TMI Blog2011 (1) TMI 1441X X X X Extracts X X X X X X X X Extracts X X X X ..... Amendment Rules 2008 w.e.f. 24.3.2008 and Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd. Vs. DCIT [ 2010 (8) TMI 77 - BOMBAY HIGH COURT] has held that it is not retrospective in nature this rule is not applicable for the year under appeal. Therefore, the Ld. CIT(A) was not justified in directing the AO to apply Rule 8D(2)(iii) for disallowance. In the result, the appeals of the revenue for Assessment Years 2000-01 and 2006- 07 are dismissed and the appeal for Assessment Year 2005-06 of the revenue is partly allowed. - I.T.A No. 1131/Kol/2009, I.T.A No. 1132/Kol/2009, I.T.A No. 1133/Kol/2009 - - - Dated:- 27-1-2011 - Sri D. K. Tyagi, JM Hon'ble Sri C. D. Rao, AM For the appellant : Sri B. R. Purakayastha For the Respondent : Sri Arvind Agarwal ORDER Per D. K. Tyagi, JM All these appeals preferred by the revenue are directed against the separate orders passed by the Ld. CIT(A), Kolkata all dated 31.03.2009 for assessment years 2000-01, 2005-06 and 2006-07. Since grounds are mostly common and facts are identical all these appeals are disposed of by this consolidated order for the sake of convenience. 2. Ground No. 1 in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons for all the three assessment years under appeal. Since the Ld. CIT(A) by following the decision of Hon'ble jurisdictional High Court's order and also the decision of the jurisdictional ITAT, treated the WBIPA receipt as a capital receipt and directed the Assessing Officer to delete the additions for all the three assessment years under appeal. we find no infirmity in his order and the same is hereby upheld. For the sake of brevity, we reproduce the relevant portion of his order as under : 6.3 I have duly considered the A.O's reliance placed on the judicial decisions and reasons for treating the WBIPA as a revenue receipt. The counter submissions made by the appellant have also been carefully examined and considered. The issue that is to be decided is whether the WBIPA receipt is a revenue or a capital receipt. The A.O placed reliance on the following case laws: Sahney Steel Press Works Ltd. (1997) 228 ITR 253 (SC) CIT Vs. Chindwara Fuels 245 ITR 9 (Cal) East India Pharmaceutical Works Ltd. Vs. DCIT (ITA No.587 (Kol) 2006 The appellant placed reliance on the following case laws: CIT Vs. Ponni Sugars Chemicals Ltd. (SC) ACITVs. Rasoi Ltd. (ITA N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax levied on raw materials, machinery, finished goods etc. Thus these two judicial decisions are mainly based on two factors : First, subsidy for carrying on business (conditional), secondly the incentive by way of refund of Sales Tax etc. The facts of the present case are different and are very similar to the case laws relied on by the appellant especially cases decided by ITAT, Kolkata. In the present case the subsidy called as 'Assistance' is given equivalent to 90% of Sales Tax paid and not to equated with Sales Tax refund and other exemptions provided as in the case of Sahney Steel Press Works Ltd. (supra). The TAT decisions relied on by the appellant clearly distinguished this point and also other conditions and held the 'assistance' receipt is a capital receipt. The notable case among others is the case of 'Rasoi Ltd.'(supra) wherein the Hon'ble jurisdictional ITAT (Kolkata) has discussed the similar issue thread bear distinguishing the Sahney Steel Press works Ltd. case and held as a capital receipt. This decision has been followed in other cases dealt by Kolkata ITAT bench including the case of KIar Sehen P. Ltd. (supra) which was later uphe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital receipt. There is no doubt about the fact that the units receiving the assistance from the Govt. of West Bengal will be required to undergo certain regulatory measures and fulfill certain existence to be allowable to the assessee in carrying for the business itself in a regular manner or even for the purpose of augmenting its pro fits On the other hand, the sole purpose behind the grant of the assistance seems to be to tide over the financial crises and 'promotion of industries. Both these activities relate to capital field and cannot be considered to be linked up with the day to day operations of the assessee in any manner. Hence, we are of too view that the incentive received by the assessee, although dependent upon certain conditionalities, is actually gratuitous in nature and forms capital receipt in its hands. The incentive cannot again be considered as provided by the Govt. to the assessee to meet some of its revenue expenses. The above ratio laid down in terms of 'assistance in the form of fresh capitol to tide over the financial crisis', 'enduring effect', 'promotion of industries' etc. has also been followed in the case of Klar Sehen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e disallowance of ₹ 8,79,844/- corresponding to expenditure relatable to earning dividend income and tax free interest income. On appeal, the Ld. CIT(A) directed the Assessing Officer to follow the method as provided in Rule 8D(2)(iii) of I. T. Rules for determining the disallowance pertains to exempt dividend income and tax free interest. Aggrieved by the said order, now the revenue is in appeal before us. 9. We have heard both the parties and perused the material available on record. We find that the Assessing Officer noticed exempted income consisting of dividend income of ₹ 5,03,392/- and tax free interest income of ₹ 20,00,000/-. The Assessing Officer made a proportionate disallowance of ₹ 8,79,844/- as incurred for earning dividend income and tax free interest income. The Ld. CIT(A) directed the Assessing Officer to follow the method as provided in Rule 8D(2)(iii) of I. T. Rules for determining the disallowance pertains to exempt dividend income and tax free interest. Since Rule 8D was inserted by the IT 5th Amendment Rules 2008 w.e.f. 24.3.2008 and Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd. Vs. DCIT (2010) 328 ITR 81 (Bom) has he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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