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TMI Blog2024 (6) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... finished product - As before the Id. CIT (A), assessee produced the sixth contractor whose statement was also recorded. In his statement, he confirmed to have supplied labor for packing, loading and unloading. Another plank of AO is that the employee of the assessee company used to withdraw cash from the contractor s bank account. CIT (A) has noted that he has perused the banks accounts and the entries of withdrawal were self. Therefore, he held that cash withdrawn by the contractors and the contractors during the statement accepted that the employee of the assessee company used to accompany him at the time of withdrawal of cash from the bank and cash used to be carried in company s vehicle and this arrangement was used to ensure for the payment distributed to labourers hired for the work of the company. Another plank of the AO is that these contractors are ex-employees of the assessee company. It has been submitted that this fact has been accepted. For this explanation, the assessee submitted that for continuous supply of labour, only reliable and known person can be deployed. Another plank of AO is that in the computer of the assessee, bills of these contractors were found. It h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We are of the view that the issue of 14A may be restored to the AO for examining afresh in the light of the settled position of law as discussed hereinabove. Needless to say that the AO will afford reasonable opportunity to the assessee accordingly. X X X X Extracts X X X X X X X X Extracts X X X X ..... .256 to 258/Del/2013, wherein the ITAT observed as under: "4. Against this order, assessee appealed before the Id. CIT (A). Ld. CIT (A) elaborately considered the issue and thereafter, he obtained written submissions from the assessee and obtained remand report from the AO also. Finally, he deleted the addition by holding as under :- "First main basis of the addition is revolving around the non existence of the alleged contractor at the address mentioned in the contractors bills enquired during search and post search proceedings. Subsequently, during the post search proceedings, when it was informed to the appellant for the first time why contractor expense should not be disallowed. The appellant submitted that the summons have been served on the contractors and they will comply with the requirements. These facts have been reproduced in the assessment order. Thereafter, during the assessment proceedings, when the appellant was asked to substantiate the expense paid to these contractors, the appellant filed documentary evidences in form of the PAN card/ Adhar Card, service tax registration, copy of service tax return, copy of bank statement of the appellant company and e- T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to withdraw cash from the contractor's bank accounts. I have perused the bank accounts. Entries of withdrawal are 'self. Therefore, the cash has been withdrawal by the contractors. The contractors during the statement, however, accepted that the employee of the appellant company used to accompany him at the time of withdrawal of cash from the bank and cash used to be carried in companies vehicle. This arrangement was used to ensure for the payment distributed to labourers hired for the work of the company. Third evidence relied by the Ld. Assessing Officer is that these contractors are Ex-employee of the company. There is no denial to the fact that these contractors were ex-employee or town persons. The contractors have also accepted these facts. Ld. AR argued that for continuous supply of labour, only reliable and known person can be deployed. Fourth basis relied by AO is that in the computer of the appellant bills of these contractors were found. All the contractors have stated that the bills were prepared at the premise of the appellant as these contractors were only supplying labour and does not have separate infrastructure. The only issue remains whether being known ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted that the employee of the assessee company used to accompany him at the time of withdrawal of cash from the bank and cash used to be carried in company's vehicle and this arrangement was used to ensure for the payment distributed to labourers hired for the work of the company. 6.2 Another plank of the AO is that these contractors are ex-employees of the assessee company. It has been submitted that this fact has been accepted. For this explanation, the assessee submitted that for continuous supply of labour, only reliable and known person can be deployed. 