2023 (3) TMI 1154 - AT - Income Tax

Excise Duty refund as non-taxable under the normal provisions of the Act - claim was not made before the AO but was claimed through additional ground before CIT(A) - as no claim of subsidy as being capital receipt was made before the AO and that CIT(A) given a finding that the facts relating to excise duty subsidy are not available on record, thus CIT(A) was fully justified in denying the claim of the assessee - HELD THAT - We find that the claim of excise duty being capital receipt was not accepted by CIT(A) in view of the fact that no claim was made before the AO and no reasons were furnished by assessee to demonstrate as to what prevented the assessee from raising such claim before the AO. We do not agree with the aforesaid reasoning of CIT(A) for denying the claim of the assessee in view of the facts in the case of CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd. 2012 (7) TMI 158 - BOMBAY HIGH COURT after considering the decision of Hon ble Supreme Court in the case of Jute Corporation India Ltd. 1990 (9) TMI 6 - SUPREME COURT as held that assessee is entitled to raise the additional ground not merely in terms of legal submissions but also legal claim not made in the return filed by it. Appellate authorities have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additional grounds which were available when the return was filed. We are, therefore, of the view that CIT(A) was not justified in not admitting the additional ground and deciding the issue. Claim and quantum of excise duty subsidy - Assessee has neither placed any material on record to demonstrate as to what is the excise duty refund claimed and other relevant details. Further in the absence of any finding on the issue of lower authorities and considering the totality of the aforesaid facts, we are of the view that the issue raised in the present ground needs to be re-examined at the end of CIT(A) - restore the issue back to the file of CIT(A) and direct him to decide the issue afresh in accordance with law. Appeal of the assessee is partly allowed for statistical purposes.

Summary

Issues involved:
The issues involved in the judgment are the disallowance, imposition of tax, and interest with reference thereto, quantification of taxable income, tax liability, claim of Education Cess on Income Tax, claim of Excise duty refund as nontaxable, and the treatment of Excise Duty subsidy as a capital receipt.

Dispute over Education Cess Claim:
The appellant initially raised a ground regarding the claim of Education Cess on Income Tax, which was subsequently withdrawn by the appellant's representative during the proceedings, citing recent statutory amendments. Consequently, this ground was dismissed as not pressed.

Excise Duty Refund Claim:
The primary contention of the appellant was related to the Excise Duty refund claimed as non-taxable under the normal provisions of the Act. The appellant argued that the Excise Duty subsidy should be treated as a capital receipt and not subject to taxation. However, the CIT(A) rejected this claim as the appellant had not raised this argument before the Assessing Officer and failed to provide reasons for not doing so. The CIT(A) also noted the lack of essential facts on record regarding the Excise Duty Subsidy. The appellant challenged this decision before the Tribunal.

Tribunal Decision on Excise Duty Refund Claim:
The Tribunal acknowledged that the claim of Excise Duty subsidy as a capital receipt was not presented before the Assessing Officer but was raised as an additional ground before the CIT(A). The Tribunal disagreed with the CIT(A)'s reasoning for denying the claim, citing legal precedents that allow for the consideration of additional grounds even if not raised initially. The Tribunal concluded that the CIT(A) should have admitted the additional ground and decided the issue accordingly.

Remittance of Issue to CIT(A):
Regarding the claim and quantum of the Excise Duty subsidy, the Tribunal observed that the appellant did not provide relevant details or materials to support the claim. In light of this and the absence of findings from the lower authorities, the Tribunal remitted the issue back to the CIT(A) for fresh examination. The CIT(A) was directed to reevaluate the claim, call for necessary information, and provide both parties with a fair hearing. The appellant was instructed to furnish the required details promptly. Consequently, the Tribunal allowed this ground of the appellant for statistical purposes.

Conclusion:
The Tribunal partially allowed the appeal of the appellant, directing the CIT(A) to re-examine the issue of the Excise Duty subsidy claim as a capital receipt. The order was pronounced in open court on 24.03.2023.