Principal Commissioner Of Income Tax Central - 1, Kolkata v. M/S. Rashmi Metaliks Ltd

Form No. (J2) IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE P R E S E N T: THE HON’BLE JUSTICE T.S. SIVAGNANAMA N D THE HON’BLE JUSTICE HIRANMAY BHATTACHARYYA ITAT/75/2021IA NO.GA/1/2021 PRINCIPAL COMMISSIONER OF INCOME TAX CENTRAL - 1,KOLKATAVS.M/S. RASHMI METALIKS LTD. ITAT/75/2021IA NO.GA/2/2021 PRINCIPAL COMMISSIONER OF INCOME TAX CENTRAL - 1,KOLKATAVS.M/S. RASHMI METALIKS LTD. Appearance :Mr. P.K. Bhowmick, Adv.Mr. Asok Bhowmick, Adv.… for the appellant Mr. Agnibesh Sengupta, Adv...for the respondent Heard on : 31.01.2022 Judgment on : 31.01.2022 T.S. SIVAGNANAM, J. :- We have heard Mr. P.K. Bhowmick,learned standing Counsel for appellant/revenue and Mr. AgnibeshSengupta, learned Counsel for respondent/assessee. There is a delay of 983 days in filing this appeal and therespondent/assessee has filed an affidavit-in-opposition pointing outthat substantial portion of the delay remains unexplained and thelittle explanation given for the remaining period is also bereft ofparticulars. We find that the delay of eight months i.e. from 5.9.2018to 24.4.2019 has not been explained . Similarly the delay from15.7.2019 to 17.2.2020 has not been explained. Therefore, we wouldhave been well justified in dismissing the application and refusing tocondone the delay. However, since the appeal has been filed by therevenue under Section 260A of the Act we thought fit to consider as towhether any substantial questions of law would arise forconsideration in this appeal. When this suggestion was put forth tothe learned Counsel for the parties, learned Counsels readily agreed toargue the main appeal itself on merits. Hence for that reason alone weexercise discretion and condone the delay in filing the appeal. ITAT/75/2021 : This appeal by the revenue filed under Section 260A of theIncome Tax Act, 1961 (the Act) is directed against the order passed bythe Income Tax Appellate Tribunal “C” Bench (Tribunal) dated 02.05.2018 in ITA/813 to 816/Kol/2017 for the assessment years2009-10 to 2012-13. The revenue has raised the following substantial questionsof law for consideration: 1.Whether in the facts and circumstances of the caseand in law, the Learned Income Tax AppellateTribunal, Kolkata is justified in quashing therevisionary order under section 263 passed by theLearned Pr. Commissioner of Income Tax, Central-1,Kolkata for the year 2009-10, 2010-11 & 2011-12 onthe ground the assessment years became unabatedproceedings without considering the provisions ofSection 153A of the Income Tax Act that the AssessingOfficer shall assess or reassess the total Income of sixassessment years immediately preceeding theassessment year relevant to the previous year in whichsuch search is conducted or requisition is made asnowhere in the Act it is stated that the assessmentshould be made on the basis of seized document?and in law, the Learned Income Tax AppellateTribunal, Kolkata is justified in quashing therevisionary order under section 263 passed by theLearned Pr. Commissioner of Income Tax, Central-1,Kolkata for the year 2009-10, 2010-11 & 2011-12 onthe ground the assessment years became unabatedproceedings without considering the provisions ofSection 153A of the Income Tax Act that the AssessingOfficer shall assess or reassess the total Income of sixassessment years immediately preceeding theassessment year relevant to the previous year in whichsuch search is conducted or requisition is made asnowhere in the Act it is stated that the assessmentshould be made on the basis of seized document? 2.Whether on the facts and circumstance of the case andin law, the Learned Income Tax Appellate Tribunal wasjustified in admitting fresh evidence by acknowledgingthe letters filed by the assessee as evidence that M/s.in law, the Learned Income Tax Appellate Tribunal wasjustified in admitting fresh evidence by acknowledgingthe letters filed by the assessee as evidence that M/s. 2.Whether on the facts and circumstance of the case andin law, the Learned Income Tax Appellate Tribunal wasjustified in admitting fresh evidence by acknowledgingthe letters filed by the assessee as evidence that M/s.in law, the Learned Income Tax Appellate Tribunal wasjustified in admitting fresh evidence by acknowledgingthe letters filed by the assessee as evidence that M/s. Rashmi Cement Pvt Ltd and M/s. Orissa Metaliks PvtLtd have for certain periods used the railway sidingsthereby concluding that the infrastructure facility wasused by other parties also when the fact is that theseclosely held Private Limited Companies are groupcompanies of Rashmi Group and cannot be treated asseparate entity? 