TaxTMI 
TaxTMI 
2016 (8) TMI 645
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....ad imposed u/s 271(1)(c) for claiming the Revenue receipts as capital receipts. 4. The above appeals were heard together and therefore, for the sake of convenience a common and consolidated order is being passed. 5. At the outset, the learned AR invited our attention to the written submissions filed by assessee and from these written submissions the learned AR explained the facts of the case. The learned AR submitted that the assessee is a Co-operative Society deriving income from running Milk Plant. During the year under consideration the assessee received subsidy from the Punjab Govt. and Central Govt. Agencies under rehabilitation scheme, grant for milking machine and grant for silage pit construction which were clearly capital receipts and which the authorities below had wrongly considered to be Revenue receipts. Inviting our attention to objects of the scheme the learned AR took us to PB page 1 to 6 and submitted that the objective and aim of the scheme was to revitalize sick Diary Cooperative Unions and the Central Govt. and Punjab Govt. had provided matching grants for the purposes of utilization the same for achieving the objects of the scheme of rehabilitation.....
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....atively if the amount of Rs. 61.50 lacs is to be considered as Revenue receipt then the corresponding expenditure of the assessee should also be allowed. 7. Highlighting the facts in ITA No.606(Asr)/2016 for Asst. Year 2011-12, the learned AR submitted that in this year also the facts are similar except the fact that in this year the grant was received to the tune of Rs. 56.05 lacs out of which the assessee had already credited Rs. 36,92,788/- to its P&L Account and balance amount of Rs. 19,12,212/- was treated as capital receipt which the authorities below has wrongly held to be as Revenue receipt. 8. Arguing the appeal in ITA No.42(Asr)/2016, the learned AR submitted that Assessing Officer in Asst. Year 2009-10 had imposed penalty u/s 271(1)(c) for concealment of income in view of the fact that assessee had declared part subsidy as capital receipts and part subsidy as Revenue receipt. The Assessing officer had imposed penalty as the Assessing Officer and learned CIT(A) had treated entire amount as Revenue receipt. However, the learned CIT(A) had deleted the penalty by passing a reasoned and speaking order and he heavily placed his reliance on the order of learned CIT(....
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....long with name of supplier, the amount paid along with cheque no. against which payment has been made has also been noted therein. Therefore, from the above facts and circumstances we held that the grant in the form of rehabilitation grant was indeed a capital receipt as it was utilized by assessee for the purchase of fixed assets and for making repayment of term loans. The purpose of grant as noted in the objective of scheme was to revitalize the State Diary Cooperative Units which clearly means that the object of the rehabilitation scheme was to revive the sick Cooperative Unit and was not meant for carrying on the business of assessee as held by the authorities below. The Hon'ble Supreme Court in the case of Sahney Steels (supra) has clearly held that if the object of the assistance under the subsidy scheme was to enable the assessee to setup a new unit or to expand the existing unit then the receipt of subsidy is to be treated as capital receipt. Though, in the present case the assistance was not for setting up new unit but the object of the scheme necessarily was to revive the sick units which could only be done by modernization and putting further infrastructure in the form o....
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....the silage pits. As per this ledger account the assessee had received Rs. 61.50 lacs and had spent the same amount by making cheque payments to various societies for constitution of silage pits. Therefore, the assessee had not derived any benefit from this grant and therefore, the finding of the authorities below is not correct and is not justified. In view of the above facts and circumstances we delete the addition confirmed by learned CIT(A) on this account. 14. In view of the above, the appeal in ITA No. 739(Asr)/2013 is allowed. 15. Now we take appeal in ITA No.606(Asr)/2105 for Asst. Year:2011-12. Since, the facts and circumstances in the present appeal are similar as those of decided by us herein above in ITA No.739(Asr)/2013 for Asst. Year:2009-10, the findings given theirin shall equally apply mutatis mutandi and accordingly appeal is allowed. 16. In nutshell, the appeals filed by assessee are allowed. 17. Now coming to the appeal filed by Revenue, we find that Assessing Officer had imposed the penalty u/s 271(1)(c) for declaring the alleged Revenue receipt as capital receipt. The learned CIT(A) has deleted the same by holding as under: "6. I have caref....