Commissioner Of Income Tax-Ii, Amritsar v. Gurdaspur Co-Operative Sugar Mills Ltd

IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH Date of decision: 21.01.2013 1.ITA No. 88 of 2012 Commissioner of Income Tax-II, Amritsar versus Gurdaspur Co-operative Sugar Mills Ltd. ...Petitioner ..Respondent 2.I.T.A No. 95 of 2012 Commissioner of Income Tax-II, Amritsar versus The Batala Co-operative Sugar Mills Ltd. ...Petitioner ..Respondent CORAM: HON'BLE MR. JUSTICE HEMANT GUPTAHON'BLE MS. JUSTICE RITU BAHRI Present:-Mr. Dinesh Goyal, Advocate, for the appellant. HEMANT GUPTA, J. (Oral) This order shall dispose of the above mentioned Income TaxAppeals filed under Section 260A of the Income Tax Act, 1961 (for short 'theAct') against the order dated 16.12.2011 passed by the Income Tax AppellateTribunal, Amritsar (for short 'the Tribunal') arising out of the assessment year2003-07 raising the following substantial question of law: “The ITAT in the facts and circumstances of case and underlaw has erred in not appreciating the penalty ofRs.10,50,00,000/- was levied on the basis of furnishing ofinaccurate particulars of income by the assessee by treatingthe revenue receipt of Rs.2,15,00,000/- as capital receiptwhereas the subsidy receipt is a revenue receipt and theaddition has been confirmed by the Hon'ble ITAT, AmritsarBench Amritsar?” Learned counsel for the appellant relies upon the Division Bench judgment of Delhi High Court reported asCommissioner of Income Tax vs.ECS Ltd, (2011) 336 ITR 162 (Delhi)wherein the deduction of 50% claimedby the assessee under Section 80-O was declined and the Assessing Officerestimated the expenditure in the ratio of proportion of foreign income to thetotal income. We find that the reliance on above said judgment is not tenable, as inthe aforesaid case, the deductions under Section 80-O of the Act was declinedfor the reason that the assessee has not produced any details of the expensesallegedly incurred by it. The Delhi High Court observed :- “The assessee, for claiming deduction under Section 80-O of theAct, wanted the same at 50 per cent of the gross income received inconvertible foreign exchange in India provided by it to its foreignclients. The Assessing Officer, however, was of the view that oncorrect interpretation under Section 80-O, deduction is restricted tothe net income and, therefore, expenditure incurred in India forearning the foreign exchange had to be deducted. The AssessingOfficer, therefore, wanted the assessee to furnish the details ofexpenses. As the assessee failed to do the needful in respect ofvarious particulars demanded, the Assessing Officer was left withno alternative but to estimate such expenditure in the ratio ofproportion of foreign income to the total income.” In the present case, there is no dispute about the quantum of receipt of grant in aid from the State Government. The assessee reflected the same ascapital receipt, whereas it has been treated as to be revenue receipt. The issue;whether the amount of grant in aid is capital receipt or a revenue receipt, is adebatable issue. The findings returned in the judgment relied upon is on fact ofnon-furnishing of details of expenses. The issue was not debatable as in thepresent case. Therefore, the reliance on the Division Bench Judgment ismisconceived. In view of the above, we do not find any error in the findingsrecorded by Tribunal while setting aside the penalty. Consequently, we do not ITA No. 88 and 95 of 2012 find that the order of the Tribunal gives rise to any substantial question of law for the opinion of this court. Dismissed. (HEMANT GUPTA) JUDGE ( RITU BAHRI ) JUDGE January 21, 2013G.Arora/Vimal