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2016 (4) TMI 1238 - AT - Income TaxTaxing of sales tax benefit received under power policy in respect of wind mills - revenue or capital receipt - application of " purpose test" - whether the said subsidy was for the purpose of giving an incentive to set up the infrastructure in the form of windmill to generate power in the State and not to meet the cost of the windmill? - Held that:- In the return of income for Ay 2005-06, the sales tax benefit related to the assessee’s wind farm project in Maharashtra, was treated by the assessee as a capital receipt. The said receipt was on account of transfer of sales tax benefit/ entitlement to M/s Tata Motors Ltd. under the agreement for Transfer of Sales Tax Incentive available from Wind Farm Project. In the assessment order, the said amount was taxed as revenue receipt. The CIT(A) and the ITAT confirmed the taxing of the said benefit as revenue receipt. Taxing of sales-tax subsidy as revenue receipts instead of capital, it has been admitted by both the parties that, this issue has been decided against the assessee by the Tribunal and the matter is admitted before the Hon’ble High Court. The assessee has filed declaration under section 158A(1) claiming that identical question of law is pending before the Hon’ble High Court and whatever may be the final decision on the question of law, the same shall be followed and assessee will not raise any question before any appellate authority or before the High Court under section 260A. - Decided against assessee. Disallowance of expenditure under section 14A r.w. Rule 8D - Held that:- So far as disallowance under section 14A is concerned, the same is required to be made, as the assessee has earned exempt income for which no expenditure has been allocated or offered for the purpose of disallowance under section 14A. Only issue canvassed before us by the Ld. Counsel is that, investment made in the partnership firm should be removed from the working of Rule 8D and accordingly disallowance should be calculated and modified. To this extent, we agree with the contention raised by the Ld. Counsel and direct the AO that, in so far as investment in partnership firm is concerned, which is a strategic investment, the same should be excluded from the working of the value of average investment as provided in Rule 8D(2)(iii). Accordingly, disallowance under section 14A r.w. Rule 8D(2) should be worked out after removing the investment made in partnership firm from the average investment. Disallowance of claim of deduction under section 80IA(4) - interest on delayed payment of sale proceeds - Held that:- It is noticed that the nature of interest is on account of delayed payment of sale proceeds and not on some fixed deposits. The allowability of deduction under section 80IA on such an interest, i.e. on delayed payment of sale proceeds stands covered by the decision in the case of CIT vs. Vidhyut Corporation [2010 (4) TMI 229 - BOMBAY HIGH COURT]. The Tribunal also in AY 2009-10 in assessee’s own case after following the principle laid down by the Hon’ble jurisdictional High Court in the above case has decided this issue as held what was received by the assessee from the purchaser was a component of interest towards delayed payment of the price of the goods sold, supplied and delivered by the assessee. There could be no dispute about the position that the price realized by the assessee from the sale of goods manufactured by the price realized by the assessee from the sale of goods manufactured by the industrial undertaking constituted a component of the profits and gains derived from the eligible business. The purchaser, on account of the delay in payment of the sale price also paid interest to the assessee. This formed a component of the sale price also paid interest to the assessee. This formed a component of the sale price and was paid towards the lag which had occurred in the payment of the price of the goods sold by the assessee. On these facts, therefore, the payment of interest on account of the delay in payment of the sale price of the goods supplied by the undertaking partook of the same nature and character as the sale consideration - Decided in favour of assessee
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