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2023 (5) TMI 690 - AT - Income TaxNature of receipt - subsidy received from Government of India - revenue or capital receipt - Assessee stated that subsidy received by the assessee is neither directly used for acquisition of any asset and thus, the same has not been reduced from the cost of asset as required under provisions of section 43 - HELD THAT:- As per the scheme, subsidy can be utilized either for setting up of new biomass cogeneration system or to promote the existing system and its benefits. In the present case, the assessee has set up 4.2 megavolts captive power plant with a cost of project of Rs. 18.90 crores. The assessee has claimed subsidy of Rs. 84 lakhs @ 20 lakhs per megavolt on total amount invested for setting up 4.2 megavolt power plant. From the above, it is very clear that subsidy received from Government of India is directly linked to investment made in setting up of new power plant. Therefore, we are of the considered view that the assessee needs to reduce the amount of subsidy received from Government of India from actual cost of asset installed in power plant, because said subsidy is directly linked to setting up of new power plant, as per the scheme promoted by the Government. Therefore, we are of the considered view that the Assessing Officer is completely erred in treating subsidy received from Government of India as revenue receipts taxable u/s. 2(24)(xviii) of the Act. Subsidy received by the assessee from Government of India through Tamilnadu Energy Development Agency, is capital subsidy given by the Government to enable the assessee to set up new power plant in line with program on biomass co-generation system in industry and thus, the assessee ought to have reduced amount of subsidy received from actual cost of plant and machinery installed in the plant for claiming depreciation. Therefore, we direct the AO to treat subsidy received from Government of India as capital receipts and also reduce from cost of asset acquired out of said subsidy and allow depreciation as per law. Disallowance u/s. 14A r.w.r. 8D to book profit computed u/s. 115JB - HELD THAT:- This issue is covered in favour of the assessee by the decision of ACIT vs Vireet Investments Pvt Ltd [2017 (6) TMI 1124 - ITAT DELHI] where it has been clearly held that the computation of clause (f) to Explanation (1) of section 115JB(2) of the Act, is to be made without resorting to the computation as contemplated u/s. 14A r.w.r. 8D of the I.T. Rules, 1962. Thus, by following the decision of ITAT Special Bench, we direct the Assessing Officer to delete additions made towards disallowance u/s. 14A r.w.r. 8D of the I.T. Rules, 1962 to book profit computed u/s. 115JB(2) of the Act.
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