Ita/2/2010 Of Shree Balaji Alloys Th.lalit Kumar Aggar v. Commissioner Of Income Tax And Anr

HIGH COURT OF JAMMU AND KASHMIR AT JAMMU. ITA No.2/2010 & CMP Nos.3/2010,28/2010 & 29/2010.ITA No.4/2010|ITA No.5/2010 & CMP No.4/2010—ITA No.13/2010—ITA No.6/2010 & CMP No.5/2010ITA No.7/2010 & CMP No.6/2010ITA No.15/2010 & CMP No.13/2010ITA No.17/2010 & CMP No.15/2010ITA No.16/2010 & CMP No.14/2010ITA No.20/2010.ITA No.01/2010 & CMP 01/2010ITA No.8/2010 & CMP No.8/2010—ITA No.9/2010 & CMP No.9/2010—ITA No.11/2010 & CMP Nos.11/2010 & 23/2010ITA No.14/2010—ITA No.12/2010 & CMP No.12/2010ITA No.24/2010 & CMP No.22/2010ITA No.21/2010 & CMP No.20/2010ITA No.22/2010ITA No.31/2010 Date of Decision: 31.01.pOl] 1.|M/S Shree Balaji AlloysVS.Commissioner ot Income Tax & anr.2. M/S Ravenbhel Healthcare Pvt. Ltd.VS.Commissioner ot Income Tax & anr.3. M/S Pee Ell AlloysVS.Commissioner ot Income Tax & anr.4. M/S Singla Cables IndustriesVS.Commissioner ot Income Tax & ors.o. Ajay GuptaVS.Commissioner ot Income Tax & anr.6. Rajesh Giri |VS.Commissioner ot Income Tax & anr.7. ACR Foods Pvt. Ltd.VS.Commissioner ot Income Tax & anr.8. M/S Shiva Steel Rolling MillsVS.Commissioner ot Income Tax.9. M/S Chattan Cement IndustriesVS.Commissioner ot Income Tax.10. M/S Unique Industrial CarbonsVS.Commissioner ot Income Tax & ors.11. M/S Suntec Controls_VS. Income Tax Officer12. M/S Suntec Controls|VS.Income Tax Officer13. M/S Bhagwati Metal WorksVS.Commissioner ot Income Tax & anr.14. Mahesh Chand GoyalVS.Commissioner ot Income Tax.15. M/S Amar Cements, KathuaVS.Commissioner ot Income Tax & anr.16. M/S SPM Industries|VS.Income Tax Officer17. Vinod Kumar JainVS.Commissioner ot Income Tax & anr.18. M/S Shiva Mint IndustriesVS.Commissioner ot Income Tax & anr.19. M/S G. Tech. IndustriesVS. Commissioner ot Income Tax & anr.20. M/S Kashmir Cement IndustriesVS. Commissioner of Income Tax & ors. | Coram: Mr. Justice J.P.Singh, JudgeMr. Justice Hasnain Massodi, Judge. Appearing Counsel:For the Appellant(s) : M/s D.C.Raina, Sr. Advocate withsachin Dogra, Advocate & Ajay Vohra, Advocatein ITA Nos.2,4,5,9 &14.|M/s Kanan Kapoor, R.K.Gupta, K.Sampat & R.P.Garh, Advocates in ITA Nos.1,8,11 & 12.M/s Salil Kapoor, $.K.Anand & C.S.Anand, |Advocates in ITA No.24/2010.Mr. 8.S.Ahmed, Advocate inITA Nos. 6,7,160 & 17.Mr. Rajiv Chopra, Advocate inITA Nos. 21 & 22/2010..Mr. Subash C. Dutta & 8. 8.Wazir, Advocates in ITANos. 13/2010 & 31/2010.|For the Respondent(s):Mr. D.S.Thakur, Advocate with Ms. Aruna Thakur2Advocate. 1)|Whether approved for reportingin Press/Journal/ MediaYes|11)Whether to be reported inD12est/journa!|Yes| J. P. Singh J: 1)Aggrieved by the orders of the Income TaxAppellate Tribunal Amritsar Bench, Amritsar, ontheir respective Appeals, against the orders of theCommissioner of Income Tax (A), Bathinda,upholding the orders of the Income Tax Officers,denying them deductions under Section 80-1B ofthe Income Tax Act, 1961, hereinafter to be.referred as “the Act’, for short, on theExciseRefundandInterest Subsidy, etc., holding that theExcise Refundand|Interest Subsidyetc. receivedby them, in pursuance to the New IndustrialPolicy and other Concessions announced for theState of Jammu and Kashmir vide Government ofIndia, Ministry|ot|CommerceandIndustry(Department of Industrial Policy and Promotion)’sOffice Memorandum of June 14, 2002, was,Revenue Receipt, and notCapital Receiptyahence liable to Tax,the appellants-assessees haveapproached this Court by their Appeals preferred under Section 260-A of the Act, seeking settingaside of the Income Tax Appellate Tribunal’s”orders of November 26, 2009, November 11, 2009, November.12,2009,December18,2009,December29,2009,December13,|20OY,|February 18, 2010 and April 09, 2010 passed intheir respective Appeals, besides the orders of theCommissioner of Income Tax (Appeals) andAssessing Officers in respect of their Income TaxReturns. — under Section 260-A of the Act, seeking settingaside of the Income Tax Appellate Tribunal’s”orders of November 26, 2009, November 11, 2009, November.12,2009,December18,2009,December29,2009,December13,|20OY,|February 18, 2010 and April 09, 2010 passed intheir respective Appeals, besides the orders of theCommissioner of Income Tax (Appeals) andAssessing Officers in respect of their Income TaxReturns. — 2)|Except variation in amounts, the issues