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2021 (11) TMI 98 - AT - Income TaxNature of income - MAT - Computation of book profit u/s 115JB - Subsidy received under the Industrial Promotion Policy of the Assam Government - application of object/purpose test to the subsidy received contention of the assessee that the impugned subsidy is capital in nature and therefore not exigible to income-tax, both under normal computational provisions as well as book profit u/s 115JB - HELD THAT:- Hon’ble Supreme Court in the cases of Sahaney Steel & Press Works [1997 (9) TMI 3 - SUPREME COURT] and Ponni Sugar & Chemicals Ltd. [2008 (9) TMI 14 - SUPREME COURT] had held that the object or purpose for which the subsidy was given is what matters, and the source of subsidy is immaterial, form of subsidy is equally immaterial and the time at which the subsidy is paid is also immaterial. Therefore, we need to examine as to what was the purpose of the scheme which enabled the grant of subsidy to the assessee. Gainful reference may also be made to the decision of this Tribunal in the case of DCIT vs. M/s. Century Plyboards (I) Ltd. [2020 (12) TMI 55 - ITAT KOLKATA] wherein the excise & VAT subsidies received by the assessee post commencement of commercial production, from the Central Government and State Government for setting up new units in the States of Assam and West Bengal respectively, was held to be capital in nature We find merit in the claim of the assessee that the VAT subsidy received by it for undertaking substantial expansion at their unit was in the nature of capital receipt not liable to tax, since the object of granting of subsidies was to bring about industrial development, encourage fixed capital investment and generate employment in the State of Assam. Allow the grounds taken by the assessee and direct the AO to deduct the VAT subsidy both while computing income under normal computational provisions and book profit u/s 115JB of the Act for the relevant AY 2014-15.- Decided in favour of assessee.
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