TaxTMI 
TaxTMI 
2020 (9) TMI 667
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....f facts relating to above ground are, during the year, assessee was engaged in the business of manufacturing Garments, Carbon Black and Insulators. The AO passed assessment order dated 21.03.2002 u/s 143(3) after making various additions/disallowances. Aggrieved by the assessment order, the assessee challenged the said assessment order before Ld. CIT(A) and thereafter, before the Hon'ble Tribunal. Before the Tribunal, assessee claimed that sales tax incentive/ exemption received during the relevant previous year was a capital receipt and hence, not chargeable to tax. That claim was not made either in the return of income nor before the Ld. CIT(A). That claim, therefore, constituted a new ground of appeal. The Tribunal disposed off the appeal by an order dated 12.08.2011. Two additional grounds remained unadjudicated. Subsequently, those grounds were adjudicated by order passed u/s 254(2) in MA No. 135/Mum/2014 dtd 18.07.2014. Accordingly, the impugned order of the Tribunal dated 12/08/2011 were modified. 5. Further, in para no. 27 of the order of ITAT in ITA No. 6668 & 6669/Mum/2003 mentioned its order in MA No. 135/Mum/2014 is reproduced below:- "27 We have heard the Ld senior ....
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.... case of NTPC (supra) in which the Hon'ble Supreme Court held that question of law arising from the facts which are on record in the assessment proceedings has to be allowed to be raised if it is necessary to consider the question in order to correctly assess the tax liability of the assessee. In this case the assessee had availed sales tax exemption of Rs. 1,14,51,012/- which was already on record before the AO as the same was included in the total sale figure of Rs. 928,36 crores. This claim of the assessee has not been controverted before us by the revenue. Therefore the fact that the assessee had availed sales tax exemption which had been shown as part of the sales was already on record before the lower authorities. In view of the decision of the Special Bench of the tribunal in case of DCIT VS Reliance Industries Ltd: (supra) which held that- sales tax subsidy granted by the State Government was of the nature of capital receipt and could not be taxed, a legal question does arise in case of the assessee whether the sales tax exemption received by the assessee from the UP. Government was taxable or not. Such question has a direct bearing on computation of tax liability of th....
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.... tax subsidy received under the scheme of the government of Uttar Pradesh from the sales turnover of the appellant in the computation of appellant's total income. 8. Considered the rival submissions and material placed on record. We notice from the record that the Coordinate Bench of ITAT has considered and adjudicated the same issue in assessee's own case in ITA No. 3938/Mum/2013 dated 18.04.18 for AY 1995-96. For the sake of clarity, it is reproduced below:- 8. We have heard rival submissions and perused material on record. We have also applied our mind carefully to the decisions placed before us. It is evident, assessee's claim that the sales tax subsidy received by it is a capital receipt has been rejected by the Departmental Authorities on the ground that sales tax subsidy granted by the U.P. government being intended for assessees business and its profitability is an operational subsidy, hence, is a revenue receipt. The elaborate reasoning on which the learned Commissioner (Appeals) has held the Grasim Industries Limited sales tax subsidy received by assessee to be of revenue nature is contained in his order passed in assessment year 1998-99 which is also under appeal ....
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....ench in Reliance Industries Pvt. Ltd. (supra) is not binding. In our view, assessees case can he decided independently without depending upon the decision in case of Reliance Industries Ltd. (supra) being adjudicated before the High Court. This is in view of the fact that the nature of subsidy received by the assessee is to be determined keeping in view the relevant subsidy scheme of the U.P. Government and the purpose for which such subsidy was granted. Perusal of the scheme of V.P. Government issued vide notification dated 27th July 1991, a copy of which is at Page-217 of the paper book. it is seen that Grasim Industries Limited for promoting development of certain areas of the State as specified in the said notification the Government thought it appropriate to grant exemption from payment of sales tax to new units as well as existing units which have undertaken expansion, diversification or modernization by making investment in fixed capital exceeding 50 crore. The said notification further provided that the sales tax exemption I incentive will be allowed to a small scale unit at 150% of the fixed capital investment and in case of other unit 125% of the fixed capital investment.....