6.3 Another plank of AO is that in the computer of the assessee, bills of these contractors were found. It has been submitted that all the contractors have prepared the bills at the premise of the assessee as these contractors were only supplying labour and did not have separate infrastructure. Furthermore, Id. CIT (A) has also found that the salary and wages per kg. production is in the range of 10% to 25% of other industries and there was no adverse findings in this regard in the assessment order. Furthermore, books have not rejected. been 7. Accordingly, in the background of aforesaid discussion, we do not find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt does not arise at all. Therefore, it is respectfully submitted that the appellant had successfully discharged the burden cast under section 69 of the Act. It is further submitted that the documents so seized, on the basis of which, the above addition is made, were only proposals for purchase of certain land and there was actually no purchase of that land by the appellant. (iii) In the appellate proceedings, it has also been submitted by the appellant that no cheque payments have been made for the alleged deal shown in the loose paper, inventoried as Annexure- A-2 at page 34. Therefore, it is claimed that not a single payment has been made through cheque and therefore, question of payment of cash amount did not arise. From the above, it is clear that the deal of purchase of the land in loose paper seized, has not taken place and therefore, there is no question of payment of cash for such alleged deal and it was only a proposal. In view of the above, I hold that alleged investment is not made, since, transaction has not materialized. Accordingly, I agree with the argument of the appellant and therefore, findings of the A.O. are erroneous. Therefore, addition of Rs. 48,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. Accordingly, in my considered opinion, this claim now made in the appellate proceedings for the first time, is not only imaginary one, but also false, as the income has not been affected/increased on account of such alleged subsidy. It will not be out of place to mention here that not a single entry, relating to the alleged claim, has been recorded in the regular books of accounts as: 1. Nothing has been mention in the final accounts and tax audit report (filed in Form 3 CD), and 2. AR failed to substantiate such claim in the appellate proceedings. In view of the above, the additional ground, does not deserve to be admitted, as there is no merit in the alleged claim. Accordingly, the additional ground is dismissed, as not admitted." 18. Aggrieved with the order of learned Commissioner (Appeals), assessee preferred the appeal before the Tribunal. 19. We have considered the rival submissions of both the sides and perused the material available on record. We observe that similar issue was raised by the assessee in assessment year 2006-07 and the Tribunal decided the issue against the assessee. The Co-ordinate Bench has not commented upon the merits of the issue invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, we are of the view that the assessee is entitled to raise the issue of deduction of subsidy before the first appellate authority also because there cannot be any estoppels against the assessee, if an income is not taxable under the Income-Tax Act, 1961 rather than the same cannot be taxed merely because the assessee has offered the same misconception of law and facts. Therefore, we are of the considered view that the assessee can raise the claim of subsidy. So far as the issue whether the subsidy received by the assessee was a capital receipt or revenue receipts, the learned counsel for the assessee submitted as under: "That preamble of the Scheme was to attract the underdeveloped and developing areas of the State. He further pointed out that Government of Maharashtra was giving package incentive scheme to the new units as well as the units who expanded substantially for developing the region of Maharashtra State. It was further submitted by the learned counsel for the assessee that incentive scheme was introduced in 1964 and was amended from time to time after conducting survey of the Maharashtra State from time to time. He pointed out that Government of Maharasht ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchases relating to the said Eligible Unit, effected during the period of validity of this Certificate. (c) (d).... (k) If the Holder of this Certificate contravenes any of the provisions of the Act of the Rules made thereunder or fails to use the goods in accordance with the terms of the declaration furnished by him or contravenes any of the conditions of this Certificate or the conditions of the said Entry, this Certificate shall be liable to be cancelled and on such cancellation or on cancellation under the circumstances referred to in condition (a) above, the exemption from tax under the said Entry shall not he admissible to him on his sales and or purchases" (emphasis supplied) "ELIGIBILTY CERTIFICATE WITH REFERENCE NO. GIN(I)/1993/EXEMPTION/EC nn. 4491 dated 28.12.2001. The Eligibility certificate under Para 3.12(b) of the 1993 Package Scheme of Incentives (hereinafter referred to as 'the 1993 Scheme is hereby issued to JINDAL POLYESTER LIMITED for additional Fixed Capital Investment of Rs 8719.00 lacs as detailed on pre-page made at 28 km Stone, Nashik-Igatpuri Road, NH-3, Village