TaxTMI 
TaxTMI 
2021 (1) TMI 154
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee of Rs. 2,55,27,120/- as Industrial Promotion Assistance from the State Govt is capital in nature as against revenue receipt as treated in the order u/s. 254 by the AO." 2. At the outset, it is noted that there is a delay of 16 days on the part of the revenue in filing this appeal before the tribunal. In this regard, the Revenue has filed an application seeking condonation of the said delay and keeping in view of the reasons given therein, which are supported by an affidavit filed by the Assessing Officer (DCIT, Circle-6(1), Kolkata, we are satisfied that there was a sufficient cause for the delay of 16 days on the part of the revenue in filing this appeal before this Tribunal. Even the Ld. Counsel has not raised any objection in thi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eceipt and profits of the assessee company rather than to assist the assessee in acquiring a capital asset. He also noted that the amount in question had been granted to the assessee company only after commencement of production and the subsidy granted after commencement of production being operational subsidy was of revenue nature. He accordingly disallowed the claim of the assessee for exemption of the amount of subsidy in question. He also held that the said claim of the assessee for exemption was otherwise also not entertainable as the same was not made by the assessee either in the I.T Return or Revised Return as held by the Hon'ble Supreme Court in the case of Goetze (India) Ltd reported in 284 ITR 323 (SC). 4. The disallowance made ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng the fact of assessee falling under the category of 'Mega Unit' under the said scheme. We find that Subsidy could be reduced from the cost only if it is found that the cost for acquiring the asset was directly or indirectly met out of the subsidy. In order to apply the proviso, it is necessary to show that the subsidy had been directly or indirectly used to acquire the asset though it may not be possible to exactly quantify the amount directly or indirectly used for acquiring the asset. For the purpose of applying the proviso, also it has to be found that the asset was acquired by directly or indirectly using the subsidy. It is apparent from the provisions of the 2000 Scheme and the certificate of registration and eligibility cert....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of the case. We find that the facts are discussed in detail and which are undisputed. It is admitted that the assessee's issue of Sales Tax Incentive is capital in nature for the reason that the very scheme under which the expansion of the unit and subsidy under Rajasthan Sales Tax Scheme. 1998 was received explains the purpose of the scheme as incurring capital expenditure for installation of plant and machinery and for eligible for fixed capital investment. Even the issue of assessee is covered in its favour by Tribunal 's decision in assessee's own case all along from AYs 2002-03 to 2006- 07. It is not brought to our notice by the Revenue that the matter has been decided by Hon'ble Calcutta High Court, despite a query f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of the fixed capital cost, which is the basis for determining the subsidy, being only a measure adopted under the scheme to quantify the financial aid, is not a payment, directly or indirectly, to meet any portion of the actual cost. Therefore, the said amount of subsidy cannot be deducted from the actual cost under sec. 43(1) for the purpose allowing depreciation. It is further held that if Government subsidy is an incentive not for the specific purpose of meeting a portion of the cost of the assets, though quantified as a percentage of such cost, it does not partake the character of payment intended either directly or indirectly to meet the " actual cost". By implication, the above judgment also provides that if the subsidy is intended ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t is so received, shall not be included in the actual cost of the asset to the assessee. In order to invoke Explanation 10, it is necessary to show that the subsidy was directly or indirectly used for acquiring an asset. This is again a question of fact. The relatable subsidy to such asset can be reduced from the cost only if it is found that the cost for acquiring that asset was directly or indirectly met out of the subsidy. Likewise in the proviso, it is necessary to show that the subsidy has been directly or indirectly used to acquire an asset but it is not possible to exactly quantify the amount directly or indirectly used for acquiring the asset. Here also, a finding of fact is necessary that an asset was acquired by directly or indire....