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2020 (6) TMI 148 - AT - Income TaxCharacterization of income - subsidy received by assessee under the PSI, 2007 Scheme - revenue or capital receipt - HELD THAT:- The Tribunal in the case of Innoventive Industries Ltd. Vs. DCIT [2017 (4) TMI 44 - ITAT PUNE] after considering the scheme and various decisions on this issue concluded that incentive received by assessee under the PSI, 2007 Scheme in the form of refund of sales tax is capital receipt not liable to tax. Similar view has been taken by the Tribunal in the case of Rohit Exhaust Systems Pvt. Ltd. Vs. ACIT [2015 (3) TMI 1151 - ITAT PUNE] The First Appellate Authority has held sales tax subsidy received by assessee as capital receipt by placing reliance on the decisions of Tribunal. Thus, no reason to interfere with the findings of CIT(A) in holding sales tax subsidy received by assessee under PSI, 2007 Scheme as capital receipt - Decided against revenue. Disallowance u/s 14A r.w.r. 8D(2)(iii) - HELD THAT:- Disallowance u/s 14A of the Act is restricted to exempt income earned during the relevant period. See Rajmal Lakhichand Jewellers Pvt. Ltd. [2018 (3) TMI 1625 - ITAT PUNE]. The ground is thus partly allowed. Value of subsidy from Written Down Value of fixed assets - CIT(A) concluded that the incentive provided under the scheme is directly linked to acquisition of fixed assets - HELD THAT:- AO in assessment proceedings has rejected assessee‟s claim of treating subsidy as capital receipt at threshold itself. AO has not examined the issue from the perspective – purpose of subsidy and its utilization. CIT(A) in the impugned order has not specified as to how the assessee has reflected the amount of subsidy in its books. Since, facts are not emerging from the orders of authorities below, we deem it appropriate to restore this issue back to the file of Assessing Officer for de novo adjudication after affording reasonable opportunity of hearing to the assessee, in accordance with law. Appeal by assessee are thus, allowed for statistical purpose.
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