2018 (5) TMI 1979

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....h infusion into working capital to improve the financial health of the company? Was he not incorrect by not analysing the nature of subsidy and finding out what was the character of such subsidy that is it will be capital in nature if it is for expansion of business /capacity enhancement and will be revenue in nature if the said subsidy is meant to be utilized as working capital? It is needless to mention that the aid issue was not examined by the A,O. during the course of Assessment proceedings. 2. Was not the Ld CIT(A) incorrect by not adhering to the decision of the Hon'ble Supreme Court in the case of Goetze (I) Ltd. Vs. CIT 284 ITR 323 whereby the Hon'ble Court held that the deduction claimed by wav of a letter before the A.O. could be disallowed on the ground that there is no provision in the Act to make amendment in the return without filing a revised return? Was he not incorrect by not following the observation of the Hon'ble Court which further held that the decision was limited to power of the assessing Authority to entertain claim of deduction otherwise than by a revised return and did not impinge on the power of the Tribunal? 3. That the ap....

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....essee has submitted that the additional grounds so raised appear to be legal in nature and there is no restriction upon the powers of the jurisdiction of the appellate authorities to consider and adjudicate upon the claims which was not before the AO by filing the return or the revised return. The CIT(A) ultimately held that the assessee is entitled to make fresh claim for deduction or relief before the appellate authority irrespective of the claim not being made by filing revised return of income before the AO. 5. The question today before us is this that whether the assessee can raise the ground as above before the appellate authority for the first time without raising the same before the AO by filing the revised return of income during the assessment proceedings. If the answer is in the affirmative then the next question will arise as to whether the assessee is entitled for exclusion of capital subsidy receipt by way of sales tax remission from the profit of the business as well as book profit u/s 115JB of the Act since the same has been received under the West Bengal Incentive Scheme 1999. At the time of hearing of the matter the ld. DR argued in support of the order passed ....

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....ments and we hold that the ld. CIT(A) has rightly exercised his jurisdiction in entertaining the additional grounds of exclusion of capital subsidy of Rs. 40,44,40,974/- received by way of sales tax remission under the West Bengal Incentive Scheme 1999 during the year under consideration. 6.1. We now come to answer the second question as to whether the assessee is entitled to claim exclusion of remission of sales tax receipt by way of incentive/subsidy from the State Government. As regards the point of claim of the assessee towards exclusion of remission of sales tax by way of sales tax remission under the West Bengal Incentive Scheme, 1999 is concerned the ld. DR reiterated his submissions that since there is no addition or deletion made by the AO such claim of the assessee is not required to be entertained and thus prays for rejection of the order passed by the ld. CIT(A). On the other hand, the ld. Counsel appearing on behalf of the assessee strongly argued that the amounts so received as subsidy by way of remission of sales tax from the profit of the business as well as book profit u/s 115JB of the Act under the West Bengal Incentive Scheme 1999 is in the nature of capital r....

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....nal ground filed by the Revenue raising the issue of violation of Rule 46A of Income Tax Rules by the Id. CIT(Appeals) and contended that when the fresh claim made by the assessee for exclusion of sales tax subsidy, otherwise than by filing a revised return, was not entertained by the Assessing Officer by relying on the decision of the Hon'ble Supreme Court in the case of Goetz India Limited (supra), the Id. CIT(Appeals) ought to have given opportunity the Assessing Officer to examine the said claim of the assessee as required by Rule 46A of the Income Tax Rules. We, however, find merit in the contention raised by the Id. counsel for the assessee in this regard that there being no additional evidence filed by the assessee before the Id. CIT(Appeals) in support of its claim for exclusion of sales tax subsidy, Rule 46A has no application and the Id. CIT(Appeals) was not required to give any opportunity to the Assessing Officer to verify the claim of the assessee. The Id. CIT (D.R.) has urged that such opportunity even otherwise deserves to be given to the Assessing Officer in the interest of substantial justice. It is, however, observed that the Id. CIT(Appeals), who is having co....