TaxTMI 
TaxTMI 
2021 (3) TMI 1160
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....eletion of government subsidy treating the same as revenue in nature of Rs. 43,08,97,000/-. 4. Brief facts as per the assessee which has been taken by the Ld. CIT(A) which is as under: "1.1 The respondent has obtained incentive in the form of Sales Tax assistance of Rs. 29,40,26,606/- in A.Y. 2013-14 as Industrial Promotional Assistance (IPA) under "The West Bengal Incentive Scheme (WBIS) 2004" issued vide Notification No. 134-CI/O/ Incentive/17/03/I dated 24.03.2004. The said incentive has been granted to encourage additional investments for setting up and/or expansion and modernization of the industrial undertaking located at the respective place to accelerate the development of the backward area of the State and to create large scale employment opportunities. The company has received sales tax assistance, being capital receipt, for expansion of existing industrial undertaking involving huge capital outlay. Similarly, company has also set up a new plant at Krishnapatnam, Andhra Pradesh and is eligible for incentives in the form of sales tax incentive, etc as per the scheme of Andhra Pradesh Gout. known as "Industrial Investment Promotion Policy (1IPP) 2010-2015" of Rs....
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....see's own case in ITA No.1915/Kol/2017 for A.Y 2011-12, which is as under: "27. We have considered the rival submissions and also perused the relevant material available on record. As regards the preliminary objection raised on behalf of the Revenue challenging the action of the ld. CIT(Appeals) in entertaining the new claim made by the assessee for treating the subsidy in question received during the year under consideration as capital receipt not chargeable to tax, it is observed that this issue is squarely covered in favour of the assessee, besides the various judicial pronouncements cited on behalf of the assessee and relied upon by the ld. CIT(Appeals) in his impugned order, by the decision of the Coordinate Bench of this Tribunal in the case of DCIT -vs.- Indian Oil Petronas Pvt. Limited rendered vide its order dated 31.05.2018 in ITA No. 157/KOL/2017, wherein it was held by the Tribunal by relying on the decision of the Hon'ble Supreme Court in the case of National Thermal Power Co. Limited -vs.- CIT (229 ITR 383) as well as the decision of the Hon'ble Calcutta High Court in the case of MaynakPoddar (HUF) -vs.- WTO (262 ITR 633) that his jurisdiction was rightly exe....
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....way linked to the steps that had been taken by the assessee in setting up the industry, Hon'ble Supreme Court held that the incentive received was revenue in nature chargeable to tax. It was, however, clarified by the Hon'ble Supreme Court that the subsidy in that case had not been granted for bringing into existence any new asset. It was further clarified by the Hon'ble Supreme Court that the character of the subsidy in the hands of the recipient, whether revenue or capital, will have to be determined by having regard to the purpose for which the subsidy is given. Explaining further with illustration, it was observed by the Hon'ble Supreme Court that if the Scheme was that the assessee will be given refund of sales tax on purchase of machinery as well as on raw materials to enable the assessee to acquire new plants and machinery for further expansion of its manufacturing capacities in backward areas, the entire subsidy must be held to be a capital receipt in the hands of the assessee. After taking note of both these decisions of the Hon'ble Supreme Court in the case of Sahany Steel & Press Works Limited (supra) and Ponny Sugar & Chemicals Limited (supra), Hon'ble Calcutta High Cou....
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....the Hon'ble Supreme Court by the interim order passed in SLP No. 30728 to 30732/2017. 31. The position that clearly emerges from the various judicial pronouncements cited by the ld. Representatives of both the sides, as discussed above, is that the character of subsidy in the hands of the recipient, whether capital or revenue, is required to be determined after having regard to the purpose for which the subsidy was given and the mode and source of payment as well as the point of time when the subsidy was paid is not relevant. Keeping this position in mind, let us now see the purpose for which the subsidy in question was given to the assessee in the form of sales tax refund under the West Bengal Incentive Scheme, 2004. As per the West Bengal Incentive Scheme, 2004 notified in the Official Gazette, it was meant to extend incentive for promotion of industries in the State of West Bengal and the same was applicable to all Large/Small Scale Projects and Tourism Units in Large/Small Scale Sector to be set up and also expansion project of existing Units on or after 1s t April, 2004. The object of the said Scheme thus was to promote setting up and expansion of industries and the s....
