TMI Blog2024 (3) TMI 542X X X X Extracts X X X X X X X X Extracts X X X X ..... the evaluation of various business opportunities - HELD THAT:- We, at the outset, find that while examining the allowability of expenditure incurred by the assessee for obtaining feasibility report in respect of home improvement and home decor business, the coordinate bench of the Tribunal in assessee s own case in the assessment year 2012-13 cited supra, vide order dated 01/03/2024, held that home improvement and home decor business is completely a new line of business, which is different from the existing business of manufacturing paints and enamels and therefore the expenditure incurred for obtaining feasibility study report is capital in nature. Thus we find no merits in the submission of the assessee in respect of expenditure incurred for obtaining a feasibility report in respect of home improvement/decor and kitchen space business and accordingly, the aforesaid expenditure is held to be capital in nature. Expenditure incurred by the assessee on exploring business opportunities in furniture and furnishings - From the perusal of the description of the furniture and furnishings, in respect of which the assessee explored business opportunity with the help of the consultant, we ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn case in Asian Paints Ltd [ 2014 (1) TMI 16 - ITAT MUMBAI] for the assessment year 2007-08, restored the issue to the file of the AO with a direction to decide the same afresh after verifying whether the expenditure in question has been incurred by the assessee on research and development, which is eligible for deduction under section 35(2AB). Allowance of balance additional depreciation - assets are put to use for less than 180 days in the previous year - AO held that there is no such provision in the Act to claim a balance 10% additional depreciation in the year under consideration for additions made in the earlier year - HELD THAT:- We find that the coordinate bench of the Tribunal in assessee s own case [ 2022 (7) TMI 1508 - ITAT MUMBAI] for the assessment year 2011-12, decided the similar issue in favour of the assessee as held assessee had purchased and installed new plant and machinery in the preceding assessment year, which is eligible for additional depreciation @20%. However, since the new assets were put to use for less than 180 days in the preceding assessment year, the claim of additional depreciation allowable at 20% was restricted to half of it, i.e. 50%. Thus, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expenditure claimed by the assessee has to be allowed. Addition on account of waiver of Royalty received from two subsidiaries - Royalty is calculated @3% of associated enterprises sales as per the agreement duly signed and executed - HELD THAT:- We find that while deciding a similar issue in favour of the assessee, the coordinate bench of the Tribunal in assessee s own case for the assessment year 2012-13 [ 2024 (3) TMI 484 - ITAT MUMBAI] held that the net sale price of the products sold can only be determined at the end of the financial year and accordingly, the amount of Royalty payable to the assessee can only be computed thereafter. Therefore, prior to the end of the financial year, no amount accrues or arises to the assessee outside India. In the present case, prior to the determination of the net sale price of the products sold, the assessee had decided to waive Royalty by 2%. No material has been brought on record to show that there is no understanding between the assessee and its overseas subsidiaries to waive the Royalty. Such being the facts, we are of the considered view when only 1% Royalty is payable by the overseas subsidiaries, therefore the AO has no authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsion of the existing unit then the subsidy is treated as capital in nature. However, if the purpose of the subsidy is to enable the assessee to run the business more profitably then the receipt is revenue in nature. Analysing the incentives/subsidy received by the assessee under the Industrial Policy, 2005 of the Government of Haryana, it is sufficiently evident that the incentives/subsidy was received for setting up a project at Industrial Model Township, Rohtak for the manufacturing of paints and the same was not to enable the assessee to run its business more profitably. Accordingly, we find no infirmity in the impugned order in treating the electricity grant received by the assessee as capital in nature. As a result, ground no.8 raised in Revenue s appeal is dismissed. - Shri Prashant Maharishi, Accountant Member And Shri Sandeep Singh Karhail, Judicial Member For the Assessee : Shri Madhur Agrawal For the Revenue : Shri Vachashpati Tripathi ORDER PER SANDEEP SINGH KARHAIL, J.M. The present cross-appeal has been filed challenging the impugned order dated 22/11/2017, passed under section 250 of the Income Tax Act, 1961 ( the Act ) by the learned Commissioner of Income Tax (Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y applying the provisions of Rule 8D of the Income