New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (8) TMI 645 - ITAT AMRITSAR

2016 (8) TMI 645 - ITAT AMRITSAR - TMI - Subsidy amount received - revenue or capital receipt - Held that:- The assistance was not for setting up new unit but the object of the scheme necessarily was to revive the sick units which could only be done by modernization and putting further infrastructure in the form of investment in plant and machinery. The Hon’ble Supreme Court in the case of CIT vs. Ponni Sugar Mills and Chemicals Ltd. (2008 (9) TMI 14 - SUPREME COURT ) after considering the case .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tal in nature as the assessee was obliged to utilize the subsidy amount only for making investment in fixed assets and for making repayment of term loans. In a recent decision the Hon’ble Supreme Court has also dismissed an appeal of Revenue in the case of Sh. Balaji Alloys & Ors. Vs. CIT (2011 (1) TMI 394 - Jammu and Kashmir High Court ), wherein the Hon’ble Court relied on its earlier judgment in the case of CIT vs. Ponni Sugars & Chemicals (supra). Therefore, keeping in view the facts and cir .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

The scheme was formed to ensure availability of green fodder in kandi area of Dist. Hoshiarpur. We further find that it has not been disputed by authorities below that silage pits had not been constructed by the selected societies. We further find that assessee was not having any beneficiary interest in the amount received as it was acting as a facilitator only. The assessee has implemented the scheme of Govt. for the welfare of the small farmers located in the kandi area of Dist. Hoshiarpur and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

therefore, the finding of the authorities below is not correct and is not justified. In view of the above facts and circumstances we delete the addition confirmed by learned CIT(A) on this account. - Penalty levied u/s 271(1 )(c) - Held that:- Assessee had not furnished inaccurate particulars as it had declared the amount received as subsidy in its balance sheet and it was only the nature of subsidy which was disputed by the Assessing Officer and therefore, he had rightly held the penalty w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the appeal filed by Revenue is dismissed. - I.T.A Nos. 739 (Asr)/2013, I.T.A Nos. 606 (Asr)/2015, I.T.A No.42 (Asr)/2016 - Dated:- 9-8-2016 - Sh. A. D. Jain, Judicial Member And Sh. T. S. Kapoor, Accountant Member Appellant by : Sh. Vinay K. Malhotra (CA) Respondent by : Sh. Bhawani Shankar (DR) ORDER Per T. S. Kapoor (AM) This is a bunch of three appeals filed by assessee as well as by Revenue. The assessee has filed appeals for Asst. Year 2009-10 and 2011-12 vide appeals in ITA No.739(Asr)/201 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

posed u/s 271(1)(c) for claiming the Revenue receipts as capital receipts. 4. The above appeals were heard together and therefore, for the sake of convenience a common and consolidated order is being passed. 5. At the outset, the learned AR invited our attention to the written submissions filed by assessee and from these written submissions the learned AR explained the facts of the case. The learned AR submitted that the assessee is a Co-operative Society deriving income from running Milk Plant. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

perative Unions and the Central Govt. and Punjab Govt. had provided matching grants for the purposes of utilization the same for achieving the objects of the scheme of rehabilitation. The learned AR submitted that during the year under consideration the assessee had received ₹ 72 lacs of grant in the form of ₹ 36 lacs each from Govt. of India, Ministry of Agricultural and from Govt. of Punjab through milk fed. In this respect he invited our attention to (PB page 7 to 9) where the evi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

estments and repayments can be considered to be on Revenue account. He submitted that these submissions were made before Assessing Officer also and various case laws including the Hon ble Supreme Court in the case CIT vs. Ponni Sugars & Chem Ltd. & Ors.306 ITR 392(SC) was relied where the Hon ble Court has held that for the purpose of determining the nature of subsidy the purpose test has to be applied meaning thereby that the purpose of subsidy has to be examined & in this case purp .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

for cattle was also considered to be as Revenue receipt whereas the assessee only acted as an intermediary as amount received from Govt. as subsidy was given to various Co-operative Societies for construction of the silage pits and the assessee did not retain any amount out of this. The learned AR in this respect, took us to PB page 30 and 31 to highlight that the said amount of ₹ 61.50 lacs was paid to various societies for construction of silage pits in their areas. The learned AR furthe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lacs out of which the assessee had already credited ₹ 36,92,788/- to its P&L Account and balance amount of ₹ 19,12,212/- was treated as capital receipt which the authorities below has wrongly held to be as Revenue receipt. 8. Arguing the appeal in ITA No.42(Asr)/2016, the learned AR submitted that Assessing Officer in Asst. Year 2009-10 had imposed penalty u/s 271(1)(c) for concealment of income in view of the fact that assessee had declared part subsidy as capital receipts and p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

evenue, he heavily placed his reliance on the orders of Assessing Officer. 10. We have heard the rival parties and have gone through the material placed on record. First, we take up the appeal in ITA No. 739(ASR)/2013. We find that it is an undisputed fact that assessee received ₹ 72 lacs as subsidy under rehabilitation grant as matching grants from Govt. of Punjab & Central Govt. Out of this assessee itself credited an amount of ₹ 29,09,681/- to its P&L Account treating the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

