2013 (4) TMI 852

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....ome on 27.10.2005 declaring total income at Rs. 1,24,44,110/-. The case for selected for scrutiny and, thereafter the assessment was framed under Section 143(3) by order dated 31.12.2007 and the total loss was determined at Rs. 8302886/-. Aggrieved by the order of A.O. assessee carried the matter before CIT(A). CIT(A) vide its order dated 12.11.2012 granted partial relief to the assessee. Aggrieved by the aforesaid order of CIT(A) the revenue is now in appeal before us and has raised the following effective ground :- On the facts and in the circumstances of the case and in law, the ld CIT (Appeals) erred in deleting the addition of Rs. 94,82,796/- on account of unutilized MODVAT credit without appreciating that it is a kind of subs....

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....t of Rs. 94,82,796/- by holding that it is a kind of subsidy and incentive given by the Government and hence it becomes part of the income of the assessee. In this regard, the appellant has submitted a copy of decision of ITAT Ahmedabad 'A' Bench in the case of M/s Jay Laminate Pvt. Ltd. in ITA no. 264/Ahd/2007 dated 3rd April, 2007 in which the bench has held as follows: We have heard the parties and considered the rival submissions. The cost of raw material and capital goods to the extent of Modvat claim were reduced, was a fact, which is not disputed by the Assessing Officer. It is this difference which remains as debit balance in the Balance Sheet after adjustment for current years utilization. It is in fact a pre-paid expendit....

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....d the parties and considered the rival submissions. The cost of raw material and capital goods to the extent of Modvat claim were reduced was a fact, which is not disputed by the Assessing Officer. It is this difference which remains as debit balance in the Balance Sheet after adjustment for Current year's utilization. It is in fact a prepaid expenditure, not chargeable to Profit and Loss Account and hence cannot constitute income. The CIT (A), in our opinion, was justified in allowing the claim of the assessee. His order, thus does not call for any interference." 9. The Hon. Apex Court in the case of CIT Vs. Indo Nippon Chemicals Co. Ltd. (supra) as held as under Head Note:- Section 145 of the Income-tax Act, 1961 - Method of a....