TaxTMI 
TaxTMI 
2018 (9) TMI 1957
X X X X Extracts X X X X
X X X X Extracts X X X X
....ernment published on 12.03.1998. The assessee treated 'Sales Tax Benefit' received from the Government as income derived from generation of power and accordingly, claimed deduction u/s.80IA of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') on the same. The Assessing Officer rejected assessee's claim of deduction u/s.80IA of the Act on the 'Sales Tax Benefit' received by the assessee. 4. Aggrieved by the withdrawal of deduction u/s.80IA of the Act on 'Sales Tax Benefit', the assessee filed appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) after placing reliance on the decision of Tribunal in the case of Patankar Wind Farm Pvt. Ltd. Vs. Dy. CIT, in ITA No.2225 & 2226/PN/2013, for assessment years 2004-05 and 2005-06, decided on 10.04.2015. In the said case, 'Sales Tax Benefit' received by the assessee, was held to be not eligible for deduction u/s. 80IA(4). The Commissioner of Income Tax (Appeals) drawing the parity rejected the assessee's claim of deduction u/s.80IA of the Act in the present set of appeals. 5. Now, the assessee is in second appeal before the Tribunal against the order of Commissioner of Income Tax (Ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 22,82,347/- 2 2007-08 21,43,166/- 3 2008-09 21,71,001/- The assessee considered these receipts as integral part of its gross receipt and credited the amount in the Profit And Loss Account in the respective assessment years. The assessee claimed deduction under section 80IA(4) in respect of the Sales Tax Benefit. The Revenue held that these receipts were not derived from the industrial undertaking, i.e., the wind mill, and excluded them while granting relief under section 80IA(4) of the I T Act. The Learned CIT(A) rejected the assessee's claim following the decision of the Pune ITAT in the case of Patankar Wind Farm Pvt. Ltd. v Dy. CIT, ITA Nos. 225, 226/PN/2013, Assessment Years 2004-05 and 2005-06. The assessee is in appeal before the Hon'ble ITAT on this issue which was heard today. ADDITIONAL GROUND OF APPEAL. The assessee's argument in support of the Additional Ground is that it received the Sales Tax Benefit under the Scheme of the State Government which was to encourage construction installation of wind mills as a alternative source of electricity. The Supreme Court has held in the case of CIT v Chaphalkar Brothers [2018] 400 ITR 279 (SC) that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 383 ITR 217 held as under: "10. The Co-ordinate Bench of the Tribunal in the case of Rasiklal M. Dhariwal (HUF) Vs. Dy. Commissioner of Income Tax (supra) had occasion to consider the nature of subsidy received in the form of sales tax incentive for generation of power in the State of Maharashtra. The Tribunal after analyzing the scheme of subsidy threadbare concluded that the subsidy received under the scheme is revenue receipt. The relevant extract of the findings of Tribunal on this issue are as under: "16. In this background, we may now revert back and examine the Scheme under which the assessee has availed of the sales-tax 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. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....payment of term loans taken by the assessee for setting up new units/expansion of existing business. In the present case, there is no such restriction or obligation on the part of the assessee to utilize the incentives availed. In fact, on this aspect the instant scheme is akin to the scheme noted by the Hon'ble Supreme Court in the case of Sahney Steels (supra) wherein the assessee was found free to use the money in its business entirely as it liked. In the present case also, the assessee is not obliged to spend the money for any particular purpose. Thus, applying the purpose 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 a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... power through windmill is eligible for deduction u/s.80IA of the Act. Similar issue was raised before the Co-ordinate Bench of the Tribunal in the case of M/s.Patankar Wind Farm Pvt. Ltd. Vs. Dy. Commissioner of Income Tax (supra). The Tribunal after considering the decision of Hon'ble Gauhati High Court in the case of Commissioner of Income Tax Vs. M/s. Meghalaya Steels Ltd. (supra) held as under: "24. Another reliance placed upon by the learned Authorized Representative for the assessee was on the ratio laid down by Hon'ble Gauhati High Court 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 th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... case. To further support his contentions the ld. AR placed reliance on the decision of Mumbai Bench of the Tribunal in the case of Rupinder Singh Arora Vs. ITO (supra). 14. The Hon'ble Apex Court in appeal by the Department has merely affirmed the decision of Hon'ble Gauhati High Court. There is no reference or discussion on sales tax subsidy either by Hon'ble High Court or by the Hon'ble Supreme Court of India in the judgment affirming the decision of Hon'ble High Court. In our considered 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sion "business subsidies" as used in para 2 of the said circular. The CBDT circular is with specific reference to transport power and interest subsidies. The expression business subsidies used in the body of circular refer to only those subsidies that are contained in subject of circular. Thus, the expression 'business subsidies' in body of circular cannot be linked to any other subsidy. 16. The ld. AR has drawn our attention to the decision of Mumbai Bench 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....