TaxTMI 
TaxTMI 
2022 (2) TMI 533
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....010 and ITA No. 577/Kol/2011 for the assessment years 2007-2008 and 2008-2009. The revenue has raised the following substantial questions of law for consideration: i) Whether on the facts and in the circumstances of the case the Learned Tribunal was justified in law to dismiss the appeal of the revenue holding, inter-alia, that the subsidy cannot be the subject matter of taxation in the years under appeal as the same got released/sanctioned only in the financial year 2009-2010. ii) Whether on the facts and in the circumstances of the case the Learned Tribunal was justified in law to upheld the order of the CIT(A) by deleting the additions made under Section 41(1) of the said Act towards the subsidy by relying upon a decisi....
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....ales Tax/VAT actually paid by the assessee after the commencement of the project and that such quantification would be relevant for the taxability of the same going by the objects of the incentive scheme. The Tribunal taking note of the decision of the Hon'ble Supreme Court in the case of Commissioner of Income Tax Vs. Ponni Sugars and Chemicals Ltd.: [2008] 306 ITR 392 (SC) as also the decision of this case in the case of Commissioner of Income Tax Vs. Rasoi Ltd : [2011] 335 ITR 438 (Cal.) dismissed the appeal filed by the revenue. Before us, the learned Counsel would place heavy reliance on the decision of the Hon'ble Supreme Court in the case of Sahney Steel and Press Works Limited (supra) and submitted that Tribunal ought to have follow....
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.... be determined with respect to the purpose for which the subsidy is given. In other words, in such cases, one has to apply the purpose test. The point of time at which the subsidy is paid is not relevant. The source is immaterial. The form of subsidy is immaterial. The main eligibility condition in the scheme with which we are concerned in this case is that the incentive must be utilized for repayment of loans taken by the assessee to set up new units or for substantial expansion of existing units. On this aspect there is no dispute. If the object of subsidy scheme was to enable the assessee to run the business more profitably then the receipt is on revenue account. On the other hand, if the object of the assistance under the subsidy scheme....
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....case being available only to new units and units which have undergone an expansion, the real purpose of the incentive has to be seen as capital subsidy and has to be recorded as such, as capital receipt and not a revenue receipt. That apart we also take note of the communication sent by the Joint Secretary to the Government of West Bengal, Commerce and Industries Department to the Managing Director, West Bengal Industrial Development Corporation dated 23rd March, 2007 wherein it has been stated that the State Government has approved the package for the assessee for setting up an Edible Oil Refinery Plant and Captive Power Generation unit and the reimbursement of 75% of the sales tax paid has been termed as Industrial Promotion Assistance....