involvedin the Appeals, being identical, these were heardtogether, finding that the case projected by theappellants involved Substantial Questions Of Law.3)The issues that arise for determination in the.Appeals, are these:-. &'Whetherthe|amountof.EXCISEREFUND and INTEREST SUBSIDY received|by the appellants-assessees, in pursuance|tothe|incentivesannouncedandsanctionedvidaeGovernmentofIndia,MinistryofCommerce|andIndustry(Departmentof|Industrial|PolicyandPromotion)’sOfficeMemorandum.No.1(13)2000-NER dated 14.6.2002 and_ 4)| Central Excise Notification Nos. 56 and 57)dated 14.11.2002 and other Notifications|issued on the subject, pertaining to theIndustrial Policy introduced in the State of|Jammu and Kashmir, is.Capital Receiptand, thus, not liable to tax under theprovisions of the Act, or.Revenue Receipt9as opined by the authorities under theAct ? 5'Whether the appellants-assessees are|entitled to deductions under Section 8OQ0-1of the Act on the'Excise Duty RefundandInterest Subsidy' etc., being the incomederived from the industrial undertaking, in CcaSAthe|ExciseRefundandInterestSubsidy'were found to be.Revenue Receipt= We have considered the submissions made on.behalt.ottheappellants-assesseesand|theRevenue, on the issues dealt with by the IncomeTax Appellate Tribunal, in the light of the case lawreferred at the Bar. D)BetorecomingTOtheissues,whichneeddetermination, regard needs to be had to thesalient features of the New Industrial Policy,Amendment introduced thereto and the StatutoryCentral Excise Notifications issued in this respectgoverning the refund ofExcise Dutyand|Interest Subsidy, as incentives to the Industrial Units,pursuant to the New Industrial Policy. The Statement and Objects, which had leadTO the|NewIndustrial Policyand|otherConcessions tor the State of Jammu and Kashmir|floated vide Office Memorandum of June 14, 2002.and the salient features thereof, may, in a nutshell, be stated thus:-_ Considering the request of the Government ofJammu and Kashmir for a special package fordevelopment of the Industries in the State on thelines for the North East Industrial Policy notifiedby the Central Government vide Ministry ofIndustry'sOMNo.EA/1/2/96-IPDdated24.12.1997, discussions were held by the CentralGovernment on!StrategyandAction Planfor|Development of Industriesandgeneration ofemploymentin the State of Jammu and Kashmirwith various related Ministries on the issues,interaliao>ot|infrastructure developmentyafinancial concessionsandeasy market accessyapursuant whereto, the Government of India, Ministry of Commerce and Industry (Departmentof Industrial Policy & Promotion), issued its OfficeMemorandum dated June 14, 2002 whereby itwas provided that keeping in view the fact thatthe State of Jammu and Kashmir had laggedbehind in industrial development, there was needforstructured.interventioniststrategiesTO accelerate the industrial development of the Stateboosting investors’ confidence. The.ne winitiatives,1n Terms|ot|the.Memorandum, were aimed at providing requisiteincentives as well as enabling environment forindustrial development, improving availability ofCapitaland increase in market access so as to.segive a fillip to.private investment in the State These Fiscal Incentives were to be provided to the.New|IndustrialUnitsandsubstantialseexpansion of existing units The.ne windustrialunitsand|existingindustrial units on their substantial expansion, asdefined, set up in growth center, industrialinfrastructure development centers and other The.ne winitiatives,1n Terms|ot|the.Memorandum, were aimed at providing requisiteincentives as well as enabling environment forindustrial development, improving availability ofCapitaland increase in market access so as to.segive a fillip to.private investment in the State These Fiscal Incentives were to be provided to the.New|IndustrialUnitsandsubstantialseexpansion of existing units The.ne windustrialunitsand|existingindustrial units on their substantial expansion, asdefined, set up in growth center, industrialinfrastructure development centers and other locations like industrial estates, parks, exportprocessing zones, commercial estates, etc., asnotified|bytheCentral Government,WeTeentitled to 100% excise duty exemption for aperiodof|10yearsfromthedateof|#commencement of commercial production All new industries in the notified locations|were eligible for Capital Investment Subsidy @15% of their investment in Plant and Machinery,subject to a ceiling of Rs.30O lakhs whereas theexisting units were entitled to subsidy onsubstantial expansion, as defined.