TaxTMI 
TaxTMI 
2022 (7) TMI 334
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....onitor and treatment of such effluent of industries. 2.2 The assessee had shown net loss of Rs.4,68,49,043/- for the year under consideration as against the net loss shown at Rs,2,86,36,855/- in the immediate preceding year. The Assessing Officer while processing the assessment for the year under consideration, made disallowance of Rs.5,95,758/- on account of rain shed protection, Rs.27,39,668/- as an expenditure towards the ISO certification of members industries and Audit, also Rs.3,87,00,000/- being subsidy received, Rs.4,13,381/- being laboratory expenses and Rs.2,69,257/- being monthly car hire charges. Thus, the total income determined by the Assessing Officer was of Rs.4,48,36,230/- and accordingly, the assessment order dated 11.03.2013 came to be passed under Section 143(3) of the Act. 2.3 Being aggrieved and dissatisfied with the aforesaid order of assessment passed by the Assessing Officer, the assessee company preferred an appeal before the CIT(A) which was registered as Appeal No.CAB(A)-3/1044/14-15. The assessee - original appellant has raised six grounds for consideration. The CIT(A) after hearing the respective parties and considering the submissions put forth alon....
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....eproduced as under: "[A] Whether on the facts and circumstances of the case and in law, the Appellate Tribunal is justified in confirming the view of the CIT(A) of allowing the entire expenditure in one year without appreciating that the same might give a very distorted picture of the profits of a particular year since the claim of assessee is in violation of doctrine of matching principles particularly when ISO certification is valid for various years? [B] Whether on the facts and circumstances of the case and in law, the Appellate Tribunal is justified in confirming the view of CIT(A) of deleting the addition of Rs.3,87,00,000/- made on account of subsidy received by the assessee? [C] Whether on the facts and circumstances of the case and in law, the Appellate Tribunal was justified in confirming the view of CIT(A) without appreciating that the assessee itself claimed that the subsidy was towards administrative expenses, which warranted the addition since the expenses claimed to this extent have been recovered from the Government? [D] Whether on the facts and circumstances of the case and in law, the Appellate Tribunal was justified in confirming the view of CIT(A) of ....
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....k done for the Plant & Machinery as well as Mechanical & Electrical Equipments and contingencies totalling to an amount of Rs.3314.00 which is covered under the head of capital of the assessee company and accordingly, the same has been considered as capital subsidy by CIT(A). By drawing attention to the assessment order, it is submitted that the decision of Tribunal is erroneous and perverse in so far as it allows the subsidy of Rs.3.87 crore in favour of assessee company. The attention of this Court was drawn to the submissions dated 08.02.2013 made by the Assessing Officer whereby it was clearly stated that the subsidy was towards administrative expenses having been recovered from the Government. Thus, it was submitted that in-fact that subsidy of an amount of Rs.3.87 crore was given towards administrative expenses incurred during the execution of project for the upgradation of infrastructure facility which ultimately enables the assessee company to run business smoothly and more profitability. Thus, considering the nature of such expenses incurred, the same is required to be classified under the head of revenue expenditure. But at the same time, if such subsidy was not granted t....
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....is so received, shall not be included in the actual cost of the asset to the assessee." 4.4 By referring to the aforesaid provision of law, the learned Senior Counsel has submitted that the Appellate Tribunal was not justified in confirming the view of CIT(A) of treating the subsidy of an amount of Rs.3.87 crore as capital in nature. It was further submitted that the Appellate Tribunal failed to appreciate that even the CIT(A) in contravention to Explanation 10 to Section 41(1) of the Act had held that the said subsidy was for expansion of the capacity, infrastructure facility and therefore, was required to be treated as capital asset subject to depreciation. 5. We have extensively heard Mr. M.R. Bhatt, the learned Senior Counsel appearing for the Revenue Department and have carefully gone through the order passed by the Assessing Officer as well as the CIT(A) and the Income Tax Appellate Tribunal. We have also perused the relevant provisions of law and have also taken into consideration the decisions relied upon by the learned Senior Counsel appearing for the Revenue. 6. This Court finds that the Revenue Department has principally raised two issues during the course of hearing....