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2022 (2) TMI 818 - AT - Income TaxDisallowance of deduction u/s 80(IB) in respect of the fertilizer unit of Haldia - HELD THAT:- As relying on MEGHALAYA STEELS LTD [2016 (3) TMI 375 - SUPREME COURT] assessee is eligible for deduction u/s 80 IB of the Income Tax Act on fertilizer subsidy received by it. Accordingly, we hold that the fertilizer subsidy income received by the assessee is income derived from the business of the industrial undertaking and is eligible for deduction u/s 80 IB of the income tax act. Nature of receipt - whether sales tax remission benefit derived by the assessee is not chargeable to income tax as it is a capital receipt? - HELD THAT:- As held by Honourable Supreme court in CIT Madras Vs Ponni Sugar [2008 (9) TMI 14 - SUPREME COURT] it is the object for which the subsidy/assistance is given which determines the nature of the incentive subsidy. The form of the mechanism through which the subsidy is given is irrelevant. In the present case when once the object of subsidy is to industrialize state, it is capital receipt. All the judgments cited before us also lay down the same ratio. Even otherwise subsidy is included in the definition of Income u/s 2 (24) (xviii) with effect from 1/4/2016. Accordingly, we hold that Sales tax incentive money received being the amount retained by the company in accordance with Section 41 of the West Bengal sales tax act, 1944 read with the West Bengal incentive scheme, 1999 was a capital receipt not chargeable to tax under the income tax act.
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