TaxTMI 
TaxTMI 
TaxTMI 
2016 (3) TMI 909
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....ly, in the facts of the present case, the assessee was engaged in the business of cotton Ginning and Pressing. For the year under consideration, the assessee had furnished return of income declaring total income of Rs. 7,57,390/-. During the course of assessment proceedings, the Assessing Officer noted that the assessee had received subsidy of Rs. 25 lakhs from State Government under "Special Capital Incentive" (PSI-2001) Scheme. The Assessing Officer noted that the assessee had not reduced the amount of the said subsidy from the cost of fixed assets as per Explanation 10 to section 43 of the Act. In reply, the assessee explained that the said subsidy was received as an incentive for establishing an industry in the backward area and the same was not for meeting any part of the cost of the assets, although the quantification of the subsidy was on the value of investment to be made in the fixed assets. Thus, the value of the said subsidy was claimed to be a capital receipt, which was not to be reduced from the cost of assets. The explanation of assessee was rejected by the Assessing Officer and the subsidy of Rs. 25 lakhs was attributed to the building and plant & machinery at Rs. 8,....
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....as drawn to the similarities between two schemes and it was also pointed out by him that the said scheme was also floated for the establishment of SSI units and the subsidy was quantified on the basis of percentage of fixed capital with ceiling provided for each of the areas. The learned Authorized Representative for the assessee further pointed out that the earlier scheme of incentive has been considered by Pune Bench of Tribunal in Rohit Exhaust Systems Pvt. Ltd. Vs. ACIT in ITA No.1880/PN/2013 , relating to assessment year 2008-09, order dated 31.03.2015, wherein on identical facts, the subsidy received by the said assessee was held to be capital receipt. 8. The learned Departmental Representative for the Revenue placed reliance on the orders of authorities below. 9. We have heard the rival contentions and perused the record. The issue arising in the present appeal is in relation to the treatment of subsidy received by the assessee for establishing a unit in the State of Maharashtra. The assessee was carrying on the business of cotton Ginning and Pressing and had set up a Small Scale Industry in the State of Maharashtra in Jalna District, which was a backward area. The Governm....
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....ixed assets, hence, the said subsidy amount is to be adjusted against the cost of assets and the depreciation is to be allowed on the re-worked cost of assets. Another aspect to be noted is that the Package Scheme of Incentives, 2001 is in furtherance to Package Scheme of 1993, the assessee has placed the copies of first Package Scheme of 1993 at pages 21 to 42 of the Paper Book and the Package Scheme of Incentives, 2001 at pages 1 to 20 of the Paper Book. The perusal of two Schemes reflects that the conditions for grant of subsidy are similar and the intention of the Scheme is to provide a platform for establishing units in under-developed areas and to provide employment within the State of Maharashtra. 11. The Pune Bench of Tribunal in Rohit Exhaust Systems Pvt. Ltd. Vs. ACIT (supra) had an occasion to consider the Package Scheme of 1993 issued by the Government of Maharashtra for establishing the industries in the backward area of Aurangabad. The Tribunal had observed as under:- "9. We have heard the rival contentions and perused the record. The assessee during the year under consideration had received Capital Incentive Subsidy under the Package Incentive Scheme, 1993 of Gove....
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....tion, relating to assessment year 2007-08 and M/s. Endress + Hauser Flowtec (India) Pvt. Ltd., Vs. ACIT in ITA No.295/PN/2013, relating to assessment year 2008-09, order dated 25.02.2015 and in lead order i.e. ITA No. 1206/PN/2011, the Tribunal considered the ratio laid down by the Mumbai Bench of the Tribunal in the case of Everest Industries Ltd. Vs. ACIT vide ITA No.814/Mum/2007 relating to assessment year 2003-04 order dated 04.12.2009, wherein it was held as under:- "10.4 Coming to the merits of the case, the "G" bench of the Tribunal in the case of M/s Zenith Fibres Ltd (supra) had considered the incentive scheme of the Maharashtra Government of 1993 and came to a conclusion that this scheme is identical to the incentive scheme of 1979 considered by the Special Bench of the tribunal in the case of CIT vs Reliance Industries Ltd 88 ITD 273 (Mum)(SB) and concluded that the receipt in question is capital receipt." 12. The Tribunal after considering the Scheme of 1993 observed as under:- "33. The contention of the learned Authorised Representative for the assessee was that 1993 scheme formulated by the Government of Maharashtra has been considered by the Mumbai Bench of ....
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....bsidy is to be reduced from the cost of the asset to re-work the depreciation on the said asset. Under the proviso, it is also provided that it is necessary to show that the subsidy had been directly or indirectly used for the acquisition of an asset. The facts of each case in this regard have to be seen to determine whether the subsidy has been granted to meet the cost of asset directly or indirectly. Similar proposition has been laid down by the Kolkata Bench of the Tribunal in DCIT Vs. Rasoi Ltd. (supra) and also by Visakhapatnam Bench of the Tribunal in Sasisri Extractions Ltd. Vs. ACIT (supra). It has been further laid down by the Tribunal in Sasisri Extractions Ltd. Vs. ACIT (supra) that even after insertion of Explanation 10 to section 43(1) of the Act, the basic principle underlying the decision of Apex Court in CIT Vs. P.J. Chemi cals Ltd. (1994) 210 ITR 830 (SC) still holds the field. The Tribunal has held as under:- "10. We have carefully considered the rival submissions and perused the record. In our considered opinion, even after insertion of Expln. 10 to s. 43(1) of the Act, the basic principle underlying in the decision of the apex Court in the case of PJ. Chemica....