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2014 (12) TMI 249 - AT - Income TaxDisallowance on depreciation – reduction of subsidy amount from the cost of fixed assets - The amount of ₹ 2.78 crore being an advance subsidy received by the lending banks was kept under subsidy reserve account – At what stage the subsidy actually accrued to the assessee – Held that:- The subsidy was released to the lending banks with the stipulation that the equivalent loan amount would not be charged with interest and subsidy amount would also not earn any interest till the final repayment of loan - since the Corporation had no access to the fund till the satisfactory compliance with the terms and conditions of the scheme and liquidation of the loan, therefore, it cannot be said that the subsidy had accrued to the assessee - If the assessee failed to comply with those terms and conditions and defaulted in liquidation of loans, then the subsidy could not be released to the assessee - the accrual of receipts was in favour of the assessee only in the year in which all the terms and conditions of the scheme were duly complied and the loans to the banks were liquidated – assessee rightly contended that it could be adjusted in the AY in which it was actually received – Decided in favour of assessee. Disallowance of claim of deduction u/s 80IB – Whether new warehouses are mere extension or expansion of the existing business and should not be considered as an 'undertaking' for the purpose of the provisions of section 80- IB – Held that:- Following the decision in A.P. State Warehousing Corporation vs DCIT [2014 (5) TMI 730 - ITAT HYDERABAD] there is no restriction in section 80-IB that an existing business unit cannot set up new undertakings to carry on the integrated business of handling, storage and transportation of food grains - The godowns where this business is to be carried on need not be owned by the assessee - The assessee had collected rentals for storing food grains and had engaged outsiders to transport the food grains - the assessee had been carrying on similar business would not disentitle the assessee from claiming relief u/s 80IB(11A) - deduction under Chap VIA, in respect of new undertakings set up by the assessee by way of expansion of the existing undertakings. Sec 80IB(11A) is applicable to income derived from the integrated business of handling, storage and transportation of food grains - it is engaged in the integrated business of handling, storage and transportation of food grains – thus, the order of the CIT(A) is set aside and the matter is remitted back to the AO to verify the claim for deduction u/s. 80IB in respect of new undertaking set up on or after 1.4.2001 and allow the deduction in accordance with law and after giving adequate opportunity of being heard to the assessee - Decided in favour of Assessee.
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