TaxTMI 
TaxTMI 
2015 (11) TMI 1882
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....omestic Company and engaged in the business of manufacturing of detonators, fuse etc. A return of income was filed declaring total income of Rs.5,52,04,240/-. Subsequently, the return was revised and claim of exemption for Rs.97,47,804/- was made. In compliance of the query of the AO, an explanation was offered by the assessee as under:- "Our Company has got sales tax incentives under PSI 1993 of Government of Maharashtra. As per scheme we establish plant at backward district then we are eligible to avail sales tax exemption in proportion of investment made in capital expenditure. These Sales Tax Incentives are not repayable by the assessee but represent the incentives provided by Government of Maharashtra with relation to cost of project. Though we have not changed sales tax separately in our sales invoices. The tax component of Rs.97,47,803/- was included in sales priced. We have availed benefits of Rs.97,47,803/- by way of Sales Tax exemption. The said amount should not be treated as revenue income. The same view has been taken in the case of Reliance Industries Lv. V/s Dy. CIT by the larger bench of ITAT Mumbai, 88 ITD 273. We request you kindly treat Rs.97,47,804/- as ca....
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....the AO, hence, an appeal was preferred by the assessee. Before the learned CIT(A), facts were reiterated and few case laws were cited and there upon relief was granted by the learned CIT(A) in the following manner:- "6.7 The Hon'ble ITAT, Special Bench, Mumbai, in the case of Reliance Industries Ltd. has considered the question as regards to whether subsidy received on account of exemption from sales tax would be treated as capital or revenue in nature. The facts of the present case of the appellant are squarely applicable to the case of Reliance Industries Ltd., wherein the Hon'ble Mumbai Special Bench of Tribunal after considering the decision of the Hon'ble Supreme Court in the case of Sahney Steel & Press Works Ltd. has held that the assessee company is justified in its claim that the sales tax incentive allowed to it during the previous year in terms of the relevant Government order constituted capital receipt and was not to be taken into account in computation of total income. On further appeal, the Bombay High Court, after considering the decision of the Special Bench of the Tribunal and the test as laid down by the Hon'ble Supreme Court in CIT vs Ponni Sugars and Chemical....
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....32, dated May 7, 1993 has introduced Package Scheme of Incentives, 1993 ("the 1993 Scheme" or "the Scheme"). Prior to this the Government had introduced almost similar package scheme of incentive in 1964, which was amended from time to time and the last it was amended in 1988. The last such scheme was known as 1988 Scheme and was operative from October 1, 1988 to September 30, 1993. 2. Pursuant to the 1993 Scheme, the Appellant has set up new industrial unit in notified backward area located at Sawanga, Post Shiva, Taluka and District Nagpur ("Eligible Unit") for manufacture of Detonators, Fuse Heads, Filled Shells, Nonel Shock Tube with the initial fixed capital investment of Rs.283.01 lakhs. 3. Subsequently, the Appellant has made an application for its Eligible Unit under the 1993 Scheme for issue of eligibility certificate in order to avail benefit of exemption from payment of sales tax for a period of 10 years. After examination of the fulfilment of the various conditions under the 1993 Scheme, the Appellant was issued eligibility certificate by the District Industries Centre, Nagpur, being Implementing Agency notified under the 1993 Scheme for implementing the said Scheme....
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....industrial development of backward district as well as generation of employment, as this as extension of earlier schemes viz. schemes introduced in 1964, 1979 and 1988 3 Industrial undertaking: The assessee in this case has set up industrial undertaking in notified backward area viz. Patalganga, Raigad District. The Appellant has set up industrial undertaking in notified backward area viz. Sawanga, post Shiva, Taluka and District Nagpur. 4 Nature of incentive under the Scheme: Exemption from liability of payment of sales tax for a period of five years. Exemption from liability of payment of sales tax for a period of ten years. 5 Mode of quantification of subsidy: The quantification was based on certain percentage of investment in fixed capital in the nature of various specified assets. The quantification is based on certain percentage of investment in fixed capital in the nature of various specified assets. 6 Mode of payment of subsidy: The assessee was entitled to collect the sales tax in the nature of subsidy and retain the same without making payment for the same. The Appellant is entitled to collect the sales tax in the nature of subsidy and retain the same withou....