TaxTMI 
TaxTMI 
2025 (12) TMI 1091
X X X X Extracts X X X X
X X X X Extracts X X X X
....following grounds of appeal : "The following grounds of appeal are taken independently and without prejudice to one another. 1. The Ld. CIT(Appeals) has erred in dismissing the Ground No. (i) of the assessee in respect of the addition of Rs. 37,84,89,268 made by the Assessing Officer on account of the capital subsidy received from the Maharashtra Government under the Package Scheme of Incentives (2007), by treating it to be of revenue nature. 2. The Ld. CIT(Appeals) has erred in holding that the incentives of Rs. 37,84,89,268 received from the Maharashtra Government under the package of incentive Scheme 2007 claimed during the year are of revenue nature and the action of the Assessing Officer in bring these to tax....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er profit and loss account. The assessee during the course of assessment proceedings has pleaded that it is Capital Receipt and not liable to tax. However, ld. AO concluded the proceedings observing that the subsidy in question is not given to the assessee for establishment of business, i.e. it was not meant to be used prior to commencement or commercial business so as to make the same as Capital Receipt which is not in form of Fixed Asset but said sum has been given to the assessee after commencement of business. Ld. AO accordingly denied the claim of the assessee of treating the subsidy received as Capital Subsidy and added it back to the total income shown by the assessee and assessed income at Rs. 7,58,19,390. 4. Aggrieved assessee p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Incentives, 2007 at Rs. 37,84,89,268. We also note that assessee has credited the said Subsidy in its profit and loss account but while computing the income to file income-tax return the same has been reduced it from the Net Profit claiming it to be Capital Receipt not liable to tax. As submitted by ld. Counsel for the assessee that this issue has come up before this Tribunal in assessee's own case on number of occasions, we take note of the decision of this Tribunal in ITA No.2992/PUN/2017 dated 27.04.2022 for A.Y. 2014-15 (supra), wherein also subsidy of Rs. 36,08,69,697 was received and claimed as a Capital Receipt. For A.Y. 2014-15 Revenue was in appeal raising a ground that since there is direct link to the investment in Fixed Asset by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rises for consideration in such circumstances is that, can be it said that subsidy is granted to meet the cost of the actual fixed assets, merely because the amount of subsidy is calculated in term of certain percentage of investment in fixed assets. The Hon'ble Supreme Court had an occasion to consider the identical issue in the case of CIT vs. P.J. Chemicals Ltd., 210 ITR 830 and after review of the case law on the point, the Hon'ble Supreme Court held as under :- "Where Government subsidy is intended as an incentive to encourage entrepreneurs to move to backward areas and establish industries, the specified percentage of the fixed capital cost, which is the basis for determining the subsidy, being only a measure adopted under th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nce Bill (2) of 1998, the Proviso take cares of situation where such subsidy, grant or reimbursement is such nature that subsidy, grant or reimbursement cannot be directly relatable to the assets acquired by an assessee. In such a situation, the Proviso envisages that so much of amount which bears to the total subsidy, reimbursement or grant, the proportion as such assets bears to all the assets in respect of or with reference to which subsidy or grant is so received shall be deducted in the actual cost of the asset of the assessee. Thus, the proviso envisages adjustment of subsidy in the assets of the assessee. In case the subsidy grant is not directly relatable to particular asset. Since in the preceding paras we held that the provisions ....