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TMI Blog2018 (3) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - I.T.A.No.223/Vizag/2015 And I.T.A.No.239/Vizag/2017 - - - Dated:- 16-3-2018 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI D. S. SUNDER SINGH, ACCOUNTANT MEMBER For The Appellant : Shri G.V.N. Hari, AR For The Respondent : Shri P.S. Murthy, DR ORDER PER D.S. SUNDER SINGH, Accountant Member: The appeal filed by the assessee is directed against order of the Principal Commissioner of Income Tax (PCIT), Guntur dated 27.3.2015 for the assessment year 2011-12 and the appeal filed by the revenue is against the order of the Commissioner of Income Tax (Appeals)-1 {CIT(A)}, Guntur vide ITA No.80/15-16/CIT(A-1)/GNT dated 31.1.2017. ITA No.223/Vizag/2015: 2. The assessee filed return of income declaring total income of ₹ 9,07,99,872/-. The return was processed u/s 143(1) and the case was selected for scrutiny and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision in the case of Polyflex (I) Limited Vs. CIT (2002) 257 ITR 343 held that the excise duty refund pursuant to the decision of Cegat shall be subject to tax u/s 41(1) of the Act and possibility of refund being set at naught on the future date will not be relevant consideration. Accordingly, held that the central excise duty refund received by the assessee in the year under consideration is taxable receipt for the assessment year 2011-12 and directed the A.O. to pass the consequential order adding the central excise duty refund to the income. 3. Aggrieved by the order of the PCIT, the assessee is in appeal before this Tribunal. During the appeal hearing, Ld. A.R. brought the various facts to our notice leading to excise duty refund to the assessee as under: i. The assessee is an individual engaged in the business of preparation and sale of betel nut. Initially, the assessee classified on 15.9.1995 the product under tariff heading 2107 Betel nut powder known as Supari and paid Central excise duty at applicable rate. Later, on 17.9.1997, the assessee filed a declaration for classification of the product under tariff heading 0801. The Asst. Commissioner of Income Tax, Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue preferred further appeal to the Hon ble High Court of A.P. viii. The order of the CESTAT was upheld by the Hon ble High Court vide order dated 11.8.2011 and the SLP filed by the revenue stood dismissed by the Hon ble Supreme Court on 27.2.2012. ix. After communication of the order of the Hon ble Supreme Court in April, 2012, the assessee transferred in to the profit and loss account, the amount shown initially as liability in the books of accounts. 4. The Ld. A.R. during the appeal hearing argued that the assessee filed its return of income for the assessment year 2011-12 on 30.9.2011 admitting total income of ₹ 9,07,99,870/- and the total tax including interest paid by the assessee was ₹ 2,83,34,307/-. In the financial statement forming part of the return of income, the assessee had disclosed an amount of ₹ 32,06,00,767/- received as payable to CBEC and the assessee had enclosed the copy in paper book page No.6 in the balance sheet. 5. The case of the assessee was taken up for scrutiny and during the assessment proceedings, the A.O. issued notice u/s 142(1) of the Act on 19.7.2013 and then the A.O. asked the complete details with regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... By taking up the case for revision u/s 263 of the Act, the PCIT has directed the A.O. to tax the central excise refund but no direction was given for the assessment year 2013-14 in which the assessee had already admitted the income, which amounts to double taxation of the same amount twice, once in the assessment year 2011-12 and second time in the assessment year 2013-14. The revision sought to be made by the Commissioner of Income Tax is revenue neutral. The income of the assessee both for 2011-12 and 2013-14 is liable to be taxed at the maximum marginal rate and as such tax liability in respect of refund of excise duty is marginal whether it is assessment for the assessment year 2011-12 or 2013-14. The assessee also relied on the decisions of CIT Vs. Triveni Engineering Industries Ltd. 336 ITR 374, CIT Vs. Aditya Builders 378 ITR 75 (Bom) and CIT Vs. Excel Industries (2013) 358 ITR 285 (SC). 7. On the other hand, the Ld. D.R. relied on the orders of the Commissioner of Income Tax passed u/s 263 of the Act and argued that the Commissioner of Income Tax has rightly directed the A.O. to tax the Central excise refund and there is no mistake in the order of the Commissioner of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is not clear whether the assessee is entitled for refund or the assessee has to pass on the benefit to the consumer welfare fund. Therefore, we are of the considered opinion that the assessee becomes absolute owner of the receipt of central excise duty refund only after rendering the judgement by the Hon ble Supreme Court. Hon ble Bombay High Court with regard to the year of allowability of expenditure in the case of Triveni Industries Engineering Limited (2011) 336 ITR 374 (Bom) relied upon by the assessee held as under: 11. After considering the submissions of the counsel on the either side, in the given facts, we are prima fade of the view that arguments of the learned counsel for the assessee to prevail. The learned counsel for the Revenue may be correct in stating the proposition of law, generally. No doubt, unless the expenditure is actually incurred or it accrued in the relevant year, it would not be allowed as deduction. Such a liability has to be in praesenti. However, at the same time, in the given scenario where in relation to the project works undertaken by the assessee, completed contract method of accounting is followed, which is consistent with the account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y now and then, the Department appears to delight in raising points of this character which do not affect the taxability of the assessee or the tax that the Department is likely to collect from him whether in one year or the other. 13. The aforesaid observations of the Bombay High Court were reiterated by this Court in the case of CIT vs. Shri Ram Pistons Rings Ltd. (2008) 220 CTR (Del) 404, as under: Finally, we may only mention what has been articulated by the Bombay High Court in CIT vs. Nagri Mills Co. Ltd. (1958) 33 ITR 681 (Born) as follows :.............. In the reference that is before us there is no doubt that the assessee had incurred an expenditure. The only dispute is regarding the date on which the liability had crystallized. It appears that there was no change in the rate of tax for the asst. yr. 1983-84 with which we are concerned. The question, therefore, is only with regard to the year of deduction and it is a pity that all of us have to expand so much time and energy only to determine the year of taxability of the amount. 14. In such circumstances, we are of the view that insofar as present appeal is concerned, substantial questions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t assessment year, the revenue has not been deprived of any tax. For the sake of convenience, we extract relevant paragraph of the Hon ble Supreme Court which reads as under: 32. Thirdly, the real question concerning us is the year in which the assessee is required to pay tax. There is no dispute that in the subsequent accounting year, the assessee did make imports and did derive benefits under the advance licence and the duty entitlement pass book and paid tax thereon. Therefore, it is not as if the Revenue has been deprived of any tax. We are told that the rate of tax remained the same in the present assessment year as well as in the subsequent assessment year. Therefore, the dispute raised by the Revenue is entirely academic or at best may have a minor tax effect. There was, therefore, no need for the Revenue to continue with this litigation when it was quite clear that not only was it fruitless (on merits) but also that it may not have added anything much to the public coffers. 11. Further, as per order of the Dy. Commissioner, Customs, the assessee is not entitled for refund, hence, the refund received in pursuance of the order of the CESTAT even if be treated as inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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