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2014 (1) TMI 1747 - AT - Income TaxAddition on account of deduction of capital subsidy from WDV of Plant and Machinery - disallowance of proportionate depreciation - Held that:- The revenue has not brought on record that the subsidy received by the assessee is directly or indirectly resulted in acquisition of any asset, we are of the considered opinion that the capital subsidy received by the assessee company under ‘Bihar Incentive Package 2006’ for undertaking expansion of its capacity from 8500 TCD to 10000 TCD cannot be deducted from WDV of plant and machinery. Since the Ld.CIT(A) has correctly appreciated the facts and the position of law aforementioned for reversing the order of the AO - Decided against revenue Treatment to subsidy received as excise duty reimbursement - capital or revenue receipt - Held that:- It is not disputed that the subsidy scheme formulated by the Government of Bihar is for the purpose of attracting capital investment and to encourage setting up the industry/expand the existing unit. It is pertinent to mention that the character of a subsidy in the hands of the assessee has to be determined with respect to the purpose for which the subsidy is given. The point of time at which the subsidy is paid and the source or the forms of subsidy are immaterial. If the object of the the subsidy scheme is to enable the assessee in setting up the new unit or to expand the existing unit, then the receipt of the subsidy is to be treated on capital account.- Decided against revenue MAT computation - additions made to the book profit on account of excess depreciation and subsidy received by way of excise duty - Held that:- The issue raised in this ground is squarely covered in favour of the assessee by the decision of the Hon’ble Apex Court in the case of Apollo Tyres Ltd. Vs. CIT [2002 (5) TMI 5 - SUPREME Court ], wherein it has been held that the AO while computing the income under section 115J has only the power to examine whether the books of account are certified by the authorities under the Companies Act as having been properly maintained in accordance with the said Act. The AO, thereafter, has the limited power of making increases and reductions as provided for in the explanation to the said section. To put it differently the AO does not have the jurisdiction to go behind the net profit shows in the P&L Account except to the extent provided for the explanation of section 115J. Also, it is noted that while deciding grounds no. 1 & 2 in respect of the additions under normal provisions of the income in respect of treatment of the said subsidy, we confirmed the deletions made by the Ld.CIT (A) and hence the additions made in computation of book profit under section 115JB is not sustainable - Decided against revenue
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