Case Law Details
Issue :- The assessee’s contention is that the subsidy/benefit so received is a capital receipt not liable to tax whereas the revenue authorities have considered such sales tax benefits/subsidies as revenue receipt and have taxed accordingly.
Held :- Assessee has sold its sales tax incentives and what it has received is not sales tax benefit/incentive but sale consideration on transfer of its entitlement and sale consideration is nothing but is a benefit directly arising from business and, is therefore, a revenue receipt. The learned counsel has vehemently supported the assessee’s claim by relying upon the Government Policy on Wind Power Generation and to substantiate its claim the assessee has also relied upon the Special Bench decision of the Tribunal in the case of Reliance Industries Ltd. 88 ITD 273. The assessee has also relied upon the decision of the Hon’ble Jammu & Kashmir High Court in the case of Shree Balaji Alloys 333 ITR 335; High Court of Punjab & Haryana 237 CTR 321; High Court of Karnataka 35 DTR 104; High Court of Bombay in the case of Chaphalkar Brothers 351 ITR 309 and High Court of Gujarat in the case of Inox Leisure Ltd. 351 ITR 314.
None of the aforementioned decisions is applicable to the facts of present case as in none of the above cases the assessees have sold their entitlement of sales tax subsidy. Whereas in the present case the assessee has sold it sales tax benefit therefore, we have no hesitation to hold that what the assessee has received is sales consideration for the transfer of its sales tax entitlement and by any stretch of imagination we cannot accept the said consideration as sales tax incentive being capital in nature. After considering the facts as stated herein-above, in our view, what the assessee has received is taxable as revenue receipt.
INCOME TAX APPELLATE TRIBUNAL, MUMBAI
Before Shri I P Bansal, JM & Shri N K Billaiya, AM
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