Case Law Details
PCIT Vs Nestle India Ltd (Delhi High Court)
Delhi High Court held that subsidy received from Government of Goa for establishing an industrial unit in a backward area is capital receipt. Further, as subsidy was not intended to meet part of cost of assets, no adjustment against cost of asset could be ordered.
Facts- Vide the present appeal, it contested that whether in the facts and circumstances of the case and law, Hon’ble ITAT is correct in confirming the order of CIT(A) directing that the amount of Rs.25,00,000/- received from Govt of Goa, as subsidy, be treated as capital in nature and to reduce the same from [the] block of assets on a proportionate basis, especially when a classificatory amendment has been made w.e.f. AY 2016-17?
Conclusion- Held that the subsidy received by the respondent/assessee was an incentive given to establish an industrial unit in a backward area and, thus, generate employment for local inhabitants, we cannot but agree with the Tribunal and CIT(A) that the subsidy, indeed, was a capital receipt.
Similarly, insofar as the other limb of the issue is concerned, we agree with the Tribunal that the measure for calculating the subsidy, which was 25% of the fixed capital cost, cannot determine the purpose for which the subsidy was given, and, thus, as directed by CIT(A), adjusted proportionately against the cost of the assets.
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