TaxTMI 
TaxTMI 
2025 (4) TMI 2173
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....or AY 2011-12 for adjudication. 4. Ground No. 1 raised by the Appellant-Revenue is general in nature and requires no adjudication. 5. Grounds No. 2 to 5 raised by the Appellant-Revenue in challenging the action of the ld. CIT(A) in holding that the Industrial Promotion Assistance received by the assessee under the West Bengal Incentive Scheme is capital receipt and non-taxable. 6. Brief facts of the case are that the assessee company had credited in its books of account, an amount of Rs..11,33,14,261/- receivable from the West Bengal Government Incentive Scheme 2004. The assessee claimed that the said Govt. Subsidy received/receivable for setting up of industry is not a taxable income. However, the Assessing Officer rejected the claim and added to the income of the assessee. In appeal, by following the decision of the Tribunal in assessee's own case for AY 2014-15 in ITA No. 2196/Chny/2019 dated 03.07.2024, the ld. CIT(A) deleted the addition made by the Assessing Officer. 7. The ld. DR. Shri Shivanand K Kalakeri, CIT relied on the order of the Assessing Officer. 8. The ld. AR Shri S. Muralidhar, F.C.A., relied on the order of the ld. CIT(A). 9. We have heard both....
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....n adjudicated in assessee's favor by Hon'ble Calcutta High Court in the cited case of M/s Rasol Ltd. (supra). This decision has considered the decision of Hon'ble Supreme Court in the case of Sahney Steel & Press Works Ltd. (supra) as well as the decision rendered in Ponni Sugars & Chemicals Ltd. (supra). In Ponni Sugars case, it was held by Hon'ble Court that if the object of the Subsidy Scheme was to enable the assessee to run the business more profitably, 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, the receipt of the subsidy was on capital account. Therefore, the Court held that it is the object for which the subsidy / assistance is given, which determines the nature of the incentive subsidy. The form of the mechanism through which the subsidy is given is irrelevant. Considering the same, Hon'ble Calcutta High Court held that in the instant case, the object of the subsidy was for expansion of capacities, modernization and improving marketing capabilities and therefore, those were for the assistance on capital accou....
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.... has been decided by Tribunal in assessee's favor for AYs 1994-95, 1996-97 and 2003-04. However, the issue has been restored back by Tribunal for AY 201112. In AY 2003-04, Tribunal approved reliance placed by Ld. CIT(A) on the decision of Hon'ble Supreme Court in the case of Madras Auto Service (233 ITR 468). The Ld. AR also submitted that though expenditure was capitalized in the books of account and depreciation was charged in the books, however, for Income Tax purpose, no depreciation was claimed on the same. The Ld. AR also placed on record relevant railway siding agreements and submitted that the terms of the agreements remain the same as they were in AY 2003-04. As per relevant clauses, the assessee is not the owner of railway siding. There being no change in the same, Tribunal order for AY 2003-04 would apply. The Ld. AR also submitted that the matter in AY 2011-12 was restored back only for the reason that railway siding agreement was not available before Tribunal while deciding the appeal for AY 2011-12. The Ld. AR also submitted that similar treatment was given to such expenditure during AYs 1994-95, 199697 and 2003-04. 4.3 After considering the submissio....
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....No. 7 to 10 raised by the Appellant - Revenue in challenging the action of the ld. CIT(A) in directing the Assessing Officer to delete the addition made towards interest expenditure under Rule 8D(2)(ii) as well as restricting the disallowance under Rule 8D(2)(iii) for those investments which yielded exempt income. The ld. CIT(A) discussed the issue in para 4.4 [(iii), (iv) & (v)] and the relevant portions at page 18 to 20 are reproduced herein below: iii) On a perusal of the financials of the appellant, it is seen that the appellant's own funds in the shape of share capital and reserves and surplus are sufficient to cover the investments as per the balance sheet. This shows that the investments are out of its own funds and therefore no disallowance can be resorted to on account of interest under the second limb of Rule 8D(2). The Honourable Chennai ITAT in the appellant's own case in IT(TP)A No.46/CHNY/2021 dated 12.09.2024 deleted the disallowances on account of interest. iv) Respectfully following the above decision, the AO is directed to delete the addition of Rs. 67,09,046/- made on account of interest disallowance under the second limb of Rule 8D(2). ....
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.... 11 MCL Employees Co-operative Society 2,500 2,500 2,500 350 TOTAL 29,06,06,999 29,06,06,999 29,06,06,999 56,10,121 As seen above, the average value of investment that yielded the dividend income of Rs. 56,10,121/- during the year is Rs. 29,06,06,999/- It is also to be noted that the Honourable Madras High Court in the case of Redington India Limited [2017] 77 taxmann.com (Madras) held that where there is no exempt income in a year, there cannot be a disallowance of expenditure in relation to an assumed income. It has been judicially held in a number of decisions that for the purpose of working out disallowance u/s. 14A, only investments which have yielded exempt income should alone be considered. Hence, the disallowance under the third limb of Rule 8D is calculated as 0.5% of the average investments of Rs. 29,06,06,999/- amounting to Rs. 14,53,035/- in tune with the decision of the Special Bench of the Honourable Chennai Tribunal in the case of M/s Vireet Investments (supra). The AO is directed to restrict the disallowance of indirect expenses under the third limb of Rule 8D(2) to Rs. 14,53,035/- ....