Case Law Details
DCIT Vs. Vinati Organics Ltd (ITAT Mumbai)
During the year under consideration the assessee has received the sale tax subsidy and raised additional ground before the ld. CIT(A) for considering the sale tax subsidy as capital receipt. The ld. CIT(A) has elaborated in his finding as supra that assessee has set up a manufacturing unit at Lote and Mahad in the state of Maharashtra. The said unit was eligible for sale tax as per the Government Resolution, Industries, Energy and labour, No. IDL -1093/[8889]/IND-8 dated 07.05.1993. The ld. CIT(A) has also considered the decision of Hon’ble Supreme Court in the case of CIT Vs. Ponni Sugar & Chemicals Ltd. (2008) 1306 ITR 392 (SC) wherein held that if the purpose of incentive or subsidy was to enable the assessee to set up a new unit or to expand the existing unit then the receipt of subsidy was of the capital in nature. The ld. CIT(A) has also discussed the other decision of ITAT, Chennai in the case of Eastman Export Global Clothing Pvt. Ltd. vide ITA No.47/Mad/2016 dated 17.05.2016 wherein it is held that if the object of assistance was to enable the assessee to set up a new unit or expand the existing unit then the receipt is of the capital account. The ld. CIT(A) has also discussed the decision of ITAT, Delhi in the case of Sutlej Textiles Industries Ltd. (ITA No. 5142/Del/2013) wherein held that TUF subsidies has been given for the purpose of technology upgradation and for providing capacity extension, globalisation of textiles trade and employment generation thus applying the propose test as laid down in Ponni Sugar the same is capital receipt not chargeable to tax. Similarly the ld. CIT(A) has also discussed the various other decision in his finding on identical issue that subsidies received pertaining to development of industries is of the nature of capital receipt.
During the course of appellate proceedings before us the ld. counsel also submitted that in subsequent year assessment year 2013-14 the ld. CIT(A) has allowed the appeal of the assessee treating sale tax subsidy as capital receipt and department has not raised any ground before the ITAT. It is also submitted that in assessment year 2015-16 the assessee has treated the sale tax subsidy received as capital receipt and same has been accepted by the A.O in the assessment order. In the light of the above facts and finding we don’t find any force in the ground of appeal of the revenue, therefore, this ground of appeal stand dismissed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The present cross appeals filed by the assessee and the revenue based on similar facts and identical issue, therefore for the sake of convenience both these appeals are adjudicated together. The revenue has raised the following grounds before us:
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