|Besides these,and other concessions, interest subsidy of 3%on the working capital and insurance premiumto the extent of 100% on capital investmenttoo was permissible to the new and existingunits on their substantial expansion for a. period of 10 years 6)Office Memorandum dated June 14, 2002 referredTO herein|aboveWaS lateramended.videNotification of November 28, 2003 issued by theGovernment of India, Ministry of Commerce and T)| Industry, Department of Industrial Policy & Promotion. [t reads thus:-. “No.1(11)/2002-NER- In pursuance ofthe announcement by the Prime Minister|on 19[th]April, 2003 at Srinagar for creationofOnelakhemploymentandselfemployment opportunities in Jammu &|Kashmir, the Government of India had set upa Task Force under Cabinet Secretary. Therecommendationsot.Task|HorceWeETEsubmitted to the Cabinet. To achieve thisobject of employment generation, the Cabinethas, inter-alia, approved following definition ofthe term ‘substantial expansion’ for thepurpose of incentives/subsidies notified as perO.M. NO.1(13)/2000-NER dated 14.06.2002.2 |TheCentralGovernment,therefore,hereby makes amendment in theCentral Interest Subsidy Scheme, 2002notified in|the Notification ot the Government ot India intheMinistry|ot.Commerce&|Industry,Department of Industrial Policy ®& PromotionNo.1(11)/2002-NER dated 22[ 0]October, 2002.The|definitionOt|theTerm‘Substantial|Expansion’ appearing under para 5(d) of theocheme may be substituted by the following:-|“Concessions for substantial expansion|should extend to include all new investmentsby entrepreneurs, which leads to substantialadditional employment creation by an existingentrepreneurwithout|insistingOf]majorexpansion.|However,credit|undertheIndustrial Policy Package should not be merelyfor paying off old debts or tor equipmentalready in place.” To implement the new Industrial Policy referred to herein above, requisite notifications for exemptionon Excise Duty were issued under Section SA ofthe Central Excise Act, 1944 prescribing therein the procedure required to be followed by theIndustrial Units before claiming incentives. | 3)ParagraphNo.9,appearing1ntheTWONotifications1.e.CentralHKHxceiNotificationNos.96/2002 and 95/7/2002 dated 14.11.2002which may be relevant to understand the issueraised in the case, needs to be noticed. It reads. thus:- " w.ccc000. Lhe exemption contained in thNotification shall apply only to the followingkind of units namely:- (a)Newindustrial unitswhich|have|commenced their commercial production on orafter the 14[th]day of June 2002. |@-AIndustrial units existing before the 14[th]day of June 2002, but which have:-(1)undertaken substantial expansion by|way of increase in installed capacity by notless than twenty-live per cent on or aiter the14[th]day of June, 2002; or | the procedure required to be followed by theIndustrial Units before claiming incentives. | 3)ParagraphNo.9,appearing1ntheTWONotifications1.e.CentralHKHxceiNotificationNos.96/2002 and 95/7/2002 dated 14.11.2002which may be relevant to understand the issueraised in the case, needs to be noticed. It reads. thus:- " w.ccc000. Lhe exemption contained in thNotification shall apply only to the followingkind of units namely:- (a)Newindustrial unitswhich|have|commenced their commercial production on orafter the 14[th]day of June 2002. |@-AIndustrial units existing before the 14[th]day of June 2002, but which have:-(1)undertaken substantial expansion by|way of increase in installed capacity by notless than twenty-live per cent on or aiter the14[th]day of June, 2002; or | 11)made new investments on or after the)14[th]day of June, 2002, and such newinvestment is directly attributable to thegenerationof|additionalregularemploymentof not less than twenty-five|percent. overandabove|thebase|employmentlimit,subject.Tothe|conditions that;-| 2&'the unit shall not reduce regularemployment after claiming exemption, and|once such employment is reduced below|one hundred and twenty-five per cent. of|the base employment limit, such industrial|unit shall be debarred from claiming the|exemption contained in this notification in|future. However, the exemption availed by suchindustrialunit,priortosuch. reduction, shall not be recoverable from|such industrial unit.