AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (4) TMI 1238
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....ming the action of the Assessing Officer of treating the sales tax subsidy being sales tax benefit of Rs. 56,00 835/- as revenue receipt liable to tax which was received by the appellant under power Policy of the State Government as incentive for setting up windmills in the Maharashtra State. He further erred in not accepting the contentions of the appellant that the said receipt was a capital receipt not liable to tax. (b) The ld. C.I.T. (A) erred in not appreciating the fact that the said subsidy was for the purpose of giving an incentive to set up the infrastructure in the form of windmill to generate power in the State and not to meet the cost of the windmill or to augment the profit of the appellant and as such applying the "purpose test" as defined by the Supreme Court in the case of CIT versus Ponni Sugars & Chemicals Ltd. [2008] 306 ITR 392 (SC)}, the same was in the nature of capital subsidy not liable to tax. Ground No. 2: DISALLOWANCE OF EXPENSES U/S. 14-A READ WITH RULE 8-D: (a) On the facts and circumstances of the case and in law, the ld. CIT(A) erred in not deleting the disallowance of Rs. 26,009/- made by the A.O. u/s. 14-A read with Rule 8-D instead directing....
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....itted by the assessee before the ITAT and appeal filed by the assessee under section 260A for AY 2005-06 vide ITA No.1167 of 2014, have been perused. The assessee's contention is that its ground of appeal against the CIT(A) confirming the additions made by treating sales tax benefit as revenue receipt in AY 2005-06, 2006-07 & 2008-09 respectively, is identical to the question of law involved in its appeal filed u/s 260A before the Hon'ble Bombay High Court, For AY 2005-06, which is pending as on date. The year-wise additions made in respect of Sales-tax Subsidy are as under: AY 2006-07 Rs.74,67,780/- AY 2007-08 Rs.58,08,273/- AY 2008-09 Rs.56,00,835/- 3. On perusal of the case records, it is noticed that in the return of income for Ay 2005-06, the sales tax benefit of Rs. 65,55,051/- related to the assessee's wind farm project in Maharashtra, was treated by the assessee as a capital receipt. The said receipt was on account of transfer of sales tax benefit/ entitlement to M/s Tata Motors Ltd. under the agreement for Transfer of Sales Tax Incentive available from Wind Farm Project. In the assessment order, the said amount was taxed as revenue receipt. The CIT(A) and the ITAT ....
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....n the impugned orders of the authorities below, it is noticed that so far as disallowance under section 14A is concerned, the same is required to be made, as the assessee has earned exempt income for which no expenditure has been allocated or offered for the purpose of disallowance under section 14A. Only issue canvassed before us by the Ld. Counsel is that, investment made in the partnership firm should be removed from the working of Rule 8D and accordingly disallowance should be calculated and modified. To this extent, we agree with the contention raised by the Ld. Counsel and direct the AO that, in so far as investment in partnership firm is concerned, which is a strategic investment, the same should be excluded from the working of the value of average investment as provided in Rule 8D(2)(iii). Accordingly, disallowance under section 14A r.w. Rule 8D(2) should be worked out after removing the investment made in partnership firm from the average investment. Thus, ground No.2 is decided accordingly. 7. As regards disallowance of claim of deduction under section 80IA(4), the Ld. Counsel submitted that, this issue is squarely covered by the decision of Hon'ble Tribunal in the case ....
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....be no dispute about the position that the price realized by the assessee from the sale of goods manufactured by the price realized by the assessee from the sale of goods manufactured by the industrial undertaking constituted a component of the profits and gains derived from the eligible business. The purchaser, on account of the delay in payment of the sale price also paid interest to the assessee. This formed a component of the sale price also paid interest to the assessee. This formed a component of the sale price and was paid towards the lag which had occurred in the payment of the price of the goods sold by the assessee. On these facts, therefore, the payment of interest on account of the delay in payment of the sale price of the goods supplied by the undertaking partook of the same nature and character as the sale consideration." 7. Thus, the ratio decidendi decided by the Jurisdictional High Court on similar set of facts, is also squarely applicable to the facts of the present case and respectfully following the said decision of the High Court, we hold that the direction given by the learned Commissioner (Appeals) is legally and factually correct and the same is upheld....