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....larity in the objects of both these Schemes, inasmuch as, it was to provide incentive for the purpose of setting up of new Units as well as for the expansion of the existing Units. 33. It is pertinent to note that the similar issue had come up for consideration before the Delhi Bench of this Tribunal in the case of Pepsico India Holdings Pvt. Limited (supra) cited by the ld. Counsel for the assessee. In the said case, industrial promotional assistance in the form of subsidy by way of refund of sales tax paid was received by the assessee under the same Scheme, i.e. West Bengal Incentive Scheme, 2004 and the issue raised was relating to the taxability of the subsidy received by the assessee. While deciding the said issue, the Tribunal took note of the object of the West Bengal Incentive Scheme, 2004, which was found to be to promote setting up and expansion of projects/industry and keeping in view the said object and the ratio laid down by the Hon'ble Supreme Court in the case of CIT -vs.- Ponny Sugar & Chemicals Limited (supra) as well as in the case of CIT -vs.- Chaphalker Brothers (supra), it was held by the Tribunal that the subsidy received by the assessee under the Wes....
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....e assessee. As further pointed out by the ld. Counsel for the assessee, a Note No. 20 was given by the assessee-company as Notes to Accounts forming part of its annual accounts pointing out specifically that it was entitled for sales tax incentive of Rs. 2494.67 lakhs under the West Bengal Incentive Scheme, 2004. We, therefore, find no infirmity in the impugned order of the ld. CIT(Appeals) allowing the claim of the assessee for exclusion of the amount of subsidy in question while computing the book profit under section 115JB of the Act. Grounds No. 2 to 5 of the Revenue's appeal are accordingly dismissed." (Emphasis given by us) 8. Since no change of facts or law could be pointed out by the Revenue on this issue which has been decided in assessee's own case and the case law relied by the A.O in the case of Sahany Steel & Press Works Limited (supra) has also been considered by the Tribunal in the above case of assessee on this issue, we respectfully follow the order of the Tribunal in assessee's own case for A.Y 2011-12 , we confirm the order of Ld. CIT(A) and dismiss both grounds of appeal. 9. Ground No.3 is against the action of the Ld. CIT(A) in allowing the emplo....
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.... of the Tribunal in the case of Narayani Ispat Pvt. Ltd. (2127/Kol/2014) as under: "Ground No.10 is regarding disallowing interest of Rs. 1,76,515/- on delay payment of service tax. This ground is squarely covered in favour of the assessee by the decision of Hon'ble ITAT in the case of NarayaniIspatPvt. Ltd. (2127/Kol/2014). Therefore, this ground is allowed." 14. We note that he Ld. CIT(A) has given relief to the assessee by relying on the decision of the Tribunal in the case of Narayani Ispat Pvt. Ltd., which he did so correctly. And since the relief has been given by relying on the ratio of the decision of this Tribunal in the case of Narayani Ispat Pvt. Ltd. (supra), we find no infirmity in the order of the ld. CIT(A), therefore, we confirm the order and dismiss the grounds of Revenue. 15. Ground No.6&7, the Ld. AR relied on the action of the A.O in deleting the action of Ld. CIT(A) of Rs. 10,662/- on account of delay payment of lease rent and in deleting addition of Rs. 63,579/- on account of delayed payment of service tax. The Ld. DR fairly submits that he could not trace out any addition made by the A.O or adjudicated by the Ld. CIT(A) on this issue, therefore....
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....: "On perusal of the Tax Audit Report [Column 27(b) of Form 3CD], it is noticed that the Auditor has pointed out the prior period expenses of 3,92,427/-. However, the assessee has not disallowed the prior period expenses of Rs. 3,92,427/- in the computation of total income. On perusal of the details of prior period expenses, it is seen that prior expenses relates to insurance claim, sponsorship, sponsorship fees, computer software and professional fees. During the course of assessment proceedings, the A/R of the assessee could not establish that the corresponding income has been recognized during the year under consideration. Since the prior period expenses are not allowable, the same is disallowed and added to the total income of the assessee company." 22. The the Ld. CIT(A) has decided the issue as under: "On this issue the AO has simply stated that the AR of the assessee could not establish that the corresponding income has been recognized during the year under consideration. In Income Tax, the allowance of any expenditure is to be considered whether it has been incurred wholly and solely for the purposes of the business of the assessee or not. The ....
