TMI Blog2014 (9) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... the capital expenditure - The fact that incidentally on account of reduction in the capital cost the assessees product would be more competitive in the market thereby increasing their revenues would not in any way alter the position that the subsidy received as a matter of fact had gone to reduce the cost of the capital - the finding of the Tribunal that the amounts received by the assessee from the Central Government by way of refund of customs duty of the capital receipts cannot be found fault – Decided against revenue. - I.T.T.A. No.143 of 2002 - - - Dated:- 5-8-2014 - L. Narasimha Reddy And Challa Kodanda Ram,JJ. For the Appellant : Sri S.R. Ashok For the Respondent : Sri A. V. Krishna loundinya JUDGMENT (Per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported components/machinery for their fertilizer plant pursuant to the notification of the Ministry of Fertilizers Chemicals, Government of India is to be treated as a capital receipt or as a revenue receipt. For the assessment year 1995-96, the assessee received certain amounts towards refund of customs duty involved in imported components/machinery for the fertilizer plant. This refund was relatable to notification of the Government of India, Ministry of Chemicals and Fertilizers, Department of Fertilizers No.4/14/92(E) FDA-I dated 27.02.1993. The Assessing Officer in its assessment orders treated the said amount as a reimbursement of the taxes paid on behalf of the assessee and treated the same as bringing down the cost of the imported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ashok, learned Senior Counsel appearing on behalf of the appellant department by drawing attention to the judgment of the Supreme Court in Sahney Steel Case (2 supra) submits that the broad test laid down by the Supreme Court is to consider the nature of the receipt particularly the purpose for which the amount has been paid. Neither the utilisation of the amount nor the method and manner of the payment of the said amount would determine the character of the receipt. The very notification of the Government of India is clear to the effect that the incentive is given with a view to bring down the cost of fertilizers, as also bringing about increased competitiveness of indigenous fertilizer industry. 7) He pointed out that the purpose of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the money, when received, was applied for capital purposes or for revenue purpose, in the absence of any special allocation in the grant itself. 11) The above principles have been accepted and laid down in series of judgments starting from Sahney Steel case (2 supra) to latest judgment in the case of Ponni Sugars (4 supra). Applying the principle laid down as above to the facts of the case we need to analyse the scheme under which the assessee has been made over an amount equivalent to the customs duty paid on machinery and plant. The incentive came to be issued under Notification No.4/14/92(E) FDA-I, dated 27.02.1993 of the Central Government, the scheme of relief / incentive is off-shoot of report of the Joint Committee on Fert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Godavari Plywoods case (Vol.168 (1987) page632 Supra) which in fact came to be approved by the Supreme Court in P.J. Chemicals case (Vol.210 (1994) page 830 Supra). Considering the crucial aspect, the Tribunal had found that the subsidy received by the assessee in fact had gone into reduction of the capital expenditure, we do not find any reason to take a contra view. The fact that incidentally on account of reduction in the capital cost the assessees product would be more competitive in the market thereby increasing their revenues would not in any way alter the position that the subsidy received as a matter of fact had gone to reduce the cost of the capital. In that view of the matter, the finding of the Tribunal that the amounts recei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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