Case Law Details
Chhattisgarh Mineral Development Corporation Limited Vs ACIT (ITAT Raipur)
Grant for Development of Coal Block/Mines under Chhattisgarh Mineral Development Fund Act towards Capital Outlays is capital receipt
Brief about the Decision
Grants/Financial Assistance received by assessee, a Government Company, from the State Government for Development of Coal Block/Mines – Grants/Financial Assistance received from Mineral Development Fund (MDF) under the provisions of Chhattisgarh Mineral Development Fund Act r.w. Chhattisgarh Mineral Development Fund Rules towards Capital Outlays or incurment of capital expenditure would be in the nature of capital receipts not chargeable to tax and that grant in aid received for specific purposes could not be taxed as income and would constitute a capital receipt not chargeable to tax. Even otherwise, the amounts received from MDF would be in the nature of financial assistance so as to ensure the survival of assessee company and in such cases also, has to be regarded as a capital receipt only. CIT Vs. Ponni Sugars & Chemicals Ltd. (2008) 306 ITR 362 (SC), CIT Vs. Chaphalkar Brothers Pune (2018) 300 CTR 113 (SC) and PCIT Vs. State Fisheries Development Corporation Ltd. (2018) 94 taxmann.com 466 (Cal.HC) relied on.
Rule of Consistency – Assessment cases starting from Assessment Year 2006-07 onwards till Assessment Year 2013-14 completed in accordance with the scheme of scrutiny assessment under section 143(3) wherein under similar facts & circumstances, the nature of grants/financial assistance has been accepted as capital receipts not chargeable to tax through out hence, in absence of any new material and evidence, taxing subsidy as ‘Revenue Receipt’ by the Revenue Authority is the exercise which can be termed as arbitrary, unjudicious, unwarranted and bad in law and principle of status quo has to be maintained. Radhasoami Satsang Vs. CIT (1992) 193 ITR 32 (SC) and CIT Vs. Neo Poly Pack (P.) Ltd. 245 ITR 492 (Del.HC) relied on.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