Mundegaon, Taluka: Igatpuri, Dist,: Nashik for manufacture of i) Polye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibility Certificate as extracted hereunder: "4.2. Claim for Incentive No right or claim for any incentive under the 1993 Scheme shall be deemed to have been conferred by the 1993 Scheme merely because the Unit has fulfilled the conditions of the 1993 Scheme. The incentives under the 1993 Scheme cannot be claimed unless an EC has been issued under the 1993 Scheme by the Implementing Agency and the Eligible Unit has complied with the stipulations/conditions of the EC (emphasis supplied) In view of the aforesaid, the appellant, in the invoices issued, did not charge any sales tax from its customers but clearly stated that "The sale is exempted from tax under the provisions of entry no, 136 of the schedule appended to the government notification" On perusal of the above scheme and certificates, it may be noted that in order to attract entrepreneurs to set manufacturing base in Nasik and other areas, from 1993 onwards, such areas were classified and notified as a backward area and complete exemption from sales tax was given to newly set up units in that area. This led to tremendous industrial development in these areas which further strengthens the view that the Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Special Bench decision of the Tribunal in the case of Reliance Industries Ltd. (Supra). Though the scheme applicable in the case of Reliance Industries Ltd. was 1979 scheme, however, in the 1993 scheme terms and conditions were of the same nature and intent. For this purpose, a comparative chart was referred by the Ld. CIT(A). As per the comparative chart the terms and conditions applicable in 1979 scheme were of the same nature and intent of the 1993 scheme. We further note that Mumbai Tribunal in the case of Everest Industries Ltd., in ITA No. 814/Mum/2007 has held that salient features of the 1993 scheme are identical to that of 1979 scheme. We further note that the Tribunal in ITA No. 678 & 679/Del/2012 in the case of M/s Indo Rama Textiles Ltd. on identical facts has held that the decision of the Mumbai Tribunal, Special Bench in the case of Reliance Industries 88 ITD 273 is applicable. Accordingly, in the background of the aforesaid discussion and precedents, we hold that that the Ld. CIT(A) has passed a reasonable order which does not need any interference on our part. Accordingly, we uphold the same." (emphasis supplied). The aforesaid decision of the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . ITA Nos. 3361/Del/2016 & Ors.: 30. This is the appeal of the assessee arising from the order of learned Commissioner (Appeals) dated 21.03.2016 and relates to assessment year 2008-09. The assessee has raised around 10 grounds, however, issues for the consideration of this Bench can be categorized as (a)entitlement of the assessee for exemption of sales-tax subsidy; (b) disallowance of expenses by invoking the provisions of section 14A read with Rule 8D of the Act. 31. So far as the issue of entitlement of the assessee for claiming exemption of sales-tax subsidy is concerned, we have already decided this issue in ITA No.3360/Del/2016 for assessment year 2007-08. The findings given for that year would apply mutatis mutandis here also. This issue is decided accordingly. 32. So far as the disallowance mad under Section 14A read with Rule 8D of the Act is concerned, the contention of the assessee is that own funds of the assessee were sufficient for making tax free investments and hence, no disallowance would have been made by the department in view of the recent judgment of the Hon'ble Gujarat High Court in CIT Vs. UTI Bank Ltd. - 32 taxmann.com 370 wherein the Hon'ble Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer in terms of section 14A read with Rule 8D of the Act. 42. During the course of assessment proceedings, it has been observed by the Assessing Officer that the assessee has incurred expenses in respect of investments in shares and securities. However, the assessee has not disallowed any expense related to those investments which yield tax free income. Before, the Assessing Officer, the learned authorized representative of the assessee argued that no direct or indirect expenditure has been incurred in respect of investment made in mutual funds etc. The Assessing Officer did not find force in the arguments of the assessee and made a disallowance of Rs. 1,01,37,668. 43. Aggrieved with the order of the Assessing Officer, the assessee filed an appeal before the learned Commissioner (Appeals) and argued that disallowance made by the Assessing Officer by invoking section 14A read with Rule 8D is unwarranted for the following reasons: a) There was no proximate nexus between the expenses incurred and interest free income earned. b) Own funds of the assessee were sufficient to make the investment yielding dividend income and hence, no disallowance could be made. c) Learne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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