TaxTMI 
TaxTMI 
TaxTMI 
2017 (4) TMI 287
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....,000/- is a capital receipt and hence not chargeable to tax." 2. Brief facts of the case are as under : The return of income declaring total income of Rs. 18,86,30,870/- was filed on 29-09-2012. During the course of assessment proceedings, it was noted by the AO that the assessee had received Industrial Promotion Subsidy amounting to Rs. 891.13 lacs and that the auditor in it explanatory note to the final account had given the following remarks : " The company has been granted an Eligibility Certificate for Mega Project under Package Scheme of Incentive - 2001 on fulfilment o various criterias stipulated under the scheme. As per the Eligibility Certificate the company is entitled to interalia, industrial promotion subsidy equival....
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....various decisions relied upon by the assessee related to "Sales Tax Incentive" and "Deferment of Sales Tax Collected" while in the case under consideration the assessee had directly received a sum of Rs. 891.13 lacs from the State Government of Maharashtra. The AO further noted that the subsidy is provided to the assessee on the basis of its capacity to generate employment and is not meant for installation of any capital asset and by applying test of usage, the amount received by the assessee can not be treated as capital in nature and was required to be brought to tax as a revenue receipt. The AO therefore added an amount of Rs. 8,91,13,000/- to the income of the assessee. 6. Upon assessee's appeal, learned CIT(Appeals) referred to severa....
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.... is not to increase the viability of the eligible units but to promote development of further industry and infrastructure in region and to provide employment. 6.7 Also, as held by the Honorable Supreme Court, th character of the receipt in the hands of the assessee has to be determined with respect to the purpose for which the subsidy is given. In other words, in such cases, one has to apply the purpose test. The point of time at which the subsidy is paid, the form in which it is paid or it source is immaterial. The Honorable Supreme Court held that the crucial aspect was the object of the scheme and if the object of the subsidy scheme was to enable the assessee to run the business more profitably then the receipt is on revenue account a....
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....both the counsel and perused the records. Learned D.R. relied upon the order of the AO. Learned counsel of the assessee supported the order of the learned CIT(Appeals). He further submitted that the issue is covered in favour of the assessee by several case laws including that of the ITAT, Nagpur Bench in assessee's own case as under : 1) ITA No. 255/Nag/2012 in the case of assessee vide order dated 20- 10-2014. 2) ITA No. 179 to 183/Nag/07 in the case of assessee vide order dated 29-10-2007. 3) (2013) 351 ITR 309 (Bom) CIT vs. Chapalkar Brothers. 4) (2014) 364 ITR 88 (Bom) CIT vs. Kirloskar Oil Engines Ltd. 5) (2016) 138 DTR 036 (SC) CIT & Anr. Vs. Shree Balaji Alloys & Ors. 6) (2011) 333 ITR 0335 (Jammu & Kashmir) Shree B....
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....a State 27. The Assessing Officer has relied on the decisions, i.e. 286ITR 1{P&H), 205 CTR304(P&H), 205 CTR 334(P&H), 257 ITR 241,(Del), 251 ITR 427{SC) and 251 ITR 843(Mad) while concluding that the sales tax incentives are in revenue nature and taxable. But no where the AO has discussed that the relevant schemes under consideration in those decisions were similar to package scheme of incentives of Maharashira which the sales tax subsidies are allowed. The decisions relied upon by the AO are also considered by the Ld. CIT{A) while treating the sales tax incentive as capital receipt on the basis of package scheme applicable announced by the Govt. of Maharashira under which the subsidy is regulated by distinguishing the above decisions. ....