TMI Blog2018 (7) TMI 376X X X X Extracts X X X X X X X X Extracts X X X X ..... sment years 2006-07 and 2007-08 respectively. Both appeals, being related to the same assessee and common issue-in-dispute involved, these were heard together and disposed of by way of this consolidated order for convenience. The grounds of appeal raised in both appeals are reproduced as under: ( i) Grounds of appeal for AY 2006-07 are as under: 1) That the learned CIT(A) has grossly erred in law and on facts and circumstances of the assessee Appellant by Sh. R.K. Kapoor, CA Respondent by Sh. Sanjeet Singh, CIT(DR) confirming an addition of ₹ 28,17,360/ - on account of alleged unverified purchases of software items. 2) That the learned CIT(A) has grossly erred in law and in confirming the addition of the software purchases merely on doubts and surmises. 3) That the learned CIT(A) ought to have appreciated that the identity of the supplier of software stood established when part of the purchases from the same supplier had been allowed by the Assessing officer himself. 4) That the addition made by the Assessing Officer and confirmed by the CIT(A) is illegal, bad in law and is prayed to be deleted. ( ii) Grounds of appeal for AY 2007-08 are as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost of fixed assets. According to the Assessing Officer, the subsidy received was in the nature of revenue receipt. On further appeal, the Ld. CIT(A) upheld the finding of the Assessing Officer and held the subsidy received as revenue in nature. 3.1 Subsequent to the completion of the regular assessments, a search and seizure action under section 132 of the Act was carried out on 10/01/2012 in the case of the assessee and consequently, notices under section 153A of the Act were issued in respect of both the assessment years 2006-07 and 2007-08. The assessments under section 153A were completed in respect of these two assessment years on 30/03/2014, wherein the Assessing Officer repeated the additions/disallowances in respect of software purchase and subsidy respectively. The Ld. CIT(A) also sustained the additions of ₹ 28,17,360/-in assessment year 2006-07 and addition of ₹ 60,7404 in assessment year 2007-08 on the issue of software purchase and subsidy respectively. Aggreived with these additions/disallowances, the assessee is in appeal before the Tribunal raising the grounds as reproduced above. 4. Before us, the Ld. counsel submitted that the Tribunal whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee both are in the appeal before Hon through the finding of the CIT(A)- IX, wherein vide paragraph no. 5.8 of the order he has discussed the issue as under:- Trading Company of Mumbai, it is observed that apart f rom filing the copy of invoices and store receipts, the assessee has not f iled any other evidence and no evidence conf irming the transaction is available in respect of the same. It is seen that despite repeated opportunities granted by the AO, he failed to produce any evidence indicating purchase of the sof tware. No such evidence was either f iled before me, the only document in supper of the purchase of sof tware submitted is a copy of the bill. A perusal of the bill indicates that the concern was a supplier of hardware and not of sof tware, which has been shown to have been purchased by the appellant f rom such concern. Under these circumstances, the f inding recorded by the AO are valid and I, therefore, hold that the purchases amounting to ₹ 28,17,360/ - remain unproved and the action of the AO on that account is conf irmed. The ground no. 4 is partly allowed to the appellant. I do not find any reason to deviate from the finding of the CIT (A) - IX ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) as revenue in nature. In the impugned order, the Ld. CIT(A) has mentioned that same addition was made in regular assessment order u/s 143(3) of the Act dated 30/12/2009 and which was upheld by the Ld. CIT(A) in his order dated 14/12/2010. The Ld. CIT(A) in the impugned order following the finding of Ld. CIT(A) against regular assessment order upheld the addition observing as under: Against the same order appeal is pending before the Tribunal. I do not find any reason to deviate from the finding {7} Ground no. 2 is against the disallowance of sales tax subsidy amounting to ₹ 6070404/ -. In this regard, similar issue was pertaining in the original assessment order- dated 30/ 12/ 2009 which has been decided by CIT (A) - IX vide order dated 14/ 12/ 2010 wherein vide paragraph no. 5.5.1 of the order CIT (A) - IX CIT (A) has decided the issue by observing as under:- that the subsidy was granted by the Government of Haryana after the plant was set up. Hence the nature of subsidy clearly becomes on the revenue account as the same was utilized for meeting revenue expenditure on day to day basis to run the business more profitably. Therefore, the treatment given by the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determine the true character of a subsidy. In the case of Birla CXL Ltd [supra], the Hon'ble High Court of Gujarat held that the main purpose of the resolution was to modernize industries which ordinarily would come at a considerable cost, particularly when such industries were located n underdeveloped areas. Their Lordships further held that for this purpose, that the said scheme was to promote giving benefit of sales tax waiver/ deferment at the option of the industry concerned and such had to be computed in terms of percentage of fixed capital investment and benefits were to last for specified periods and upto exhausting minimum limit computed in terms of the percentage of the fixed capital investment. 13. In the present case, as per Table 2 of Rule 28C of the Rules applicable to the industrial unit, tax concession for medium/ large scale industrial units have been linked with fixed capital investment and also in Table 2 applicable to industrial unties the tax concession has been linked with additional investment in plant and machinery which clearly shows that the purpose of sales tax subsidy by the Haryana Government by way of tax concession/ subsidy was to contribute t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties which says that a system of accounting regularly followed by the assessee and accepted by the Revenue should not be disturbed substantially unless the AO finds that such system does not reflect the true factual income of the assessee. 16. In the present case, undisputedly and admittedly the AO accepted the treatment given by the assessee to the sales tax subsidy as capital receipt in A.Ys 2005-06 and 2006-07 and for A.Ys 2007-08 and 2008-09. The AO has not brought out any allegation or facts to allege that that the income does not reflect true factual income of the assessee. In this situation, we are inclined to hold that the authorities below flaunted the Rule of consistency without any justif ied cause or basis and in view of the proposition laid down by the Hon'ble Supreme Court in the case of CIT Vs. Woodward [supra] and CIT Vs. Realist Builders [supra] a system of accounting following by the assessee and accepted by the Revenue during the earlier years, consistency cannot be disturbed without any reasonable cause or justified reasoning. 17. On the basis of foregoing discussion, we have no hesitation to hold that in the present facts and circumstances of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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