TaxTMI 
TaxTMI 
2012 (12) TMI 208
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....AT in assessee's own case for the AY 2006-07 wherein the ITAT, while disposing of the cross-appeal of the Revenue in ITA No.1559/Del/2010 and, after discussing at length, held as under:- "18. The next dispute in the revenue's appeal reads as under: "3. On the facts and circumstances, whether Ld. CIT(Appeals) was justified on facts of the case and in law in deleting the disallowance of Rs.2,46,12,660/- on account of subsidy received by the assessee company and claimed as capital receipt whereas the AO has rightly treated the same as revenue receipt and disallowed the same citing various judicial pronouncements." The assessee company had been granted sales-tax subsidy by the State of Punjab to the tune of Rs 12.45 crores. During the relevant year, the assessee had claimed an amount of Rs.2,46,12,660/- being utilized out of the total subsidy and the same has been treated as capital receipt. When asked to justify the treatment of subsidy of sales-tax done in the computation of income, the assessee submitted a copy of the policy of the Punjab Government and the assessee stated that: "the company has set up Unit No.II in the financial year 2001-02. The fixed capital investmen....
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.... it has been mentioned that to encourage the growth of existing industrial units the benefit of investment incentive and sales tax concession shall be allowed on expansion provided the fixed capital investment is increased by at least 50%. Perusal of the above schemes shows that the incentive has been granted by the State Government to induce the foster rapid and wide growth of Industrialization of the State. The quantum of benefit has to be worked out on the basis of the fixed capital investment made by the industry. In the case of the appellant it is observed that the unit is in an area which has been notified as a specified area by the government. The Government of Punjab vide its notification mentioned above has notified that the State Government was of the opinion that for promoting the development of certain industries in the State it was necessary to grant exemption from Sales tax to a new unit and also to units which had undertaken an extension modernization or diversification. The amount of tax exemption allowed was on the basis of fixed capital investment made by the assessee. The Hon'ble Supreme Court in the case of Sawhney Steel and Press Works Ltd. 228 ITR 253 has held....
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....grieved. The learned D.R. strongly supported the order of the A.O. According to him the principle laid down by the Supreme Court in the case of Sawhney Steel and Press Works Ltd. (228 ITR 253) are clearly applicable in respect of the sales-tax received by the assessee. He also submitted that under the Incentive Scheme of the Government, the assessee is only entitled to deferment of sales-tax payment, calculated at a percentage of fixed capital investment. In fact, according to him, the sales-tax incentive will be treated as a deferred loan and the assessee is required to reimburse the said loan to the government. 21. The learned counsel for the assessee, on the other hand, heavily relied upon the order of the CIT (A) and the facts of his case, according to him, are exactly the same to the facts of M/s Bhushan Steels & Strips Ltd., New Delhi (ITA No.3727/Del/97 dated 27.02.2003) where identical scheme has gone in detail by the Tribunal and the Tribunal after examining the Scheme held that the amounts in question are to be treated as capital receipt. In all force, the issue stands covered in favour of the assessee by the aforesaid decision of the Tribunal. The decisions of the Tri....
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....pplicable. He relied upon the order of the Assessing Officer and stated that since the subsidy was given after the commencement of production as per the decision of the Hon'ble Apex Court in the case of Sahney Steel and Press Works Ltd. And Others (supra), the subsidy was in the nature of revenue receipt. However, we find that the identical issue was considered by the ITAT in assessee's own case in the earlier year and, in that year also, the learned DR has relied upon the decision of Hon'ble Apex Court in the case of Sahney Steel and Press Works Ltd. And Others (supra). The ITAT, after considering the above decision and the facts of the assessee's case, held that the subsidy was not a revenue receipt. Since the facts of the year under consideration are identical, respectfully following the above decision of the Tribunal in assessee's own case for AY 2006-07, we allow ground No.1 of the assessee's appeal. 5. Ground No.2 of the assessee's appeal reads as under:- "That the order u/s 250 passed by the Learned Commissioner of Income-Tax (Appeals) XV, New Delhi is against law and facts on the file in as much as he was not justified to uphold the action of the learned DCIT, Circ....