TMI Blog2022 (9) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... (7) TMI 501 - DELHI HIGH COURT] against the assessee, the operation of the aforesaid judgment rendered by the Hon ble Delhi High Court has been found to be stayed by the Hon ble Supreme Court [ 2017 (12) TMI 477 - SC ORDER] The subsidy in the instant case though computed in terms of sales tax deferment/waiver, it was essentially meant for capital outlay expanded by the assessee for set up of unit in case of new industrial unit and for expansion and diversification of existing unit. The entitlement was also stated to be related to percentage of fixed capital investment. No hesitation to accept the plea of the assessee. While doing so, we do not see any merit in the plea of the Revenue that necessary facts are not placed on record. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order passed by AO u/s 143(3) r.w.s. 254 of the Act is illegal bad in law being barred by limitation. The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 17,66,395/- by holding that sales tax incentive provided by Government of Rajasthan to encourage establishment/ enhancement of production capacity and for generation of employment is a revenue receipt and not a capital receipt as claimed by the assessee. 3. Ground No.1 is dismissed being not pressed in the course of hearing. 4. Ground No.2 concerns addition of Rs.17,66,395/- received by way of sales tax incentive provided by the Government of Rajasthan as Revenue receipt against the capital receipt claimed by the assessee. 5. Briefly stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determine the nature and character of sales tax incentive of Rs.17,66,395/- received by the assessee in the facts and circumstances of the case. It is the case of the assessee that sales tax incentive was given by the Government of Rajasthan for investment in Rajasthan to encourage the establishment / enhancement of production capacity and for generation of employment as envisaged in clause (3) of the scheme, namely, The Rajasthan Sales Tax / Central Sales Tax Exempt Scheme for Industries, 1998 as notified by the Government of Rajasthan vide S. No. 1131-F.14(8) FD/ Tax Divn/98 dated 7.4.1998. It is the claim of the assessee that such subsidy has direct nexus with investment in the capital resources and therefore the same is a capital rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period not exceeding four years and the objects of both the schemes are same. Therefore, the subsidy by way of exemption/remission of entertainment duty under both the schemes is capital receipt. (ii) PCIT Vs. Deepak Vegpro (P) Ltd. (2018) 401 ITR 89 (Raj.) (HC) Subsidy from Government in the form of VAT reimbursement related to encourage setting up of the new units and to generate fresh employment opportunities in the State is not taxable since it constituted capital receipt. (iii) CIT Anr. Shree Balaji Alloys Ors. (2016) 138 DTR 36 (SC) Excise refund and interest subsidy received by the assessee in pursuance of the incentives announced and sanctioned vide Government of India, Ministry of Commerce and Industry s Office Memo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n nature. It is submitted that the said decision of Hon ble Delhi High Court has been stayed by Hon ble Supreme Court vide order dt. 20.11.2017 (PB 36) and thus this decision is not applicable more particularly when the Supreme Court after the decision of Delhi High Court has held such receipts as capital receipt. 10. On a reading of the incentive scheme, it is noticed that the Government of Rajasthan proposed incentive by way of exemption from payment of sales tax on goods manufactured by industrial unit with a view to encourage for establishment / enhancement of production capacity and for generation of employment. 11. A conspectus of case law cited above would show that the purpose of subsidy is paramount for determination of cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of existing unit. The entitlement was also stated to be related to percentage of fixed capital investment. 14. In this backdrop, we have no hesitation to accept the plea of the assessee. While doing so, we do not see any merit in the plea of the Revenue that necessary facts are not placed on record. It is nowhere spelt out what additional facts were exactly required to appreciate the factual matrix. We also observe that notwithstanding that the assessee has treated such incentive as revenue receipt in past, the same cannot be deterrent for making a correct claim in the subsequent assessment year. We also do not see any merit in the adverse observation made by the CIT(A) with reference to the amendment brought out by Finance Act, 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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