AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (4) TMI 916
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.... income of Rs. 337.00 crore and odd was filed by the assessee on 25.9.2008. Assessment in this case was completed u/s 143(3) read with section 144C of the Act on 27.11.2012 at a total income of Rs. 654.97 crore. During the year under consideration, the assessee received, inter alia, subsidy amounting to Rs. 49,38,00,503/- from the Government of Maharashtra which was treated as a capital receipt not chargeable to tax. The Assessing Officer, while framing the assessment, accepted the treatment given to it by the assessee. However, the ld. CIT, invoking jurisdiction u/s 263 of the Act, came to hold that such subsidy received from the Government of Maharashtra was a revenue receipt and hence chargeable to tax. Characterizing the assessment orde....
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....augmenting exports from the industrial units in the State and creating large scale employment opportunities duly ensuring environmental planning." 5. It is clear from the objective of the Scheme that the same is aimed at accelerating the flow of investment in industry and also creating a large-scale employment opportunities. The Scheme was notified by the Government Resolution dated 31.03.2001 as 'Maharashtra PSI Scheme 2001.' A copy of such Notification is available from page 153 onwards of the paper book. The said Package Scheme of Incentives, 2001 was amended vide Government Resolution dated 02.06.2005, whose copy is available from page 187 onwards of the paper book. The introduction part of this Resolution dated 2nd June, 2005 elaborat....
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....onal FCI within a period of 7 years, whichever is lower. While giving this subsidy, the Government would deduct the amount of benefits availed at 2.2.1 above over a period of 7 years. The modalities of paying the subsidy amount will be determined shortly." 6. On going through the relevant clauses of the Incentive Scheme and MoU, it emerges that the assessee agreed to make additional investment in the Maharashtra State and also undertook to give additional employment and, as a quid pro quo, the Government agreed to allow exemption from payment of electricity duty and subsidy to the extent of 75% of the fixed capital of investment, in the form of relief from taxes on the increased turnover as a result of the proposed additional investment. I....
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....t case, we find that the assessee received the extant subsidy for accelerating flow of investment in industry in the State of Maharashtra i.e., for expansion of the industry. The subsidy resulting from such industrial expansion is ex consequenti governed by the judgment of the Hon'ble Supreme Court in the case of Ponni Sugars and Chemicals Ltd. (supra) and, hence, a capital receipt. 8. It is observed that the Package Scheme of Incentive 2001, under which the assessee received the above subsidy, is a successor of the 1993 Scheme of Maharashtra Government and 1979 Scheme of Maharashtra Government. All these schemes were/are aimed at increasing the pace of industrialization and the incentive is based on the amount of investment in fixed a....
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....vernment or any authority or body or agency in cash or kind to the assessee other than the subsidy or grant or reimbursement which is taken into account for determination of the actual cost of the asset in accordance with the provisions of Explanation 10 to clause (1) of section 43;' 10. A bare reading of the above provision makes it explicit that now subsidy given by the Central Government or a State Government or any authority etc. for any purpose, except where it is taken into account for determination of the actual cost of the asset under Explanation 10 section 43(1), has become chargeable to tax. Even if a subsidy is given to attract industrial investment or expansion, which is a otherwise a capital receipt under the preamendment era,....