TaxTMI 
TaxTMI 
2018 (7) TMI 376
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....dition of Rs. 28,17,360/ - on account of alleged unverified purchases of software items. 2) That the learned CIT(A) has grossly erred in law and in confirming the addition of the software purchases merely on doubts and surmises. 3) That the learned CIT(A) ought to have appreciated that the identity of the supplier of software stood established when part of the purchases from the same supplier had been allowed by the Assessing officer himself. 4) That the addition made by the Assessing Officer and confirmed by the CIT(A) is illegal, bad in law and is prayed to be deleted. (ii) Grounds of appeal for AY 2007-08 are as under: 1) That the learned CIT(A) has grossly erred in law and on facts and circumstances of the assessee holding that the sales tax subsidy of Rs. 60,70,404/ - received by the assessee is on revenue account. 2) That the order passed by the Assessing Officer and upheld by the CIT(A) holding that subsidy received is on revenue account is bad in law. 3) That the CIT(A) has grossly erred in law in concurring with his predecessor without applying his mind independently on the issue. 4) That the Ld. CIT(A....
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....nt years 2006-07 and 2007-08. The assessments under section 153A were completed in respect of these two assessment years on 30/03/2014, wherein the Assessing Officer repeated the additions/disallowances in respect of software purchase and subsidy respectively. The Ld. CIT(A) also sustained the additions of Rs. 28,17,360/-in assessment year 2006-07 and addition of Rs. 60,7404 in assessment year 2007-08 on the issue of software purchase and subsidy respectively. Aggreived with these additions/disallowances, the assessee is in appeal before the Tribunal raising the grounds as reproduced above. 4. Before us, the Ld. counsel submitted that the Tribunal while deciding the appeal against the regular assessment proceeding in ITA No. 1505/del/2011 for assessment year 2006-07 and ITA No. 1506/Del/2011 for assessment year 2007-08 has already deleted the said additions/disallowances and in the present assessment proceedings under section 153A of the Act, the Assessing Officer has merely repeated those additions/disallowances. According to him, when the Tribunal has already deleted the said additions in regular proceedings, same cannot be sustained in the assessment proceedings under section....
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....idence was either f iled before me, the only document in supper of the purchase of sof tware submitted is a copy of the bill. A perusal of the bill indicates that the concern was a supplier of hardware and not of sof tware, which has been shown to have been purchased by the appellant f rom such concern. Under these circumstances, the f inding recorded by the AO are valid and I, therefore, hold that the purchases amounting to Rs. 28,17,360/ - remain unproved and the action of the AO on that account is conf irmed. The ground no. 4 is partly allowed to the appellant. I do not find any reason to deviate from the finding of the CIT (A) - IX in this regard thus ground no. 2 of the appeal cannot be fully allowed. Therefore, this ground is treated as partly allowed. 8. We also note that while disposing of the appeal related to regular assessment proceedings, the Tribunal in ITA No. 1505/Del/2011 for assessment year 2006-07 has deleted the addition of Rs. 28,17,360/- observing as under: On careful consideration of the above rival submissions, firstly we observe that the ld. Departmental Representative has not disputed this contention of the ld. AR that the AO allowed an....
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....f sales tax subsidy amounting to Rs. 6070404/ -. In this regard, similar issue was pertaining in the original assessment order- dated 30/ 12/ 2009 which has been decided by CIT (A) - IX vide order dated 14/ 12/ 2010 wherein vide paragraph no. 5.5.1 of the order CIT (A) - IX CIT (A) has decided the issue by observing as under:- that the subsidy was granted by the Government of Haryana after the plant was set up. Hence the nature of subsidy clearly becomes on the revenue account as the same was utilized for meeting revenue expenditure on day to day basis to run the business more profitably. Therefore, the treatment given by the AO to the subsidy as per the assessment order has been found to be correct. The same is accordingly confirmed However, I am inclined to accept the alternate argument of the Ld AR that in case .the subsidy is treated on the revenue account, depreciation on the same may be allowed as the appellant had reduced the same from the cost of assets. Accordingly, the AO is directed to allow depreciation as per law af ter due verification. The ground no. 3 is accordingly dismissed subject to the allowance of depreciation Against the same order appeal is pending ....
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....ment and benefits were to last for specified periods and upto exhausting minimum limit computed in terms of the percentage of the fixed capital investment. 13. In the present case, as per Table 2 of Rule 28C of the Rules applicable to the industrial unit, tax concession for medium/ large scale industrial units have been linked with fixed capital investment and also in Table 2 applicable to industrial unties the tax concession has been linked with additional investment in plant and machinery which clearly shows that the purpose of sales tax subsidy by the Haryana Government by way of tax concession/ subsidy was to contribute towards the capital investment made by entrepreneurs and the amount of subsidy has been clearly defined as capital subsidy. In view of the above, in the instant case while we apply the purpose test laid down by the Hon'ble Supreme Court in the case of Ponni Sugars and Chemicals Ltd [supra], it is clear that the purpose of the Haryana Government to grant sales tax subsidy to the unit was capital contribution and therefore. the assessee reduced the amount of sales tax subsidy from the opening amount of fixed assets and claim depreciation on reduced va....
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.... reflect true factual income of the assessee. In this situation, we are inclined to hold that the authorities below flaunted the Rule of consistency without any justif ied cause or basis and in view of the proposition laid down by the Hon'ble Supreme Court in the case of CIT Vs. Woodward [supra] and CIT Vs. Realist Builders [supra] a system of accounting following by the assessee and accepted by the Revenue during the earlier years, consistency cannot be disturbed without any reasonable cause or justified reasoning. 17. On the basis of foregoing discussion, we have no hesitation to hold that in the present facts and circumstances of the case wherein the provisions of Rule 28C of the Haryana Government General Sales Tax Rules, as reproduced hereinabove, are self speaking and clearly mandates that the sales tax subsidy given to the industrial unit for promotion of industry for a specified period of item as per specified percentage to the limited amount, the same has to be treated a capital subsidy as per the purpose test laid down by the Hon'ble Supreme Court in the case Ponni Sugar Mills [supra]. Finally, we hold 14 ITA Nos. 1506 & 5251, 1715/ Del/ 2011 that the AO ....