Commissioner Of Income Tax v. M/S Jay Ambey Corporation

HIGH COURT OF JAMMU AND KASHMIRAT JAMMU ITA nos. 169/2012 Date of order: 12.11.2012 Commissioner of Income TaxV.M/s Jay Ambey Corporation Coram: Hon’ble Mr. Justice M. M. Kumar, Chief JusticeHon’ble Mr. Justice Mohammad Yaqoob Mir, Judge Appearing counsel: For the applicant(s)/appellant(s) : Mr. D. S. Thakur, Sr. Advocate with | Mr. K. D. 8S. Kotwal, Advocate. | For the non-applicant(s) /respondent(s): 1))Whether approved for reportingYes/No)in Press/Media2)|Whether to be reported inYes/NoD10CST/Journal M. M. Kumar, Cu 1.|This order shall dispose of two* Income Taxappeals filed by the Revenue against an identicalorder of the Tribunal passed on 02.07.2012 in respectotassessment.YCars2005-2006&YA2OQOOR-2confirming the view taken by Commissioner of IncomeTax (Appeals) in its order dated 21.12.2011. 2 |The pivotal issue raised in these appeals is|whether the deduction claimed by the assessee undersection 80-IB on account of excise duty refund inpursuance of the policy of the State would be treatedas‘CapitalReceipt’OT|‘RevenueReceipt’. TheCommissioner of Income Tax (Appeals) has taken the view that the nature of receipt on which deductionunder Section SO-IB otf the Income Jax Act wereclaimed had not been disputed. A Division Bench ofthis Court after analyzing the New Industrial Policyand the nature of concessions granted by the CentralGovernment for the State of Jammu and Kashmir hasconcluded in the case oft M/s Shree Balajt Alloys v.CIT and anr. (2011) 333 ITR 335 (J&K) that thepurpose of New Industrial Policy and the incentivesprovided to industrial units in terms of that policywas to accelerate industrial development in the Stateleading to creation of such industrial atmosphere andenvironmentwhichwould.provideadditionalpermanent source of employment to the unemployedyouth in the State of Jammu and Kashmir. On thatbasis, the Division Bench held that the purpose of theNew Industrial Policy was eradication of the problemof unemployment in the State by acceleration of theindustrial development and removing backwardnessof the area which was certainly a purpose of publicinterest. The Division Bench also ruled that the policycannot be construed to have provided incentives forproduction and trade. The incentives were to be madeavailable to the bonafide industrial units so thatlarger public interest of eradicating unemployment in the State of Jammu and Kashmir is achieved. For thealoresaid view, the Division Bench has placed relianceon the judgments of Hon’ble the Supreme Court in theCases of Sahney Steel and Press Works Limitedand ors v. Commissioner of Income Tax (1997)|228 ITR 253 and Commissioner of Income Tax v.Ponnt Sugars and Chemicals Limited (2008) 306ITA 392 SC. 3Mr. D. 8S. Thakur, learned counsel for theRevenue has made an attempt to persuade us to takea view different than the one taken by the DivisionBench of this Court in the case in M/s Shree BalajiAlloys’ case (Supra). According to the learned counsel,the ratio-decidendi of the Sahney Steel and PressWorks Limited has been incorrectly understood by theDivision Bench and that error needs to be corrected.Mr. Thakur has also brought to our notice thatagainst a Division Bench judgment in the case of M/sohree Balaji Alloys, Civil Appeal no. 100061/2011 filedby the Revenue is pending consideration of theirLordships of Hon'ble the Supreme Court. 4Having heard learned counsel for the Revenue|and perusing the judgment rendered by the DivisionBench of this Court in M/s Shree Balaji Alloys’ case 3Mr. D. 8S. Thakur, learned counsel for theRevenue has made an attempt to persuade us to takea view different than the one taken by the DivisionBench of this Court in the case in M/s Shree BalajiAlloys’ case (Supra). According to the learned counsel,the ratio-decidendi of the Sahney Steel and PressWorks Limited has been incorrectly understood by theDivision Bench and that error needs to be corrected.Mr. Thakur has also brought to our notice thatagainst a Division Bench judgment in the case of M/sohree Balaji Alloys, Civil Appeal no. 100061/2011 filedby the Revenue is pending consideration of theirLordships of Hon'ble the Supreme Court. 4Having heard learned counsel for the Revenue|and perusing the judgment rendered by the DivisionBench of this Court in M/s Shree Balaji Alloys’ case (Supra), we are of the considered opinion that noquestion of law would emerge from the impugnedorder of the Tribunal which may warrant admission ofthe appeal within the jurisdiction of this Court. TheDivision Bench has already put the controversybeyond any doubt and therefore, the excise refund onaccount.ottheincentivesgivenTO|the.Assessee/respondent will have to be treated as‘Capital Receipt and not the ‘Revenue Receipt’. Merelybecause the Division Bench has not understood thejudgment of Hon’ble the Supreme Court in Sahneysteel and Press Works case (Supra) would not besufficient for us to reopen the issue. We might havefelt persuaded if the judgments of Hon’ble thesupreme Court were not considered. Therefore, we areof the opinion that a binding precedent cannot bebrushed aside. 5 |As a sequel to the above discussion, these|appeals are found to be covered by the Division Benchjudgment of this Court in M/s Shree Balaji Alloys’case (supra). Accordingly, both the appeals fail andthe same are dismissed alongwith connected CMAs, ifany. 6.|A copy of this order be placed on the other file| also. (Mohammad Yagoob Mir) (M. M. Kumar).Judge Chief JusticeJammu,12.11.2012Parshant,S. No.Titled1.)Commissioner of Income TaxVOM/s)JayAmbeyCorporationITA no. 169[2OL28.Commissioner ot Income TaxVOM/s)Jay|AmbeyCorporationTTAnO170/201~ (Mohammad Yaqoob Mir) (M. M. Kumar) | Judge Chief Justice Jammu,13.11.2012Parshant