ULTRA TECH CEMEMENT LTD, MUMBAI v. ADDL CIT RG 2(2), MUMBAI

ITA 1751/MUM/2009 | 2006-2007
Pronouncement Date: 31-05-2010 | Result: Allowed

Appeal Details

RSA Number 175119914 RSA 2009
Assessee PAN AAACL6442L
Bench Mumbai
Appeal Number ITA 1751/MUM/2009
Duration Of Justice 1 year(s) 2 month(s) 13 day(s)
Appellant ULTRA TECH CEMEMENT LTD, MUMBAI
Respondent ADDL CIT RG 2(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 31-05-2010
Date Of Final Hearing 10-05-2010
Next Hearing Date 10-05-2010
Assessment Year 2006-2007
Appeal Filed On 18-03-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F MUMBAI BEFORE SHRI R.V. EASWAR SR. VICE PRESIDENT AND SHRI A.L. GEHLOT ACCOUNTANT MEMBER ITA NOS. 1751/M/2009 ASSESSMENT YEAR: 2006-07 ULTRATECH CEMENT LTD. APPELLANT AHURA CENTRE B WING 2 ND FLOOR MAHAKALI CAVES RD. ANDHERI (E) MUMBAI 400 093 (PAN AAACL 6442L) VS. ADDL. COMMISSIONER OF INCOME TAX RESPONDENT RANGE 2(2) MUMBAI ITA NOS. 2064/M/2009 ASSESSMENT YEAR: 2006-07 VS. ADDL. COMMISSIONER OF INCOME TAX APPELLANT RANGE 2(2) MUMBAI VS. ULTRATECH CEMENT LTD. RESPONDENT AHURA CENTRE B WING 2 ND FLOOR MAHAKALI CAVES RD. ANDHERI (E) MUMBAI 400 093 (PAN AAACL 6442L) ASSESSEE BY : MR. SAMPAT KABRA/B.L. KABRA REVENUE BY : MR. AJIT KUMAR SINHA ORDER PER A.L. GEHLOT A.M.: THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER OF CIT (A)- II MUMBAI PASSED ON 14.1.2009 FOR THE ASSESSMENT YEAR 2006-07. ITA NO. 1751/M/09 APPEAL BY ASSESSEE 2. THE SOLE GROUND RAISED IN THIS APPEAL BY THE ASS ESSEE IS THAT THE CIT (A) ERRED IN NOT TREATING THE SALES TAX EXE MPTION BENEFIT OF RS. 105.94 CRORES AS CAPITAL RECEIPT. ITA NO.1751 & 2064/M/09 M/S ULTRATECH CEMENT LTD. 2 3. BRIEFLY THE FACTS RELATING TO RAISE THIS GROUND ARE THAT THE ASSESSEE CLAIMED A SUM OF RS. 105.5 CRORES ON ACCOU NT OF SALES TAX EXEMPTION AS CAPITAL IN NATURE WHEREAS THE AO WAS O F THE VIEW THAT IT IS REVENUE IN NATURE. THE CIT (A) CONFIRMED THE ORDER OF AO. 4. AT THE OUTSET THE LEARNED REPRESENTATIVES OF TH E PARTIES SUBMITTED THAT THIS ISSUE IS COVERED BY THE ORDER O F ITAT IN ASSESSEES OWN CASE IN ITA NOS. 7646 & 7647/MUM/07 AND 7735 & 7736/MUM/07 FOR A.YS 2004-05 & 2005-06 VIDE ORDER D ATED 20TH AUGUST 2009 WHEREIN THE ITAT HAS FOLLOWED THE DECI SION OF ITAT SPECIAL BENCH MUMBAI IN THE CASE OF RELIANCE INDUST RIES 88 ITD 273 WHICH WAS AFFIRMED BY THE HONBLE BOMBAY HIGH COURT IN APPEAL NO. 1299 OF 2008 DATED 15.04.2009. THE LEARN ED REPRESENTATIVES OF THE PARTIES SUBMITTED THAT FACTS OF THE CASE UNDER CONSIDERATION ARE IDENTICAL AND SCHEME OF SAL ES TAX IS ALSO SIMILAR TO THAT OF RELIANCE INDUSTRIES. 