TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 1939
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....g that the object of scheme of sales tax subsidy granted to the assessee to be for setting up of or for expanding existing industries in the developing region of Maharashtra without appreciating the fact the legal and factual matrix of the cases. The 2nd ground of appeal 2. On the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in holding the nature of sales tax subsidy received by the assessee is capital receipt relying upon decision of the jurisdictional High Court in the case of CIT vs. Reliance Industries Ltd. (CEA No. 1299/2008) dated 15.04.2008 which has not attained finality and not properly appreciating the ratio of decision in the case of Sahaney Steel and Press Works Ltd vs. CIT (1977) (228 ITR 253) (SC) which clearly laid down that the subsidy received after commencement of business without any specific instruction for its use towards the capital utilized for establishing the business constitutes revenue receipt. 2.1 During the year under consideration, the assessee had received industrial promotion subsidy of Rs.179,77,51,676/- from the Government of Maharashtra. The assessee claimed it as a deduction in the computation of income on the....
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....ation issued by the State Government. According to the said notification, certain facilities and incentives were to be given to all the new industrial undertakings which commenced production on or after 01.01.1969 with investment capital not exceeding Rs.5 crores. The incentives were to be allowed for a period of five years from the date of commencement of production. The incentives were not available unless and until production had commenced. The AO included the said amount in the assessable income of the assessee and that was affirmed by the CIT(A). On further appeal, the Tribunal deleted the additions holding that the refund was a development subsidy in the nature of a capital receipt. On reference, the Hon'ble High Court set aside the order of the Tribunal. On appeal to Supreme Court, it was held that the subsidies had been granted for production of or bringing into existence any new asset. The subsidies were granted year after year only after setting up of the new industry and commencement of production. Such a subsidy could only be treated as assistance given for the purpose of carrying on of the business of the assessee and, therefore, these were of revenue character and wou....
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....In Sahney Steels and Press Works Ltd. v. CIT [1997] 228 ITR 253 (SC) the Supreme Court had ruled that the character of the subsidy in the hands of the recipient, whether capital or revenue, has to be determined having regard to the purpose of which the subsidy was given. Although the source is immaterial, the purpose should be examined; if the purpose was to help the assessee to set up its business or to complete the business, the moneys had to be treated as having received for capital purposes. Conversely, if moneys were given to the assessee for assisting it in carrying on business operations and if the money was given only after and conditional upon production, subsidies had to be treated as assistance for the purpose of the trade." In the instant case, as per the EC issued by the Directorate of Industries on 24.01.2011, the assessee was entitled to IPS equivalent to 100% of the eligible amount of fixed capital investment made by the assessee or the taxes paid by it to the GOM within a period of 20 years, whichever is lower. Between 2008 to 2010, the assessee had set up a plant for the manufacture of four wheelers, trucks and construction equipments. Commercial production from....
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.... this case in 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 the 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 was to enable the assessee to set up a new unit or to expand the existing unit then the receipt of the subsidy was on capital account ..." We are of the considered view that the ratio laid down in the above decision squarely applies to the present case. In the instant case, the main objective of the scheme was to intensify and accelerate the process of dispersal of industries from developed areas and for development of under-developed regions of Maharashtra. It is clear from the scheme that IPS incentive was granted not for carrying on day-to-day business of the unit more profitably but to provide impetus to the process of dispersal of industries to backward areas. The plant of the assessee falls in Group C, which also includes Khed, which is outside the Pune Metropolitan....
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.... driving simulator and press shop partners with PCMC Traffic Police after holding that these were incurred for the purpose of the business without appreciating that these expenses were social in nature and were not incurred wholly and exclusively for the purpose of business of the assessee. 3.1 During the year under consideration, the assessee had debited Rs.14,26,00,000/- on account of miscellaneous expenditure. During the course of assessment proceedings, the assessee submitted before the AO vide letter dated 14.12.2016 the bifurcation of miscellaneous expenses stating that it had incurred expenses of Rs.96,95,743/- on account of CSR activities. The AO has noted that the assessee failed to file documentary proof along with justification for allowing these expenses. Referring to section 37 of the Act that "any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 (18 of 2013) shall not be deemed to be an expenditure incurred by the assessee for the purpose of the business or profession", the AO disallowed the above sum of Rs.96,95,743/- incurred by the assessee towards CSR. 3.2 In a....
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....its that Explanation 2 to section 37(1), which states that any CSR expenditure incurred as per the mandate provided under the Companies Act, 2013, is prospective in nature. However, prior to amendments in IT Act and Companies Act, there was no demarcation between voluntary and statutory CSR expenditure. Further, there was no express provision dealing with allowability of CSR expenditure. It is stated by him that in various cases for example in Orissa Forest Development Corporation Ltd. (2002) 80 ITD 300 (Cuttack) and Hindustan Petroleum Corporation Ltd. (2004) 92 TTJ 168 (Mum), it has been held that expenditure incurred on CSR was allowable as revenue expenditure even though there was no statutory liability to incur such expenditure. Referring to the order of the Tribunal, Raipur Bench in the case of Jindal Power Ltd. in ITA No. 99/BLPR/2012, the Ld. counsel submits that the expenditure incurred on the activities mentioned above has been done by the assessee in its capacity as a good corporate citizen and as a measure of fostering congenial working relations and enhancing goodwill amongst the people living in an around its premises and thus allowable u/s 37(1) of the Act. 3.4 We h....