TaxTMI 
TaxTMI 
TaxTMI 
2013 (7) TMI 655
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....ption of Rs. 3,09,40,235/=. Similar sales tax exemptions of varying amounts were received for the subsequent assessment years ie., AY 1992-93 and 1993-94 also. Such incentives, according to the assessee, were in the nature of capital receipts. The Assessing Officer, however, did not accept such contention and held that the same was revenue in nature. The assessee carried the matter in appeal. CIT [A] by his order dated 28th March 2011, reversed the view of the Assessing Officer. He held that the purpose of incentives was clearly for promoting capital investment and thereby to achieve industrial development and therefore, incentive was in the nature of capital receipt. He relied on the decision of the Apex Court in case of CIT v. Ponni Sugars & Chemicals Limited, reported in 306 ITR 392. Revenue carried the matter in appeal before the Tribunal. The Tribunal, dismissed the Revenues appeal by judgment dated 4th November 2011. The Tribunal relied on the decision in case of Ajanta Manufacturing Limited v. CIT [ITA No. 793/RJT/2010]. The Revenue is thereupon before us in the present Tax Appeals. Learned counsel for the Revenue pointed out that the decision of the Tribunal in case of Aj....
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....object of granting refund of sales tax was that the assessee could set up new business or expand his existing business. The contention of the assessee in that case was dismissed by the Tribunal and, therefore, the assessee had come to this Court by way of a special leave petition. It was held by this Court on the facts of that case and on the basis of the analyses of the Scheme therein that the subsidy given was on revenue account because it was given by way of assistance in carrying on of trade or business. On the facts of that case, it was held that the subsidy given was to meet recurring expenses. It was not for acquiring the capital asset. It was not to meet part of the cost. It was not granted for production of or bringing into existence any new asset. The subsidies in that case were granted year after year only after setting up of the new industry and only after commencement of production and, therefore, such a subsidy could only be treated as assistance given for the purpose of carrying on the business of the assessee. Consequently, the contentions raised on behalf of the assessee on the facts of that case stood rejected and it was held that the subsidy received by Sahney St....
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.... leave petition. It was held by this Court on the facts of that case and on the basis of the analyses of the Scheme therein that the subsidy given was on revenue account because it was given by way of assistance in carrying on of trade or business. On the facts of that case, it was held that the subsidy given was to meet recurring expenses. It was not for acquiring the capital asset. It was not to meet part of the cost. It was not granted for production of or bringing into existence any new asset. The subsidies in that case were granted year after year only after setting up of the new industry and only after commencement of production and, therefore, such a subsidy could only be treated as assistance given for the purpose of carrying on the business of the assessee. Consequently, the contentions raised on behalf of the assessee on the facts of that case stood rejected and it was held that the subsidy received by Sahney Steel could not be regarded as anything but a revenue receipt. Accordingly the matter was decided against the assessee. The importance of the judgment of this Court in Sahney Steel case lies in the fact that it has discussed and analysed the entire case law and it ha....
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....f the existing industrial unit merely replaces plant and machinery it will not be considered modernization, eligible for incentives under this scheme. Conditions for seeking benefit of the scheme were as under :- New Investment in Modernization which fulfills the following criteria will be treated as modernization eligible for incentives under this scheme :- [a] The existing industrial unit would make new investment towards modernization to the extent of not less than 25% of the original book value of the plant and machinery for which incentives are claimed. [b] Such new investment should not be less than Rs. 5 Crores. [c] Such new investment towards modernization must be accompanied by and result into 25% or more increase in the licenced capacity as it existed prior to modernization. [d] The benefit of incentives towards modernization will be restricted to the new investment towards additional 50% increase in the licenced capacity thereby aggregating the licenced capacity upto 150%. [e] Modernization in respect of new plant and machinery which is not a replacement and modernization in respect of plant and machinery which is depreciated upto 80% or more of the original book....
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....tries to under-developed areas as well as to provide additional employment. The Government responded positively to the representations that on account of rapid changes in technology, there was constant need for upgradation of technology in industries. It was, therefore, necessary to encourage modernization. As part of such a scheme, incentives were given to industries existing in under-developed areas to undertake modernization. The scheme thus was primarily concerned with the modernization of the existing industries. It was not a scheme either for development of new industries in specified areas, or for mere expansion of the existing production capacities of the industries. Thus, the main purpose of the resolution was to modernize industries, which ordinarily would come at a considerable cost, particularly when such industries were located in under-developed areas. It can be imagined that the industries will find it difficult without Governments incentive to undertake large-scale modernization with the use of modern technology. It was for this purpose that the said scheme was framed giving benefit of the Sales Tax Waiver/Deferment, at the option of the industry concerned. Such ben....