(2)The manufacturer shall produce acertificate, from General Manager of the.concerned District Industries Centre to thejurisdictionalDeputyCommissionerofCentral ExciseOTthe|AssistantCommissioner of Central Excise, as the)case may be, to the effect that the unit has|createdsuchadditionalregularemployment Explanation: for the purposes of thisnotification; (a)“hase|employment.limit”maximum number of regular employees|employed at any point of time, by theconcerned industrial unit, during last five|years7(b)“regular employment” shall not includeemployment provided by the industrial|unit to daily wagers or casual employees;(c) “new investment” shall not includeinvestments which are used for paying off olddebts or making payments for the plant ormachinery installed prior to the 14[th]day of)June2002,OT|payingsalariesTO theemployees.(Above Clause(b) has been substituted videNTF No.11/2004-CE, Dt. 29/01/2004) [OLD-_ (b) Industrial units existing before the 14[th]dayof June 2002, but which have undertakensubstantial expansion by way ol increase ininstalled capacity by not less than twenty fivepercent on or aiter 14[th]day of June 2002.|_ 4The|exemption|contained1nthisnotification shall apply to any of the said unitsfor a period not exceeding ten years from thedate of publication of this notification in theOfficialGazetteOT|fromthe.dateOt|COmMmmencemenotcommercialproductionwhichever is later.” 9)With the above prelude on the facts necessary for| determination of the issues, we proceed to) LL examine the basis on which the [ncome Tax|Appellate Tribunal has recorded its findings on|the first issue. Dealing with the issue that the Excise Refundand Interest Subsidy availed of by the assesees|WaSCapital Receiptin their hands and not.Revenue Receipt,as held by the Commissioner ofIncome Tax and Income Tax Officers, which the.Tribunal had permitted the appellants to raise as_additional ground, the Tribunal came to the)conclusion that the incentives received by the)appellants wereRevenue’ Receipand not. Capital Receipt 10) In taking the above view treating the incentives as_Revenue Receipt, the Appellate Tribunal was) influenced by the following factors:- 1)The Excise Refund and Interest Subsidy hadnot been given to the appellants to establish|industrial units because the industry stood|already established. 11)The incentives were not available unless and|untilcommercialproduction|hadcommenced. 111)The incentives were recurring in nature, in|that, those were limited to a period of 10|years from the date of commencement of|commercial production. 10) In taking the above view treating the incentives as_Revenue Receipt, the Appellate Tribunal was) influenced by the following factors:- 1)The Excise Refund and Interest Subsidy hadnot been given to the appellants to establish|industrial units because the industry stood|already established. 11)The incentives were not available unless and|untilcommercialproduction|hadcommenced. 111)The incentives were recurring in nature, in|that, those were limited to a period of 10|years from the date of commencement of|commercial production. iv)The incentives in the form of Excise Duty|Refund and Interest Subsidy were not given| to the assessees for purchasing Capital assetor for purpose of machinery. )AThe incentives were given for easy market|accessibility and to run the business more|profitably. 11)Relying on the above factors and referring to)VATIOUSparagraphs|appearing1n the.TWOjudgments of the Hon’ble Supreme Court of India|reported as|Sahney Steel and Press Works Limitedand others vs. Commissioner of Income Tax, 220,ITR 253 and.Commissioner of Income Tax vs. PonntSugars and Chemicals Limited, |2008] 306 ITA392(SC), the Income Tax Appellate Tribunal,|interpretedthe|incentives,1n question,asProduction Incentives, hence Revenue Receipts in the hands of the assessee and thus, liable to tax|as such. © 12) Learned counsel appearing for the appellants-assessees and the Revenue, relied heavily on the|above two judgments of Hon’ble Supreme Court ofIndia to project their respective view point, for andagainst the plea that the incentives ofExciseRefundand|Interest Subsidy etc.in the hands oftthe assessees was.Capital Receipt,referring to various paragraphs in the two judgments to)support their respective submissions. | 13) Orders passed in a case in the given facts and. circumstancesdo|NOToperateaS|binding.precedent, for, it is only theratio decidendithereotthat operates as precedent in law, is a position|well settled in law. 14) We, therefore, proceed to find the|ratioin the twosupreme Court Judgments relied upon by both|the parties to support their respective view point,to examine as to whether the Tribunal hadfollowed the ratio or was influenced by the orderspassed in the two cases on the basis of the facts|and circumstances of those cases. 