3.Whether on the facts and circumstances of the caseand in law, the Learned Tribunal Tax AppellateTribunal was justified in holding that the assessee isentitled to deduction under section 80IA and quashingthe order under Section 263 thereby denying thatAssessing Officer to conduct enquiry relating to theclaim under section 80IA particularly in the light offreight evasion which could have an impact on theagreement with the railways and consequent denial of80IA claim for the Assessment Year 2012-13? We have heard Mr. P K Bhowmick, learned Counsel dulyassisted by Mr. Asok Bhowmick for the appellant/revenue and Mr.Agnibesh Sengupta, learned Counsel for the respondent/assessee. The short question involved in this appeal is whether theassessee was entitled to the benefit of deduction under Section 80-IA(4). The assessing officer completed the assessment under Section 153A read with Section 143(3) by order dated 31.03.2015. Thoughthere were several issues involved, the issue which is the subjectmatter for consideration before us was decided in favour of theassessee, vide order dated 31[st] March, 2015. Though the said issueis as to whether the assessee was entitled for deduction under Section80-IA (4) of the Act was directly not considered, the collateral issuewas whether there were incriminating documents available during thesearch and seizure operations and when there was nothing recoveredor seized during the search and seizure operations relatable to theclaim of deduction under Section 80-IA(4) whether such deductioncould have been denied. Accordingly, assessment stood completed forall the four assessment years by allowing the deduction. The PrincipalCommissioner of Income Tax, Central I, Kolkata (PCIT) invoked itspower under Section 263 of the Act among other things proposed thaton scrutiny of the assessment records it is seen that the assessee hadclaimed deduction under Section 80-IA(4) of the Act for its privaterailway sidings. This according to the PCIT was not admissible.Accordingly, show cause notice dated 28.02.2017 was issued underSection 263 of the Act. Assessee filed their objections which did notfind favour with the PCIT and the same was rejected and the proposalwas confirmed by separate orders dated 20.03.2017 for all the fourassessment years. Aggrieved, by such order, the assessee filed appealbefore the Tribunal. The Tribunal has done a very thorough factual examination. Firstly, it went into aspect as to whether every loss ofrevenue as a consequence of an order of the assessing officer could betreated as prejudicial to the interest of revenue and erroneous. Inthis regard, the Tribunal rightly took note of the decision rendered inanother case wherein the Tribunal has relied on the decision of theHon’ble Supreme Court in M/s. Malabar Industrial Co. Ltd. Vs. CIT;reported in 2000 243 ITR 83 and held that every assessment orderwhich may result in loss of revenue cannot be treated to be prejudicialto the interest of revenue. Thereafter the Tribunal proceeded toexamine as to whether the assessing officer was right in granting thebenefit of the deduction under Section 80-IA(4) of the Act. After takingnote of the relevant statutory provision, the Tribunal examined thevarious covenants contained in the agreement entered into betweenthe assessee and the Indian Railways and in particular Clause 19 ofthe agreement dealing with the Railway Administration’s rightregarding use of the sidings and after noting the said condition andalso other related facts the Tribunal granted relief to the assessee. Therevenue seeks to sustain the order passed by the PCIT under Section263 of the Act by contending that the two companies which werepermitted to use the railway sidings were group companies of theassessee and they were closely held companies by the assessee and,therefore, cannot be construed to be used by general public. Thiscontention of the revenue has to be outrightly rejected and such narrow interpretation of the agreement entered into between theassessee and Indian Railways cannot be given. In our opinion, theTribunal rightly referred to the various clauses in the agreement andcame to the conclusion that the Railway Administration had a right touse all the sidings which have been put up by the assessee. Thus, theassessee would squarely fall within the ambit of clause (b) of Section80-IA(4) of the Act. Further, we note Tribunal has relied on thedecision in the case of Tamilnadu Petro Products Vs. AssistantCommissioner of Income Tax (2011) 13 taxman.com 139(Madras). Inthe said decision the Court took note of the decision in the case of CITVs. Tanfac Industries Ltd.; [SLP (C) No. 18537 of 2009], wherein whileapplying Section 80-IA(4) of the Act, The Hon’ble Supreme Court tooka view that the value of steam used for captive consumption by theassessee was entitled to be deducted under Section 80-IA of the Act.In Tamilnadu Petro Products (supra) the revenue contended that theexpression “derived from” should be given restricted meaning in whichevent the claim of the assessee cannot be countenanced. Thisargument by the revenue was rejected by holding that Section 80-IA(4) provides for the benefit even in respect of electricity generationplant established by the assessee and income derived from suchenterprise of the assessee and it was held that the assessee has fullycomplied with the requirement prescribed under Section 80IA in orderto avail the benefit provided therein. The above decision will squarely apply to the facts of the case on hand. Furthermore, the Tribunal alsorelied upon the decision of the ITAT Mumbai Bench in the case of JSWSTEEL VS. PCIT in ITA NOS.4063, 4064 and 4086/MUM/2017 dated30/11/2017 wherein identical facts were involved and thus we are ofthe clear view that the Tribunal rightly allowed the appeal filed by theassessee.In the result, the present appeal filed by the assessee standsdismissed and substantial questions of law are answered against therevenue. Consequently, stay application stands dismissed. (T. S. SIVAGNANAM, J.) I agree. (HIRANMAY BHATTACHARYYA, J.) GH/RS