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2016 (7) TMI 1329 - HC - Income TaxSales tax collected but not paid to the State Government - taxable revenue receipt OR capital receipt - Held that:- The Scheme is oriented towards and was subservient to the investment in fixed capital assets. The sales tax incentive was envisaged only as an alternative to the cash disbursement and by its very nature, was to be available only after production had commenced. Thus, in effect, the subsidy in the form of sales tax incentive was not given to the assessee for assisting it in carrying out the business operations but, to encourage the setting up of industries in the backward area. In our opinion, the judgment rendered by the Bombay High Court in CIT v. Reliance Industries Ltd. (2009 (4) TMI 516 - Bombay High Court ) would govern the issue on hand. Since the object of the subsidy in the form of sales tax incentive was to set up a new unit in a backward area so that employment could be generated, it is a capital receipt and not revenue receipt. Hence, the Revenue authorities committed serious error in holding it as revenue receipt. - Decided in favour of assessee.
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