TaxTMI 
TaxTMI 
2011 (9) TMI 344
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.... circumstances of the case and in law the Hon'ble Tribunal was right in holding that expenditure for earning dividend income cannot be estimated and therefore, cannot be allowed while computing book profits and also under the normal provisions of the Income tax Act. (B) Whether on the facts and circumstances of the case and in law the Hon'ble Tribunal was right in disallowing u/s 43B of the Income tax Act the unpaid custom duty and excise duty included in closing stock. (C) Whether on the facts and circumstances of the case and in law the Hon'ble Tribunal was right in holding that sales tax incentive is a Capital Receipt." Accordingly, the civil appeals are allowed, impugned orders are set aside and the cases are remitted to the Hi....
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....nts. P.C.: 1. Revenue is in appeal on the following substantial questions of law: "(A) Whether on the facts and in the circumstance of the case and in law the Hon'ble Tribunal was right in holding that expenditure for earning dividend income cannot be estimated and therefore cannot be allowed while computing book profits and also under the normal provisions of the Income-Tax Act. (B) Whether on the facts and in the circumstance of the case and in law the Hon'ble Tribunal was right in deleting the disallowance made by the Assessing Officer of payments made by the Assessee Company towards provident fund and superannuation fund relating to Assessment Year 1997-1998 that were claimed by the Assessee in 1998-1999 u/s 43B of the Incom....
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....al in appeal observed that "The assessee has earned dividend income only from three companies. There is no fact of having incurred any expenditure for the purpose of earning the dividend income. The disallowance in our view is misconceived and the same is deleted in the light of the same order." In our opinion, this is purely a finding of fact and, therefore, question (A) as framed would not arise. 3. So far as Question (C) is concerned, same is answered by the judgment of the Supreme Court in Income Tax Reports Volume 266 [2004] 99 in the case of Berger Paints India Ltd. v. Commissioner of Income-Tax. Question (C), therefore, would not arise. 4. So far as Question (B) is concerned, the Tribunal relied upon the ITAT Mumbai Bench 'J' (....
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.... in effect, it was held by the Tribunal that the subsidy in the form of sales tax incentive was not given to the assessee for assisting it in carrying out the business operations. The object of the subsidy was to encourage the setting up of industries in the backward area." . Thus, it can clearly be seen that a finding has been recorded that the object of the subsidy was to encourage the setting up of industries in the backward area by generating employment therein. In our opinion, in answering the issue, the test as laid down by the Supreme Court in Commissioner of Income-Tax v. Ponni Sugars and Chemicals Ltd. [2008] 306 ITR 392 (SC) will have to be considered. The Supreme Court has held that the test of the character of the receipt of ....