Pr. Commissioner Of Income Tax -4 v. Harinagar Sugar Mills Ltd

R.M. AMBERKAR (Private Secretary) IN THE HIGH COURT OF JUDICATURE AT BOMBAYO.O.C.J.INCOME TAX APPEAL NO. 464 OF 2017 Pr. Commissioner of Income Tax -4 Versus ..Appellant Harinagar Sugar Mills Ltd ..Respondent ................... Mr. Suresh Kumar for the Appellant Mr. Suresh Kumar for the Appellant ................... CORAM : AKIL KURESHI & S.J. KATHAWALLA, JJ. DATE : JUNE 10, 2019. P.C.: 1.Revenue is in the appeal against the judgment of theIncome Tax Appellate Tribunal, Mumbai (“the Tribunal” forshort) dated 12.4.2016. 2.Following questions are presented for our consideration:- "(i) Whether on the facts and in the circumstances of the case andin law, the ITAT was justified in upholding the order of theCIT(A) in directing the Assessing Officer to delete the additionon account of excess depreciation claimed by the assessee?in law, the ITAT was justified in upholding the order of theCIT(A) in directing the Assessing Officer to delete the additionon account of excess depreciation claimed by the assessee? (ii) Whether on the facts and in the circumstances of the case andin law, the ITAT was justified in holding that capital subsidyin law, the ITAT was justified in holding that capital subsidy received as excise duty reimbursement is not a revenuereceipt?" (iii) Whether on the facts and in the circumstances of the case andin law, the ITAT was justified in upholding the order of theCIT(A) in directing the Assessing Officer to delete the additionmade to the book profit on account of excess depreciation andsubsidy received by way of reimbursement of commercial tax(VAT)?"in law, the ITAT was justified in upholding the order of theCIT(A) in directing the Assessing Officer to delete the additionmade to the book profit on account of excess depreciation andsubsidy received by way of reimbursement of commercial tax(VAT)?" 3.In so far as Question No. (I) is concerned, we notice that similar issue had come up for consideration before this Courtin Revenue’s Income Tax Appeal No. 1710 of 2014 in case ofthis very assessee for earlier assessment year. Whiledisposing of the appeal by an order dated 3.4.2017, theCourt recorded that the learned counsel for the Revenue haSinstructions not to press this ground. This question is,therefore, not considered. 4.In so far as question Nos. (ii) and (iii) are concerned,the same were considered in case of this very assessee inIncome Tax Appeal No. 1132 of 2014. By an order dated4.1.2017 while disposing of the Revenue’s appeal, the Courtmade following observations:- the same were considered in case of this very assessee inIncome Tax Appeal No. 1132 of 2014. By an order dated4.1.2017 while disposing of the Revenue’s appeal, the Courtmade following observations:- "3.Regarding question no. (i): (a) It is undisputed position before us as also before the Tribunal that the subsidy scheme formulated by the Government of Bihar wasfor the purpose of attracting capital investment and to encouragesetting up / expansion of existing units. Thus the object / purposes ofthe subsidy was for the purposes of encouraging capital investmentsin the State of Bihar. Consequently the impugned order holds thatsubsidy would be on Capital account and could not be considered tobe on Revenue account. (b) In fact this issue about the object/purpose of the subsidydeciding its character as revenue or capital is no longer res integra inview of the decision of the Supreme Court in CIT, Madras v/s. PonniSugars & Chemicals Ltd. (2008) 9 SCC 337 and in Civil AppealNo.10666 of 2013 (CIT v/s. M/s. Shree Balaji Alloys) rendered on 19[th]April, 2016. Thus the test has been correctly applied by the Tribunalin accordance with the above decisions. (c) In the above view, question no.(i) as proposed does not giverise to any substantial question of law. Thus not entertained. -4. Regarding question no. (ii): (b) In fact this issue about the object/purpose of the subsidydeciding its character as revenue or capital is no longer res integra inview of the decision of the Supreme Court in CIT, Madras v/s. PonniSugars & Chemicals Ltd. (2008) 9 SCC 337 and in Civil AppealNo.10666 of 2013 (CIT v/s. M/s. Shree Balaji Alloys) rendered on 19[th]April, 2016. Thus the test has been correctly applied by the Tribunalin accordance with the above decisions. (c) In the above view, question no.(i) as proposed does not giverise to any substantial question of law. Thus not entertained. -4. Regarding question no. (ii): (a) The issue raised in this question is consequential to questionno.(i). We have already held that the subsidy received by therespondent - assessee from the State of Bihar was in the nature ofcapital receipt. Hence the same cannot be added to arrive at bookprofits of the respondent - assessee under Section 115J of the Act. (b) However, it is pertinent to note that the question as proposedalso seeks addition to book profits on account of excess depreciationalong with subsidy received by the respondent - assessee. It issettled position in law as held by the Apex Court in Apollo TyresLtd. v/s. CIT 255 ITR 273 that the Assessing Officer while computingthe book profit under Section 115J of the Act has only a power to examine whether the books of account have been maintained inaccordance with the provisions of the Companies Act and have beenduly audited. The book profits as reflected in the duly auditedaccount have to be accepted by the Assessing Officer and the onlylimited power he has to increase/ decrease the book profit as arrivedat by the assessee is only in terms of the Explanation to Section115J of the Act. In the present case, the Revenue is not invoking theexplanation to Section 115J of the Act to vary the book profitdeclared in the audited accounts of the respondent - assessee. Thus,the question as proposed herein does not give rise to any substantialquestion of law as it also stands concluded against the Revenue bythe decision of the Apex Court in Apollo Tyres Ltd. (supra). 5.In the result, the appeal is dismissed. [ S.J. KATHAWALLA, J. ] [ AKIL KURESHI, J ]