TMI Blog2023 (5) TMI 690X X X X Extracts X X X X X X X X Extracts X X X X ..... talled in power plant, because said subsidy is directly linked to setting up of new power plant, as per the scheme promoted by the Government. Therefore, we are of the considered view that the Assessing Officer is completely erred in treating subsidy received from Government of India as revenue receipts taxable u/s. 2(24)(xviii) of the Act. Subsidy received by the assessee from Government of India through Tamilnadu Energy Development Agency, is capital subsidy given by the Government to enable the assessee to set up new power plant in line with program on biomass co-generation system in industry and thus, the assessee ought to have reduced amount of subsidy received from actual cost of plant and machinery installed in the plant for claiming depreciation. Therefore, we direct the AO to treat subsidy received from Government of India as capital receipts and also reduce from cost of asset acquired out of said subsidy and allow depreciation as per law. Disallowance u/s. 14A r.w.r. 8D to book profit computed u/s. 115JB - HELD THAT:- This issue is covered in favour of the assessee by the decision of ACIT vs Vireet Investments Pvt Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] where it ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al income under Section 14A of the Income Tax Act, 1961 by applying Rule 8D. 3.1 The AO / DRP ought to have appreciated that the Appellant has made the current investment in Mutual funds from out of its surplus funds available with the appellant from time to time and therefore disallowance of expenditure u/s.14A read with Rule 8D both under normal provisions and Section 115JB does not arise . 3.2 The AO / DRP ought to have appreciated that there was no fresh investment during the year and the profit for the year after tax was Rs.27.31 crores and with depreciation of Rs.6.36 crores resulted in cash profit of Rs.33.67 crores. Hence there can be no disallowance of interest in making the said investments. (HDFC Bank Ltd 383 ITR 529 Bom). 3.3 The AO /DRP ought to have appreciated that no expenditure was incurred by the Appellant Company for earning the exempt income, as they are deposited to the bank account. (Canara Bank v CIT 265 CTR 385 Kar 3.4 Without prejudice, the disallowance under this section should be restricted to 0.5% of the investment from which dividend has been earned and not on the entire investment as per Rule 8D(2)(iii). 3.5 The DRP / AO erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration systems, promote decentralized/distributed power generation through supply of surplus power to the grid and to create awareness of the potential and benefits of alternative modes of energy generation in industry. The assessee has received a sum of Rs. 84 lakhs subsidy from Tamilnadu Energy Development Agency towards setting up of 4.2 megavolt captive power plant. As per details filed by the assessee, such subsidy has been given @ 20 lakhs per megavolt. The assessee has treated subsidy received from Government of India as capital receipt which is not taxable under the Income Tax Act. The Assessing Officer, has assessed capital subsidy received from Government of India as income assessable u/s. 2(24)(xviii) of the Act, on the ground that subsidy received by the assessee is in the nature of revenue receipts, because it has been given for promotion of co-generation plants. 5. The ld. Counsel for the assessee, referring to the documents which facilitates receipts of subsidy from Government of India submitted that subsidy received by the assessee is neither directly used for acquisition of any asset and thus, the same has not been reduced from the cost of asset as required unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the subsidy is provided to enable the tax payers to set up a new unit or to expand the existing unit, then the subsidy would qualify as capital receipt and such subsidy needs to be reduced from the actual cost of such asset in terms of provisions of section 43 and Explanation (10). In this case, if you go through the objectives of subsidy scheme promoted by the Ministry of New and Renewable Energy, Government of India, the scheme is promoted to encourage the deployment of biomass co-generation system in industries for meeting their captive thermal and electrical energy requirement with supply of surplus power to the grid. Further, as per objectives of the scheme, the subsidy can be utilized for the purpose of deployment of biomass co-generation system in industry, promote decentralized/distributed power generation, conserve the use of fossil fuels for captive requirements and to create awareness about the potential and benefits of alternative modes of energy generation in industry. As per the scheme, subsidy can be utilized either for setting up of new biomass cogeneration system or to promote the existing system and its benefits. In the present case, the assessee has set up 4.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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