9,09,681/- for repayment of loans of National Diary Development Board and loan from Marked and had relied on the case law of Hon ble Supreme Court in the case of CIT vs. M/s Ponni Sugar & Chemicals Ltd. (supra) for the proposition that the amount received as subsidy for making repayments of term loans has to be treated as capital receipt. However, learned CIT(A) did not accept the arguments of assessee. 12. We find that it is a fact that assessee had utilized an amount of ₹ 27.56 for t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

.13.01 lacs (vi) Repayment to Milkfed Rs.9.71 lacs Total ₹ 72.00 lacs Further breakup of investment in machinery is also placed at PB page 14. In the chart placed at page 14, the items of plant and machinery along with name of supplier, the amount paid along with cheque no. against which payment has been made has also been noted therein. Therefore, from the above facts and circumstances we held that the grant in the form of rehabilitation grant was indeed a capital receipt as it was utiliz .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assistance under the subsidy scheme was to enable the assessee to setup a new unit or to expand the existing unit then the receipt of subsidy is to be treated as capital receipt. Though, in the present case the assistance was not for setting up new unit but the object of the scheme necessarily was to revive the sick units which could only be done by modernization and putting further infrastructure in the form of investment in plant and machinery. The Hon ble Supreme Court in the case of CIT vs. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

In the present case receipt of subsidy was capital in nature as the assessee was obliged to utilize the subsidy amount only for making investment in fixed assets and for making repayment of term loans. In a recent decision the Hon ble Supreme Court has also dismissed an appeal of Revenue in the case of Sh. Balaji Alloys & Ors. Vs. CIT (J&K High Court), wherein the Hon ble Court relied on its earlier judgment in the case of CIT vs. Ponni Sugars & Chemicals (supra). Therefore, keeping .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ge pits. The scheme for construction of silage pits in various parts is placed at (PB page 21 to 27). The scheme was formed to ensure availability of green fodder in kandi area of Dist. Hoshiarpur. We further find that it has not been disputed by authorities below that silage pits had not been constructed by the selected societies. We further find that assessee was not having any beneficiary interest in the amount received as it was acting as a facilitator only. The assessee has implemented the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r constitution of silage pits. Therefore, the assessee had not derived any benefit from this grant and therefore, the finding of the authorities below is not correct and is not justified. In view of the above facts and circumstances we delete the addition confirmed by learned CIT(A) on this account. 14. In view of the above, the appeal in ITA No. 739(Asr)/2013 is allowed. 15. Now we take appeal in ITA No.606(Asr)/2105 for Asst. Year:2011-12. Since, the facts and circumstances in the present appe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. I have carefully considered the assessment order, penalty order and the submissions of assessee. The amounts in question were treated by assessee as a capital receipt whereas the A.O. as well as the Ld. CIT(A), while deciding the appeal of assessee against quantum additions made have held that the amounts in question were revenue receipt in the hands of the assessee. The matter has yet not attained finality as the matter is pending before the Hon ble ITAT Amritsar for adjudication. The crux of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

plicable as well as other case laws which were cited in support of assessee. I find that there can t be two opinions that the issue at hand in purely legal and debatable. The factual undisputed position was clear from the balance sheet and there was no furnishing of inaccurate particulars. A claim, though decided against the assessee can t be said to be a case of either concealment or of furnishing inaccurate particulars. In the case of M/s Gurudaspur Cooperative Sugar, the Hon'ble jurisdict .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

issue - Therefore, there is no error in findings recorded by Tribunal while setting aside penalty - Revenues appeal dismissed. 7. In this decision it was further held that:- In the present case, there is no dispute about the quantum of receipt of grant in aid from the State Government. The assessee reflected the same as capital receipt, whereas it has been treated as to be revenue receipt. The issue; whether the amount of grant in aid is capital receipt or a revenue receipt, is a debatable issu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version