TMI Blog2019 (4) TMI 1856X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of Tribunal, we hold that the assessee is not eligible for claiming benefit of deduction u/s.80IA(4) in respect of Sales Tax Benefit‟ received from the State Government. - Decided against assessee. - ITA No.1634/PUN/2017 - - - Dated:- 22-4-2019 - Shri R.S. Syal, Vice President And Shri Vikas Awasthy, Judicial Member Assessee by: S/Shri Prayag Jha and Prateek Jha Revenue by: Shri Mahender Bishnoi ORDER Vikas Awasthy, JM : This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-4, Pune dated 03-01-2017 for the assessment year 2003-04. 2. The assessee has assailed the findings of Commissioner of Income Tax (Appeals) by raising following grounds : 1. The Id. CIT(A) was not justified in rejecting the Appellant's contention that the Sales Tax Benefit of ₹ 22,54,500/- was inextricably linked to the industrial undertaking and was integral part of the profit derived from power generation by the said undertaking, eligible for deduction u/s 80IA(i). 2. The Id. CIT(A) was not justified in rejecting the Appellant's contention that the Sales Tax Benefit of ₹ 22,54,500/- granted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions. The assessee has received Sales Tax Benefit‟ from State Government in respect of generation of power from Windmill. The assessee has treated Sales Tax Benefit‟ as income derived from generation of power through Windmill. The Authorities below have held that the assessee has wrongly claimed benefit of deduction u/s. 80IA(4) on Sales Tax Benefit‟ received from the State Government. We find that identical issue had come up before the Tribunal in the case of Dy.CIT Vs. Indo Enterprises Pvt. Ltd. and M/s. Patankar Wind Farm Pvt. Ltd. (supra.). The Tribunal after considering various decisions including the decision rendered in the case of CIT Vs. Meghalaya Steels Ltd., reported as 383 ITR 217 held as under: 10. The Co-ordinate Bench of the Tribunal in the case of Rasiklal M. Dhariwal (HUF) Vs. Dy. Commissioner of Income Tax (supra) had occasion to consider the nature of subsidy received in the form of sales tax incentive for generation of power in the State of Maharashtra. The Tribunal after analyzing the scheme of subsidy threadbare concluded that the subsidy received under the scheme is revenue receipt. The relevant extract of the findings of Tribunal on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rant is linked to achieving operational efficiencies and that too for only six continuous years. If a unit which is otherwise eligible for incentive, does not achieve the plant load factor of 12% or above, it would not be entitled to receive the sales tax benefit. Therefore, in our considered opinion, though the object of the Scheme is to promote generation of energy through non conventional sources but the same is sought to be achieved by the Government in the form of supporting the units to perform more efficiently and profitably. 17. In fact the Hon'ble Supreme Court in the case of Ponni Sugars Chemicals Ltd. (supra) clearly noted that the subsidy received therein was to be utilized only for repayment of term loans taken by the assessee for setting up new units/expansion of existing business. In the present case, there is no such restriction or obligation on the part of the assessee to utilize the incentives availed. In fact, on this aspect the instant scheme is akin to the scheme noted by the Hon'ble Supreme Court in the case of Sahney Steels (supra) wherein the assessee was found free to use the money in its business entirely as it liked. In the present case also, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , facts in present case are distinguishable, the ratio laid down in Garden Silk Mills Vs. Commissioner of Income Tax and Another (supra) would not apply. Similarly, in the cases of Commissioner of Income Tax Vs. Chaphalkar Brothers (supra) and DCIT Vs. Inox Leisure Ltd. (supra) entertainment subsidy/exemption of sales tax as subsidy was given to promote construction of multiplex theatres. The subsidy was given to recoup capital investment and thus, was held to be capital receipt. Since, the facts of the above referred cases are entirely different, they would not in any manner support the connections of the assessee. 12. Now, we proceed to decide the second issue i.e. whether the sales tax subsidy received by assessee on generation of power through windmill is eligible for deduction u/s.80IA of the Act. Similar issue was raised before the Co-ordinate Bench of the Tribunal in the case of M/s.Patankar Wind Farm Pvt. Ltd. Vs. Dy. Commissioner of Income Tax (supra). The Tribunal after considering the decision of Hon'ble Gauhati High Court in the case of Commissioner of Income Tax Vs. M/s. Meghalaya Steels Ltd. (supra) held as under: 24. Another reliance placed upon by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal by the Department in the case of Commissioner of Income Tax Vs. Meghalaya Steels Ltd. (supra) has held that subsidies‟ which goes to reimbursement of cost production of goods of a particular business would also have to be included under the head profits and gains of business or profession , and not under the head income from other sources . The contention of the ld. AR is that the word subsidies‟ used by the Hon'ble Apex Court in para 28 of the judgment includes all sorts of subsidies including sales tax subsidy and is not merely restricted to transport, power and interest subsidies. Therefore, the appeals may be remitted back to Commissioner of Income Tax (Appeals) for reconsideration of the issue in the light of decision of Hon'ble Apex Court in the said case. To further support his contentions the ld. AR placed reliance on the decision of Mumbai Bench of the Tribunal in the case of Rupinder Singh Arora Vs. ITO (supra). 14. The Hon'ble Apex Court in appeal by the Department has merely affirmed the decision of Hon'ble Gauhati High Court. There is no reference or discussion on sales tax subsidy either by Hon'ble High Court or by the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional subsidy. The Tribunal in the case of M/s. Patankar Wind Farm Pvt. Ltd. Vs. Dy. Commissioner of Income Tax (supra) has held that Sales Tax subsidy is not an operational subsidy and is not linked to the profits of industrial undertaking. The scheme under which the present assessee has received Sales Tax subsidy is same, therefore, there is no reason to take a different view. 15. The reliance placed by the ld. AR on CBDT Circular No. 39/2016 dated 29-11-2016 is again misplaced. The said circular specifically deals with transport, power and interest subsidies received by industrial undertaking. The ld. AR has drawn our attention to the words business subsidies‟ used in para 2 of the said circular to contend that business subsidies includes sales tax subsidy. We are not in consonance with ld. AR in interpretation of expression business subsidies as used in para 2 of the said circular. The CBDT circular is with specific reference to transport power and interest subsidies. The expression business subsidies used in the body of circular refer to only those subsidies that are contained in subject of circular. Thus, the expression business subsidies‟ in body of ci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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