, which are not present in this case. The assessee has to prove due care, attention and diligence and should demonstrate that the delay was beyond its control. For the same, Ld. CIT-DR referred to the decision of Hon'ble Madras High Court in Madhu Dadha V/s ACIT (317 ITR 458) to support the contention that there is a requirement of sufficient cause to explain the delay. Reliance has similarly been placed on various other judicial pronouncements. 5.5 The Ld. AR, on the other hand, submitted that the decisions as referred to by Ld. CIT-DR would not be applicab....
X X X X Extracts X X X X
X X X X Extracts X X X X
....solely because as per the advice given by tax consultant, no fruitful purpose would have been served in view of the adverse decision of the Hon'ble Bombay High Court. The appeal was filed only due to subsequent decision of Hon'ble Apex Court reversing the decision of Hon'ble Bombay High Court. On these facts, the Hon'ble Tribunal condoned the delay stating that the delay in filing the appeal was solely due to bona-fide and genuine belief and no mala-fide intentions were involved. On similar facts, the delay was also condoned by the Hon'ble Tribunal in the case of National Bank for Agriculture and Rural Development v. Addl. CIT {ITA No. 5310/Mum/2010 dated 30/08/2019}. 5.7 The Ld. AR drew attention to the observations of Hon'ble Supreme Court in the case of N. Balakrishnan v. M. Krishnamurthy (7 SCC 123) as under: - "11. Rule of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. the object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation fixes a life-span for such legal remedy for the redress of the l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....if the explanation rendered by him does not smack of mala-fides or it is not put forth as part of the dilatory strategy. 5.8 The Ld. AR also referred to the following guiding principles laid down by Hon'ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji & Ors. (167 ITR 471): - "It is common knowledge that this court has been making a justifiably liberal approach in matters instituted in this court. But the message does not appear to have percolated down to all the other courts in the hierarchy. And such a liberal approach is adopted on principle as it is realised that: 1. Ordinarily a litigant does not stand to benefit by lodging an appeal late. 2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. 3. 'Every day's delay must be explained' does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational, common sense and pragmatic manne....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as received by the assessee on 06/11/2019 as reflected on the acknowledgement of filing of the appeal provided to the assessee. In the absence of any contrary record / evidence, the said submission is to be accepted. Counted from this date, the cross-objection was required to be filed by the assessee by 05/12/2019 as against actual filing date of 05/01/2021. Counting from this date, the period of delay would be 397 days. 7. So far as the period of 297 days (15/03/2020 to 05/01/2021) is concerned, the same is certainly the period when the whole country was in lockdown state due to adverse situation arising out of Covid-19 Pandemic. Taking cognizance of the same, Hon'ble Apex Court vide suo-moto writ petition (Civil) No. 3/2020 dated 23/03/2020 held that the period of limitation in all the proceedings, irrespective of the limitation prescribed under the general law or special laws whether condonable or not, shall stand extended w.e.f.15/03/2020 till further orders. In terms of the aforesaid order of Hon'ble Supreme Court, as extended from time to time, the period from 15/03/2020 till 14/03/2021 would stand excluded. Therefore, delay on part of the assessee in filing the cross-o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....djusted with General Reserve while computing tax liability under the provision of Section 115JB of the Act. 5. On the facts and circumstances of the case, the respondent prays that the Ld. CIT(A) ought to have allowed the disallowance made u/s 14A of the Act. 9.2 The Ld. AR, on the strength of various subsequent judicial pronouncements rendered by Hon'ble High Courts, submitted that the above claims are allowable to the assessee and therefore, the same may be allowed after verification by lower authorities. The Ld. AR also pleaded that there was no bar on the appellate authorities to entertain a new claim of the assessee during appellate proceedings as per the decision of Hon'ble Supreme Court in National Thermal Power Corporation Ltd. V/s CIT (1998 229 ITR 383) as well as the decision in Goetz India Limited V/s CIT (284 ITR 323). The Ld. AR submitted that since the relief is being sought on the basis of subsequent favorable decisions, these grounds could not have been raised earlier. The Ld. CIT-DR has opposed admission of additional grounds at this stage. 9.3 We are of the considered opinion that as per the ratio of cited decisions, there is no bar on the appellate....