TMI Blog2020 (2) TMI 720X X X X Extracts X X X X X X X X Extracts X X X X ..... t subsidy as specified under the TUF Scheme, the amount of interest subsidy in question received by the assessee was a receipt of capital in nature. Utilization of the amount of incentive in question for the purpose of meeting the interest liability of the Company on loans and advances taken by it to set up its plant and machinery - HELD THAT:- Hon ble Calcutta High Court has directed us to examine or investigate before arriving at any conclusion as regards the nature of the interest subsidy whether capital or revenue, it is observed that neither the Assessing Officer nor the ld. CIT(Appeals) has given any finding on this aspect. In this regard, the ld. D.R. has submitted that this matter requires verification and an opportunity may be given to the Assessing Officer to verify the same from the relevant record. We are inclined to accept this contention of the ld. D.R. and since assessee has also not raised any objection in this regard, we restore this issue to the file of the Assessing Officer for the limited purpose of verifying the issue of utilisation of amount of subsidy in question by the assessee. If it is found by the Assessing Officer on such verification that the subsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UFS in short) during the year under consideration was liable to be treated as capital receipt not chargeable to tax instead of revenue receipt chargeable to tax as offered by the assessee in its return of income. The said additional ground along with the submissions made by the assessee in support of its case on the issue raised therein was forwarded by the ld. CIT(Appeals) to the Assessing Officer seeking the latter's remand report. In the remand report submitted to the ld. CIT(Appeals), the Assessing Officer strongly objected to the admission of the additional ground raised by the assessee by submitting that the issue raised therein was not the subject matter of either the original assessment made under section 143(3) or even the fresh assessment made under section 143(3) read with section 263. The ld. CIT(Appeals), however, did not find the objection raised by the Assessing Officer to be sustainable and after discussing this aspect in detail in the light of various judicial pronouncements, he admitted the additional ground raised by the assessee. In the remand report, the claim of the assessee as made in the additional ground for treating the interest subsidy received under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... analysed threadbare. The question whether the subsidy incentive was being utilized for the purpose of meeting the interest liability of the company on loans and advances taken by it to set up its plant and machinery had to be investigated and a firm conclusion ought to have been arrived at. Only if it was so utilized, possibly, the subsidy incentive could be described as a capital receipt. Otherwise it had to be treated as a revenue receipt. In those circumstances, we remand the matter back to the Tribunal to decide this particular issue upon hearing the parties and by a reasoned order within three months from the date of communication of this order . Hon ble High Court of Calcutta thus remanded the matter back to the Tribunal with a direction to decide the issue involved in the assessee s case afresh after examining/ analysing the concerned subsidy scheme and utilization of subsidy incentive for the specific purpose. 4. As per the order/direction of the Hon ble Calcutta High Court, the case has been fixed for hearing afresh and arguments of both the sides have been heard. It is observed that the interest subsidy in question was received by the assessee under Technology ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agency on a project of technology upgradation in conformity with this resolution. With effect from 1st January, 2002, an option has been provided to the Small Scale Textile and Jute Industries to avail of either 12 percent Credit Linked Capital Subsidy (CLCS-TUFS) or 5 percent interest reimbursement under Technology Upgradation Fund Scheme. The rate of 12 percent has been increased to 15 percent w.e.f. 13.01.2005. With effect from 6th November, 2003, an additional option has been provided to the powerloom units to avail of 20% capital subsidy under TUFS in lieu of 5% interest reimbursement / 15% CLCS-TUFS on investment in TUF compatible specified machinery subject to a capital ceiling of ₹ 60 lakh and ceiling on capital subsidy is ₹ 12 Iakh. The capital ceiling for machinery has been increased from ₹ 60 lakh to ₹ 1 crore and the ceiling on capital subsidy has also been increased from ₹ 12 lakh to ₹ 20 lakh w.e.f. 13.01.2005. An additional incentive of 10% capital subsidy over and above the 5% interest subsidy has been provided for the specified textile processing machinery during a period of one year from 20' April, 2005 to 19t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Note Vide circular No.2 (2004-2005 series) dated 27th May, 2004, the machinery eligible for one segment has been made eligible for other segments/activity also unless its eligibility is specifically restricted for a particular segment. 1. GENERAL ELIGIBILITY CONDITIONS 3.1 TYPE OF UNITS : (1) Existing unit with or without expansion and new units. (2) Existing units can modernise and / or expand with the state-of-the-art technology. (3) New units must set up their entire facilities only with the appropriate eligible technology. (4) A unit can undertake one or more activities listed at ISCOPE OF THE SCHEME hereinbefore under the scheme. However, multiple activities can be undertaken only in an integral manner, i.e., by way of forward or backward integration. It is, however, clarified that weaving / knitting and garment manufacturing or weaving / knitting and processing or garment manufacturing and processing will be considered as integral activities. (5) Textile / Jute units with 100% foreign equity. 3.2 TYPE OF TEXTILE MACHINERY ELIGIBLE : (I) Under the TUF Scheme, generally only new machinery will be permitted. (2) Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of specified machinery for each sector of the Textile Industry. The purpose of giving incentive in the form of interest subsidy under the TUF Scheme thus was to encourage capital investment by the eligible unit in the form of specified machinery in order to induct state-of-the-art or near-state-of the-art technology or at least a significant step up from the present technology level to a substantially higher one. In our opinion, going by this purpose of the interest subsidy as specified under the TUF Scheme, the amount of interest subsidy in question received by the assessee was a receipt of capital in nature. 6. As regards the issue of utilization of the amount of incentive in question for the purpose of meeting the interest liability of the Company on loans and advances taken by it to set up its plant and machinery, which the Hon ble Calcutta High Court has directed us to examine or investigate before arriving at any conclusion as regards the nature of the interest subsidy whether capital or revenue, it is observed that neither the Assessing Officer nor the ld. CIT(Appeals) has given any finding on this aspect. In this regard, the ld. D.R. has submitted that this matter requir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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