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2023 (7) TMI 1265 - AT - Income TaxNature of receipt - Sales Tax subsidy - revenue or capital receipt - HELD THAT:- Tribunal in [2012 (9) TMI 281 - ITAT DELHI] and others have given a categorical finding that Sales Tax subsidy is of capital in nature, following the Special Bench decision in the case of Reliance Industries Ltd [2003 (10) TMI 255 - ITAT BOMBAY-J] which was subsequently affirmed by the Hon’ble High Court of Bombay [2009 (4) TMI 516 - BOMBAY HIGH COURT]. Thus Sales Tax subsidy is treated as capital receipt. Recomputation of depreciation by reducing the capital subsidy from written down value of assets - CIT(A) was of the opinion that Sales Tax subsidy is solely meant to encourage setting up of industries in under-developed regions and merely because subsidy given was quantified according to investment made in fixed assets, it would not become payment for meeting cost of any or all the fixed assets. - HELD THAT:- Hon’ble Madras High Court in the case of Standard Fireworks Private Limited [2008 (6) TMI 344 - MADRAS HIGH COURT] held that where subsidy was given based on specified percentage of fixed capital cost, is not a payment directly or indirectly made to meet any portion of the actual cost and, therefore, such subsidy was not to be reduced from the actual cost u/s 43(1) of the Act. This view was fortified by the decision of Eicher Tractors Ltd [2007 (5) TMI 688 - DELHI HIGH COURT]. We do not find any error or infirmity in the findings of the ld. CIT(A). Disallowance of deduction u/s 10B - allocation of expenses - AO has computed the profits of EOU units on pro-rata basis in the ratio of sales turnover of EOU units and non-EOU units - HELD THAT:- We find that the entire quarrel revolves around the payment of Senior Management Salary, which has been allocated by the Assessing Officer in the ratio of turnover of EOU and non-EOU units as against appellant’s allocation of 5% of total expenses. In A.Y 2006–07, AO was not convinced with the allocation and in the year under consideration i.e A.Y 2007–08, the assessee itself has allocated the Senior Management Salary cost in the ratio of sales of EOU units and non-EOU units. Therefore, the adverse inference of the AO in A.Y 2006–07 has been taken care of in A.Y 2007– 08. Thus no merit in the action of the Assessing Officer in reducing the claim of deduction u/s 10B of the Act. Therefore, we do not find any reason to interfere with the findings of the ld. CIT(A). Ground No. 1 is, accordingly, dismissed. Depreciation on computer accessories - @60% OR 15% - HELD THAT:- CIT(A) was of the correct opinion that the ratio laid down in the case of BSES Rajdhani Ltd [2010 (8) TMI 58 - DELHI HIGH COURT] squarely apply wherein the Hon'ble High Court has held that peripherals, such as printers, scanners, server, formed, integral part of computer, and therefore, eligible for deduction of depreciation, @ 60%. Addition on account of loan processing charges - CIT(A) deleted the addition - HELD THAT:- We find that the loan was utilized for business purpose is not in dispute. Merely because it was one-time payment made by assessee for loan processing charges would not make it a capital expenditure. As decided in India cement case [1965 (12) TMI 22 - SUPREME COURT] loan obtained is not an asset or advantage of an enduring nature, expenditure was made for securing the use of money for a certain period and it is irrelevant to consider the object with which the loan was obtained. Consequently, in the circumstances of the case, the expenditure was revenue expenditure - Decided in favour of assessee.
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