Ita/177/2009 Commissioner Of Income Tax, Kolkata-Iii, Kolkata v. Itc Bhadrachalam Paper Boards Ltd

O-77 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE ITA/177/2009COMMISSIONER OF INCOME TAX, KOLKATA-III, KOLKATAVS.ITC BHADRACHALAM PAPER BOARDS LTD. BEFORE : THE HON’BLE JUSTICE T.S. SIVAGNANAMAndTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYADate : 13[th] February, 2023 Appearance :Mr. Prithu Dudhoria, Adv.… for appellantMr. J.P. Khaitan, Sr. Adv.Ms. Nilanjana Banerjee Pal, Adv.… for respondent The Court : This appeal by the revenue filed under Section 260A of theIncome Tax, 1961 (the Act) is directed against the order dated 18[th] February,2005, passed by the Income Tax Appellate Tribunal, “A” Bench, Kolkata(Tribunal) in ITA No. 177(Hyd.)/1998 for the assessment year 1993-94. The appeal was admitted on 20[th] September, 2010 on the followingsubstantial questions of law :- “Whether on the facts and in the circumstances of the case Tribunal wasjustified in holding that the amount of Rs. 3,65,66,602/- received by theassessee on account of Sales Tax subsidy as capital receipt and notrevenue receipt and not taxable in the year of receipt on the basis of subsequent order or refund passed after more than eight years withoutconsidering and disregarding that during the intervening period the saidamount has remained with the assessee and it has utilized the sameduring the intervening period ?” We have heard Mr. Prithu Dudhoria, learned standing counsel appearingfor the appellant/revenue and Mr. J.P. Khaitan, learned senior counselappearing with Ms. Nilanjana Banerjee Pal, learned advocate for therespondent/assessee. On account of certain subsequent developments we are not required todecide the correctness of the order passed by the learned Tribunal, butsimultaneously we are required to clarify certain facts for better clarity. Theissue was whether the amount of subsidy of Rs.3,65,66,602/- received by theassessee from the State government as Sales Tax subsidy was a revenue receiptor a capital receipt. The Assessing Officer by order dated 29[th] March, 1996 heldthe same to be revenue receipt. This order was affirmed by the Commissioner ofIncome Tax (Appeals), Kolkata on 19[th] December, 1997. The learned Tribunal on an appeal filed by the assessee had reversed thedecision of the CIT(A). Aggrieved by such order, the revenue has filed this appealbefore this Court. It appears that pursuant to an order passed by the Hon’ble High Court ofAndhra Pradesh, it was held that the respondent/assessee was not entitled tothe subsidy. This order was affirmed by the Hon’ble Supreme Court whichnecessitated the respondent/assessee to refund the amount of subsidy receivedby them, namely, Rs.3,65,66,602/-. Upon such refund, the assessee claimed deduction for the assessment year 2002-03 which was rejected by the assessingofficer, affirmed by the CIT(A) and in an appeal filed before the learned Tribunalin ITA No.2113/Kol/2005, it was held that the assessee was entitled for thededuction. The order of the Tribunal is dated 5th October, 2006 which hasattained finality. In the light of the this factual development, assuming theappeal filed by the revenue is allowed, it would amount to inconsistent orders asthe order passed by the CIT(A) would stand revived and the resultant positionwould be, it would be inconsistent with the relief of deduction granted to theassessee for the assessment year 2002-03. Therefore, we are inclined to issuethe following direction so as to being a finality to the matter. Taking note of the above factual situation, this appeal stands disposed ofclarifying that the order passed by the learned Tribunal impugned in this appeal,need not be tested for its correctness on account of the order passed by theTribunal in ITA No.2113/Kol/2005 dated 5th October, 2006 for the assessmentyear 2002-03 as the said order, in effect, would render this appeal incapable ofbeing pursued as the order has worked itself out. Taking note of the above factual situation, this appeal stands disposed ofclarifying that the order passed by the learned Tribunal impugned in this appeal,need not be tested for its correctness on account of the order passed by theTribunal in ITA No.2113/Kol/2005 dated 5th October, 2006 for the assessmentyear 2002-03 as the said order, in effect, would render this appeal incapable ofbeing pursued as the order has worked itself out. Furthermore, the learned senior Advocate appearing for therespondent/assessee has submitted that pursuant to the orders passed by theCIT(A) dated 19th December, 1997, the assessee had paid tax which has nowbeen allowed as a deduction in the assessment year 2002-03 pursuant to theorder of the Tribunal dated 5th October, 2006. That apart, ‘no giving effect tothe order’ was passed by the Department pursuant to the impugned order in thisappeal dated 18th February, 2005. We further clarify the position that the order impugned in this appealpassed by the Tribunal need not be given effect to and on account of the deduction granted in the year 2002-03, necessarily, the order passed by theCIT(A) dated 19th December, 1997 stands restored. With the above observation, this appeal (ITA/177/2009) stands disposedof. Consequently, the substantial question of law is left open. (T.S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.)