1s) After going through the two judgments, we find.the ratio in Sahney Steel case and approval|thereof in Ponni Sugars and Chemicals Limited, tohave been spelt out, in the following paragraph ofthe judgment delivered by the Hon’ble Supreme|Court of India in Ponni Sugars and Chemicals|Limited case. [t reads thus:-. “ The importance of the judgment of this|Court inSahney Steelcase lies in the fact 16) that it has discussed and analysed the entirecase law and it has laid down the basic test|to be applied in judging the character of a/subsidy. That test 1s that the character of thereceipt in the hands of the assessee has to bedetermined with respect to the purpose for|which the subsidy is given. In other words, 1nsuch cases, one has to apply thepurposetest. The point of time at which the subsidy|is paid is not relevant. The source isimmaterial.Theformofsubsidyisimmaterial. The main eligibility condition in the scheme with which we are concerned in this case is that the incentive must be§utilized for repayment of loans taken by the|tosetupnewunitsorfor|substantial expansion of existing units. On|this aspect there is no dispute. If the object|of the subsidy scheme was to enable the|assessee to run the business more profitably|then the receipt is on revenue account. On|the other hand, if the object of the assistanceunder the subsidy scheme was to enable the_assessee to set up a new unit or to expand|the existing unit then the receipt of thesubsidy was on capital account. Therefore, it isthe|objectforwhichthe|subsidy/ assistance is given which determinesthe nature of the incentive subsidy. The formor the mechanism through which the subsidyis given are irrelevant7 Perusal of the judgments in Sahney Steel and Ponni Sugars, therefore, reveals that the Apex Perusal of the judgments in Sahney Steel and Ponni Sugars, therefore, reveals that the Apex Court had applied the above quoted dictum todetermine thewhich the two Schemes|DUrpose,had intended to achieve by theincentiveSubsidies, permissible under the Schemes in)question in those cases. It was, therefore, in the context of respectiveSubsidy incentive Schemes-in the two cases, thatthe subsidy in|Sahney Steelwas held to be.Revenue Receipt- whereas theSubsidy1nN PonntSugars and Chemicals Limitedwas held asCapital‘eReceipt 1/7) We are supported in taking this view by theobservations made by the Hon’ble Supreme Courtof India in a later decision reported asM/s MepcoIndustries Limited, Madurai vs. Commissioner ofIncome Tax and anr., 2009(7) Supreme 964, wherethe above dictum was reiterated as follows:- | S seooosseeeerrmahiney Steel and PreLimited & ors. (Supra) was a case which dealtwith production subsidy,|Ponnt Sugars andChemicals Limited (Supra)| dealt with subsidylinked to loan re-payment whereas thepresent case deals with a subsidy for setting|up an industry in the backward area.Therefore, in each case, one has to examinethe nature of the subsidy. The judgment ofthis Court in Sahney Steel and Press Works|Limited and ors. (supra) was on its own facts; so also, the judgment of this Court in Ponn1|Sugars and Chemicals Limited(Supra). The|nature of the subsidies in each of the three|cases 1s separate and distinct. There is no.straight jacket principle of distinguishing a_capital receipt from a revenue receipt.It depends upon the circumstances ofeach case. As stated above, in Sahney Steel|and Press Works Limited & ors.(supra), this|Court has observed that the production|incentive scheme is' different from theSchemeSivingsubsidyfor|settingUp|industries in backward areas.’ 