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2022 (4) TMI 1584 - AT - Income TaxAllowance of expert incentive - capital or revenue nature - as per AO assessee has merely stated that the expert incentive is capital in nature and has not given any further clarification as to what was the purpose for which the subsidy has been given nor has it clarified as to the purpose for which the subsidy has been utilized - HELD THAT:- As regards SHIS, the incentive was given with the objective to promote investment in technology upgradation and was granted @ 1% of FOB value of Export. The investment in technology is clearly a capital expenditure. So far as the incremental incentive scheme is concerned, the incentive was linked with incremental export if a particular year, export sale was more than certain percentage of export in the preceding year, the assessee becomes entitled for this incentive. The said incentive was connected to expenses of investment in new plant and machinery, hence, the incentive is capital in nature. With regard to, Market Linked Focus Product Scheme (MLEPS) is concerned, the incentive was granted in order to export of products of high export intensity employment potential and is incentivized at 2% of FOB value of exports. This incentive was linked to employment generation by the company connected to the export of goods and mercantile. It is linked with capital in nature. The CIT(A) has placed reliance upon the decision of the Hon’ble Supreme Court in the case of CIT Vs. Ponni Sugars & Chemicals Ltd.[2008 (9) TMI 14 - SUPREME COURT], Eastman Exports Global Clothing Pvt. Ltd. [2016 (7) TMI 951 - ITAT CHENNAI] and Sutlej Textiles & Industries Ltd. [2015 (7) TMI 515 - ITAT DELHI] and M/s. Gloster Jute Mills Ltd. [2014 (7) TMI 172 - ITAT KOLKATA]. These issues have duly been examined and discussed by CIT(A) in his order. The scheme is self-explanatory. There is nothing on record to which it can be assumed that the same is not in existence. No reason has been explained to which it can be assumed that the CIT(A) has granted the relief wrongly and illegally. The facts are not distinguishable at this stage. In view of the facts and circumstances and the law considered by the CIT(A), we are of the view that the finding of the CIT(A) is quite correct which is not liable to be interfered with at this appellate stage. Accordingly, we affirm the finding of the CIT(A) on this issue and decide this issue in favour of the assessee against the revenue. Allowance of claim of the Education Cess - Hon’ble ITAT has passed the order dated 26.10.2021 in the case of M/s. Kanoria Chemicals & Industries Ltd. [2021 (10) TMI 1153 - ITAT KOLKATA] in which it is held that the Education Cess is the part and parcel of the tax. It is also argued that the Finance Bill 2022 has also cleared the situation in which Education Cess has been treated as a part of the tax. However, on the other hand, the Ld. Representative of the assessee has strongly relied upon the order passed by the CIT(A) in question. Taking into account of all the facts and circumstances, we observed that the Hon’ble ITAT in the case of M/s. Kanoria Chemicals & Industries Ltd.[supra] has passed the order by relying upon the decision of the K. Srinivasan [1971 (11) TMI 2 - SUPREME COURT] Subsequently, the Finance Bill, 2022 has been passed in which the preposition of Education Cess has been dealt with and accordingly the Education Cess is being treated as part and parcel of the tax and the claim of expenses in connection with the Education Cess is not liable to be allowed. Accordingly, we set aside the finding of the CIT(A) and decide this issue in favour of the revenue against the assessee.
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