2019 (9) TMI 1154

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....Upgradation Fund); second subsidy of Rs.1,67,84,009/- (under the Focus Market Scheme); and the third subsidy of Rs.26,52,890/- (under Electricity Duty Subsidy). The assessee claimed all these to be capital receipts. 2. The assessee is a textile manufacturer. For the relevant year i.e. 2013-2014, it received the Technology Upgradation Fund, pursuant to a scheme drawn by the Union Textile Ministry. The payment of invasion of amounts by deferred repayment of interest, as it were. Under para 8 of the Technology Upgradation Fund programme (the amounts which were released under an agreement dated 12.07.2005) the amounts were to be treated as non-interest bearing term loans by the Bank and the repayment was to be worked out excluding the subsid....

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....llows: "6. The purpose of scheme under which the subsidy is given, has been discussed by the Tribunal. To sustain and prove the competitiveness and overall long term viability of the textile industry, the concerned Ministry of Textile adopted the TUFS scheme, envisaging technology upgradation of the industry. Under the scheme, there were two options, either to reimburse the interest charged on the lending agency on purchase of technology upgradation or to give capital subsidy on the investment in compatible machinery. In the present case, the assessee has taken term loans for technology upgradation and subsidy was released under agreement dated 12.7.2005 with Small Industry Development Bank of India. The relevant clause of....

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....als Ltd. & Ors. [(2008) 306 ITR 392] and Sahney Steel & Press Works Ltd. & Ors. vs. Commissioner of Income Tax [(1997) 94 Taxman 368]. In these circumstances, the Court is of the opinion that the amount was received as capital stream and therefore, not taxable. 7. A similar view was taken by the Calcutta High Court in CIT vs. Gloster Jute Mills Ltd. [(2018) ITL 3046 (CAL)(HC)]. 8. As far as the question with regard to Focus Marketing Scheme was concerned, apparently the Central Government gave the subsidy to enhance indian export potential in the international market. It was not granted to meet the cost of expenditure to meet the competition of the Indian textile market. The ITAT took note of judgment in Ponni Sugars & Chemicals Ltd.(....