Commissioner of Incometax v. Meghalaya Steels Ltd.

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The Tax Publishers2013 TaxPub(DT) 2125 (Gau-HC) : (2013) 356 ITR 0235 : (2013) 261 CTR 0017 : (2013) 217 TAXMAN 0184 : (2013) 091 DTR 0081 IN THE Gauhati High Court I.A. Ansari & P. K. Musahary, J.J. CIT v. Meghalaya Steels Ltd. ITA Nos. 7 of 2010 & 16 of 2011 29 May, 2013 In favour of assessee. Section 80-IB, read with section 80-IC, of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial undertakings other than infrastructure development undertakings (Computation of deduction) Appellant by : K. P. Pathak, A. Hazarika & B. Chakraborty Respondent by : R. P. Agarwalla, R. Goenka, U.K. Borthakur, A. Goenka & D. Sahu JUDGMENT *I.A. Ansari, J.* By this common judgment and order, we propose to dispose of these two appeals, preferred under section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act), against the orders, dated 19-3-2010, passed by the learned Income Tax Appellate Tribunal (hereinafter referred to as the learned Tribunal), Guwahati, in Income Tax Appeal (in short, ITA) Nos. ITA 52/Gau/2009 and ITA 95/Gau/2007 inasmuch as these two appeals, as would be seen, cover all the four subsidies, namely, transport subsidy, interest subsidy, power subsidy and insurance subsidy, which form the subject-matter of controversy in the present set of appeals. While disposing of the two appeals, as indicated above, the learned Tribunal took the view that the assessee-respondents are entitled to claim deduction either under section 80IB or under section 80IC of the Act, though the Revenue contends that the assessee-respondents are not entitled to receive, and could not have been legally given, the benefit of deduction either under section 80IB or under section 80IC. 2. Whereas, by the impugned order, dated 19-3-2010, the learned Tribunal has dismissed the Appeal No. ITA 52/Gau/2009, preferred by the Revenue, by taking the view that the subsidies, namely, transport subsidy, power subsidy, interest subsidy and insurance subsidy, received by the assessee-respondents, would go on to reduce the corresponding expenses incurred and the resultant profit would be the profits and gains of the business of the industrial undertaking, that all these subsidies are inter-linked, inter-laced and having a direct nexus with the manufacturing activities of the assessee which are inseparable from the expenditure incurred by the assessee on account of transportation of purchase as well as sales, power, interest, insurance cover of the business of the assessee and, therefore, there is a direct nexus between the subsidy received by the assessees industrial undertaking and the resulting profits and gains thereof and the assessee is eligible for deduction under section 80-IB/80-IC of the Act. 3. The learned Tribunal, by its order, passed on the same date (i.e., by the order, dated 19-3-2010), has allowed the Appeal No. ITA 95/Gau/2007, preferred by the assessee, by taking the view that the subsidies, in question, would go on to reduce the corresponding expenses incurred and the resultant profit would be the profits and gains of the business of the industrial undertaking, that all these subsidies are inter-linked, inter-laced and having a direct nexus with the manufacturing activities of the assessee which are inseparable from the expenditure incurred by the assessee on account of transportation of purchase as well as sales, power, interest, insurance cover of the business of the assessee and, therefore, there is a direct nexus between the subsidy received by the assessees industrial undertaking and the resulting profits and gains thereof and the assessee is eligible for deduction under section 80-IB/80-IC of the Act. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 2125 (Gau-HC) : (2013) 356 ITR 0235 : (2013) 261 CTR 0017 : (2013) 217 TAXMAN 0184 : (2013) 091 DTR 0081

IN THE Gauhati High Court

I.A. Ansari & P. K. Musahary, J.J.

CIT v. Meghalaya Steels Ltd.

ITA Nos. 7 of 2010 & 16 of 2011

29 May, 2013

In favour of assessee.

Section 80-IB, read with section 80-IC, of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial undertakings other than infrastructure development undertakings (Computation of deduction)

Appellant by : K. P. Pathak, A. Hazarika & B. Chakraborty

Respondent by : R. P. Agarwalla, R. Goenka, U.K. Borthakur, A. Goenka & D. Sahu

JUDGMENT

I.A. Ansari, J.

By this common judgment and order, we propose to dispose of these two appeals, preferred under section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act), against the orders, dated 19-3-2010, passed by the learned Income Tax Appellate Tribunal (hereinafter referred to as the learned Tribunal), Guwahati, in Income Tax Appeal (in short, ITA) Nos. ITA 52/Gau/2009 and ITA 95/Gau/2007 inasmuch as these two appeals, as would be seen, cover all the four subsidies, namely, transport subsidy, interest subsidy, power subsidy and insurance subsidy, which form the subject-matter of controversy in the present set of appeals. While disposing of the two appeals, as indicated above, the learned Tribunal took the view that the assessee-respondents are entitled to claim deduction either under section 80IB or under section 80IC of the Act, though the Revenue contends that the assessee-respondents are not entitled to receive, and could not have been legally given, the benefit of deduction either under section 80IB or under section 80IC.

2. Whereas, by the impugned order, dated 19-3-2010, the learned Tribunal has dismissed the Appeal No. ITA 52/Gau/2009, preferred by the Revenue, by taking the view that the subsidies, namely, transport subsidy, power subsidy, interest subsidy and insurance subsidy, received by the assessee-respondents, would go on to reduce the corresponding expenses incurred and the resultant profit would be the profits and gains of the business of the industrial undertaking, that all these subsidies are inter-linked, inter-laced and having a direct nexus with the manufacturing activities of the assessee which are inseparable from the expenditure incurred by the assessee on account of transportation of purchase as well as sales, power, interest, insurance cover of the business of the assessee and, therefore, there is a direct nexus between the subsidy received by the assessees industrial undertaking and the resulting profits and gains thereof and the assessee is eligible for deduction under section 80-IB/80-IC of the Act.

3. The learned Tribunal, by its order, passed on the same date (i.e., by the order, dated 19-3-2010), has allowed the Appeal No. ITA 95/Gau/2007, preferred by the assessee, by taking the view that the subsidies, in question, would go on to reduce the corresponding expenses incurred and the resultant profit would be the profits and gains of the business of the industrial undertaking, that all these subsidies are inter-linked, inter-laced and having a direct nexus with the manufacturing activities of the assessee which are inseparable from the expenditure incurred by the assessee on account of transportation of purchase as well as sales, power, interest, insurance cover of the business of the assessee and, therefore, there is a direct nexus between the subsidy received by the assessees industrial undertaking and the resulting profits and gains thereof and the assessee is eligible for deduction under section 80-IB/80-IC of the Act.