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2014 (5) TMI 319 - HC - Income TaxDisallowance of entertainment tax capitalized - Addition as subsidy - Capital or revenue in nature – Whether the Tribunal was justified in confirming the order of the Tribunal deleting the addition made on account of disallowance of entertainment tax capitalised as subsidy – Held that:- The State Government proceeded to exempt entertainment tax for a period of 5 years payable by a "new" cinema hall constructed, subject to the condition that commercial exhibition of films in such cinema hall was required to be started by 31.03.2000 - In the scheme of the Act of 1957, where entertainment tax is determined and recoverable from the proprietor of the entertainment and is levied with reference to the number of admissions to the entertainment, when the State Government had exempted such proprietor of new cinema hall from payment of entertainment tax on the given condition - the object was clearly to promote the construction of new cinema halls. Merely because the amount was not directly meant for repaying the amount taken for construction of the cinema hall, its purpose could not be considered to be other than that of promoting construction of new cinema hall - the source of funds for construction of cinema hall is irrelevant - it would also not matter if the grant would be available after the business has been set up – the observations of the ITAT was correct that the remission had been granted by way of incentive of capital receipts in the construction of cinema building – Following Kalpana Palace Versus Commissioner of Income-Tax [2004 (8) TMI 65 - ALLAHABAD High Court] - the Tribunal was justified in affirming the deletion of addition being the amount of entertainment tax capitalized as subsidy – Decided against Revenue.
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