Sales-tax incentive from state govt. not taxable as capital receipt: ITAT decision upheld.

The ITAT upheld the CIT(A)'s decision that sales-tax incentive received from the state government is a capital receipt and not taxable. Relying on precedent and consistent with the co-ordinate bench's view, the ITAT dismissed the revenue's appeal, stating the incentive is not subject to tax. The order was pronounced on 21st March 2018.

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Issues:
- Appeal against CIT(A) order pertaining to AY 2011-12 regarding sales-tax incentive received from state government.

Analysis:
1. Issue of Disallowance of Sales-tax Incentive:
- The appeal filed by the revenue was against the CIT(A)'s order for AY 2011-12, where the assessee company's income was determined by disallowing sales-tax incentive received from the state government.
- The CIT(A) deleted the addition based on the decision of ITAT, Nagpur bench in the assessee's own case for AY 2003-04 to 2009-10, stating that sales-tax incentive availed is a capital receipt and not taxable.
- The revenue contended that the sales-tax subsidy was revenue in nature and taxable as profits, citing a decision of the Hon’ble Delhi High Court.
- The ITAT, considering the previous decisions, upheld that the sales-tax incentive is capital in nature and not subject to tax, consistent with the view taken by the co-ordinate bench.

2. Judgment and Conclusion:
- The ITAT upheld the CIT(A)'s decision, stating that sales-tax incentive received from the state government is a capital receipt and not taxable.
- The ITAT relied on the precedent set in the assessee's own case for earlier years and dismissed the revenue's appeal.
- The ITAT found no error in the CIT(A)'s order and concluded that the sales-tax incentive is not exigible to tax, in line with the view taken by the co-ordinate bench.
- The appeal of the revenue was dismissed, and the order was pronounced on 21st March 2018.

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