18)Now coming to the findings of the AppellateTribunal on the issue, we find that the Tribunalhas referred to various paragraphs appearing inthe two judgments to support its view that theReceipts in the hands of the assesses wereProduction Incentives and thus)Revenue Receiptand not.Capital Receipt.This, however, appears tohave been done without appreciating that theobservations made in those paragraphs were inthe context of the Schemes as such, which the.Apex Court was considering to find theIntentand|PUFPOSeof the incentives under those Schemes,and not the law laid down as such. 19) The Tribunal has relied upon five factors to holdthe.incentives1nNquestionaS|ProductionIncentives but without dealing with that part of the Scheme, whereby unemployment in the Statehad been intended to be eradicated creatingatmosphere for accelerated industrial developmentto provide employment opportunities to deal withthe social problem of unemployment. — This in our view is lop-sided interpretation oftheNewIndustrialPolicyand|Concessionsformulated by the Central Government for theState.oT JammuandKashmirVICEOfficeMemorandum of June 14, 2002.20) Therefore, in view of the clear legal positionadumbrated by the Hon’ble Supreme Court ofIndia on the issue in question, that to determinethe nature and intent of the incentives as to'whether those were.OFRevenue ReceiptsCapitalReceipts, thePUFPOSe- underlying the incentiveswas the determinative test, there may not be anynecessity of referring to the judgments of otherHigh Courts of the Country relied upon by theappellants’ learned counsel, some of which hadbeen considered by the Hon’ble Supreme Court ofIndia in the above referred cases. 21) Thus, finding that the New Industrial Policy andother concessions for the State of Jammu andsKashmir has not been correctly appreciated by theAppellate Tribunal, we proceed to examine thetrue intent and purpose underlying the Policy andthe Concessions contemplated by the OfficeMemorandum of June 14, 2002 and statutorynotifications issued in this behalf. 21) Thus, finding that the New Industrial Policy andother concessions for the State of Jammu andsKashmir has not been correctly appreciated by theAppellate Tribunal, we proceed to examine thetrue intent and purpose underlying the Policy andthe Concessions contemplated by the OfficeMemorandum of June 14, 2002 and statutorynotifications issued in this behalf. 22) PerusalottheOfficeMemorandumdated14.06.2002 indicating New Industrial Policy and)other concessions for the State of Jammu and/Kashmir, makes it explicit that the concessionswere issued to achieve twin objects viz. (i)Acceleration of industrial development in theState of Jammu and Kashmir, which had beenfound lagging behind in such developmentand(11)Generation of employment in the State ofJammu and Kashmirse AmendmentintroducedTOthe|OfficeMemorandum vide Notification of November 28,2003 of the Government of India, Ministry ofCommerce and Industry (Department of Industrial Policy and Promotion) eloquently demonstrates theCentral Government’s intention in extending theincentives.TheGovernment’sasobjective,conveyed by Hon’ble the Prime Minister atsrinagar on April 19, 2003, was,For creation of. one lac employment and self employment opportunities in Jammu and Kashmir State. 23) To achieve the purpose and objective referred toherein above, it was,|inter alia, provided in the|Central Excise Notifications that the exemptionscontained in the Notifications would be available|only on production of Certificate from GeneralManager of the concerned District Industry Centreto the Jurisdictional Deputy Commissioner of theCentral Excise or the Assistant Commissioner otCentral Excise, as the case may be, to the effectthat the unit had.created Required Additional|Regular Employment,which would not, however,include employment provided by the industrialunitsto Daily wagers or Casual employees|seengaged in the Units 24) A close reading the Office Memorandum and theamendment introduced thereto with para No.3appearing in the Central Excise NotificationNos.56 and S/ of November 11, 2002, thus,makes it amply clear that the acceleration ofdevelopment of industries in the State wascontemplated with the object of generation ofemployment in the State of Jammu andKashmir and the generation of employment, soWasnotcasualorcontemplated,only temporary; but was on the other hand, ofpermanent nature. 