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2011 (3) TMI 1619 - AT - Income TaxClaim for sales-tax Benefits - nature of receipt - capital or revenue - The appellant is an HUF which is, inter alia, engaged in a range of business activities viz. manufacture and sale including generation and sale of power. In the course of its activities, the assessee company set up wind mills in the State of Maharashtra for generation of wind power. The Government of Maharashtra in terms of its policy on wind power generation granted various benefits, including sales-tax benefit. assessee was also entitled to the facility of transferring the sales-tax benefit to the third party. The assessee after obtaining the requisite permission from the State Government transferred the sales-tax benefit entitlements to a third party and the consideration thereof amounting to ₹ 63,74,291/- was claimed as a capital receipt. HELD THAT:- In the present case, it is not the timing of the subsidy alone but the grant is linked to achieving operational efficiencies and that too for only six continuous years. If a unit which is otherwise eligible for incentive, does not achieve the plant load factor of 12% or above, it would not be entitled to receive the sales tax benefit. Therefore, it could not be said that the sales-tax benefit is available merely on commencement of generation. in our considered opinion, though the object of the Scheme is to promote generation of energy through non conventional sources but the same is sought to be achieved by the Government in the form of supporting the units to perform more efficiently and profitably. Thus, applying the purpose test to the facts of the present case and keeping in mind the objects behind the payment of incentive subsidy, we are satisfied that the sales-tax benefits received by the assessee under the instant Scheme are in the course of carrying on its trade more profitably and therefore such receipt cannot be characterized as capital in nature. Thus, the assessee fails on this Ground.
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