Case Law Details
Bridgestone India Pvt. Ltd. Vs ACIT (ITAT Indore)
Introduction: The case of Bridgestone India Pvt. Ltd. vs. ACIT before the Income Tax Appellate Tribunal (ITAT) Indore involved the classification of subsidies received from the Government of Maharashtra and Madhya Pradesh. The central issue revolved around whether these subsidies were capital receipts or revenue receipts.
Analysis: The appellant, Bridgestone India Pvt. Ltd., contested additions made by the Assessing Officer (AO) and Dispute Resolution Panel (DRP) regarding subsidies received. The AO treated the subsidies as revenue receipts, while the appellant argued they were capital receipts based on the respective subsidy schemes. The ITAT examined precedents and scheme details.
In the case of Maharashtra subsidy, the ITAT referred to prior years’ decisions and held that the subsidy was capital in nature, reducing the cost of acquisition of assets. The ITAT referred to the Supreme Court’s judgment in the case of Ponni Sugars & Chemicals Ltd. and determined the subsidy to be capital in line with the explanation under Section 43(1) of the Income Tax Act.
However, concerning the Madhya Pradesh subsidy, the ITAT relied on binding precedents from the jurisdictional High Court and the Supreme Court, stating that the subsidy was revenue in nature. These judgments followed the Sahney Steel & Press Works Ltd. case, confirming the revenue nature of such subsidies.
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