Priya Soparkar v. Indian Petrochemicals Corporation Ltd., Incometax Appeal

Priya Soparkar IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1587 OF 2016 Commissioner of Income Tax-LTU … Appellant V/s. M/s Indian Petrochemicals Corporation Ltd.… Respondent --- Mr.Tejveer Singh for the Appellant.Mr.Jehangir Mistri, Senior Counsel with Mr.P.C.Tripathi with Mr.Amit K. Mathur i/by Mr.Raj Daraka for the Respondent. --- CORAM : AKIL KURESHI AND M.S.SANKLECHA, JJ. DATE : FEBRUARY 18, 2019. P.C.:- 1.This appeal is filed by the revenue raising following question for our consideration: “1.Whether, on the facts and in thecircumstances of the case and in law, the ITATwas right in holding that notional sales taxexemption amount of Rs.85,97,07,481/- is acapital receipt not liable to Income-tax?2.Whether on the facts and in thecircumstances of the case and in law, the Tribunalwas right in deleting the addition made by the AOby disallowing the deduction u/s 80IA ofRs.86,51,99,227/- claimed by the assessee?” 2.Respondent-assessee is a registered company. For theassessment year 2006-07, the assessee had filed a return ofincome. Question No.1 raised by the revenue relates to theassessee's claim of a sum of Rs.85.97 crores (rounded off)received by way of sales tax exemption scheme of the Governmentof Gujarat and Government of Uttar Pradesh in relation to theassessee's three different projects. The assessee contended thatthe receipt was capital in nature as against the revenue'scontention that the sales tax exemption/waiver resulted intorevenue receipts in the hands of the assessee. The Commissionerof Income Tax in the Appellate Order after detailed discussionheld that the receipts were capital in nature. In so far as thereceipts arising out of the sales tax exemption scheme of Stateof Gujarat is concerned, we find that the issue is no longer res-integra. Gujarat High Court in case of Commissioner of IncomeTax-1 Vs. Indian Petrochemicals Corporation Ltd., IncomeTax Appeal No.1773 of 2018 and connected appeal byjudgment dated 19[th] July, 2016 while dismissing the revenue'sappeal, in this context made following observations : Priya Soparkar “5.We have heard both the learned counsel andperused the record. We have also gone throughthe decisions cited before us. After consideringthe material on record, we are of the view thatthe issues involved in this appeal are squarelycovered by the decisions of Apex Court in the casesof Ponni Sugars and Chemicals Ltd. (supra),Meghalaya Steels Ltd. (supra), Sri VenkataSatyanarayana Rice Mill Contractors Co.(supra),Ajanta Pharma Ltd.(supra) and the decisions of thisCourt in Tax Appeal No.226 of 2010, Tax AppealNo.77 of 2008, Sarabhai M.Chemicals (P.) Ltd.(supra). Learned advocate for the revenue is not ina position to controvert the law laid down in theaforesaid decisions. Therefore, the questions oflaw posed for our consideration in these appealsare answered in favour of the assessee and againstthe revenue. Accordingly appeal is dismissed.” 3.We may notice that similar issue came up before this Courtin case of The Commissioner of Income-Tax-LTU Vs. M/s.Indian Petrochemicals Corporation Limited reported inIncome Tax Appeal No.1428 of 2016. Following the decisionof the Gujarat High Court in the above noted decision revenue'sappeal was dismissed. 4.Learned counsel Shri Mistri for the respondent-assesseehowever fairly pointed out that in the present case the asssessee's 412 itxa 1587-16-o 3.We may notice that similar issue came up before this Courtin case of The Commissioner of Income-Tax-LTU Vs. M/s.Indian Petrochemicals Corporation Limited reported inIncome Tax Appeal No.1428 of 2016. Following the decisionof the Gujarat High Court in the above noted decision revenue'sappeal was dismissed. 4.Learned counsel Shri Mistri for the respondent-assesseehowever fairly pointed out that in the present case the asssessee's 412 itxa 1587-16-o claim arose out of two more receipts both under the sales taxexemption scheme of Government of Uttar Pradesh. We noticethat this issue has been elaborately discussed by theCommissioner (Appeals). He took note of the various terms ofthe scheme of State of Uttar Pradesh and noted that depending onthe location of the units of the eligible assessees, sales taxexemption was granted in terms of percentage of capitalinvestment. The scheme itself was founded on the basis ofattracting capital investments in certain backward areas. Thatbring the position, the scheme of Utter Pradesh which came upfor consideration before the CIT (appeals) and Tribunal in thepresent case is substantially similar. Though obviously cannotbe identical to the sales tax exemption scheme of theGovernment of Gujarat which was examined in case of M/s.Indian Petrochemicals Corporation Limited (supra). Under thecircumstances, the first question raised by the revenue is notentertained. 5.In so far as the third question is concerned, undisputedlythe issue is covered by the decision of this Court in case of Commissioner of Income Tax-LTU Vs. M/s Reliance IndustriesLtd. reported in Income Tax Appeal No.1056 of 2016. Therevenue's appeal was dismissed on this ground making followingobservations: “7.Counsel for the assessee pointed out that thejudgment of the Tribunal in case of RelianceInfrastructure limited(supra) was carried in appealby the revenue before the High Court in Income TaxAppeal No.2180 of 2011, such appeal was dismissedmaking following observations:- “6. As far as question (d), namely, the claimrelating to purchase price from Tata PowerCompany is concerned and that was for thededuction under Section 80IA, the ITAT inparagraph 21 onwards has noted the factualfindings and also referred to the order of theMaharashtra Electricity Regulatory Authority(for short “MERC”). Paragraph 36 set outs asto how the claim arose. The claim has beenconsidered in the light of Section 80IA andparticularly proviso and explanation thereto.The Tribunal eventually held that till theAssessment Year 2005-2006, the Revenueconsidered the rate at which the power waspurchased by the Assessee from Tata PowerCompany as market value. There is nothingbrought on record as to how the ratedetermined by the MERC is the true marketvalue. The Assessee gave explanation that therates determined by the MERC do not reflectthe correct market rate. The finding is that themode of computation and deduction underSection 80IA requires no deviation from thepast. The findings of fact and to be found inparagraphs 42 to 50 also reflect that the very Priya Soparkar issue came up for consideration for theAssessment Year 2003-2004. For the reasonsassigned by the ITAT and finding that theattempt is to seek reappreciation andreappraisal of the factual data that we cometo a conclusion that even question (d) asframed is not a substantial question of law.”Assessment Year 2003-2004. For the reasonsassigned by the ITAT and finding that theattempt is to seek reappreciation andreappraisal of the factual data that we cometo a conclusion that even question (d) asframed is not a substantial question of law.” 8.Thus, the issue at hand had been examined bythis Court on earlier occasion and the view of theTribunal under similar circumstances was approved.”this Court on earlier occasion and the view of theTribunal under similar circumstances was approved.” 8.Thus, the issue at hand had been examined bythis Court on earlier occasion and the view of theTribunal under similar circumstances was approved.”this Court on earlier occasion and the view of theTribunal under similar circumstances was approved.” 6.In the result, Income Tax Appeal is dismissed. (M.S.SANKLECHA,J.) (AKIL KURESHI,J.)….….