Calcutta High Court
Kolkata vs M/S. Rashmi Metaliks Ltd on 31 January, 2022
Form No. (J2)
IN THE HIGH COURT AT CALCUTTA
SPECIAL JURISDICTION (INCOME TAX)
ORIGINAL SIDE
P R E S E N T:
THE HON'BLE JUSTICE T.S. SIVAGNANAM
AND
THE HON'BLE JUSTICE HIRANMAY BHATTACHARYYA
ITAT/75/2021
IA NO.GA/1/2021
PRINCIPAL COMMISSIONER OF INCOME TAX CENTRAL - 1,
KOLKATA
VS.
M/S. RASHMI METALIKS LTD.
ITAT/75/2021
IA NO.GA/2/2021
PRINCIPAL COMMISSIONER OF INCOME TAX CENTRAL - 1,
KOLKATA
VS.
M/S. RASHMI METALIKS LTD.
Appearance :
Mr. P.K. Bhowmick, Adv.
Mr. Asok Bhowmick, Adv.
... for the appellant
Mr. Agnibesh Sengupta, Adv.
..for the respondent
Heard on : 31.01.2022
Judgment on : 31.01.2022
T.S. SIVAGNANAM, J. :- We have heard Mr. P.K. Bhowmick,
learned standing Counsel for appellant/revenue and Mr. Agnibesh
Sengupta, learned Counsel for respondent/assessee.
There is a delay of 983 days in filing this appeal and the
respondent/assessee has filed an affidavit-in-opposition pointing out
that substantial portion of the delay remains unexplained and the
little explanation given for the remaining period is also bereft of
particulars. We find that the delay of eight months i.e. from 5.9.2018
to 24.4.2019 has not been explained . Similarly the delay from
15.7.2019 to 17.2.2020 has not been explained. Therefore, we would
have been well justified in dismissing the application and refusing to
condone the delay. However, since the appeal has been filed by the
revenue under Section 260A of the Act we thought fit to consider as to
whether any substantial questions of law would arise for
consideration in this appeal. When this suggestion was put forth to
the learned Counsel for the parties, learned Counsels readily agreed to
argue the main appeal itself on merits. Hence for that reason alone we
exercise discretion and condone the delay in filing the appeal.
ITAT/75/2021 :
This appeal by the revenue filed under Section 260A of the
Income Tax Act, 1961 (the Act) is directed against the order passed by
the Income Tax Appellate Tribunal "C" Bench (Tribunal) dated
02.05.2018 in ITA/813 to 816/Kol/2017 for the assessment years
2009-10 to 2012-13.
The revenue has raised the following substantial questions
of law for consideration:
1. Whether in the facts and circumstances of the case
and in law, the Learned Income Tax Appellate
Tribunal, Kolkata is justified in quashing the
revisionary order under section 263 passed by the
Learned Pr. Commissioner of Income Tax, Central-1,
Kolkata for the year 2009-10, 2010-11 & 2011-12 on
the ground the assessment years became unabated
proceedings without considering the provisions of
Section 153A of the Income Tax Act that the Assessing
Officer shall assess or reassess the total Income of six
assessment years immediately preceeding the
assessment year relevant to the previous year in which
such search is conducted or requisition is made as
nowhere in the Act it is stated that the assessment
should be made on the basis of seized document?
2. Whether on the facts and circumstance of the case and
in law, the Learned Income Tax Appellate Tribunal was
justified in admitting fresh evidence by acknowledging
the letters filed by the assessee as evidence that M/s.
Rashmi Cement Pvt Ltd and M/s. Orissa Metaliks Pvt
Ltd have for certain periods used the railway sidings
thereby concluding that the infrastructure facility was
used by other parties also when the fact is that these
closely held Private Limited Companies are group
companies of Rashmi Group and cannot be treated as
separate entity?
3. Whether on the facts and circumstances of the case
and in law, the Learned Tribunal Tax Appellate
Tribunal was justified in holding that the assessee is
entitled to deduction under section 80IA and quashing
the order under Section 263 thereby denying that
Assessing Officer to conduct enquiry relating to the
claim under section 80IA particularly in the light of
freight evasion which could have an impact on the
agreement with the railways and consequent denial of
80IA claim for the Assessment Year 2012-13?
We have heard Mr. P K Bhowmick, learned Counsel duly
assisted by Mr. Asok Bhowmick for the appellant/revenue and Mr.
Agnibesh Sengupta, learned Counsel for the respondent/assessee.
