TaxTMI 
TaxTMI 
2018 (1) TMI 1615
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.... sales tax subsidy received from the Government amounting to Rs. 14,91,51,889/- on the ground that the same was capital receipt not chargeable to tax. The relevant details and documents in support of the said claim were also furnished by the assessee before the Assessing Officer. Since the said claim was not made by the assessee in the return of income filed by it and there was no revised return filed by the assessee making the said claim, the ld. CIT(Appeals) did not entertain the same by relying on the decision of the Hon'ble Supreme Court in the case of Goetz India Limited [284 ITR 323] and proceeded to complete the assessment under section 143(3) vide an order dated 25.03.2013 without considering the claim of the assessee for exclusion of sales tax subsidy. 3. Against the order passed by the Assessing Officer under section 143(3), an appeal was preferred by the assessee and after considering the submissions made by the assessee as well as the case laws cited in support, the ld. CIT(Appeals) admitted the claim of the assessee for exclusion of the sales tax subsidy for the following reasons given in paragraph no. 5.2 of his impugned order:- "5.2. I have considered the su....
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....The Eligibility Certificate was issued for appellant's project at Block Sutahata Block-1, Post Office Haldia 721602 Police Station Bhabhanipur District Midnapur (E) for the manufacture of blended LPG having capacity of 6,00,000 tonnes. As per the scheme the West Bengal Industrial Development Corporation Ltd. sanctioned the incentive in the form of remission of sales tax on sale of finished goods due for payment by it for a period of 9 years subject to ceiling of 100% of the gross value of fixed capital assets of the approved project or R.75 crore whichever is less, as per para 10.1.1(ii), 10 1.7 of the scheme It therefore appeared that the incentive in the form of sales tax remission was for setting up of a new industrial unit. 5.4. On perusal of West Bengal Incentive Scheme. 1999, notified on 22.06.1999, it is observed that it starts with the wordings "Whereas, the Governor is of the opinion that it necessary and expedient to extend incentive for promotion of industries in this State; Now, therefore, the Governor is pleased hereby. in supersession of the West Bengal Incentive Scheme, 1993 sanctioned under Commerce & Industries Department's Notification No 188....
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....ting up a new unit for the manufacture of blended LPG at Block - Sutahata Block-I. Post Office Haldia-721602 Police Station Bhabhanipur District Midnapur (E). As per the approval letter, the appellant company was granted Incentives in the form of remission of sales tax, exemption of sales tax and waiver of electricity duty As per the Scheme. the Incentive was provided for setting up of new unit, but the mode of calculation of incentive was sales tax paid/collected by the appellant In view of the foregoing facts & circumstances. I am of the opinion that it would not be correct to say that the subsidy/incentive was given to the appellant for the purpose of assisting in carrying on business or trade by way of refund of sales tax or that there was cessation of liability on account of payment of sales tax attracting the provisions of section 41(1) of the act Though. the method of calculation of incentive/subsidy is collection of sales tax but the purpose of giving the incentive was setting up/expansion of industries in the backward areas of the State of West Bengal. On perusal of approval letter/eligibility certificate, it is apparent that the incentive was allowed to the appellant comp....
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....d Invested a substantial amount in fixed capital assets for the purpose of setting up a new unit. Hence, as per the principles laid down by the Hon'ble Supreme Court in the case of Ponni Sugars & Chemicals Ltd (Supra), the receipt on account of incentive in the form of sales tax remission received by the appellant was on capital account. 5.7. The Calcutta High Court In the case of CIT vs, Rasoi Ltd (335 ITR 438) observed that the assessee received a subsidy amount of Rs. 5,34,86,887/- as Industrial Promotion Assistance from the Government of West Bengal. In the books of account, the said amount was shown as income under the head "Other Income". In the notes to accounts, the assessee mentioned that although the amount had been accounted for in the above manner, the company has been legally advised that it was of the nature of capital receipt for the purpose of computation of taxable income and in the return of income filed by the assessee, it claimed the amount to be in the nature of capital receipt The AO dismissed the claim of the appellant and held that the subsidy was utilized for meeting revenue disbursements and therefore, was supplementary trade receipts and to be....
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....within capital or revenue Thus, in the case before us, the amount paid as subsidy was really capital in nature". 5.8. In the case of appellant, the incentive in the form of sales tax remission, though, calculated on the basis of payment/collection of sales-tax, was received by it under the West Bengal Incentive Scheme, 1999 for setting up of new manufacturing unit. I find that the decision of the Honble Calcutta High Court In the case of Rasoi Ltd (supra) is squarely applicable to the facts of the appellant's case and therefore the Incentive received by way of sales tax remission is capital in nature. 5.9. Similar issue was decided by the Hon'ble Jurisdictional High Court in the case of CIT vs. M/s. Strassenburg Pharmaceuticals Ltd (G.A. 20142 of 2011) dated 21.07.2011 holding that various amounts received by the assessee as subsidy under the West Bengal Industrial Promotion Assistance is capital in nature following the decision in the case of M/s Rasoi Limited (supra). 5.10. Similar Issue was again decided by the ITAT, Kolkata In the case of DCIT -vs.- Ankit India Ltd. (ITA No 1330/KoI/2010). In the decided case the assessee was engaged in the production ....
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....he incentive as revenue receipt relying on the decision in the cases of Supreme Court in Sahney Steel & Press Works Ltd vs CIT (228 ITR 253), Madras High Court In CIT vs. Ponni Sugars & Chemicals Ltd. (260 ITR 605). Calcutta High Court in B Marino Ply & Chemicals Ltd vs. CIT (209 ITR 508) and Andhra Pradesh High Court In CIT vs. Tirumala Bricks & Tiles Factory (217 ITR 547) On first appeal, the CIT(A) held that the assistance given by the State Government by way of sales-tax remission is in the nature of capital receipt and accordingly he directed the AO to delete the addition. Aggrieved by the said order, the Revenue filed an appeal before the ITAT, Kolkata. After hearing both the sides, the IT AT held as under. 5.12. Similar view was reiterated by the ITAT, Kolkata in ITO Vs Duroplas India Pvt. Ltd (ITA Nos 1983. 1984 and 1985/Kol/2008) as well wherein the incentive/subsidy received by the assessee from the Government of West Bengal under the WBIS, 1999 was held to be capital in nature as the incentive was provided by the State Government for industrial promotion in the State of West Bengal. 5.13. The claim made by the appellant that the amount received from the Govt. o....