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2021 (3) TMI 1160 - AT - Income TaxGovernment subsidy receipt - revenue or capital - HELD THAT - Since no change of facts or law could be pointed out by the Revenue on this issue which has been decided in assessee s own case for A.Y 2011-12 wherein the Ld. CIT(A) has held that sales tax incentive enjoyed by the assessee was for setting up industry in the backward areas in the State and hence it is a Capital Receipt not taxable as per the provisions of the Act and the case law relied by the A.O in the case of Sahany Steel Press Works Limited 1997 (9) TMI 3 - SUPREME COURT has also been considered by the Tribunal in the above case of assessee on this issue, we respectfully follow the order of the Tribunal in assessee s own case for A.Y 2011-12 , we confirm the order of Ld. CIT(A) and dismiss both grounds of appeal. Employee s contribution to PF/ESI which was not paid before the due date - HELD THAT - We note that the Ld. CIT(A) allowed the grounds of appeal of the assessee on this issue by relying on the decision of the Hon ble Jurisdictional High Court in the case of Vijay Shree Ltd. 2011 (9) TMI 30 - CALCUTTA HIGH COURT - We confirm the order of the Ld. CIT(A) and dismiss the ground of the Revenue. Interest on delay payment of excise duty and payment of service tax - HELD THAT - We note that he Ld. CIT(A) has given relief to the assessee by relying on the decision of the Tribunal in the case of Narayani Ispat Pvt. Ltd. 2017 (10) TMI 67 - ITAT KOLKATA which he did so correctly. And since the relief has been given by relying on the ratio of decision of the Tribunal in the case of Narayani Ispat Pvt. Ltd. (supra), we find no infirmity in the order of the ld. CIT(A), therefore, we confirm the order of the Ld. CIT(A) and dismiss the grounds of Revenue. Delay payment of lease rent - HELD THAT - Since Revenue could not demonstrate that the interest on delay payment of lease rent of Haldia plant was in the nature of penalty or an infraction of law, the Ld. CIT(A) s view was plausible view and we find no infirmity in the order of the Ld. CIT(A) and so we confirm the order of the Ld. CIT(A), therefore, this ground of the Revenue is dismissed. Prior period expenses disallowance - CIT-A deleted the addition - HELD THAT - According to the assessee, all these expenses are genuine expenditure otherwise deductible from the income of the assessee. It is also noted that for the AY 2013-14 AY 2014-15 the assessee has paid tax under MAT and the tax rate under MAT is same for both the year, hence it is noted that the assessee will not gain any benefit by deferring the tax liability. The assessee had relied on the decision of Hon ble Delhi High Court in the case of CIT vs. Vishnu Industrial Gases (P) Ltd. 2008 (5) TMI 636 - DELHI HIGH COURT and CIT vs. Shri Ram Pistons Rings Ltd. 2008 (5) TMI 631 - DELHI HIGH COURT It was held by the Hon ble Delhi High Court that unless it is noticed that the assessee has deliberately claimed prior period expenses by deliberate deferment to reduce tax liability in the subsequent years, there is no reason to disallow the prior period expenses in a summary manner. In the light of the aforesaid discussion, we find no infirmity in the order of the Ld. CIT(A) and we confirm the order of the Ld. CIT(A), therefore, this ground of the Revenue is dismissed.
Issues Involved:
1. Treatment of government subsidy as capital or revenue receipt. 2. Allowability of employee’s contribution to PF/ESI paid after the due date. 3. Allowability of interest on delayed payment of excise duty and service tax. 4. Allowability of prior period expenses. 5. Admission of new grounds under Rule 27 of the Income Tax Appellate Tribunal Rules, 1963. Detailed Analysis: 1. Treatment of Government Subsidy as Capital or Revenue Receipt: - The primary issue was whether the government subsidy of ?43,08,97,000/- received by the assessee should be treated as a capital receipt or revenue receipt. - The assessee received incentives under the West Bengal Incentive Scheme (WBIS) 2004 and the Industrial Investment Promotion Policy (IIPP) 2010-2015 of Andhra Pradesh Government for setting up and expanding industrial units in backward areas. - The Assessing Officer (A.O) treated the subsidy as a revenue receipt, while the Commissioner of Income Tax (Appeals) [CIT(A)] treated it as a capital receipt, not taxable. - The Tribunal upheld the CIT(A)'s decision, referencing the Supreme Court and High Court rulings that subsidies aimed at encouraging capital investment are capital receipts, even if received post-production. - The Tribunal found no change in facts or law from previous years and followed its earlier ruling in the assessee’s own case for AY 2011-12, confirming that the subsidy was a capital receipt. 2. Allowability of Employee’s Contribution to PF/ESI Paid After the Due Date: - The issue was whether the employee’s contribution to PF/ESI paid before the due date of filing the return but after the statutory due date should be allowed. - The CIT(A) allowed the deduction, relying on the jurisdictional High Court’s decision in the case of Vijay Shree Ltd. - The Tribunal upheld the CIT(A)'s decision, noting that the Revenue could not point out any change in facts or law, and confirmed the deduction. 3. Allowability of Interest on Delayed Payment of Excise Duty and Service Tax: - The CIT(A) allowed the deduction of interest on delayed payment of excise duty and service tax, relying on the Tribunal’s decision in Narayani Ispat Pvt. Ltd. - The Tribunal upheld the CIT(A)'s decision, confirming that the interest on delayed payment of excise duty and service tax is allowable as a deduction. 4. Allowability of Prior Period Expenses: - The A.O disallowed prior period expenses of ?3,92,427/-, but the CIT(A) allowed them, noting that the expenses were genuine and crystallized during the relevant year. - The Tribunal upheld the CIT(A)'s decision, agreeing that the expenses were genuine and deductible in the year they were claimed, especially since the assessee paid tax under MAT for both years, resulting in no tax benefit from deferring the expenses. 5. Admission of New Grounds under Rule 27 of the Income Tax Appellate Tribunal Rules, 1963: - The assessee filed a petition under Rule 27 to raise new grounds regarding the waiver of electricity duty and the disallowance under section 14A. - The Tribunal dismissed the petition, stating that Rule 27 allows supporting the CIT(A)’s order on grounds decided against the respondent, but the issues raised were not contested before the CIT(A) and were not purely legal issues. - The Tribunal emphasized its limitations as a statutory body and the necessity for the assessee to have filed an appeal or cross-objection to raise these grounds. Conclusion: - The Tribunal dismissed the Revenue’s appeals, confirming the CIT(A)’s decisions on all grounds. - The Tribunal also dismissed the assessee’s Rule 27 petitions for both assessment years, emphasizing procedural adherence and the necessity for proper appeal or cross-objection filings.
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