5. AFTER HEARING THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSING THE RECORD WE FIND THAT THE ITAT IN ASSES SEES OWN CASE CITED SUPRA ON IDENTICAL SET OF FACTS HELD AS UNDER :- 5.2 WE FURTHER NOTED THAT IN SIMILAR CIRCUMSTANCES THE OTHER BENCH OF THE TRIBUNAL IN THE CASE OF MAHARASHTRA OI L EXTRACTION P. LTD IN 7618/MUM/2005 FOR AY 2003-04 F OLLOWING THE DECISION IN THE CASE OF RELIANCE INDUSTRIES HAS ALLOWED THE CLAIM OF THE ASSESSEE. SIMILARLY IN THE CASE OF ZE NITH FIBRES LTD. IN 2009-TOIL-468 THE TRIBUNAL HAS ALLOWED THE CLAIM OF THE ASSESSEE. 6. SINCE THE FACTS ARE SIMILAR IN THE PRESENT CASE THEREFORE IN VIEW OF THE ABOVE DECISIONS OF THE TRIBUNAL AND THE DECISION OF THE HONBLE BOMBAY HIGH COURT WE HOLD THAT SALE S TAX EXEMPTION BENEFIT IS ON ACCOUNT OF CAPITAL RECEIPT NOT LIABLE TO TAX. ACCORDINGLY THIS GROUND FOR BOTH THESE YEARS IS ALLOWED. 6. SINCE THE FACTS OF THE CASE UNDER CONSIDERATION ARE IDENTICAL TO THAT OF DECISION OF ITAT IN ASSESSEES OWN CASE IN AY 2004-05 & 2005-06 WE RESPECTFULLY FOLLOW THE ORDER OF ITAT A ND IN THE LIGHT OF THAT WE SET ASIDE THE ORDERS OF THE REVENUE AUTHORI TIES AND ALLOW THE CLAIM OF THE ASSESSEE. ITA NO.1751 & 2064/M/09 M/S ULTRATECH CEMENT LTD. 3 ITA NO. 2064/M/09 REVENUES APPEAL 7. GROUND NOS. 1 & 2 ARE IN RESPECT OF DEDUCTION U/ S 80IA IN RESPECT OF PROFITS OF UNDERTAKINGS CONSISTING OF PO WER GENERATING DG SETS. 8. BRIEFLY THE FACTS RELATING TO THESE GROUNDS ARE THAT THE ASSESSEE CLAIMED DEDUCTION U/S 80 IA IN RESPECT OF PROFITS OF UNDERTAKING CONSISTING OF POWER GENERATING DG SETS. THE AO REJECTED THE ASSESSEES CLAIM ON THE GROUND THAT UN DERTAKING CONSISTING OF POWER GENERATING DG SETS ARE STAND BY POWER GENERATING MACHINES AND NOT STAND ALONE MACHINES T HEREFORE THEY CANNOT BE TREATED AS INDUSTRIAL UNDERTAKINGS ENGAGE D IN THE BUSINESS OF GENERATING POWER. THE CIT (A) FOLLOWING THE ORDER OF ITAT IN ASSESSEES OWN CASE FOR AY 2004-05 AND 2005 -06 ALLOWED THE CLAIM OF THE ASSESSEE. 9. AFTER HEARING THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSING THE RECORD WE FIND THAT ON IDENTICAL SET OF FACTS ITAT HAS ALREADY DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSE E IN ASSESSEES OWN CASE IN ITA NOS. 7646 & 7647/MUM/07 AND 7735 & 7736/MUM/07 FOR A.YS 2004-05 & 2005-06 VIDE ORDER D ATED 20TH AUGUST 2009. SINCE THE CIT(A) ALLOWED THE CLAIM O F THE ASSESSEE FOLLOWING THE SAID ORDER OF ITAT WE DO NOT FIND AN Y INFIRMITY IN THE ORDER OF CIT(A) THEREFORE THE ORDER OF IS HEREBY CONFIRMED. 10. GROUND NOS. 3 4 & 5 ARE IN RESPECT OF DISALLOW ANCE U/S 80-IA IN RESPECT OF PROFIT OF RAIL SYSTEM AT HIRMI IN THE STATE OF CHHATTISGARH. 