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eference to the decision of the Apex Court in Addl. CIT v. Gurjargravures (P.) Ltd. [1978] 111 ITR 1, and held that it does not prohibit the raising of an additional ground before the appellate authority, when the ground so raised could not have been raised before the Assessing Officer or the ground now becomes available in view of changed circumstances such as a decision of a Court allowing a particular deduction. 23. Therefore, before an additional ground is allowed to be raised, the appellate authority must be satisfied that the ground raised could not have been raised earlier for good reasons. The underlying basis for allowing the raising the additional ground in the case of Ahmedabad Electricity Co. Ltd. (supra) was the subsequent decision rendered by this Court in Amalgamated Electricity Co. Ltd. (supra) when appeal was pending. As held by the subsequent decisions of the Apex Court in National Thermal Power Corpn. Ltd. (supra), a judicial decision when an appeal is pending will entitle raising of additional ground. 24. In any view of the matter, the aforesaid decision does not deal with the situation which arises for consideration in this case viz. relying u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion 80IA of the Act for subject assessment year during the proceedings before the Assessing Officer and the CIT(A). Therefore, in the above facts, the view taken by the Tribunal in not allowing the appellant to raise additional ground in appeal is in line with the decision of the Apex Court in Gurjargravures Pvt. Ltd. (supra), National Thermal Power Corpn. Ltd. (supra) and Jute Corporation of India Ltd. 26. None of the decisions cited by the appellant would render the decision of the Supreme Court in Gurjargravures Pvt. Ltd. (supra), read with Jute Corpn. of India Ltd. and National Thermal Power Corpn. Ltd. (supra) inapplicable to the present facts. 27. There can be no dispute that whether or not to allow an additional ground to be raised before the appellate authority is to be decided by the appellate authority in exercise of its discretion considering the facts and circumstances of the case before it. Where only a pure question of law arises from facts which are already on record, then there is no reason why the appellate authority should not consider the question of law so as to determine the correct tax liability of an assessee in accordance with law. However....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0.2 We concur that this issue is covered by the cited decision of jurisdictional High Court. Therefore, Ld. AO is directed to verify the claim of the assessee and allow the deduction in terms of the cited decision. This ground stand allowed for statistical purposes. 11. Ground No.2 : Exclusion of export-incentive received under FMS scheme not liable to tax in computing the tax liability under normal provision and under section 115JB of the Act. 11.1 The Ld. AR has submitted that the assessee has received export incentives under the Focus Market Scheme (FMS) issued by Ministry Of Commerce & Industries, Directorate General of Foreign Trade. The copy of the said scheme has been enclosed in the paper-book. The Ld. AR submitted that the scheme was floated with the objective to off-set high freight cost and other externalities to select international market with a view to enhance India's export competitiveness in these countries. The exporters were therefore, entitled to duty credit equivalent to 3% of the F.O.B. value of exports. It is submitted that the said receipt is in the nature of capital receipt and that the same cannot be brought to tax as income of the assessee as per ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....owed for statistical purposes. 13. Ground No.4 : Adjustment of depreciation due to change in the method of useful life under with General Reserve while computing tax liability under the provision of Section 115JB of the Act. 13.1 In this ground, the assessee has prayed that while computing the book profits, deduction should be granted on account of depreciation due to change in the method of useful life which was adjusted against general reserves. It has been submitted that pursuant to the introduction of Companies Act, 2013 in place of the erstwhile Companies Act, 1956, the assessee was required to re-compute the quantum of depreciation and the written down value of the various assets in accordance with the Companies Act, 2013. Upon re-computation of written down value (WDV) of the assets as per Companies Act, 2013, the excess amount of WDV was adjusted against the general reserves in the balance sheet of the assessee (as evident from assessee's balance sheet on record). The perusal of Note No.2 of the Balance Sheet (Page 11 of the paper-book) would show that depreciation impact due to change in the method of useful lives amounting to Rs. 182 Lacs was adjusted against the ge....