- (1.) THIS order shall dispose of four appeals bearing ITA Nos.420 to 422 of 2007 and 1 of 2008 as learned counsel for the parties are agreed that common question of law is involved in all the appeals besides one additional issue in ITA No.422 of 2007. However, the facts are being extracted from ITA No.420 of 2007. The delay in refiling the appeals is condoned.
(2.) ITA No.420 of 2007 has been preferred by the appellantassessee under Section 260A of the Income Tax Act, 1961 (in short, "the Act") against the order dated 27.10.2006, Annexure A.4, passed by the Income Tax Appellate Tribunal, Chandigarh Bench (in short, "the Tribunal"), for the assessment year 1995 -96, proposing to raise following substantial question of law: - "Whether in the facts and circumstances of the case, the Sales Tax Subsidy received by the assessee can be considered to be a revenue receipt when the Hon'ble Supreme Court has been pleased to entertain the Special Leave Petition No.21673 of 2006 and has also issued notice regarding stay against the operation of the judgment of this Hon'ble Court CIT vs. Abhishek Industries Limited, 2006 286 ITR 1"
(3.) IN ITA No.422 of 2007, besides the aforesaid substantial question of law, the following additional question has also been claimed: - "Whether in the facts and circumstances of the case, the Hon'ble ITAT was right in disallowing the interest under section 36(1) (iii) of the Income Tax Act on interest free loans granted to sister concern, contrary to the judgment of the Hon'ble Supreme Court in the case of S.A.Builders Limited v. CIT(Appeals) and another, 2007 288 ITR 1 " A few facts relevant for the decision of the controversy involved, as narrated in ITA No.420 of 2007, may be noticed. The assessee appellant was initially incorporated as Trident Alco Chem Limited on 29.9.1986 and its name was changed to Industrial Organics and Pharmaceuticals Limited on 5.12.2006. The assessee filed return for the assessment year 1995 -96 on 29.11.1995 showing nil income. Thereafter, the return was revised claiming deduction on account of sales tax subsidy as capital receipt and not revenue receipt for an amount of Rs. 77,27,755/ -. The Assessing officer passed order under section 143(3) of the Act disallowing the sales tax subsidy and treating the same as revenue receipt. The other additions made were on account of variance of yield of acetic acid treating Rs. 14,36,715/ - as suppressed sales and disallowance of interest on account of interest free loans given to sister concern to the extent of Rs. 3,23,617/ - and other miscellaneous expenses relating to advertisement, charity, donation and festival expenses. Aggrieved by the order, the assessee filed appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 14.10.1998, Annexure A.3, the CIT(A) deleted the addition made by the Assessing officer holding that the Assessing Officer could not make such an addition without rejecting the books of account. The disallowance made under section 36(1) (iii) of the Act on account of interest free loans given to sister concern was also deleted. However, the action of the Assessing officer in treating the sale tax subsidy as revenue receipt was upheld. Not feeling satisfied, the assessee filed appeal before the Tribunal. The Tribunal vide order dated 27.10.2006, Annexure A.4, following the decision of this Court in Abhishek Industries's case held the sales tax subsidy to be revenue receipt. The interest under Section 36(1) (iii) of the Act on account of interest free loans granted to sister concern was disallowed in the appeal relating to assessment year 1996 -97 out of which ITA No.422 of 2007 has arisen. Hence the instant appeals by the assesseeappellant.;