295) Considered thus, the paramount consideration oftheCentralGovernment1nprovidingtheincentives to the New Industrial Units and-Wa Seubstantial Expansion of the existing units, the|generationofemploymentthroughacceleration of industrial development, to dealwith the social problem of unemployment inthe State, additionally creating opportunitiesfor self employment, hence a purpose in PublicInterest. 26) In this view of the matter, the incentives providedto the Industrial units, in terms of the NewIndustrialPolicy,foracceleratedIndustrialdevelopment in the State, for creation of suchindustrial atmosphere and environment, whichwould provide additional Permanent source ofEmployment to the unemployed in the State ofJammu and Kashmir, were in fact, in the natureof creation of New Assets of Industrial Atmosphereand|Environment,havingthe|potentialot|employment generation to achieve a social object.such incentives, designed to achieve PublicPurpose, can not, by any stretch of reasoning, beconstrued as production or operational incentivesfor the benefit of assesses alone. 2/) Thus, looking to the purpose, of eradication of thesocial problem of unemployment in the State byacceleration of the industrial development andremoving backwardness of the area that laggedbehind in Industrial development, which iscertainly a purpose in thePublic Interest, theincentives provided by the Office Memorandum and statutory notifications issued in this behalf, tothe appellants-assesses, cannot be construed asTnlerProduction and Trade Incentives,as held bythe Tribunal 2/) Thus, looking to the purpose, of eradication of thesocial problem of unemployment in the State byacceleration of the industrial development andremoving backwardness of the area that laggedbehind in Industrial development, which iscertainly a purpose in thePublic Interest, theincentives provided by the Office Memorandum and statutory notifications issued in this behalf, tothe appellants-assesses, cannot be construed asTnlerProduction and Trade Incentives,as held bythe Tribunal 28) Making of additional provision in the Scheme thatincentiveswould become.availableTOtheindustrial units, entitled thereto, from the date ofcommencement of the commercial production, andthat these were not required for creation of NewAssets cannot be viewed in isolation, to treat the.incentives as production incentives, as held by theTribunal, for the measure so taken, appears tohave been intended to ensure that the incentives|WeETEmadeavailableonlyTO thebonafide|Industrial Units so that larger Public Interest ofdealing with unemployment in the State, asintended, in terms of the Office Memorandum, was_achieved. 29) The other factors, which had weighed with theTribunal|1nthe.incentivesaS|determiningProduction Incentives may not be decisive todetermine the character of the incentive subsidies, when it is found, as demonstrated in the Office.Memorandum, amendment introduced theretoand the statutory notification too that the incentives were provided with the object ofcreating avenues for Perpetual Employment, toeradicate the social problem of unemployment inthe State by accelerated industrial development. 30) For all what has been said above, the finding of the Tribunal on the first issue that the Excise|Duty Refund, Interest Subsidy and InsurancesubsidyWeETEProductionIncentives,henceRevenue Receipt, cannot be sustained, beingagainst the law laid down by Hon’ble SupremeCourt of India in Sahney Steel and Ponni Sugarscases(supra). 31) The finding of the Tribunal that the incentiveswere Revenue Receipt is, accordingly, set asideholding the incentives to be Capital Receipt in thehands oft the assesses. 32) In view of our above finding on the first issue,there is no need to opine on the second issue,which was raised in the alternative. 33) These)Appeals,therefore,succeedand|Alc, accordingly, allowed setting aside the ordersimpugned in the Appeals, made by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar onthe appellants’ Appeals. 34) The appellants’ Appeals before the Income TaxAppellate Tribunal Amritsar Bench, Amritsaragainst the orders of the Commissioner of IncomeTax (Appeals), and Income Tax Officers, shall,therefore,TeVIVEfor|passingappropriateconsequential orders thereon, in accordance withlaw, in view of the findings recorded in theseAppeals. No orders as to costs. (Hasnain Massod1) (J. P. Singh) Judge — Judge Jammu:31.01.2011 |