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of <h1>Tribunal allows assessee's appeal on deduction under section 80 IA for subsidies received</h1> <h3>Rupinder Singh Arora Versus ITO 6 (1) (2), Mumbai and ITO 9 (3) (4), Mumbai Versus Rupinder Singh Arora and Vice-Versa</h3> Rupinder Singh Arora Versus ITO 6 (1) (2), Mumbai and ITO 9 (3) (4), Mumbai Versus Rupinder Singh Arora and Vice-Versa - TMI Issues:1. Availability of deduction under section 80 IA on subsidy received.2. Nature of subsidy - capital or revenue.Issue 1: Availability of deduction under section 80 IA on subsidy received:- The assessee claimed deduction under section 80 IA against business income, including MEDA subsidy and Sales Tax entitlement.- Assessing officer disallowed the deduction on the grounds that the subsidy and incentive were not profits derived from the industrial undertaking.- CIT (Appeal) upheld the disallowance based on judicial precedents.- The assessee argued that the income from subsidy and incentive had a direct nexus to the wind mill project, making it eligible for deduction under section 80 IA.- The Tribunal referred to a Supreme Court judgment in the case of CIT Vs. M/S Meghalaya Steel Ltd., where it was held that subsidies reimbursed for costs incurred in the business are eligible for deduction.- The Tribunal set aside the CIT (Appeal) order and directed the assessing officer to reconsider the deduction claim in light of the Supreme Court judgment.Issue 2: Nature of subsidy - capital or revenue:- The nature and character of the subsidy and incentive were not disputed in this case.- The Tribunal proceeded on the assumption that the subsidy and incentive were revenue in nature.- The Tribunal emphasized that the immediate source of the subsidies being the government does not affect their eligibility for deduction under section 80 IA.- The Tribunal cited the Supreme Court's ruling in CIT Vs M/S Sri Balaji Alloys, supporting the inclusion of subsidies under the head 'profits and gains of business or profession.'- The Tribunal allowed the assessee's appeal for statistical purposes, directing a reevaluation by the assessing officer.In conclusion, the Tribunal allowed the assessee's appeals for statistical purposes and dismissed the department's appeal. The orders were pronounced on 10.02.2017.
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