TaxTMI 
TaxTMI 
2014 (8) TMI 800
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....Learned AO have erred in law and on the facts and circumstances of the case by imposing interest under section 234B and Section 234D. 4. The above grounds of appeal are independent and without prejudice to one another. 2. The issue involved is as to whether the sum of Rs. 2,00,64,000/- received on account of sales tax subsidy is revenue receipt or capital receipt. 3. The facts in brief are that during the year the assessee had received sales tax subsidy to the extent of Rs. 2,00,64,000/-. The assesee charges sales tax separately which is over and above the sale price of goods sold to the customer. While recording the sale transaction in the books of accounts, the assessee recognized it as a debtor in its books of accounts with the total amount of (sales including sales tax) as mentioned in the invoice raised to the customers. Since the assessee is entitled to 50% sales tax exemption, it transfers 50% of the amount of sales tax to the sales tax payable account and remaining 50% to the credit side of profit and loss account as "other income". The amount of sales tax recognized in sales tax payable account is finally deposited by the assesse to the Govt. tr....
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....392 (SC) 2. Sadichha Chitra vs. Commissioner of Income Tax [(1991 (189) ITR 774 BCM] 3. Commissioner of Income Tax vs. P.J. Chemicals Ltd. [1994 (210) ITR 830 SC] 4. M/s. Sahney Steel & Press Works Ltd. vs. Commissioner of Income Tax [ 1997 (228) ITR 253 SC] 5. Maruti Udyog Ltd. vs. CCE [2004 (166) ELT 360 DEL] 6. Deputy Commissioner of Income Tax vs. Reliance Industries Ltd. Mumbai [2005 (273) ITR 16 MUM] 7. Deputy Commissioner of Commissioner of Income Tax vs. Ponni Sugars & Chemicals Ltd. [2008 (273) ITR 392 SC] 8. Deputy Commissioner of Zenith Fibres Ltd. vs. Income Tax and another [2009 (319) ITR 208 SC] 9. M/s. Mepco Industries Ltd. vs. Commissioner of Income Tax and Another [2009 (319) ITR 208 SC) 10. Commissioner of Income Tax vs. Siya Ram Garg HUF [ITA No. 679 of 2010] 11. Shree Balaji Alloys and Others vs. Commissioner of Income Tax and Others (2011 (239) CTR 70 J & K) 12. Commissioner of Income Tax vs. Rasoi Ltd. (ITA No.258 of 2011)....
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....ubsidy is capital in nature. His submission is firmly grounded in the observations of the Hon'ble Supreme Court in Ponni Sugars & Chemicals Ltd. itself. He submitted that the Hon'ble Supreme Court in Ponni Sugars & Chemicals Ltd. has laid stress on the purpose test and at the same time has distinguished the facts of Sahney Steel & Press Works Ltd. . It is not enough to state that the purpose of the subsidy was for capital purposes. This has to be proved taking into account the nature of the scheme and attendant circumstances. He submitted that in the case of Ponni Sugars & Chemicals Ltd. The Hon'ble Court latched on the fact that the subsidy was granted to repay terms loan which was taken for acquiring capital assets. This view of Hon'ble Supreme Court was material for determining the character of the subsidy. The Hon'ble Court has nowhere said that this is a sine qua non for determining whether a particular subsidy is capital or revenue in nature. Clarifying the decision the Hon'ble Supreme Court has observed further that if the object of the subsidy scheme was to enable the assessee to run the business more profitably then the receipt is of revenue in natu....
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.... 28 C of the Haryana General Sales Tax Rules 1975 to avail the sales tax concession to be allowed. The Delhi Bench of the Tribunal has also discussed several decisions cited before it including decision of Hon'ble Supreme Court in the cases of Ponni Sugars and Chemical Ltd. (supra) and in the case of Sahney Steel and Press Works Ltd. (supra). The bench has also discussed the decision of Hon'ble Supreme Court in the case of Seaham Harbour Dock Co. vs. Crook (1931) 16 TC 333. For a ready reference para 47 to 48 of the said decision of Delhi Bench of the Tribunal in the case of Maruti Suzuki India Ltd. (supra) are being reproduced hereunder :- 47. We have carefully considered the rival contentions and gone through the record including the scheme under which the impugned subsidy was received by the assessee. The CIT(A) was right in having come to the conclusion that when the assessee signed a letter dated 1.12.2008 before the AO during the course of assessment proceedings wherein it was claimed that the disputed receipt be excluded from the total income, was required to be adjudicated by the AO. Merely because the assessee wrongly included the income in th....
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....s tax concession to the extent of Rs. 564.35 crores during the period 1.8.2001 to 31.7.2015. The Supreme Court in the case of Punni Sugars & Chemicals Ltd. has laid down the following principle after elaborately discussing importance of the judgment of the Supreme Court in the case of Sahney Steel and Press Works Ltd. and Others vs. CIT 228 ITR 253 wherein their Lordships have again stressed the importance of the purpose test. Their Lordships of the Supreme Court again analysed the case of the House of Lords in the case of Seaham Harbour Dock Co. vs. Crook (1931) 16 TC 333:- "In the decision of the House of Lords in the case of Seaham Harbour Dock Co. vs. Crook (1931) 16 TC 333, the Harbour Dock Co. had applied for grants from the Unemployment Grants Committee from funds appropriated by Parliament. The said grants were paid as the work progressed the payments were made several times for some years. The Dock Co. had undertaken the work of extension of its docks. The extended dock was for relieving the unemployment. The main purpose was relief from unemployment. Therefore, the House of Lords held that the financial assistance given to t eh company for dock exten....
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....ceipt in question are part of capital receipt given by the State Government for the purpose of meeting the objectives of Industrial Policy 1999, viz to attract new investment and to ensure growth of existing industries so that they can generate employment in industrial and allied sector by 20%. The entire package of incentives should be read as focusing on providing incentives for investment of industrial sector to achieve effective, meaningful and speedy development of the state. Therefore, the assessee's retention of Rs. 16.04 crore out of the sales tax collected on sale of finished products from expanded unit is part of capital receipt under the subsidy scheme of the Govt. of Haryana. In the light of principle laid down by the apex court in the case of Ponni Sugars as also the decision of the Reliance Industries of the Bombay High Court cited supra, we do not find any infirmity in the order of the CIT(A). 9. Discussing the issue in detail the Delhi Bench of the Tribunal in the above cited case of Maruti Suzuki India Ltd. has decided the issue in favour of the assessee with this finding that the subsidy in question viewed from the angle of provisions of section 25A of the Hary....