TMI Blog2016 (6) TMI 1023X X X X Extracts X X X X X X X X Extracts X X X X ..... tax v. Munjal Auto Industries Ltd. reported in (2013 (10) TMI 650 - GUJARAT HIGH COURT) wherein held it can thus be straightaway seen that the benefit, though computed in terms of the Sales Tax liability in the hands of the recipient, the same was not mean to give any benefit on day-to-day functioning of the business, or for making the industry more profitable. The principle aim of the scheme was to cover the capital outlay already made by the assessee in undertaking special modernization of its existing industry . Therefore, the questions of law posed for our consideration in these appeals are answered in favour of the assessee - TAX APPEAL NO. 226 of 2010 With TAX APPEAL NO. 1214 of 2005 With TAX APPEAL NO. 504 of 2012 With TAX APPEAL NO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The question of law framed at the time of admitting Tax Appeal No.504 of 2012 reads as under:- 2. Whether the Tribunal is right in holding that the interest u/s. 234D of the Act is leviable only from A.Y.2004-05 and accordingly deleting the levy of interest u/s. 234D of the Act 5. The question of law framed at the time of admitting Tax Appeal No.345 of 2014 reads as under:- 2. Whether on the facts and in the circumstances of the case, the Appellate Tribunal is right in law and on facts in reversing the order passed by CIT(A) and hereby holding that amount of Sales-tax Incentive of ₹ 1,17,45,309/- received by the Assessee is a capital receipt ? 6. Mr.Amin, learned counsel for the appellant submitted that so fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. On the other hand, Mr.Soparkar, learned counsel appearing for the respondent contended that so far as Tax Appeal No.226 of 2010 is concerned, after discussing the evidence on record, the Tribunal has followed earlier decision and discussed the issue in detail in para 54 and 55 of its decision, which reads as under:- 54. Per contra, the learned D.R. Supported the orders passed by the Assessing Officer and the learned CIT (A). Referring to the judgment in Sahney Steel and Press Works Limited v. CIT, 228 ITR 253 (SC), he submitted that the impugned sales tax exemption increased the profits of the assessee by eliminating the expenses which the assessee would have had to incur later and therefore the impugned receipts were in the reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of both the schemes was to attract capital investment to ensure development of backward areas and the modality or mechanism chosen to attract such investment was, inter alia, through exemption from payment of sales tax. 9. He further contended that in view of decisions of this Court in Commissioner of Income-tax v. Birla VXL Ltd. reported in (2013) 32 Taxmann.com 330 (Gujarat) and in Deputy Commissioner of Income-tax v. Munjal Auto Industries Ltd. reported in (2013) 37 Taxmann.com 115 (Gujarat) the issue is squarely covered and the decisions which are sought to be relied upon by learned advocate for the appellant are not applicable in the facts of the present case. In the case of Commissioner of Income-tax v. Birla VXL Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntage of fixed capital investment. It is undoubtedly true that such subsidy was computed in terms of sales tax deferment and necessarily therefore, would accrue to an industry only once the commercial production commences. However, this by itself would not be either a sole or concluding factor. In case of Sahney Steel and Press Works Ltd. and others v. Commissioner of Income-tax reported in 228 ITR 253, the Apex Court held and observed that 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. The source of fund is quite immaterial. If the purpose is to help the assessee to set up its business or complete a project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not be either a sole or concluding factor. In case of Sahney Steel and Press Works Ltd. and others v. Commissioner of Income-tax reported in 228 ITR 253, the Apex Court held and observed that 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. The source of find is quite immaterial. If the purpose is to help the assessee to set up its business or complete a project the monies must be treated as having been received for capital purposes. Such But if monies are given to the assessee for assisting him in carrying out the business operations and given after the satisfaction of the conditions of commencement of product ..... X X X X Extracts X X X X X X X X Extracts X X X X
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