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.... Rules 1963 for A.Ys 2013-14 and 2014-15. Since the averments in both the years are the same, we reproduce the submission of the assessee for A.Y 2013-14 which is as under: This humble Petition under Rule 27 of the Income Tax Appellant Tribunal Rules, 1963of the Petitioner most humbly and respectfully SHEWETHS 1. The Income Tax Appeal bearing ITA No. 2563/Kol/2019 has been filed by the Revenue against the order passed by Ld. CIT(A)-4, Kolkata on 19th September 2019. The said Appeal is fixed for hearing before Hon'ble "B" Bench on 7th December 2020. 2. The facts of the case are that the Respondent Assessee had received various incentives/Subsidies, as detailed herein below, from West Bengal Government and Andhra Pradesh Government. Electricity Duty Rs. 2,07,09,740 Sales Tax Incentive Rs. 43,08,97,000 3. The Respondent Assessee Company claimed before the Assessing Officer that these Incentives/subsidies were received by it under Schemes formulated by Government of West Bengal and Government of Andhra Pradesh for industrial development in the respective states. It was claimed that the said Incentives/Subsidies were Capital receipt in nature....
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....2019] 101 taxmann.com 167 (Delhi). SLP filed by Revenue against this judgement was dismissed by Hon'ble Supreme Court in [2019] 112 taxmann.com 322 (SC) 11. The Assessee Company submits that the mistake or inadvertence on the part of the assessee whereby an income not taxable is wrongly offered for tax, will not operate as any kind of estoppel against the assessee regardless whether the revised return was filed or not. In such a case the Revenue is obliged to assess the correct income. In support of the aforesaid claim the Assessee Company refers to and relies on the judgement of Hon'ble Gujarat High Court in the case of Pr. CIT vs. Greenland Infracon P. Ltd. in R/Tax Appeal No. 239 of 2019 (Judgement dated 09.07.2019). The relevant portion of the judgement is quoted hereunder. "6. The Tribunal also concurred with the findings recorded by the CIT(A) that the mistake or inadvertence on the part of the assessee whereby an income not taxable is wrongly offered for tax, will not operate as any kind of estoppel against the assessee regardless whether the revised return was filed or not. If the assessee is in a position to show that it has been over assessed on account ....
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....e 27 can be pressed into for admission of two new grounds and how it can be said to support the decision of Ld. CIT(A). According to Ld. D.R, if the assessee had any grievance in respect of two grounds (new), then the assessee ought to have filed an appeal or cross-objection rather than filing Rule 27 application which in not correct at all. So he objects to the admission of two new grounds under Rule 27 of the Rules. On the other hand, the Ld. A.R submitted that the issues raised are no longer res-integra and therefore these are legal issues which should be admitted for interest of justice and technicalities should not come in the way of substantial justice and the counsel's omission not to file appeal/C.O should not deprive the assessee of the substantial justice. 29. We have heard both the parties and perused the records. We note that the revenue has preferred an appeal against the order of Ld. CIT(A) dated 19.09.2019 and 20.09.2019 for AY 2013-14 and AY 2014-15 respectively. However, the assessee did not prefer any cross appeal or cross objection against the impugned order of Ld. CIT(A). However, the assessee has preferred an application under Rule 27 of the Rules praying fo....
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.... the powers conferred by sub-section (5) of section 255 of the Act, the Tribunal has framed the Income Tax Appellate Tribunal Rules, 1963, the Rules to regulate the procedure of the Tribunal. By virtue of the provisions of the Act and Rules, if the assessee /revenue is aggrieved by the order of Ld. CIT(A), then either parties can prefer an appeal or cross objection before this Tribunal and Rule 27 can be used by the respondent (in this case, the assessee), though it (assessee) has not filed an appeal or cross objection, still can support the action order of Ld. CIT(A) on any grounds decided against it by the Ld. CIT(A). We find that the issue regarding incentive which the assessee received towards waiver of electricity duty or disallowance u/s 14A of the Act was not raised as a ground by the assessee before the Ld. CIT(A) and therefore it is difficult to comprehend as to how the provision of Rule 27 can come to the aid of the assessee for admission as new grounds of appeal which are not even pure legal issue but it is issues which are mixed question of facts and law. And it has to appreciated that since we are a creature of the Act, we do not enjoy the inherent power of Court or....