The short question involved in this appeal is whether the
assessee was entitled to the benefit of deduction under Section 80-
IA(4). The assessing officer completed the assessment under Section
153A read with Section 143(3) by order dated 31.03.2015. Though
there were several issues involved, the issue which is the subject
matter for consideration before us was decided in favour of the
assessee, vide order dated 31st March, 2015. Though the said issue
is as to whether the assessee was entitled for deduction under Section
80-IA (4) of the Act was directly not considered, the collateral issue
was whether there were incriminating documents available during the
search and seizure operations and when there was nothing recovered
or seized during the search and seizure operations relatable to the
claim of deduction under Section 80-IA(4) whether such deduction
could have been denied. Accordingly, assessment stood completed for
all the four assessment years by allowing the deduction. The Principal
Commissioner of Income Tax, Central I, Kolkata (PCIT) invoked its
power under Section 263 of the Act among other things proposed that
on scrutiny of the assessment records it is seen that the assessee had
claimed deduction under Section 80-IA(4) of the Act for its private
railway sidings. This according to the PCIT was not admissible.
Accordingly, show cause notice dated 28.02.2017 was issued under
Section 263 of the Act. Assessee filed their objections which did not
find favour with the PCIT and the same was rejected and the proposal
was confirmed by separate orders dated 20.03.2017 for all the four
assessment years. Aggrieved, by such order, the assessee filed appeal
before the Tribunal. The Tribunal has done a very thorough factual
examination. Firstly, it went into aspect as to whether every loss of
revenue as a consequence of an order of the assessing officer could be
treated as prejudicial to the interest of revenue and erroneous. In
this regard, the Tribunal rightly took note of the decision rendered in
another case wherein the Tribunal has relied on the decision of the
Hon'ble Supreme Court in M/s. Malabar Industrial Co. Ltd. Vs. CIT;
reported in 2000 243 ITR 83 and held that every assessment order
which may result in loss of revenue cannot be treated to be prejudicial
to the interest of revenue. Thereafter the Tribunal proceeded to
examine as to whether the assessing officer was right in granting the
benefit of the deduction under Section 80-IA(4) of the Act. After taking
note of the relevant statutory provision, the Tribunal examined the
various covenants contained in the agreement entered into between
the assessee and the Indian Railways and in particular Clause 19 of
the agreement dealing with the Railway Administration's right
regarding use of the sidings and after noting the said condition and
also other related facts the Tribunal granted relief to the assessee. The
revenue seeks to sustain the order passed by the PCIT under Section
263 of the Act by contending that the two companies which were
permitted to use the railway sidings were group companies of the
assessee and they were closely held companies by the assessee and,
therefore, cannot be construed to be used by general public. This
contention of the revenue has to be outrightly rejected and such
narrow interpretation of the agreement entered into between the
assessee and Indian Railways cannot be given. In our opinion, the
Tribunal rightly referred to the various clauses in the agreement and
came to the conclusion that the Railway Administration had a right to
use all the sidings which have been put up by the assessee. Thus, the
assessee would squarely fall within the ambit of clause (b) of Section
80-IA(4) of the Act. Further, we note Tribunal has relied on the
decision in the case of Tamilnadu Petro Products Vs. Assistant
Commissioner of Income Tax (2011) 13 taxman.com 139(Madras). In
the said decision the Court took note of the decision in the case of CIT
Vs. Tanfac Industries Ltd.; [SLP (C) No. 18537 of 2009], wherein while
applying Section 80-IA(4) of the Act, The Hon'ble Supreme Court took
a view that the value of steam used for captive consumption by the
assessee was entitled to be deducted under Section 80-IA of the Act.
In Tamilnadu Petro Products (supra) the revenue contended that the
expression "derived from" should be given restricted meaning in which
event the claim of the assessee cannot be countenanced. This
argument by the revenue was rejected by holding that Section 80-IA
(4) provides for the benefit even in respect of electricity generation
plant established by the assessee and income derived from such
enterprise of the assessee and it was held that the assessee has fully
complied with the requirement prescribed under Section 80IA in order
to avail the benefit provided therein. The above decision will squarely
apply to the facts of the case on hand. Furthermore, the Tribunal also
relied upon the decision of the ITAT Mumbai Bench in the case of JSW
STEEL VS. PCIT in ITA NOS.4063, 4064 and 4086/MUM/2017 dated
30/11/2017 wherein identical facts were involved and thus we are of
the clear view that the Tribunal rightly allowed the appeal filed by the
assessee.
In the result, the present appeal filed by the assessee stands
dismissed and substantial questions of law are answered against the
revenue.
Consequently, stay application stands dismissed.
(T. S. SIVAGNANAM, J.)
I agree.
(HIRANMAY BHATTACHARYYA, J.)
GH/RS
