Case Law Details
Sanghi Industries Ltd. Vs ACIT (ITAT Hyderabad)
Only if subsidy or other grant was given to offset the cost of an asset, such payment would be covered by Explanation 10 to section 143(1). In the instant case where subsidy was received as an incentive for setting up industries to generate employment, the mere fact that specified percentage of fixed capital cost was taken as basis for determining the subsidy, it should not be mistaken as a payment intended to subsidise the cost of fixed assets. Therefore, AO was directed to not to adjust the subsidy so received out of the cost of depreciable assets.
FULL TEXT OF THE ITAT JUDGMENT
These are cross-appeals by Assessee and Revenue against the orders of the Commissioner of Income Tax (Appeals)-3, Hyderabad, dated 24-03-2017 & 27-03-2017 for the AY. 2006-07, AY.2008-09, AYs.2011-12 to 2013-14.
2. Briefly stated facts are that assessee-company is engaged in the business of manufacture of cement and chemicals and has filed returns of income, offering incomes under normal computation as well as u/s. 115JB of the Income Tax Act [Act]. In the order u/s. 143(3) dt. 24-12-2008 for AY. 2006-07, the Assessing Officer (AO) determined the income under normal provisions at NIL and accepted the income u/s. 115JB at Rs. 80,59,75,288/-. In that assessment year, AO inter-alia disallowed the claim of increased interest element on account of foreign exchange fluctuations at Rs. 37,65,807/- and also disallowed an amount of Rs. 8,12,27,057/- u/s. 40(a)(ia) of the Act. In addition to the above amount, the AO also added an amount of Rs. 3,01,76,155/-representing the element of Excise Duty on Closing Stock. AO has not allowed a deduction u/s. 40(a)(ia) disallowed in earlier year but allowable in this year. Aggrieved on the above order, assessee preferred an appeal before the Ld.CIT(A).
Please become a Premium member. If you are already a Premium member, login here to access the full content.