11. BRIEFLY THE FACTS RELATING TO THESE GROUNDS ARE THAT THE ASSESSEE CLAIMED RS. 20 94 78 143/- U/S 80-IA IN RE SPECT OF PROFITS OF RAIL SYSTEM AT HIRMI. THE AO REJECTED THE ASSESS EES CLAIM ON THE GROUND THAT RAIL SYSTEM IS NOT AN INDEPENDENT UNIT BUT IT IS 100% DEPENDING ON THE CEMENT UNIT. THE CIT(A) ALLOWED T HE CLAIM OF THE ITA NO.1751 & 2064/M/09 M/S ULTRATECH CEMENT LTD. 4 ASSESSEE FOLLOWING HIS PREDECESSORS ORDER FOR AY 20 04-05 AND 2005-06 OBSERVING THAT THE FACTS OF THE CASE UNDER CONSIDERATION ARE IDENTICAL TO THAT OF AY 2004-05 & 2005-06. 12. AT THE OUTSET THE LEARNED REPRESENTATIVES OF T HE PARTIES SUBMITTED THAT THIS ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF ITAT IN ASSESSEES OWN CASE IN ITA NOS. 7646 & 7647/MUM/07 AND 7735 & 7736/MUM/07 FOR A.YS 2004-05 & 2005-06 VIDE ORDER DATED 20TH AUGUST 2009. THE REL EVANT FINDING OF THE ITAT IS REPRODUCED BELOW:- 16 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDE RED THEM CAREFULLY. WE HAVE ALSO PERUSED THE VARIOUS M ATERIAL PLACED ON RECORD ON WHICH OUR ATTENTIONS WERE DRAWN . AFTER TAKING INTO CONSIDERATION WE FIND THAT THE CIT(A) HAS DEALT WITH THE ASPECT IN DETAIL. CONTENTION RAISED BEFORE THE CIT(A) ON BEHALF OF THE ASSESSEE WERE NOT FOUND INCORRECT OR FALSE. CONDITIONS OF SEC. 80IA HAVE BEEN FULFILLED BY THE ASSESSEE. THEREAFTER THE CIT(A) CAME TO THE CONCLUSION THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IA. THE FINDINGS OF THE LD CIT(A) ARE GIVEN IN PARA 3.10 ARE AS UNDER: 3.10 AFTER PERUSAL OF THE FACTS OF THE CASE FINDIN GS GIVEN BY THE AO AND SUBMISSIONS MADE BY THE APPELLANT I FIN D THAT THE ONLY ISSUES IN THIS CASE IS WHETHER THE APPELLANT I S ELIGIBLE FOR DEDUCTION U/S 80IA IN RESPECT OF PROFITS DERIVED FR OM THE RAIL SYSTEM. THERE IS NO DISPUTE THAT THE APPELLANT 9I) IS A COMPANY (II) HAS DEVELOPED THE RAIL SYSTEM AND (III) IT HAS ENTERED INTO AN AGREEMENT FOR OPERATION AND MAINTENANCE OF THE R AIL SYSTEM WITH THE RAILWAYS I.E. THE GOVERNMENT. THUS ALL TH E THREE CONDITIONS REQUIRED TO BE FULFILLED AS PER SEC. 80I A(4)(I) HAVE BEEN SATISFIED BY THE APPELLANT. MOREOVER RAIL SYST EM IS DEFINED IN EXPLANATION TO SEC. 80IA(4)(I) AS AN INF RASTRUCTURE FACILITY. FURTHER SEPARATE BOOKS OF ACCOUNT ARE BEI NG MAINTAINED BY THE APPELLANT. THE MERE FACT THAT INT ERNAL INVOICES ARE NOT RAISED DOES NOT MEAN THAT THE RAIL SYSTEM IS NOT A PROFIT CENTER. IT IS ALSO FOUND THAT ALL THE DOUBTS RAISED BY THE AO IN THE ASSESSMENT ORDER HAVE BEEN FULLY E XPLAINED BY THE APPELLANT I.E. THE AO HAS HIMSELF STATED IN THE ASSESSMENT ORDER THAT THE RAIL SYSTEM WAS DEVELOPED BY L&T LTD. WHICH HAS BEEN INHERITED BY THE APPELLANT AS A RESULT OF THE DEMERGER AND CIRCULAR NO.733 DATED 3.1.1996 CAT EGORICALLY STATED THAT BENEFIT OF SEC. 80IA IS APPLICABLE TO D EVELOPMENT OF RAIL SYSTEM AND THERE IS NO GAIN SAYING THE FACT TH AT THE APPELLANT HAS DEVELOPED THE RAIL SYSTEM AND IS OPER ATING AND MAINTAINING THE SAME. AFTER PERUSAL OF THE FACTS AS SELL AS THE JUDICIAL PRONOUNCEMENTS QUOTED ABOVE IT IS THEREFOR E HELD THAT THE APPELLANT IS ELIGIBLE FOR DEDUCTION U/S 80IA IN RESPECT OF ITA NO.1751 & 2064/M/09 M/S ULTRATECH CEMENT LTD. 5 PROFITS FROM RAIL SYSTEM. IN VIEW OF THE SAME THE AO IS DIRECTED TO ALLOW DEDUCTION/S 80IA OF RS. 15 64 33 576/-. 