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2015 (5) TMI 147 - AT - Income TaxClaim of deduction under section 80IA - whether Sales Tax benefit was inextricably linked to the industrial undertaking and was integral part of the profit derived from power generation by the said undertaking, eligible for deduction? - Held that:- The assessee is in receipt of sales tax subsidy, which undoubtedly, is a revenue receipt in the hands of the assessee, but the said subsidy does not in any manner reduce the cost of production of industrial undertaking. It is a benefit given to the industrial undertaking for establishing the wind energy generation units in the State of Maharashtra, but the same does not have a direct nexus between the subsidy on the one hand and the manufacturing activity of the industrial undertaking on the other hand. In the absence of a direct and first degree nexus between the subsidy on the one hand and profits of the industrial undertaking on the other hand, where such subsidy does not reduce the cost of production, we hold that the sales tax subsidy received by the assessee is not eligible to the deduction under section 80IA of the Act. The sales tax subsidy received by the assessee is an Incentive subsidy and is not an operational subsidy and consequently, does not affect profits of the business and is not linked to the profits of industrial undertaking and hence, is not deductible in terms of provisions of section 80IA of the Act. Thus no merit in the claim of assessee and rejecting the same, we modify the order of CIT(A) to the extent that the sales tax benefit is to be taxed as business receipts of the assessee, on which the assessee is not entitled to the claim of deduction under section 80IA of the Act. - Decided against assessee. Interpretation of provisions of section 80IA(5) - Held that:- Where the assessee has exercised the option of 10 consecutive years as contained in section 80IA of the Act, then the losses beginning from such initial year were brought forward and set off while applying the provisions of section 80IA(5) of the Act and not the losses of earlier years, which had been adjusted against other income of the assessee in the relevant year itself. - Decided in favour of assessee.
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