TMI Blog2020 (6) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... udicial to the interest of the Revenue. Though the principles of res judicata doesn t apply in the income tax proceedings, however, it has also been laid down by the Courts that unless there are changes in the facts and circumstances of the case, past consistent position so adopted should not be disturbed. In the instant case, we find that under the same investment promotion scheme of 2010 of the Rajasthan Government, the assessee has received the subsidy right from A.Y 2012-13 onwards and similar treatment has been done by the assessee in its financial statements where the amount of subsidy has been credited in the capital reserve account and similar treatment has been done while filing its tax return which subsidy has not been offered to tax. Facts and circumstances of the case are exactly identical as in the past years and where the Assessing officer has followed the consistent position, the order so passed by him cannot be held as erroneous. We note that in the past as well as current year, the Assessing officer has followed the decision in case of Shree Cements Ltd [ 2017 (8) TMI 1336 - RAJASTHAN HIGH COURT] and there is nothing on record that such decision has been ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Employment Subsidy and the said amount was credited in Capital Reserve Account instead of being credited in the profit/loss account. It was further observed by the ld. Pr. CIT that where the subsidy is in nature of a capital receipt, as per the law, the subsidy has to be considered under Explanation-10 to section 43(1) of the Act. It was further observed by ld. Pr. CIT that the Assessing Officer did not examine this issue and has failed to apply the law on this issue. No enquiries were made to see how the subsidy was utilized or what tax treatment is required to be given to the subsidy granted by the State Government to the assessee. Accordingly, a show cause notice u/s 263 was issued to the assessee vide letter dated 24.01.2019. In response, the assessee filed its submission and the submissions so filed by the assessee were considered but not found acceptable to the ld. Pr. CIT and thereafter, she has recorded her finding setting aside the matter to the AO for denovo examination of this particular issue relating to receipt of the subsidy from the State Government and the relevant findings of the ld. Pr. CIT reads as under:- 6. From the above facts and circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts use and finalized the assessment in accordance with the prevailing law to quantify the correct income of the assessee liable to tax for AY 2014-15 after according opportunity to the assessee. The order of the AO is, accordingly, set aside on the issues as discussed above. 3. Against the aforesaid findings of ld Pr. CIT, the assessee is in appeal before us. 4. During the course of hearing, the ld. AR taken us through the Rajasthan Investment Promotion Scheme 2010 which is to promote investment in the State of Rajasthan and to further generate employment opportunities through such investment. It was submitted by the ld AR that the object of the scheme is to promote investment and generate employment and is not investment specific. It was further submitted that the investment subsidy shall be allowed to all eligible enterprises to the extent of 30% of taxes which have become due and have been deposited by the enterprises and the employment generation subsidy shall be allowed to the extent of 20% of taxes which have become due and have been deposited by the enterprises. Further, our reference was drawn to the entitlement certificate for subsidy issued by the District Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Hon ble Rajasthan High Court in case of Shree Cement Limited (supra). It was submitted that basis the submission of the assessee and position which has been accepted in the previous assessment years, and taking into consideration the decision of the Hon ble Rajasthan High Court, the Assessing officer examined the matter and didn t make any addition/adjustment in the hands of the assessee. It was accordingly submitted by the ld AR that the matter was duly examined by the AO in the previous assessment years as well as in the year under consideration and given that there was no change in the facts and circumstances of the case where the AO has followed the view taken and accepted in the earlier assessment years, the order so passed by the AO cannot be held to be erroneous so far as prejudicial to the interest of the Revenue. Further, reliance was placed on the decision of Hon ble Supreme Court in case of CIT vs. G. M. Mittal Stainless Steel (P) Ltd. reported in (2003) 263 ITR 255 (SC) and CIT vs. Sh. Manjunathesware Packing Products Camphor Works reported in (1998) 231 ITR 53 (SC). 5. Per contra, the ld. CIT DR submitted that it is a clear case of lack of enquiry on the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... romotion Scheme, 2010 (RIPS 2010) by the District Level Screening Committee. As per the entitlement certificate dated 30.03.2011 issued by the District Level Screening Committee, the assessee company shall be entitled for 30% investment subsidy and 20% employment subsidy for period of 7 years from the date of issuance of the certificate. Besides, the assessee company is also held entitled to receive CLCSS subsidy of ₹ 15,00,000/-. For the first time, the assessee company received subsidy of ₹ 79,94,970/- under RIPS 2010 and ₹ 15,00,000 under CLCSS during the financial year relevant to assessment year 2012-13 which was noticed by the Assessing officer (ACIT Circle 4, Jaipur), as reflected in the assessee s financial statement and a specific show-cause vide order sheet entry dated 1.01.2015 was issued to the assessee company. The assessee company replied to the said showcause and submitted that it has received the subsidy under the RIPS, 2010 and referring to the objects of the scheme, it was submitted that the purpose and objective of the scheme is for encouragement of investment and employment generation in the State of Rajasthan and therefore, it is a capital rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see and the assessment was completed u/s 143(3) vide order dated 16.12.2016 wherein no addition has been made by the Assessing officer (ACIT Circle 4, Jaipur). At the same time, we find that during the course of assessment proceedings, the matter relating to subsidy was taken up for consideration by the Assessing officer and the assessee was asked to file its submissions/explanation which was responded by the latter vide its submission dated 23.11.2016 wherein the assessee has stated that it was in the nature of capital subsidy credited in capital reserve account and in support of its position, it has again relied on the decision of Hon ble Rajasthan High in case of Shree Cement Ltd (supra). 7. In light of aforesaid factual matrix of the case, we find that where the matter relating to treatment of subsidy under RIPS 2010 is arising year after year right from assessment year 2012-13 and in the said year, the matter has been duly examined by the Assessing officer and said subsidy has been treated and accepted as capital subsidy and not brought to tax and following the same position as adopted by his predecessor holding the same charge as that of ACIT, Circle 4, Jaipur, subsequentl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ictional High Court was operative at the material time, the Assessing Officer could not be said to have erred in law. The fact that this Court had subsequently reversed the decision of the High Court would not justify the CIT in treating the Assessing Officer's decision as erroneous. The power of the CIT under section 263 of the Act must be exercised on the basis of the material that was available to him when he exercised the power. At that time, there was no dispute that the issue whether the power subsidy should be treated as capital receipt had been concluded against the revenue. The satisfaction of the CIT, therefore, was based on no material either legal or factual which would have given him the jurisdiction to take action under section 263 of the Act. 6. The decisions of the High Courts relied upon by learned counsel appearing for the appellant do not, in our view, assist the revenue. The Madras High Court in Seshasayee Paper Boards Ltd.'s case (supra) considered a situation where the Assessing Officer had relied upon a particular decision in framing the assessment order. The decision relied upon was itself the subject-matter of an appeal before the Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X
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