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2021 (8) TMI 1035 - ITAT AHMEDABADNature of Cash subsidy received from Madhya Pradesh Rajyasetu Nirman - Reduction from the project cost - Amortization of expenditure - DR submitted that the amount of cash subsidy should have been offered to tax instead of showing it in the balance sheet under the head "Capital Reserve" it is because the amount of cash subsidy directly relates to the project of the assessee - HELD THAT:- Firstly subsidy was received by the assessee in the earlier years and therefore if at all it was to be subjected to tax then it should have been done in the year in which it was received - amount of subsidy received by the assessee in the earlier years cannot be added to the income of the year under consideration. Secondly, the assessee has incurred the expenses with respect to the projects as discussed above on actual basis which is evident from the financial statement of the assessee. Likewise, the assessee for the purpose of income tax has amortized the project expenses over the concession period of projects after reducing the subsidy amount of ₹ 83.80 crores received by it in the earlier years. Admittedly, the amount of capital subsidy received by the assessee in the earlier years was shown under the head capital reserve in the financial statements prepared under the Companies Act - assessee, while amortizing the project expenses has adjusted the amount of subsidy in the profit and loss account. This fact can also be verified from the financial statement of the assessee which are placed on record. Accordingly we hold that the finding of the AO that assessee has not adjusted the amount of capital subsidy against the project expenses is devoid of any merit. At the time of hearing, the learned DR has also not brought anything on record contrary to the finding of the learned CIT(A). Undoubtedly, the assessee has incurred the expenses on the projects which were in the nature of BOT. Thus the assessee was entitled to amortize the expenses over the concession period of these projects. Decided against revenue.
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