17 AS STATED ABOVE NEITHER THE FINDINGS OF THE LD CIT(A) COULD BE CONTROVERTED BY THE LD DR NOR ANY OTHER MA TERIAL WAS BROUGHT ON RECORD TO ESTABLISH OTHERWISE. THEREFORE IN VIEW OF THE UNCONTROVERTED REASONING GIVEN BY THE LD CIT(A) WE CONFIRM HIS RUDER ON THIS ISSUE ALSO. 13. AFTER HEARING THE LEARNED REPRESENTATIVES OF TH E PARTIES WE FIND THAT SINCE THE FACTS ARE IDENTICAL TO THAT OF THE CASE DECIDED BY THE ITAT IN ASSESSEES OWN CASE FOR AY 2004-05 & 20 05-06 WE RESPECTFULLY FOLLOW THE ORDER OF ITAT AND IN THE LI GHT OF THAT WE CONFIRM THE ORDER OF CIT(A). 14. GROUND NOS. 6 7 & 8 ARE IN RESPECT OF DISALLOWA NCE OF RS. 8 28 008/- INCURRED FOR PURCHASE OF SOFTWARE. 15. THE ASSESSEE CLAIMED RS. 8 28 008/- IN BOOKS OF ACCOUNT AS CAPITAL EXPENDITURE WHICH WAS INCURRED FOR PURCHAS E OF SOFTWARE AND CLAIMED DEPRECIATION ACCORDINGLY. HOWEVER A NO TE IS GIVEN IN COMPUTATION OF TOTAL INCOME THAT IT MAY BE TREATED AS REVENUE EXPENSES. THE AO REJECTED THE CLAIM OF THE ASSESSE E AND TREATED THE SAME AS CAPITAL EXPENDITURE. THE CIT(A) ALLOWE D THE CLAIM OF THE ASSESSEE. 16. AT THE TIME OF HEARING BEFORE US THE LEARNED D R RELIED UPON THE ORDER OF AO WHEREAS THE LEARNED AR RELIED UPON THE JUDGMENT OF HONBLE P&H HIGH COURT IN THE CASE OF CIT VS. RAMCO INTERNATIONAL [2009] 17 DTR (P&H) 214 AND SUBMITTE D THAT THE ASSESSEE CAN CLAIM DEDUCTION U/S 80-IB BY WAY OF AN APPLICATION. HOWEVER THE LEARNED AR HAS NOT MUCH ARGUED ON THIS GROUND. ITA NO.1751 & 2064/M/09 M/S ULTRATECH CEMENT LTD. 6 17. AFTER HEARING THE LEARNED REPRESENTATIVES OF T HE PARTIES WE ARE OF THE VIEW THAT SINCE THE AR HAS NOT MUCH ARGU ED ON THIS POINT WE SET ASIDE THE ORDER OF CIT (A) AND RESTOR E THAT OF THE ORDER OF AO. 18. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED AND THE APPEAL OF THE REVENUE IS PARTLY ALLOWED. PRONOUNCED IN OPEN COURT ON THIS 31 ST DAY OF MAY 2010. SD/- SD/- (R.V. EASWAR) (A.L. GEHLOT ) SR. VICE PRESIDENT ACCOUNTANT MEMBER DATED: 31 ST MAY 2010. COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE F BENCH I.T .A.T. MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR I.T.A.T. MUMBAI. KV S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON 10.5.10 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 24.5.10 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER