TMI Blog2009 (11) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... of opinion - in each case, one has to examine the nature of the subsidy - The judgement of this Court in Sahney Steel and Press Works Limited & Ors. (supra) was on its own facts; so also, the judgement (2008 TMI - 5620 - SUPREME Court) Therefore, the Department has erred in invoking Section 154 of the Act. – rectification order set aside. - 7662-7663 OF 2009 - - - Dated:- 19-11-2009 - S.H. KAPADIA, H.L. DATTU and DEEPAK VERMA JJ. CIVIL APPEAL NOS.7662-7663 OF 2009 (Arising out of S.L.P. (C) Nos.9979-9980 of 2008) JUDGMENT KAPADIA, J. - Heard learned counsel on both sides. Leave granted. The short question which arises in the facts and circumstances of these appeals is: whether it was open to the Commissioner of Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dmissible to Sahney Steel and Press Works Limited was a revenue receipt and, hence, it was liable to be taxed under Section 28 of the Act. This decision was based on a detailed examination of the Subsidy Scheme formulated by the Government of Andhra Pradesh. It stated that incentives would not be available unless and until production had commenced. In that matter, this Court found that incentives were given by refund of sales tax and by subsidy on power consumed for production. In short, on the facts and circumstances of that case, this Court came to the conclusion that incentives were production incentives in the sense that the assessee was entitled to incentives only after entering into production. It was also clarified that the Schem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay state that, in these appeals, we are concerned with Assessment Years 1993-1994 and 1994-1995. The short point involved in these appeals is, whether there existed a 'rectifiable mistake' enabling the Department to invoke Section 154 of the Act? If one examines the Scheme of the Income Tax Act, as it stood at the material time, one finds a clear dichotomy between Section 154 and Section 147 of the Act. Section 154 deals with rectification of mistake. Section 154(1), inter alia, states that, with a view to rectify any mistake apparent from the record, an Income Tax Authority may amend any order passed by it under the provisions of the Act, whereas Section 147, inter alia, states that if the Assessing Officer has reason to believe that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Commissioner of Income Tax vs. Ponni Sugars and Chemicals Limited, reported in [2008] 306 I.T.R.392, the subsidy given by the Government was for re-paying loans. Therefore, in each case, one as to examine the nature of subsidy. This exercise cannot be undertaken under Section 154 of the Act. There is one more reason why Section 154 in the present case was not invokable by the Department. Originally, the Commissioner of Income Tax, while passing orders under Section 264 of the Act on 30th April, 1997, had taken the view that the subsidy in question was a capital receipt not taxable under the Act. After the judgement of this Court in Sahney Steel and Press Works Limited (supra), the Commissioner of Income Tax has taken the view tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Ors. , reported in [1988] 174 I.T.R.579, the facts were as follows: the assessee claimed interest on advance tax paid by it in excess but beyond the due dates. The Income Tax Officer disallowed the claim of the assessee. The Commissioner of Income Tax upheld the claim of the assessee. Following the decision of a learned Single Judge of the Kerala High Court in A. Sethumadhavan vs. Commissioner of Income Tax [1980] 122 I.T.R.587, the Tribunal held that belated payments were not to be taken into account as advance tax for the purpose of Section 214 of the Income Tax Act, and, therefore, interest was not admissible for such belated payments. However, subsequently, a Division Bench of the same High Court in Santha S. Shenoy vs. Uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cals Limited (supra) dealt with subsidy linked to loan re-payment whereas the present case deals with a subsidy for setting up an industry in the backward area. Therefore, in each case, one has to examine the nature of the subsidy. The judgement of this Court in Sahney Steel and Press Works Limited Ors. (supra) was on its own facts; so also, the judgement of this Court in Ponni Sugars and Chemicals Limited (supra). The nature of the subsidies in each of the three cases is separate and distinct. There is no straight-jacket principle of distinguishing a capital receipt from a revenue receipt. It depends upon the circumstances of each case. As stated above, in Sahney Steel and Press Works Limited Ors. (supra), this Court has observed th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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