2018 (8) TMI 1752 - AT - Income Tax

Tribunal upholds Commissioner decision on subsidy as capital receipt.

Assistant Commissioner of Income Tax, Circle – 12, Pune Versus M/s. Universal Construction

The Tribunal dismissed the Revenue's appeal, upholding the Commissioner's decision to treat the subsidy received by the assessee as a capital receipt. The ... Nature of receipt - addition in respect of subsidy received - revenue or capital receipt - Held that:- As decided in COMMISSIONER OF INCOME-TAX VERSUS RELIANCE INDUSTRIES LTD.[2009 (4) TMI 516 - BOMBAY HIGH COURT] subsidy sanctioned to the assessee under similar Package Scheme of Incentives, 1993 was held to be capital in nature. DR has failed to controvert the findings of Commissioner of Income Tax (Appeals). In the absence of any contrary material on record, we uphold the findings of First Appellate Authority in deleting the addition in respect of subsidy received by the assessee holding it to be capital in nature. Accordingly, the appeal of the Revenue is dismissed being devoid of any merit. - Decided against revenue. Issues:Interpretation of subsidy received by the assessee under the Package Scheme of Incentives, 2007 as revenue or capital receipt.Analysis:The appeal by the Revenue was against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2012-13. The notice of appeal was duly served to the assessee, but no representation was made on behalf of the assessee. The Assessing Officer treated the subsidy received by the assessee as a revenue receipt, adding it to the income returned. The Commissioner of Income Tax (Appeals) referred to a previous Tribunal decision to classify the subsidy as a capital receipt. The Revenue, represented by Shri M.K. Gautam, contested this classification, arguing that the subsidy should be considered a revenue receipt. The Revenue also mentioned an appeal filed before the High Court against a similar Tribunal decision. The Tribunal examined the facts, noting the subsidy was granted against the investment made by the assessee in various assets. The Tribunal upheld the Commissioner's decision, citing precedents where similar subsidies were deemed capital in nature. As the Revenue failed to provide contrary evidence, the Tribunal dismissed the appeal, affirming the subsidy's classification as a capital receipt.In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the Commissioner's decision to treat the subsidy received by the assessee as a capital receipt. The judgment was delivered on August 3, 2018.