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2021 (9) TMI 124 - AT - Income TaxNature of receipt - grant received by the assessee from the Government of Andhra Pradesh - revenue or capital receipt - sales tax paid is received as a grant from the State Govt - HELD THAT:- Assessee has to receive 25% of the sales-tax paid during financial year will be ploughed back as a grant by the Government towards the payment of sales tax during the next year and the benefit will be available for 5 years from the date of commencement of production i.e., up to 6th year. In the present case, the assessee has commenced the manufacturing on 6/4/2007 and the assessee is selling the products and collecting the sales tax and later on it is paid to the Govt. of AP and in the next year, 25% of the total sales tax paid is received as a grant from the State Govt. There is no doubt that the sales tax is a liability on sales made by the assessee and collected from the purchaser of goods and later on paid to the Government as a sales tax liability. As the subsidy received by the assessee in the form of refund of sales tax paid from the Sate Govt of AP is to be treated as revenue receipts. Therefore, all the appeals filed by the revenue on these grounds are allowed. Disallowance u/s 14A - proof of exempt income earned by the assessee - HELD THAT:- As perusing the entire material available on record and the orders of the Authorities below, we observe that the disallowance made U/s. 14A of the Act has rightly been allowed by the Ld. CIT(A). We find from the order of the Ld. CIT(A) that there is no exempt income earned by the assessee during the impugned assessment year and he has relied on certain judgments while deciding the issue in favour of the assessee. The Hon’ble Delhi High Court in the case of Cheminvest Ltd.[2015 (9) TMI 238 - DELHI HIGH COURT] has held that section 14A will not apply where no exempt income is received or receivable during the relevant assessment year. Therefore, as per our considered view, we do not find any infirmity in the order of the Ld. CIT(A)
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