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2018 (4) TMI 999 - AT - Income TaxTreatment to the sales tax subsidy - nature of receipt - revenue or capital receipt - Held that:- As we examine the U.P. Government subsidy scheme under which the assessee has received the sales tax incentive it is to be noted that the purpose of the subsidy scheme is to attract people to invest and take part in industrialization of certain areas in the State. The subsidy scheme nowhere states that it is for the benefit of generating product purchase from the town / district of U.P. As held in case of Ponni Sugars (2008 (9) TMI 14 - SUPREME COURT), if the object scheme was to enable the assessee to set–up a new unit or to expand the unit then the receipt of subsidy was on capital account. The same is the case with the assessee as the U.P. Government subsidy scheme was for enabling the assessee to expand / modernize its existing unit. Therefore,we hold that the sales tax subsidy received by the assessee being a capital receipt is not taxable. This ground is allowed. Disallowance of depreciation on payment made to MSEB for allowing 132KV electric transmission line - Held that:- Initially assessee had claimed expenditure incurred towards payment made to MSEB as revenue expenditure which was disallowed by the Assessing Officer holding it as capital expenditure Commissioner (Appeals) allowed the claim of the assessee. While deciding Revenue’s appeal against the order of the learned Commissioner (Appeals), the Tribunal restored the order of the Assessing Officer on the issue. The learned Commissioner (Appeals) has rejected assessee’s claim of depreciation simply on the reasoning that Tribunal has not issued any such direction. In our view, there is no necessity of Tribunal in directing the Assessing Officer to allow depreciation. Once a particular expenditure is held as capital, consequential benefits attached to such expenditure should automatically follow. That being the case, we direct the Assessing Officer to consider assessee’s claim of depreciation on the payments made to MSEB. Grant of interest under section 244A - Held that:- We find that the learned Commissioner (Appeals), in fact, has directed the Assessing Officer to calculate interest allowable to the assessee under the provisions of the Act. Be that as it may, considering the submissions made before us, we direct the Assessing Officer to verify assessee’s claim and decide the issue in accordance with the relevant statutory provisions. Ground is allowed for statistical purposes. Disallowance of expenditure for allowing transmission line and construction of access road in factory premises at Vizag - Held that:- No reason to interfere with the decision of the learned Commissioner (Appeals) on the issue, since, the nature of expenditure incurred by the assessee has attained finality in view of the decision of the Tribunal holding expenditure as capital in nature. So far as allowability of assessee’s claim of depreciation, the Assessing Officer is directed to comply to the directions of the Tribunal as above.
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