Commissioner of Income Tax vs Gurdaspur Co-Operative Sugar Mills Ltd.

Hemant Gupta, J.—This order shall dispose of the abovementioned income tax appeals filed u/s 260A of the income tax Act, 1961 (for short "the Act"), against the order dated December 16, 2011, passed by the income tax Appellate Tribunal, Amritsar (for short "the Tribunal") arising out of the assessment year 2003-04 raising the following substantial question of law:

The income tax Appellate Tribunal, in the facts and circumstances of the case and under law, has erred in not appreciating the penalty of Rs. 10,50,00,000 was levied on the basis of furnishing of inaccurate particulars of income by the assessee by treating the revenue receipt of Rs. 2,15,00,000 as capital receipt whereas the subsidy receipt is a revenue receipt and the addition has been confirmed by the hon''ble income tax Appellate Tribunal, Amritsar Bench, Amritsar?

Learned counsel for the appellant relies upon the Division Bench judgment of the Delhi High Court reported as Commissioner of Income Tax Vs. ECS Ltd., wherein the deduction of 50 per cent, claimed by the assessee u/s 80-O was declined and the Assessing Officer estimated the expenditure in the ratio of proportion of foreign income to the total income.

We find that the reliance on the abovesaid judgment is not tenable, as in the aforesaid case, the deductions u/s 80-O of the Act was declined for the reason that the assessee has not produced any details of the expenses allegedly incurred by it. The Delhi High Court observed (page 170):

The assessee, for claiming deduction u/s 80-O of the Act, wanted the same at 50 per cent of the gross income received in convertible foreign exchange in India provided by it to its foreign clients. The Assessing Officer, however, was of the view that on correct interpretation u/s 80-O, deduction is restricted to the net income and, therefore, expenditure incurred in India for earning the foreign exchange had to be deducted. The Assessing Officer, therefore, wanted the assessee to furnish the details of expenses. As the assessee failed to do the needful in respect of various particulars demanded, the Assessing Officer was left with no alternative but to estimate such expenditure in the ratio of proportion of foreign income to the total income.

In the present case, there is no dispute about the quantum of receipt of grant-in-aid from the State Government. The assessee reflected the same as capital receipt whereas it has been treated as to be revenue receipt. The issue whether the amount of grant-in-aid is capital receipt or a revenue receipt is a debatable issue. The findings returned in the judgment relied upon is on fact of non-furnishing of details of expenses. The issue was not debatable as in the present case. Therefore, the reliance on the Division Bench judgment is misconceived.

In view of the above, we do not find any error in the findings recorded by the Tribunal while setting aside the penalty. Consequently, we do not find that the order of the Tribunal gives rise to any substantial question of law for the opinion of this court. Dismissed.