TaxTMI 
TaxTMI 
2018 (12) TMI 1891
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....-, on account of depreciation without appreciating the fact that the assessee has not claimed any depreciation on goodwill but has allocated the entire amount of share capital issued to the share holders of M/s. J.K. Synthetic Limited free of cost, among all the fixed assets which is not permissible. 4. Ld. Commissioner of Income Tax (Appeals)-II, Kanpur has erred in law and on facts by allowing the relief of Rs. 13,74,26,007/-, on account of additional depreciation. 5. Ld. Commissioner of Income Tax (Appeals)-II, Kanpur has erred in law and on facts by allowing the relief Rs. 5,93,88,041/- on account of Subsidy received from Rajasthan Govt. treated as capital receipt without appreciating the fact that the subsidy has to be treated capital or revenue has been dealt with by the Hcn'ble Supreme Court in the case of Sahney Steel & Pressing Works Ltd. Vs. CIT(1997)228 ITR253, wherein it has been said that in the case of subsidy, the assessee was free to use the money in its business entirely as it liked and was not obliged to spend the money for particular purpose." 2. Apropos Ground Nos. 1 to 3, the assessee is a Public Limited Company and it has acquired....
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....of shares allotted to the shareholders of JKSL is part of payment of purchase consideration towards the cost of acquisition of cement undertaking on which assessee is eligible for depreciation. Even in the alternative, if the cost of shares allotted to the shareholders of JKSL is considered to be the cost of goodwill acquired by the assessee, as it was shown as part of means of finance, even then it is eligible for depreciation in the light of the aforesaid judgments of the Hon'ble High Court and the Hon'ble Apex Court. Therefore, we are of the considered opinion that the ld. CIT(A) has rightly adjudicated the issue and we do not find any infirmity therein. Accordingly, we confirm his order in both the years." 5. Further, for A.Ys. 2007-08 to 2011-12, vide order (APB 81-94) dated 30.10.2015, the Tribunal has reiterated this position to uphold the CIT(A) action in reversing the assessment orders. The Tribunal has held as follows: "During the course of hearing, the ld. DR simply placed reliance upon the order of the AO on this issue, whereas the ld. Counsel for the assessee has placed heavy reliance upon the aforesaid order of the Tribunal. Since no contrary view has been....
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..... Act would not restrain the assessee from claiming the balance of the benefit of additional depreciation in the subsequent assessment year. 9. No decision contrary to the above decisions has been brought to our notice. Hence, finding no error therein, the order under appeal on this issue is also confirmed. Ground No.4 is rejected. 10. So far as regards Ground No.5, the assessee received interest subsidy of Rs. 5,93,88,041/- from the Rajasthan Govt. The assessee showed this as capital reserve in its balance sheet. The AO, however, treated it as a revenue receipt, following the assessment orders for earlier years. The ld. CIT(A) allowed the assessee's claim of capital receipt, following the first appellate orders for A.Ys. 2007-08 to 2011-12, as affirmed by the ITAT vide its order (supra) dated 30.10.2015. 11. The Tribunal, vide its order (supra) dated 30.10.2015, for A.Ys. 2007-08 to 2011-12, has upheld the CIT(A)'s similar action, holding : "6. Having carefully examined the orders of the lower authorities, in the light of rival submission, we find that as per Raj Investment Policy 2003 appearing at page nos. 38 to 49 of the compilation of the assessee, the scheme....
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....r capital will have to be determined having regard to the purpose for which the subsidy is given. The source of the fund is quite immaterial. If the purpose is to help the assessee to set up its business or to complete a project, the monies must be treated as to have been received for capital purpose. But if the money is given only after and conditional upon commencement of production, such subsidies must be treated as assistance for the purpose of the trade. In the case of Ponni Sugars and Chemicals Ltd. their lordship has held that the nature of subsidy is to be determined in respect of purpose for the subsidy is granted. The character of subsidy is to be determined with respect to subsidy is granted. In other words one has to apply the purpose test. The point of time as subsidy paid is not relevant. The source is immaterial if the object of the subsidy is to enable the assessee to run the business more profitably then the receipt is of revenue receipt. On the other hand, object of the assistance under the subsidy scheme is to enable the assessee to setup a new unit or to expend an existing unit then the receipt of the subsidy is a receipt in capital account. Their lordship ....