TMI Blog2016 (3) TMI 726X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the assistance under the subsidy scheme is to enable the assessee to set up a new unit or to expand an existing unit then the receipt of the subsidy would be on capital account. We find that in the facts of this case, where the subsidy was given on the capital account in the form of capital cost to encourage upgrading the textile industry and the purpose and object was for capital investment, as such, is clearly a capital receipt as per the case laws relied upon by the ld. AR before us. Therefore, we direct that the receipt to be treated as receipt of capital nature and not to be taxed in the hands of the assessee. - Decided in favour of assessee - ITA No.4698/Del./2011 - - - Dated:- 5-2-2016 - SHRI N.K. SAINI, ACCOUNTANT MEMBER AND ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al subsidy of ₹ 74,02,161/- received from the Govt. of India, Ministry of Textile under the Technology Upgradation Fund Scheme (TUF Scheme) against the purchase of new machinery as revenue receipt. Under the purpose test, the said capital subsidy constitutes a capital receipt as held by Hon ble Apex Court in the case of CIT vs. Ponni Sugars Chemicals Ltd. reported in 306 ITR 392 (SC). The disallowance has been made on erroneous views and / or non-appreciation of the facts or law involved without properly considering the material and case law on record. As such too the same is unwarranted and not capable of being sustained. 5. Brief facts relating to the aforesaid ground are that on scrutiny of the record, the AO observed the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Govt. Conversely according to the Ld AO it is Revenue receipt and nothing but profit supplement to be offered as income from the relevant period. The appellant in its favour has given some case laws, equal number of decisions were also given by the Ld AO. 2.3 According to me, this is essentially a question of fact. The grant was received from the Textile Ministry would by itself will not make the issue either in favour of the Revenue or the appellant. We have to go behind the documents and to see the nature of grant given by the Govt Authority. The examination of document shows that the State has given the appellant enterprise a running support to continue its business activity. The fact that the scheme indicates that the appellant w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und Scheme). He submitted that under this scheme, the Government gives the fund straightway to the designated bank and the bank has to give a certificate to the effect that the Plant Machinery was purchased and in assessee s case, the bank has given a certificate dated 26.08.2006. He submitted that the AO treated the same as revenue receipt on the ground that the same was released as profit supplement. However, he submitted that the AO has not given any detailed reason for treating the grant as revenue receipt and not capital receipt. The ld. AR categorically stated that the assessee has received the grant once only during the relevant period. He submitted that there was no assistance from the Government either in AY 2006- 07 or in 2008-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital account in the form of reimbursement of part of capital cost to encourage the upgradation of the textile industry. He submitted that the capital subsidy paid in assessee s case is clearly within the purpose and object to promote capital investment, as such the same is clearly a capital receipt as per the said case law relied upon by the assessee. He categorically submitted that the aforesaid Apex Court decision is a binding and a recent one and in any case, the Hon ble High Court decisions cited by Ld. AO of earlier dates could not override the aforesaid recent Hon ble Supreme Court decision, which is in assessee s favour. He, however, submitted that in any case, the Hon ble High Court decisions relied by the AO are clearly distinguish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. Sham Lal Bansal (2011) 11 taxmann.com 369 (P H) and CIT vs. Tirumala Bricks and Tiles Factory (supra) and contended that a receipt of such nature which is given directly to the bank cannot be termed as revenue receipt and ought not to have been added to the income of the assessee. We find force in the contention of the ld. AR that in a similar case, the Hon ble Punjab Haryana High Court in CIT vs. Sham Lal Bansal (supra), the facts being similar, wherein the assessee received subsidy for repayment of loan taken for building and plant and machinery under the Credit Linked Capital Subsidy Scheme under the TUF Scheme of the Ministry of Textiles was held as capital in nature. We find that the objective of the subsidy scheme was to enha ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
