TaxTMI 
TaxTMI 
TaxTMI 
2013 (10) TMI 924
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....d not form part of the actual cost of plant and machinery within the meaning of section 43 of the income tax act, 1961. Therefore, the addition of Rs. 6,36,750/- may kindly be deleted. 3. Ground No.1 : After hearing both the parties, we find that during assessment proceedings the Assessing Officer noticed that assessee has received a sales tax subsidy amounting to Rs. 6,65,19,673/- which was treated as capital receipt. On query, it was submitted that assessee had received sales tax exemption for a period of 10 years in terms of Punjab State Government Industrial Policy Incentive Code 1996. It was also contended that as per the decision of Hon'ble Punjab & Haryana High Court in the case of State v Si ya Ram Garg dated 14.12.2010 in ITA No. 679 of 2010, the subsidy has to be treated as capital receipt. However, the Assessing Officer observed that under similar circumstances, sales tax subsidy was held to be of Revenue nature by the Hon'ble Punjab & Haryana High Court in the case of Abhishek Industries Ltd (286 ITR 1). 4. On appeal, it was admitted before the Ld. C IT(A) that this issue has already been decided in the earlier years in favour of the Revenue by the Tribunal. The Ld. C....
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....r:- "Explanation 10 - Where a portion of the cost of an asset acquired by the assessee has been met directly or indirectly by the Central Government or a State Government or any authority established under any law or by any other person, in the form of a subsidy or grant or reimbursement (by whatever name called), then, so much of the cost as is relatable to such subsidy or grant or reimbursement shall not be included in the actual cost of the asset to the assessee. 14. The above clearly shows that subsidy has to be reduced from the cost of fixed assts, therefore, we find nothing wrong with the order of Ld. C IT(A) and confirm the same. 15. In the result, assessee's appeal is dismissed. ITA No. 1019/Chd/2012: 16. In this appeal, the Revenue has raised the following grounds:- 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the appeal of the assessee without appreciating the facts of the case. 2. On the facts and in the circumstances of the case and in law, the Ld CIT(A) has erred in deleting the addition made by the AO by assessing the Die Tooling charges of Rs. 6,57,48,421/- as capital expenditure which was claimed by the....
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....g of enduring nature. The ld DR supported the assessment order and placed reliance upon the decision in CIT vs Saraswati Industrial Syndicate ltd (166 ITR 366) and 78 ITD 327. On the other hand the contention of the learned counsel for the assessee that for earlier assessment years, on identical fact, it was allowed as revenue expenditure. Reliance was also placed upon the decision in the case of CIT vs Madras Spinners Ltd (177 ITR 495) and 275 ITR 403. 13. We have considered the rival submissions and perused the material available on the file. The claim of the assessee before the ld assessing officer was as under:- "The company has claimed die tooling charges of Rs.5579108/- as revenue expenditure whereas the same has been capitalized in the books of account but the company has not claimed any depreciation on the same in the income tax return. The company has incurred the above said expenditure for development of die toolings to manufacture the automotive wheel rims with an object of achieving the maximum output. The expenditure has been incurred with an object of improving the existing products already manufactured by the company and does not relate to setting up to altogether ....
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....conom y and efficiency in manufacturing activities. Reliance was placed in the order for assessment year 2004-05. However, the Assessing Officer did not agree with the same and disallowed the expenditure. 22. On appeal, the Ld. CIT(A) following the order of the Tribunal allowed these expenses. 23. Both parties were heard. 24. After considering the rival submissions, we find that this issue came up for consideration of the Tribunal in ITA No. 828/Chd/2011 for assessment year 2008-09 and the same was decided vide para 14 following the earlier order against the assessee. Para 14 of the said order reads as under:- "14. Apropos Ground No.3 taken by the Department, both the parties submitted that the issue was covered by the order of this Tribunal in Department's appeal bearing ITA No. 341/Chd/2007 (A.Y. 2004-05) in favour of the assessee and against the Department. The Tribunal has decided the issue in favour of the assessee with the following observations : "4. The parties agreed that the issue is covered in favour of the assessee by the decision of the Tribunal for assessment year 2001-02 in I.T.A.No. 750/Chandi/2005, order dated 30.7.2007. The said order has further been followe....
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....(P) Ltd (78 ITR 327) is not applicable to the instant case since the same pertains to assessment year 1991-92 when the Income Tax Act did not recognize technical know how as an intangible asset on which depreciation is allowable. Further, it is seen that the Technical Collaboration agreement has specific clauses regarding the training of engineers w.r.t specific items viz training in rims, training in discs and training in design etc. The venues fro training vary with the specific items as also training schedules. It has also been categorically specified in the technical collaboration agreement that the expenses towards the foreign and domestic travel of the technicians would have to be borne by the assessee. From the details of the foreign traveling expenses, it is noticed that the entire expenditure has been incurred towards to & fro travel between Japan and India for the purposes of training as per the technical collaboration agreement" If the aforesaid conclusion of the ld assessing officer is analysed. it says that these expenses are linked to the expansion of the present unit and virtually it is a new unit, therefore, the expenses are of capital nature whereas the conclusio....