TaxTMI 
TaxTMI 
TaxTMI 
2019 (4) TMI 1856
X X X X Extracts X X X X
X X X X Extracts X X X X
....omote generation of wind energy and was, therefore, eligible for deduction u/s 80IA(i). 3. The above grounds of appeal are without prejudice to one another. 4. The appellant craves leave to amend or alter any of the above Grounds of Appeal or to add new Grounds of Appeal during the course of appeal proceedings." Additional ground of appeal "Without prejudice to Ground Nos. 1 & 2, and on the facts and in the circumstances of the case and in law, the authorities below erred in not appreciating that the amount of Rs. 22,54,500/- received as Sales Tax Benefit, was of capital nature not liable to Income Tax." 3. Shri Prayag Jha with Shri Prateek Jha appearing on behalf of the assessee submitted that the assessee during the period relevant to the assessment year under appeal had received Sales Tax subsidy amounting to Rs. 22,54,500/- under the State Government Scheme. The assessee treated the amount of Sales Tax benefit received as part of its gross receipt and claimed deduction u/s. 80IA of the same. In assessment proceedings the Assessing Officer disallowed the same holding the amount received by the assessee under Sales Tax benefit scheme as capital receipt. The ld. AR fairly ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der which the assessee has availed of the salestax benefit. In the present case, as noted earlier, the State Government vide its Resolution dated 12.3.1998 modified its existing policy for the purposes of promoting wind energy generation in the State of Maharashtra. This policy has been formulated in the background of the fact that the earlier policy of the State Government on generation through non conventional sources in January, 1996 did not achieve the desired results. In the said policy, nine different incentives have been laid out, which have been extracted by us in earlier part of this order. The dispute before us is in relation to the sales-tax benefits. The Preamble of the policy itself reflects the area which is sought to be addressed by the policy which is "the problems being faced by promoters of wind energy generation". It is quite clear that the sales-tax benefit is not intended to be granted for creation of or bringing into existence any new asset. It is also clear that there is no prescribed criteria as to the manner in which such incentives are to be utilized. The claim of the assessee is that the sales-tax benefit is granted having regard to the qualifying investm....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... test to the facts of the present case and keeping in mind the objects behind the payment of incentive subsidy, we are satisfied that the sales-tax benefits received by the assessee under the instant Scheme are in the course of carrying on its trade more profitably and therefore such receipt cannot be characterized as capital in nature. Thus, the assessee fails on this Ground." The aforesaid decision of Co-ordinate Bench answered the first issue raised in the present set of appeal i.e. the sales tax subsidy received by assessee on generation of power is revenue in nature. In the light of above findings the alternate plea raised by assessee by way of application under Rule 27 is rejected. 11. The ld. AR has placed reliance on the decision of Hon'ble Gujarat High Court in the case of Garden Silk Mills Vs. Commissioner of Income Tax and Another (supra) to contend that the subsidy in the form of sales tax incentive is capital receipt. The ld. AR has not drawn any parity between the sales tax subsidy held as Capital in the said case and the sales tax subsidy in question in the appeals in hand. Merely for the reason that that the subsidy therein was in the nature of sales tax inc....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in CIT Vs. Meghalaya Steels Ltd. (supra), wherein the Hon'ble High Court held that the transport subsidy, power subsidy, interest subsidy and insurance subsidy reduced the cost of production of an industrial undertaking and since there was first degree nexus between the said subsidies and the profits and gains derived by an industrial undertaking, therefore, it was entitled to the deduction under section 80IB/80IC of the Act in respect of the said subsidies so received. The proposition propounded by the Hon'ble Gauhati High Court in the said case was that the subsidies received by the assessee were interlinked and had direct nexus with the manufacturing activities of the industrial undertaking and had reduced the cost of production of the said undertaking and hence, there was nexus between the said subsidies and profits and gains derived by the industrial undertaking and hence, the same were held to be eligible for deduction under section 80IB/80IC of the Act. However, in the facts of the case before us, the assessee is in receipt of sales tax subsidy, which undoubtedly, is a revenue receipt in the hands of the assessee, but the said subsidy does not in any manner reduce t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed view, the observations of Hon'ble Apex Court in para 28 on which the ld. AR has placed are in context of "subsidies‟ which were subject matter of dispute in the case of Commissioner of Income Tax Vs. Meghalaya Steels Ltd. (supra). The subsidies that were subject matter of adjudication in the aforesaid case were Transport, Interest and Power subsidies. The relevant para 28 of the judgment by Hon'ble Apex Court in the case of Commissioner of Income Tax Vs. Meghalaya Steels Ltd. (supra) read as under : "28. It only remains to consider one further argument by Shri Radhakrishnan. He has argued that as the subsidies that are received by the respondent, would be income from other sources referable to Section 56 of the Income Tax Act, any deduction that is to be made, can only be made from income from other sources and not from profits and gains of business, which is a separate and distinct head as recognised by Section 14 of the Income Tax Act. Shri Radhakrishnan is not correct in his submission that assistance by way of subsidies which are reimbursed on the incurring of costs relatable to a business, are under the head "income from other sources", which is a residuary ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ench of the Tribunal in the case of Rupinder Singh Arora Vs. ITO (supra). In the said case the Tribunal has restored the issue back to the file of Assessing Officer to consider assessee‟s claim of deduction u/s.80IA(4) in the light of decision of Hon'ble Supreme Court of India in the case of Commissioner of Income Tax Vs. Meghalaya Steels Ltd. (supra) and in the case of Commissioner of Income Tax Vs. M/s. Shree Balaji Alloys (supra). It would be relevant to mention here that perhaps the decision of Pune Bench of the Tribunal in the case of M/s. Patankar Wind Farm Pvt. Ltd. Vs. Dy. Commissioner of Income Tax (supra) was not brought to the notice of Mumbai Bench. As we have observed earlier, the issue whether the assessee is eligible for claiming deduction u/s. 80IA in the light of decision rendered by Hon'ble High Court in the case of Commissioner of Income Tax Vs. Meghalaya Steels Ltd. (supra) has already been considered and has been decided against the assessee. Accordingly, we find no reason to remit this issue back to the file of Assessing Officer. 17. Thus, in the view of our above findings and the decision of Pune Bench of the Tribunal in the case of M/s.Patank....