TaxTMI 
TaxTMI 
2018 (6) TMI 356
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....1961 (hereinafter referred to as "the Act") dated 27/03/2015, 18/03/2016 & 30/12/2016 relevant to Assessment Years (AYs) 2012-13, 2013-14 & 2014-15. 2. Since in all three appeals issues are common only figures and assessment years are different. Therefore, for the sake of convenience, we would like to dispose of all three appeals together. 3. The ground of appeals raised by the department in all three appeals read as under:- "1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 11,91,08,010/- made on account of Sales Tax (VAT) Exemption Benefit treated as capital in nature; whereas the same is revenue receipt as the same is promotional scheme pronounced by the Govt. of Gujara....
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.... prayed that the order of the C.I.T.(A) may be set aside and that of the A.O. be restored to the above extent." 4. Brief facts of the case are that the assessee is a Limited Company. Its source of income is income from profit and gains of business on profession. During the year, assessee derived income from the business of manufacturing of electrical products, CEL Lamps, Digital Clocks, Telephone, Vitrified Tiles, Digital Display Boards, Home Appliances and Electromotive Bikes etc. 5. On verification of audit accounts and details submitted during the course of assessment proceedings, it was noticed that assessee has received incentives of Rs. 12,03,66,408/-, which is credited to profit and loss accounts under the head other income as Cap....
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....nd Sale Tax (VAT) incentive duty refund wrongly reduced from profit u/s.115JB and same was of Rs. 15,96,86,401/-. 9. Against the said order assessee preferred first statutory appeal before the ld. CIT(A) which was allowed by the ld. CIT(A). 10. Now department's appeal is before us. 11. We have gone through the relevant record and impugned order. During the year under consideration, the assessee company had received incentive viz. Excise Duty refund of Rs. 12,58,398/- and Sales Tax (VAT) Exemption Benefit of Rs. 11,91,08,010/- aggregating to Rs. 12,03,66,408/- which were credited to the Profit and Loss Account under the head income as Capital Receipts (Kutch Incentive Schemes). 12. Assessee company has received aforesaid incentives in th....
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....centive for setting up an industrial unit in Kutch District in accordance with the scheme formulated by the Government. 15. Similar receipts in the form of incentives have been held to be in the nature of capital receipt by the Appellate Authority viz. CIT(A) and ITAT in the assessee's own case in ITA No.793/Rjt/2010 for Asst. Year 2006-07. Relevant para of the said order is reproduced as under: "Thus it can clearly be seen that a finding has been recorded that the object of the subsidy was to encourage the setting up of industries in the backward area by generating employment therein. In our opinion, in answering the issue, the test as laid down by the Supreme Court in Commissioner of Income-tax v. Ponni Sugan and Chemicals Ltd. (2008) ....
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....ideration of the fact of the case and in view of the case laws cited before us, we uphold the order of the CIT(A) by which the receipts have been held to be capital in nature." 16. Co-ordinate Bench has held in the matter of Genus Electrotech Ltd. (supra), that subsidies do not have any income element and therefore, they should be excluded for the computation of income u/s.115JB of the Act. 17. ITAT, Jaipur has held in the case of Shree Cement Ltd. (ITA No.614/615/635/JP/2010) and held that sales tax incentive and excise incentive are capital receipts and hence, they are not liable for inclusion under the computation of book profit u/s.115JB of the Act. 18. As ITAT, Rajkot in appellant's own case, it is held that incentives received by ....