TMI Blog2017 (1) TMI 902X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee is aggrieved by the impugned order dated 09/10/2013 of the Ld. First Appellate Authority, Mumbai, disallowing a sum of ₹ 3,37,24,199/- on account of subsidy received from Government of India under Technology Upgradation Fund Scheme (TUF Scheme) ignoring case laws, relied upon by the assessee as mentioned in the ground of appeal itself. 2. During hearing of this appeal, the ld. counsel for the assessee, Shri Hariom Tulsyan claimed that the impugned issue is covered by the decision of the Tribunal in the case of assessee itself for Assessment Year 2012-13 order dated 23/09/2016 (ITA No.4375, 2147/Mum/2015) and also another decision of the tribunal in the case of M/s SVG Fashions Ltd. vs DCIT (ITA No.5644/Mum/2011) order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to interest is also to be treated as revenue item. 3. The nature of the business of the assessee-company is manufacturing and trading of cloth and yarn. The assessee availed Technology Upgradation Fund Scheme (TUFS) formulated by the Government of India and received interest subsidy of ₹ 2,84,21,657/- during the A.Y. 2011-12 and ₹ 2,48,57,810/- during the A.Y. 2012- 13. The same was claimed by the assessee as capital receipt by transferring it to the capital reserve account of TUF Interest. The assessee submitted before the AO that the TUFS was introduced for the purpose of encouraging the acquisition of technologically advanced textile machineries by way of extending loans for the specified purpose through commercial bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L appropriation to the credit of capital reserve account and claimed the same as deduction from the taxable income. As the assessee has not reduced the above from the capital assets for depreciation purpose, the AO followed the decision in the case of Sahney Steel and Press Works Ltd. (supra) and made the addition to the total income of the above amount in the respect the A. Y.s treating the same as revenue receipt instead of capital receipt shown by the assessee. 4. The ld. CIT(A) having gone through the order of the AO and submission of the assessee during the course of appellate proceedings before him observed that the issues is directly covered by the judgment of the Hon ble Punjab Haryana High Court in the case of CIT vs. Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is produced below: In the light of the foregoing, it has been felt necessary to make operational a focussed and time-bound Technology Upgradation Fund Scheme (TUFS) which would provide a focal point for modernisation efforts through technology upgradation in the industry. The main feature of the TUF Scheme would be a 5% reimbursement on the interest actually charged by the identified financial institutions on the sanctioned projects. 7.1 Now we shall turn to the decision relied on by the ld. DR. In Sahney Steel and Press Works Ltd. (supra), the following has been held: The payments in the nature of subsidies were made only after the industries have been set up. Payments were not made for the purpose of setting up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of the textile industry, the concerned Ministry of Textile adopted the TUFS scheme, envisaging technology upgradation of the industry. Under the scheme there were two options, either to reimburse the interest charged by the lending agency on purchase of technology upgradation or to give capital subsidy on the investment in compatible machinery. In the instant case, the assessee had taken term loans for technology upgradation and subsidy was released under agreement with Small Industry Development Bank of India. [Para 6] For determining whether subsidy payment was revenue receipt or capital receipt, character of receipt in the hands of the assessee has to be determined with respect to the purpose for which subsidy is given by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in order to sustain competitiveness in the domestic as well as international market and over all long-term viability of the industry, the Ministry adopted the TUF Scheme envisaging technology upgradation of the industry and therefore the subsidy received in that regard was capital in nature. 8. The present factual matrix is to be tested on the anvil of the above enunciation of law. In the light of the decision in the case of Sham Lal Bansal, M/s SVG Fashions Ltd. and Gloster Jute Mills Ltd. referred here-in-above and the facts being similar, we uphold the order passed by the ld. CIT(A) for the A.Y. 2011-12 and A.Y. 2012- 13. 9. In the result, the appeal filed by the Revenue for the above two assessment years are dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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