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TMI Blog2019 (11) TMI 750X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee for the purpose of grant of subsidy for setting-up industrial unit in the State of Jammu and Kashmir. The Ld. CIT(A) correctly followed the decision of Hon ble Supreme Court in the case of Pooni Sugars Chemicals Ltd. [ 2008 (9) TMI 14 - SUPREME COURT] and in the case of Shree Balaji Alloys vs., Commissioner of Income Tax [ 2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT] in which similar Notification have been considered and held Excise refund and interest subsidy received by the assessees in pursuance of the incentives announced and sanctioned vide Government of India, Ministry of Commerce and Industry's Office Memorandum dt. 14th June, 2002 and Central Excise Notification Nos. 56 and 57 dt. 14th Nov., 2002 and other notifications issued on the subject, pertaining to the Industrial Policy for the State of Jammu Kashmir, is capital receipt. - ITA.No.3837/Del./2016 - - - Dated:- 13-11-2019 - Shri Bhavnesh Saini, Judicial Member And Shri O.P. Kant, Accountant Member For the Assessee : Shri S.S. Nager, C.A. For the Revenue : Ms. Rakhi Bimal, Sr. D.R. ORDER PER BHAVNESH SAINI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l as computation of book profits under section 155JB. The submissions of the assessee are reproduced in the appellate order in which the assessee explained that assessee is a manufacturer of pesticides and chemicals. The assessee due to industrial unit in Udhampur enjoyed subsidy in the form of excise duty refund. In the revised computation submitted before A.O, the assessee claimed refund of excise duty as capital receipt. The A.O. however, stated that claim of assessee for exclusion of excise subsidy from total income under normal provisions of the Act as well as book profit computation under section 115JB of the I.T. Act, is not allowable since it is in the nature of fresh claim. It can only be raised through revised return. The A.O. relied upon Judgment of Hon ble Supreme Court in the case of Commissioner of Income Tax vs. Goetze (India) Ltd., [2006] 204 CTR 182 (SC) and made the addition. The assessee submitted before the Ld. CIT(A) that assessee has availed incentive in the form of excise duty refund in terms of Office Memorandum Dated 14.06.2002 [ Excise Notification No.56/2002, Dated 14.11.2002 ]. The said incentive has been granted for development of industries and generat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of CIT vs. Ponni Sugars Chemcials Ltd. reported in 306 ITR 392 and decision of Hon'ble Jammu Kashmir High Court in the case of Shree Balaji Alloys vs.CIT reported in 333 ITR 335. The Hon'ble Jammu Kashmir High Court following the decision of Hon'ble Apex Court in the case of Ponni Sugar Chemicals Ltd. held:- We, therefore, proceed to find the ratio in the two Supreme Court judgments relied upon by both the parties to support their respective viewpoints, to examine as to whether the Tribunal had followed the ratio or was influenced by the orders passed in the two cases on the basis of the facts and circumstances of those cases. 15. After going through the two judgments, we find the ratio in Sahney Steel case (supra) and approval thereof in Ponni Sugars Chemicals Ltd. (supra), to have been spelt out, in the following para of the judgment delivered by the Hon'ble Supreme Court of India in Ponni Sugars Chemicals Ltd. case (supra). It reads thus : The importance of the judgment of this Court in Sahney Steel case (supra) lies in the fact that it has discussed and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oan repayment whereas the present case deals with a subsidy for setting up an industry in the backward area. Therefore, in each case, one has to examine the nature of the subsidy. The judgment of this Court in Sahney Steel Press Works Ltd. Etc. (supra) was on its own facts; so also, the judgment of this Court in Ponni Sugars Chemicals Ltd. (supra). The nature of the subsidies in each of the three cases is separate and distinct. There is no straightjacket principle of distinguishing o capital receipt from a revenue receipt. It depends upon the circumstances of each case. As stated above, in Sahney Steel Press Works Ltd. Etc. (supra), this Court has observed that the production incentive scheme is different from the scheme giving subsidy for setting up industries in backward areas. 18. Now coming to the findings of the Tribunal on the issue, we find that the Tribunal has referred to various paras appearing in the two judgments to support its view that the receipts in the hands of the assessees were production incentives and thus revenue receipt and not capital receipt. This, however, appears to have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia, Ministry of Commerce and Industry (Department of Industrial Policy and Promotion) eloguently demonstrates the Central Government's intention in extending the incentives. The Government's objective, as conveyed by Hon'ble the Prime Minister at Srinagar on 19th April, 2003, was, for creation of one lac employment and self-employment opportunities in Jammu Kashmir State. 23. To achieve the purpose and objective referred to hereinabove, it was, inter alia, provided in the Central excise notifications that the exemptions contained in the notifications would be available only on production of certificate from general manager of the concerned District Industry Centre to the jurisdictional Dy. CCE or the Asstt. CCE, as the case may be, to the effect that the unit had created required additional regular employment, which would not, however, include employment provided by the industrial units to daily wagers or casual employees engaged in the units. 24. A close reading of the Office Memorandum and the amendment introduced thereto with para No. 3 appearing in the Central Excise Notification Nos. 56 and 57 of 11th Nov., 2002, thus, makes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensure that the incentives were made available only to the bona fide industrial units so that larger public interest of dealing with unemployment in the State, as intended, in terms of the Office Memorandum was achieved. 29. The other factors, which had weighed with the Tribunal in determining the incentives as production incentives may not be decisive to determine the character of the incentive subsidies, when it is found, as demonstrated in the Office Memorandum, amendment introduced thereto and the statutory notification too that the incentives were provided with the object of creating avenues for perpetual employment, to eradicate the social problem of unemployment in the State by accelerated industrial development. 30. For all what has been said above, the finding of the Tribunal on the first issue that the excise duty refund, interest subsidy and insurance subsidy were production incentives, hence revenue receipt cannot be sustained, being against the law laid down by Hon'ble Supreme Court of India in Sahney Steel (supra) and Ponni Sugars case (supra). 31. The finding of the Tribunal that the incentives were revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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