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of <h1>Tax Tribunal Upholds Deductions for Transport Subsidies as Integral to Business Profits for 2000-01 and 1997-98.</h1> The ITAT dismissed the Revenue's appeals for asst. yrs. 2000-01 and 1997-98, affirming the CIT(A)'s decisions to allow deductions under section 80-IA for ... Deduction u/s 80-IA - partnership concern for setting up an industrial unit - freight subsidy - HELD THAT:- There is no doubt in our mind that the transport subsidy granted to the assessee was with a view to run the unit profitably and the nature of the subsidy is operational and cannot be segregated from the business of the industrial undertaking. Thus, we are of the view that the transport subsidy granted to the assessee was rightly taken by the assessee into consideration in working out the profits and gains of business of the undertaking. As already pointed out, the grant of subsidy is linked with the incurring of the expenditure and, therefore, the receipt is not a separate source of income. The receipt is the business income of the undertaking and the same has rightly been taken into consideration as income of the undertaking under the said head of income. Our view is supported by the decision of Calcutta High Court in the case of Merinoply & Chemicals Ltd.[1993 (8) TMI 29 - CALCUTTA HIGH COURT]. We accordingly see no infirmity in the order of the CIT(A) in having deleted the disallowance made by the AO. We, therefore, dismiss the appeal of the Revenue. Similar is the ground raised in Revenue's appeal for the asst. yr. 1997-98. The CIT(A) has allowed relief on account of transport subsidy for the purpose of computation of profits derived from business of the undertaking. For the reasons discussed in Revenue's appeal for the asst. yr. 2000-01, the order of the CIT(A) does not call for any interference. The same is accordingly upheld. In the result, both the appeals filed by the Revenue are hereby dismissed. Issues involved: Calculation of deduction u/s 80-IA in appeals for asst. yr. 2000-01 and 1997-98.For asst. yr. 2000-01:The Revenue disputed the deduction claimed by a partnership concern for setting up an industrial unit, involving a freight subsidy. The AO disallowed the deduction based on previous court decisions. However, the CIT(A) allowed the deduction, citing various judgments and the direct link between the subsidy and the income of the industrial unit.The Revenue contended that previous court decisions supported disallowing the subsidy, while the assessee argued that the subsidy was linked to reducing transportation costs and should not be treated as separate income. The Tribunal analyzed the Transport Subsidy Scheme and concluded that the subsidy was integral to the business operation, supporting the CIT(A)'s decision to allow the deduction.For asst. yr. 1997-98:Similar to the previous case, the Revenue challenged the allowance of transport subsidy for calculating business profits. The CIT(A) granted relief on this account, and the Tribunal upheld this decision based on the same reasoning as in the previous appeal.In both cases, the Tribunal dismissed the Revenue's appeals, affirming the CIT(A)'s decisions to allow the deduction for transport subsidies in computing the profits derived from the business undertakings.
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