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TMI Blog2023 (5) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... Accountant Member For the Appellant : Shri Jay Prakash Gupta, FCA For the Respondent : Shri N.T. Sherpa, JCIT ORDER PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Appeals) Guwahati-2, (hereinafter the ld. CIT(A) dated 30.08.2019 for Assessment Year 2015- 16 against the order passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) by ITO, Ward-4(2), Guwahati, dated 05.04.2017. 2. Grounds raised by the assesee is on challenging the treatment of VAT remission as not eligible for deduction u/s 80IE of the Act by invoking the provisions of revision u/s 263 of the Act. 3. Brief facts of the case are that assessee is engaged in the business of manufacturing of instant food, baby food, cheese ball, puff rings etc. Assessee started its manufacturing activities in an industrial undertaking with effect from November, 2013 relevant to assessment year 2014-15. Return of income was filed on 29.09.2015 reporting total income of Rs. 5,65,320/-. Case of the assessee was selected for scrutiny through CASS for which statutory notices wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectly linked to manufacturing activity. In respect of VAT remission, he did not agree on this issue and set aside the assessment order u/s 263 of the Act with the direction to the ld. AO to complete the assessment in view of this observation. 5. Aggrieved, assessee is in appeal before the Tribunal. 6. Before us, ld. Counsel for the assessee reiterated the submissions made before the ld. AO in the assessment proceedings as well as before the ld. PCIT in the revisionary proceeding which are not repeated for the sake of brevity as already noted above. Before delving into the issue, we apprise ourselves with the provisions of section 80IE of the Act which is reproduced as under: 80-IE. (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking, to which this section applies, from any business referred to in sub-section (2), there shall be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred per cent of the profits and gains derived from such business for ten consecutive assessment years commencing with the initial assessment year. (2) This section applies to any undertaking which ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura; (iii) substantial expansion means increase in the investment in the plant and machinery by at least twenty-five per cent of the book value of plant and machinery (before taking depreciation in any year), as on the first day of the previous year in which the substantial expansion is undertaken; (iv) eligible article or thing means the article or thing other than the following : (a) goods falling under Chapter 24 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), which pertains to tobacco and manufactured tobacco substitutes; (b) pan masala as covered under Chapter 21 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); (c) plastic carry bags of less than 20 microns as specified by the Ministry of Environment and Forests vide Notification No. S.O. 705(E), dated the 2nd September, 1999 and S.O. 698(E), dated the 17th June, 2003; and (d) goods falling under Chapter 27 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), produced by petroleum oil or gas refineries; (v) eligible business means the business of, ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lating to VAT Remission and Central Excise Duty refund were dealt with, holding that this has a direct nexus with the manufacturing business of the assessee and hence were eligible for deduction u/s 80IB /80IC of the Act. Relevant extracts from the said order are reproduced for case of reference: 7....................The issue relating to value added tax/CST remission had also been decided by this Tribunal in favour of the assessee in I. T. Appeal No. 43 of 2009 in the case of ACIT v. G.L. Coke (P.) Ltd. vide order dated April 5, 2010. This Tribunal has already decided the issue in the case of Plast India Enterprises (supra) vide order dated April 5, 2010. In this decision, the hon'ble Tribunal held that the amount of transport subsidy, power subsidy, interest subsidy and insurance subsidy would go to reduce the corresponding expenditure incurred under those heads and resultant profit would be the profits and gains of the business of the industrial undertaking eligible for deduction under section 80-IC of the Incometax Act. The Tribunal also took the view that all these subsidies were interlinked, interlaced and had a direct nexus with the manufacturing activities of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii. 50/Gau/2009 05-04-2010 Central excise refund and VAT remission Plast India Enterprises Pvt. Ltd. iv. 43/Gau/2009 05-04-2010 VAT remission G.L. Coke Pvt. Ltd. v. 58/Gau/2009 05-04-2010 VAT remission JBB Lime Industry 6.4. Further, we note that while dealing with the issue in hand, the Co-ordinate Bench of ITAT, Guwahati had referred to and placed reliance on the decision of Hon ble Jurisdictional High Court of Guwahati in the case of CIT vs Meghalaya Steels Ltd. (2011) 333 ITR 91. The decision of Hon ble Jurisdictional High Court of Guwahati in Meghalaya Steels Ltd. (supra) was approved by the Hon ble Supreme Court in its judgment reported in CIT vs Meghalaya Steels Ltd. (2016) 67 taxmann.com 158 (SC). 6.5. Hon ble Supreme Court held in para 28 that assistance by way of subsidies, received or receivable will be income chargeable to tax under the head profits and gains of business ..... X X X X Extracts X X X X X X X X Extracts X X X X
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