The Commissioner Of Income Tax, Tamil Nadu Viii Madras v. The Tiruttani Co-Operative Sugar Mills Limited Tiruvalangadu 631 210

In the High Court of Judicature at Madras Dated :28.4.2009 Coram : The Honourable Mr.Justice K.RAVIRAJA PANDIANandThe Honourable Mr.Justice M.M.SUNDRESH Tax Case (Appeal) Nos.609 to 612 of 2004 The Commissioner of Income Tax,Tamil Nadu VIII Madras.... Appellant in all Tax Cases Vs The Tiruttani Co-operative Sugar Mills LimitedTiruvalangadu 631 210.... Respondent in all Tax Cases TAX CASE (APPEALS) under Section 260A of the Income Tax Actagainst the orders of the Income Tax Appellate Tribunal Madras ABench dated 16.7.2003 made in I.T.A.No.1118, 1119/Mds/1996 and 1795and 1796/Mds/1998. respectively for the assessment year 1991-92.1992-93. 1993-94. 1994-95 and against the orders of the Commissionerof Income Tax, dated 05.03.1996, 05.03.1996, 04.06.98 and 04.06.1998made in ITA.No.59/93-94, 13/95-96, 2/96-97 and 80/96-97 for theassessment year 1991-92, 1992-93, 1993-94 and 1994-95 respectively,and against the orders of the Deputy Commissioner of Income Tax,Special Range-V, Madras-600 034, dated 28.01.1994, 21.03.1995,25.3.1996 and 16.01.1997 made in PAN.GIR.No. (1).603-T, (2).603-T-P.A.No.47-095-AZ-9622, (3).603-T-P.A.No.47-095-AZ-9622, and (4).630-T/94-95 respectively for Assessment Year 1991-92, 1992-93, 1993-94and 1994-95 respectively. JUDGMENT OF THE COURT WAS DELIVERED BY K.RAVIRAJA PANDIAN,J The appeals are filed by the revenue against the order ofthe Income Tax Appellate Tribunal, Madras A Bench dated 16.7.2003made in I.T.A.No.1118, 1119/Mds/1996 and 1795 and 1796/Mds/1998 https://hcservices.ecourts.gov.in/hcservices/ respectively. The relevant assessment years are 1991-92, 1992-93,1993-94 and 1994-95. The substantial questions of law formulated forentertainment of the appeal is as follows:- 1. Whether on the facts and in thecircumstances of the case, the Appellate Tribunalwas right in law in holding that the receipts fromthe sale of levy free sugar is capital receiptand not taxable ? 2. Whether on the facts and in thecircumstances of the case, the Tribunal isjustified in law in holding that receipt fromconcession in the rate of excise duty rebate iscapital receipt and not taxable ?" 2. The assessee is a co-operative Society engaged inmanufacture and sale of sugar. As regards the assessability ofreceipts on account of higher free sale of sugar and receipt ofexcise duty rebate, it was represented that these receipts arecapital in nature and therefore not to be treated as income liableto tax. The first appellate authority held that the amount receivedon account of higher free sale of sugar was a revenue receiptincludible in the total income of the assessee and confirmed theorder of the assessing officer. The addition is confirmed on accountof excise duty debited in the profit and loss account which was infact was not an ascertained liability or a real liability of theexcise duty payable by the assessee. These additions also confirmedby the appellate authority. Against the said order, the assesseepreferred appeals before the Income Tax Appellate Tribunal. TheTribunal allowed the appeals filed by the assessee. Aggrieved bythat order, the present tax case appeals are filed. 3. We heard the arguments of the learned counsel for therevenue and perused the materials available on record. 3. We heard the arguments of the learned counsel for therevenue and perused the materials available on record. 4. Learned counsel appearing for the revenue submitted that theissue involved in this case has already been decided by this court inthe case of Chengalrayan Co-operative Sugar Mills Ltd., Vs.Commissioner of Income Tax reported in 261 ITR 575, wherein thiscourt held that the purchase tax subsidy received by the assesseewould form part of the income from business. However, the exciseduty rebate or excise duty incentive would not form part of incomefrom business assessable to tax under Section 28(iv) of the IncomeTax Act, 1961. For coming to the said conclusion the Division Benchrelied on the decision of this court in the case of Commissioner ofIncome Tax Vs. Ponni Sugars and Chemicals Ltd., reported in 260 ITR605. 5. In the case of Commissioner of Income Tax Vs. MadurantakamCo-operative Sugar Mills Ltd reported in 263 ITR 388, the DivisionBench has held that the incentives given by the Government in theform of higher free sugar and allowing the owner to collect exciseduty on the sale price of free sale sugar in excess of normal quotabut to pay to the Government only the excise duty payable on theprice of levy sugar were incentives given exclusively for the purposeof repayment of loan borrowed for the purpose of meeting part of thecapital cost from financial institutions and therefore were notrevenue receipts. 6. The Supreme Court in the latest decision in COMMISSIOENR OFINCOME TAX VS. PONNI SUGARS AND CHEMICALS LTD (306 ITR 392(SC) heldthat the main eligibility condition in the schemes was that theincentive had to be utilised for repayment of loans taken by theassessee to set up new units or for substantial expansion of anexisting unit. The subsidy received by the assessee was not in thecourse of a trade but was of a capital nature. 7. In view of the above enunciation of law by the SupremeCourt, the questions of law have to be answered against the Revenueand the appeals are liable to be dismissed and as such dismissed. Sd/Asst.Registrar/true copy/Sub Asst.Registrarkrr To 1. The Assistant Registrar,Income Tax Appellate Tribunal,III Floor, Rajaji Bhavan,Besand Nagar, Chennai-90. 2. The Income Tax Appellate Tribunal,Chennai 'A' Bench, Chennai. 3. The Commissioner of Income Tax,121, Mahatman Gandhi Road, Chennai - 34. 4. The Deputy Commissioner of Income Tax,Special Range - V,Chennai - 34. 1 cc To Mr.Pushya Sitaraman, Standing Counsel for I.T.Cases, SR.18398. T.C.(A)Nos.609 to 612 of 2004 KSK(CO)RVL 05.06.2009