TaxTMI 
TaxTMI 
2020 (2) TMI 720
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....f the assessee was determined by the Assessing Officer at Rs. 8,96,39,082/-. The said assessment was subsequently set aside by the ld. CIT vide an order dated 08.12.2010 passed under section 263 with a direction to the Assessing Officer to complete the assessment afresh on certain issues as pointed out in the order under section 263. In compliance with the order of the Id. CIT passed under section 263, a fresh assessment was made by the Assessing Officer vide an order dated 22.12.2011 determining the total loss of the assessee-company at Rs. 7,13,55,082/- after making addition of Rs. 1,82,84,000/- on account of the interest income. 3. Against the order passed by the Assessing Officer under section 143(3) read with section 263, an appeal was filed by the assessee before the ld. CIT(Appeals). During the course of appellate proceedings before the ld. CIT(Appeals), additional ground was raised by the assessee claiming that the interest subsidy of Rs. 3,04,53,559/- received by it under Technology Upgradation Fund Scheme (TUFS in short) during the year under consideration was liable to be treated as capital receipt not chargeable to tax instead of revenue receipt chargeable to tax as ....
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..../KOL/2010 dated 02.07.2014), wherein a similar issue relating to the assessee's claim of treating the interest subsidy received under TUFS as capital receipt not chargeable to tax had been allowed by the Tribunal. The said order of the Tribunal dated September 18, 2017 was challenged by the Revenue in the appeal filed before the Hon'ble Calcutta High Court and Their Lordships of Hon'ble Calcutta High Court as per the judgment delivered on 27.03.2019 in I.T.A. No. 15 of 2019 set aside the order of the Tribunal and remanded the matter back to the Tribunal by observing as under:- "We have examined the impugned order of the Tribunal. The Tribunal has simply referred to the subsidy scheme without specifying the scope, purport or the details of it. Simply because the subsidy scheme has been declared by the Tribunal to be capital receipt in the case of other assessees, it pronounced the decision in this case that it was to be treated as such. In our view, that was not the correct approach. The subsidy scheme had to be analysed threadbare. The question whether the subsidy incentive was being utilized for the purpose of meeting the interest liability of the company on loan....
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.... competitiveness and overall long term viability, it is essential for the textile industry to have access to timely and adequate capital at internationally comparable rates of interest in order to upgrade its technology level. In the light of the foregoing, it has been felt necessary to make operational a focussed and time-bound Technology Upgradation Fund Scheme(TUFS) which would provide a focal point for modernisation efforts through technology upgradation in the industry. The main feature of the TUF Scheme would be a five percent reimbursement on the interest actually charged by the identified financial institutions on the sanctioned projects. Resolution: It is, therefore, resolved that a Technology Upgradation Fund Scheme be made operational for the textile, jute and cotton ginning & pressing industries w.e.f. 1.4.1999 for a period of 5 years i.e., up to 31st March 2004, which was subsequently extended up to 31.3.2007. The scheme will provide a reimbursement of five percentage points on the interest charged by the lending agency on a project of technology upgradation in conformity with this resolution. With effect from 1st January, 2002, an o....
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....ccordingly, technology levels are benchmarked in terms of specified machinery for each sector of the textile industry. Machinery with technology levels lower than that specified will not be permitted for funding under the TUF Scheme. 2. ELIGIBLE MACHINERY Installation of the following types of machinery in a new unit or in an existing unit by way of replacement of existing machinery and / or expansion will be eligible for coverage under TUF scheme: 2.1 Cotton Ginning and Pressing - 2.2 Spinning/Silk Reeling & Twisting/ Wool Scouring & Combing/Synthetic filament yam Texturising, Crimping & Twisting- 2.3. Manufacturing of viscose filament yarn and viscose staple fibre - 2.4. Weaving / Knitting including non-wovens and Technical Textiles-_ 2.5 Garment / Made-up manufacturing 2.6 Processing of fibre / Yarn / Fabrics / Garments / made-ups 2.7 Jute industry 2.8 Energy saving & process control equipments for various sectors 2.9 Machinery eligible under 20% CLCS-TUFS for powerloom sector 2.10. Machinery eligible under 10% capital subsidy for processing sector Note Vide circu....
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....stry. The main feature of the TUF Scheme was a five percent reimbursement on the interest actually charged by the identified financial institutions on the sanctioned projects. It is pertinent to note that options were also provided in the Scheme to the Small Scale Textile and Jute Industries as well as to the Powerloom Units to avail capital subsidy to the extent of certain fixed percentage of the investment in TUF compatible specified machinery. As per the definition of "Technology Upgradation" given in the Scheme, what it meant was induction of state-of-the-art or near-state-of the-art technology and what it envisaged was at least a significant step up from the present technology level to a substantially higher one for such trailing segments. Accordingly, technology levels were benchmarked in terms of specified machinery for each sector of the Textile Industry. It is thus clear that even though the subsidy in question under TUF Scheme was given in the form of reimbursement of the interest, the objective of giving the said subsidy was to upgrade its technology level by the eligible unit by induction of state-of-the-art or near-state-of-the-art technology and such technology lev....