TaxTMI 
TaxTMI 
2022 (11) TMI 1595
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.... allowing the stock discrepancy found in the course of search & treating the same as undisclosed investment in stock. ii) Whether on the facts and circumstances of the case the Ld. CIT(A)-21, Kolkata, was justified in law in allowing the Appeal of the assessee by holding that Sales Tax Incentive received by the assessee from the Government of West Bengal amounting to Rs. 3,03,57,566/- is of the nature of capital receipt and hence non-taxable. iii) Whether on the facts and the circumstances of the Ld. CIT(A)-21, Kolkata, was justified in law by considering the claim of the assessee of incentive received as capital receipt although in the return of income as well as in the tax audit report the assessee had considered the same as revenue receipt and auditor has mentioned as revenue receipt respectively. iv) Whether on the facts and circumstances of the case conclusion arrived at by the Ld. CIT(A)-21, Kolkata, is not justified in law in not appreciating and considering that incentive received by the assessee, being a non-refundable grant earned through exercise of business is taxable business income and is a capital receipt but not a revenue receipt. ....
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....as inventorised by the Investigation Wing of the Department for which assessee was asked to provide a reconciliation statement showing the manner in which the items of stock were categorised. The method followed by the assessee was not accepted by the Ld. AO, who made an ad-hoc addition by considering the stock discrepancy where it was more than 500 units. The categorisation and computation done by the Ld. AO in respect of stock as contained in the order of Ld. CIT(A) at page 26 is reproduced hereunder: 8. Ld. CIT(A) found the method followed by the assessee as reasonable and rejected the action of the Ld. AO and deleted the addition made thereon. Similar issue was dealt by the coordinate bench of ITAT, Kolkata in the case of ACIT Vs. Shanthinath Detergents Pvt. Ltd. (IT(SS)A No.27 to 32/Kol/2019 dated 20.03.2020 which is also part of the same group to which the assessee belongs. The issue relating to addition made on account of stock discrepancy was dealt in para 12 of the said order which is reproduced as under: "12. Lastly comes the Revenue's sixth appeal IT(SS)A No. 32/Kol/2019 for assessment year 2015-16 raising third substantive grievance seeking to revive additio....
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....ugned addition. The Revenue's sixth appeal IT(SS)A No. 32/Kol/2019 also fails." 9. Since the issue has already been dealt as referred above, we respectfully following the decision of the coordinate bench of ITAT, Kolkata in the case of Shatinath Detergents Pvt. Ltd. (supra) find no reason to interfere with the findings given by the Ld. CIT(A) in deleting the impugned addition. Accordingly, ground no. 1 is dismissed. 10. In respect of ground nos. 2 to 4, wherein the sales tax incentive received by the assessee from the Govt. of West Bengal amounting to Rs.3,03,57,566/- treated as capital receipt and hence, not chargeable to tax, it was submitted by the Ld. Counsel that this very issue has been dealt in assessee's own case for AYs 2013-14 and 2015-16 by the coordinate bench of ITAT, Kolkata in IT(SS)A No. 36/Kol/2019 and ITA No. 466/Kol/2021 respectively. The sales tax incentive received by the assessee from the Govt. of West Bengal has been held to be capital in nature in both the above cited decisions. Relevant extracts from IT(SS)A No. 36/Kol/2019 dated 22.10.2020 is reproduced as under: 5. Ground No. 3, 4 & 5 are against the ld. CIT(A) holding that the sales tax in....
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.... incriminating material found / seized during the course of search. 9. Next comes yet another significant aspect on merit as to whether the impugned sales tax incentive subsidy sum(s) received under Notification No. 1460 dated 27.05.1994 issued by the West Bengal Industrial Promotion (Assistance to Industrial Units) Scheme are in the nature of a capital or revenue subsidy. We find this latter issue to be no more res integra since the CIT(A) has taken note of various judicial precedents; including that of hon'ble jurisdictional high court, that this subsidy gives rise to capital receipt only. We adopt the very reasoning mutatis mutandis and uphold the CIT(A)'s findings under challenge granting relief to assessee." 6. On a query from the Bench, the ld. D/R, could not demonstrate that the scheme under which the Sales Tax incentive was given to the assessee was different from the scheme under which sales tax incentive was given to Shantinath Detergents Pvt. Ltd.. On facts, he could not distinguish this case from that of the case of Shantinath Detergents Pvt. Ltd. Hence, we find no infirmity in the order of the ld. CIT(A). We uphold the same by applying the pro....