TaxTMI 
TaxTMI 
2014 (1) TMI 1029
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.... Power Policy of the State Government as incentive for setting up windmills in the Maharashtra State. We shall first take up ITA No. 7125/Mum/2007. 2. The assessee's contention is that the subsidy/benefit so received is a capital receipt not liable to tax whereas the revenue authorities have considered such sales tax benefits/subsidies as revenue receipt and have taxed accordingly. 3. Prima facie by going through the grounds of appeal of the assessee, it appears that the issue relates to the taxability or otherwise of sales tax benefits, but once we understand the facts of the case in the right perspective, the issue would be different. 4. As per the State Government of Maharashtra policy, investment in plant and machinery, new building,....
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.... of Sales Tax. The amount of sales tax benefit related to the wind energy generation and not to the amount of electricity sold to the third party. After obtaining the Entitlement Certificate for sales tax benefit, the promoters of the project can transfer it to the third party to whom they have sold the electricity. The amount of sales tax benefit is related to the qualifying investment and plant load factor. It is further provided that the electricity sold to the unit/units of the third party can avail sales tax benefit limited only to the qualifying investment. 6. Taking benefit of the aforesaid stipulation in the policy on wind power generation, the assessee sold entire sales tax entitlement of Rs. 1.66 crores for a consideration of Rs.....
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....tlement/benefits. We failed to persuade ourselves to consider/accept this consideration as sales tax benefit/subsidy. This is nothing but consideration for the transfer of the entitlement and, hence, clearly taxable as revenue receipt in the nature of benefit convertible into money arising from business. Our view is also fortified by the agreement for transfer of sales tax incentive available from wind farm project exhibited at pages 56 to 63 of the paper-book in the case of Sun & Sand Hotels Pvt. Ltd in ITA No. 7125/Mum/2007. This agreement clearly states that it is for transfer of sales tax incentive to Grasim Industries Ltd. The relevant clauses of the said agreement read as under: "... B. The vendor has represented that it has set up ....
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....to 75% of the sales tax liability utilized out of the entitlement amount. The Purchaser shall avail of the exemption Entitlement amount received from the Vendor and accordingly shall pay such entitlement fee to the extent of the entitlement amount actually utilized, within 10 days of filing of the monthly Sales Tax return (hereinafter referred as "due date") as per the Bombay Sales Tax Rules. The Purchaser agrees to make available to the vendor copies of Sales Tax returns filed along with other allied documents for the purposes of cross verification of Sales Tax benefits absorbed and payment due to the Vendor. The Purchaser agrees that the Entitlement fees shall be paid to the Vendor through cheques which are payable at par by the bankers i....