TMI Blog2020 (10) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts [ 2003 (5) TMI 4 - SUPREME COURT] had held that assessed income could be below the returned income. We hold that CIT(A) was justified in holding that assessed income could go below the returned income. Our aforesaid observations on merits and on technicalities and in view of the decision of the Hon‟ble Supreme Court in the case of Ponni Sugars [ 2008 (9) TMI 14 - SUPREME COURT] we do not find any infirmity in the entire order of the ld. CIT(A) granting relief to the assessee both on technicalities and on merits. Accordingly, the grounds raised by the revenue are dismissed. - ITA No.6197/Mum/2017, ITA No.6198/Mum/2017 And ITA No.6199/Mum/2017 - - - Dated:- 7-9-2020 - Shri C.N. Prasad, JM And Shri M. Balaganesh, AM For the Assessee : Shri Dharmesh Shah For the Revenue : Shri V Vinodkumar ORDER PER M. BALAGANESH (A.M): These appeals in ITA Nos.6197/Mum/2019, 6198/Mum/2019 6199/Mum/2019 for A.Y.2012-13, 2013-14 2014-15 respectively arise out of the order by the ld. Commissioner of Income Tax (Appeals)-18, Mumbai in Appeal Nos.CIT(A)-18/IT-302/ACIT-11(1)(2)/14-15, CIT(A)- 18/IT-75/DCIT-11(1)(2)/17-18 dated 29/05/2017 (ld. CIT(A) in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Government were very much available in the public domain and does not constitute verification of any fresh facts. Moreover since the additional ground involves a legal issue and goes to the root of the matter, the same was admitted by the ld. CIT(A) and adjudicated in detail by him. The copy of the schemes of Technology Upgradation Fund and Rajasthan Government Promotion Scheme 2003, which are available in public domain were examined by the ld. CIT(A) as an authority having co-terminus powers with that of the ld. AO. We find that the ld. CIT(A) had observed under Rajasthan Government Promotion Scheme, the assessee had received incentive from Rajasthan Government and interest subsidy under TUF from Government of India to promote textile industry. It was also submitted before the ld. CIT(A) that this subsidy was erroneously offered to tax as revenue receipt in view of the fact that the subsidy had been netted off with interest and sales account and not disclosed separately in the financial statements. It was also brought to the notice of the ld. CIT(A) that the subsidy whether it is capital or revenue in nature would become taxable in terms of Section 2(24) (xviii) only from A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to timely and adequate capital at - internationally comparable rates of interests m order to upgrade its technology level. Due to this scheme substantial investment was made in country in the textile sector. c) The incentive/subsidy under the TUF Scheme was provided with the basic intention of development / modernization of textile industry and to provide financial support for heavy capital outlay required in such modernizations by industries. (d) W.e.f 01/01/2002 an option was provided to the eligible entrepreneurs avail the incentive either in the form of Credit Linked Capital Subsidy (CLCS) or by way of 5% interest reimbursement under Technology Upgradation Scheme. This according to the Appellant is Conclusive proof that the incentive under TUF scheme is a capital subsidy which may be availed either under the 12% CLCS scheme or as 5% interest reimbursement. The mode of disbursement shall not change the nature of an incentive from capital to revenue. (e) The objective of the The Technology Upgradation Fund Scheme (TUFS)' issued by the Ministry of Textiles, Govt. of India, it is seen that to improve the overall health of the textile industry which contributes s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the extent of 5% on the Term loan facility/working capital advanced by the banks/financial institutions. The amount of subsidy so received is also noticed to have been shown as part of interest income net off in Interest paid account in schedule 24 Finance Cost of the audited accounts. Further the interest and wages subsidy from Rajasthan Govt net off in Sale of product account as these subsidy given in the form of sales tax incentive and net off in sales in schedule 17 Revenue from operation of the audited accounts. These facts, clearly lead to the conclusion that the subsidy was granted for industrial development in the State of Rajasthan and for Textile industrialization and creating employment opportunities. Thus, applying the purpose test laid down by the Supreme Court, in the case of Ponni Sugars Chemicals Ltd. Vs CIT 306 ITR 392 (S.C.), the subsidy received by the appellant is in the nature of capital receipt and not revenue receipt. 3.3. We find from the above that the ld. CIT(A) had categorically made it clear that the aforesaid subsidies were given to the assessee for promoting capacity expansion, globalization of textile trade and employment generation and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence filed by the assessee before the ld. CIT(A). 3.6. With regard to the other argument advanced by the ld. DR that if the subsidy is treated as receipt not chargeable to tax, then the assessed income would go below the returned income is concerned, we find that in the instant case, the subsidy received by the assessee has been erroneously offered to tax by the assessee alongwith filing the return of income. Moreover, the time limit available to the assessee u/s 139(5) of the Act for filing revised return had expired in the instant case. Till the completion of assessment, the assessee was not advised about the existing Hon‟ble Supreme Court judgment in the case of Ponni Sugars Chemicals Ltd. vs. CIT reported in 306 ITR 392. Later on when the assessee was made aware about the said Hon‟ble Supreme Court judgment, during the pendency of the first appellate proceedings, the assessee thought to fit the raise the additional ground before the ld. CIT(A) and relief has been rightly granted by the ld. CIT(A) on merits. The legal principle to be understood here is that there is no estoppel against the statute . The entire scheme of taxation after determining the tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has admitted his liability to pay tax in accordance with law. Facts of the present case are therefore, different. In case of hand, the assessment was not rendered null. In fact such assessment, which according to the order of CIT(Appeals) had became final tax liability of the assessee, came lower than that declared by him in the return filed. 3.7. Respectfully following the aforesaid decision of the Hon‟ble Gujarat High Court and in view of the aforesaid observations in the facts and circumstances of the instant case, we hold that CIT(A) was justified in holding that assessed income could go below the returned income. 3.8. In view of our aforesaid observations on merits and on technicalities and in view of the decision of the Hon‟ble Supreme Court in the case of Ponni Sugars reported in 306 ITR 392, we do not find any infirmity in the entire order of the ld. CIT(A) granting relief to the assessee both on technicalities and on merits. Accordingly, the grounds raised by the revenue are dismissed. 4. In the result, appeals of the revenue are dismissed. Order pronounced on 07/09/2020 by way of proper mentioning in the notice board - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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