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2022 (9) TMI 247 - AT - Income TaxNature of Sales tax incentive received - Revenue receipt OR capital receipt - HELD THAT:- As subsidy was principally aimed to cover the capital outlay of the assessee for undertaking modernization industries in Rajasthan and thus subsidy in the form of sales tax waiver deferment was not meant to give any benefit on day to day functioning of the business or to make it more profitable per se. Hence, such sales tax incentive is clearly capital in nature as claimed by the assessee. CIT(A) has followed the judgment rendered by the Hon’ble Delhi High Court in the case of CIT vs. Bhushan Steels and Strips Ltd. [2017 (7) TMI 501 - DELHI HIGH COURT] against the assessee, the operation of the aforesaid judgment rendered by the Hon’ble Delhi High Court has been found to be stayed by the Hon’ble Supreme Court [2017 (12) TMI 477 - SC ORDER] The subsidy in the instant case though computed in terms of sales tax deferment/waiver, it was essentially meant for capital outlay expanded by the assessee for set up of unit in case of new industrial unit and for expansion and diversification of existing unit. The entitlement was also stated to be related to percentage of fixed capital investment. No hesitation to accept the plea of the assessee. While doing so, we do not see any merit in the plea of the Revenue that necessary facts are not placed on record. It is nowhere spelt out what additional facts were exactly required to appreciate the factual matrix. We also observe that notwithstanding that the assessee has treated such incentive as revenue receipt in past, the same cannot be deterrent for making a correct claim in the subsequent assessment year. No merit in the adverse observation made by the CIT(A) with reference to the amendment brought out by Finance Act, 2015 by insertion of clause (xviii) to Section 24 whereby such subsidy has been included in the definition of income. Such inclusion is to be regarded as prospective in operation in the light of the judgment in CIT vs. Vatika Township Pvt. Ltd. [2014 (9) TMI 576 - SUPREME COURT] - Appeal of the assessee is allowed.
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