TMI Blog2003 (4) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... against the disclosed income and arrived at a total income of nil . The assessee received a special package of incentive being implemented to Scheduled Caste and Scheduled Tribe entrepreneurs by the State Government. The special package consisted of investment subsidy, interest subsidy as well as sales tax subsidy. The Assessing Officer treated the reimbursement of sales tax of Rs. 50,000 as revenue receipt and accordingly taxed the same. On appeal, the ld. CIT(A) had held that the reimbursement of sales tax is a capital receipt and deleted the addition. Aggrieved of the above, the revenue is in appeal before us. 3. Ld. Departmental Representative submitted that the issue is covered in his favour by the judgment of the Hon ble Supreme Court in the case of Sahney Steel Press Works Ltd. v. CIT [1997] 228 ITR 253 1 (SC). He filed a paper book consisting of pages 1 to 13. He vehemently contended that the assessee had not reduced the amount of subsidy received from the value of its capital assets and that he continued to claim depreciation on the cost before reducing subsidy. He drew the attention of the bench to pages 11 and 12 of his paper book, which consists of a let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment of Andhra Pradesh Abstract Industries Introduction of New Scheme of State Incentives for Scheduled Tribes Entrepreneurs under Tribunal Sub-Plan-Guidelines for implementation of the Scheme - Issued. Industries and Commerce (IA) Department G.O. Ms. No. 194 Dated 24-4-1989 Read the following : 1.GO Ms. No. 230 Industries and Commerce (IA) Department dated 2‑6-1987. 2.From the Commissioner of Industries, Hyderabad. Letter No. 2712/Dsk.10/B3/87, dated : 8-2-1988. 3.From the Commissioner of Industries, Hyderabad. Letter No. 2712/Dsk.10/B3/87, dated : 4-11-1988. Order In the G.O. first read above, the Government have issued orders offering "special package" of incentives to the industries set up by the Scheduled Caste Entrepreneurs in all the areas of the State. The Commissioner of Industries in his letters 2nd and 3rd read above has requested that the package of special incentives being implemented to Scheduled Castes Entrepreneurs may also be extended to Scheduled Tribe Entrepreneurs without imposing any area restrictions. 2. After careful examination of the above proposal, Government accept the recommendations of the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entrepreneur(s) may be permitted with the approval of Additional Director/Director of Industries. These conditions are to be incorporated in affidavits/agreement bonds mentioned under item (11) above. 13. Components of the Scheme : All the three incentive components i.e., Investment subsidy, Interest subsidy and reimbursement of sales tax are by way of subsidy/grants only. 15. Interest Subsidy : ( a )The total credit i.e., term loan component and working capital component is eligible for reimbursement of Interest Subsidy at 6% for a period of five years upto a maximum of Rs. 1 lakh per year per unit. The interest accrued and paid to the financial institutions for that year shall be reimbursable either on term loan or working capital loan or on both. The applications for reimbursement shall be routed through the concerned financial institutions. ( b )The units availing interest concessions or eligible for the same under the scheme like composing loaning scheme or D.R.I. Scheme (Differential Rate of Interest Scheme) and other institutional schemes of A.P. Khadi and Village Industries Board, Integrated Rural Development Programme, A.P. Scheduled Tribes Cooperative Financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State Level Committee of Rs. 50,000 (Rupees Fifty thousand only) to the entrepreneur through Andhra Pradesh Scheduled Tribe Cooperative Finance Corporation Limited subject to the following conditions : 1.The Commissioner has right to recover the total sanctioned amounts in the following circumstances : ( a )Availing the subsidy by hiding any truth/truths. ( b )If at any time later, if it is found that the entrepreneur is not eligible for the subsidy. ( c )If the said industry is closed within the period of seven years from the date of commencement of commercial production except in such circumstances that if it is closed less than 6 months due to lack of raw material. ( d )If the promoters could not furnish relevant information. 2.The entrepreneur shall not change the place of the unit even though he has received full/part of the subsidy for a period of seven years from the date of commencement of commercial production and he shall not transfer any asset belonging to the unit to anyone. 3.For a period of seven years from the date of availing the subsidy the entrepreneur shall submit the audited financial statements and after commencement of commercial productio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipt in the hands of the assessee. It will not be open to the Revenue to contend that the refund of sales tax paid on raw materials or finished products must be treated as revenue receipt in the hands of the assessee. In both the cases, the Government is paying out of public funds to the assessee for a definite purpose. If the purpose is to help the assessee to set up its business or complete a project as in Seaham Dock Co. s case [1931] (16 TC 333) (HL), the monies must be treated as having been received for a capital purpose. But if monies are given to the assessee for assisting him in carrying out the business operation and the money is given only after and conditional upon commencement of production, such (subsidies) must be treated as assistance for the purpose of the trade." The test to be applied as per this judgment of the Hon ble Supreme Court is that the source of the fund is quite immaterial and the character of the subsidy in the hands of the recipient-whether revenue or capital will have to be determined having regard to the purpose for which the subsidy is given. It is further laid down that if the purpose is to help the assessee to set up its business or comple ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
