Case Law Details
DCIT Vs. Bhagyalaxmi Rolling Mill Pvt. Ltd. (ITAT Pune)
The issue for adjudication in all these appeals is the assessee having received subsidy from Government of Maharashtra under Package Scheme of Incentives of 2007 (PSI-2007), Whether the said subsidy is capital receipt or a revenue receipt. The assessee-company had set up a mega project as defined in Government of Maharashtra’s PSI 2007 in Jalna.
Under the scheme PSI 2007 mega project the assessee has received capital incentive subsidy in different years from A.Y. 2010-11 to 2015-16.This incentive being capital receipt was credited to capital reserve in Balance sheet in each of these years. The AO in assessment treated subsidy as revenue receipt and taxed accordingly.
On appeal, Hon Pune ITAT relying on the Apex Court judgements CIT Vs. Chapalkar Brothers 400 ITR 279 and Shree Balaji Alloys & Oss. (2016) 287 CTR 459 held that subsidy for years prior to AY 2017-18 is Capital Receipt not chargeable to tax.
The ITAT also noted that , the position has changed w.e.f. 01.04.2016 relevant to A.Y. 2017-18 onwards with the amended provision of sub-clause (xviii) to sec. 2(24) of the Act. However, at present, we are concerned with A.Y. 2011-12 to 2015-16.
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