Tax Rules, 1962 ( the Rules ) computed the disallowance of Rs. 2,31,65,014 under section 14A of the Act after considering the suo-moto disallowance of Rs. 25,56,103 made by the assessee. The learned CIT(A), vide impugned order, restricted the disallowance made under section 14A read with Rule 8D to Rs. 1,26,29,721 after granting relief to the assessee with respect to the proportionate interest amount computed on interest incurred for the normal running of the business, following the approach adopted by its predecessor in earlier years in assessee s own case. Being aggrieved, both the assessee as well as the Revenue are in appeal before us. 6. During the hearing, the learned Authorised Representative ( learned AR ) made similar arguments as were made in assessee s appeal for the assessment year 2012-13 and submitted that recording of satisfaction is a prerequisite for invoking the provisions of section 14A of the Act. However, in the present case, the AO did not record any satisfaction regarding the rejection of assessee s plea. The learned AR further submitted that in preceding years disallowance made under section 14A of the Act h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment-related activity, which has been computed as under: Disallowance u/s 14A of Income Tax Act (Estimated allocable expenses) Employee Designation Chief Financial Officer Senior Manager-Finance Finance Executive Total Proportionate salary Proportionate Interest amount Percentage 5% 25% 50% Cost to Company 1,62,88,500 30,28,400 10,30,600 Value of disallowance 8,14,425 7,57,100 5,15,300 20,86,825 3,58,715 Total Section 14A disallowance 24,45,540 9. It is the plea of the assessee that it has not engaged any specific staff for investment activity and the same is being carried out by the existing staff. Further, no incremental expenditure has been incurred on staff and other administrative activities for earning the exempt income. It is evident from the record that the AO disagreed with the correctness of the claim of expenditure made by the assessee and held that adequate interest and administrative expenses have not been disallowed for earning the exempt income. Accordingly, the AO proceeded to compute the disallowance of Rs. 1,51,24,084/- under section 14A read with Rule 8D of the Rules, after considering the suo-moto disallowance made by the assessee. 10. Before proceeding further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Assessment Year 2002-2003. Sub-sections (2) and (3) of Section 14A of the Act read with Rule 8D of the Rules merely prescribe a formula for determination of expenditure incurred in relation to income which does not form part of the total income under the Act in a situation where the Assessing Officer is not satisfied with the claim of the assessee. Whether such determination is to be made on application of the formula prescribed under Rule 8D or in the best judgment of the Assessing Officer, what the law postulates is the requirement of a satisfaction in the Assessing Officer that having regard to the accounts of the assessee, as placed before him, it is not possible to generate the requisite satisfaction with regard to the correctness of the claim of the assessee. It is only thereafter that the provisions of Section 14A(2) and (3) read with Rule 8D of the Rules or a best judgment determination, as earlier prevailing, would become applicable. (emphasis supplied) 12. Therefore, the satisfaction as required to be recorded under the provisions of section 14A of the Act is not limited to merely disagreeing with the submission of the assessee and requires that the AO should als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of expenditure made towards earning exempt income by the respondent. This exercise not having been carried out by the Assessing Officer before applying Rule 8D of the Income Tax Ru'es, the disallowance of expenditure to earn exempt income cannot be sustained. (d) This issue is no longer res integra as the Apex Court in Gorej Boyce Mfg. Co. Ltd. Vs. Dy. CIT, 394 ITR 449 decided the issue in favour of the respondent. In the above case, the Supreme Court has while considering the issue of disallowing of expenditure incurred to earn exempt income observed as under :- Whether such determination is to be made on application of the formula prescribed under rule 8D or in the best judgment of the Assessing Officer, what the law postulates is the requirement of a satisfaction in the Assessing Officer that having regard to the accounts of the assessee, as placed before him, it is not possible to generate the requisite satisfaction with regard to the correctness of the claim of the assessee. It is only thereafter that the provisions of section 14A (2) and (3) read with rule 8D of the Rules or a best judgment determination, as earlier prevailing, would become applicable. Thus, Rule 8D of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and overseas acquisition. During the assessment proceedings, the assessee was asked to show cause why the claim of the aforesaid expenditure should not be disallowed. In response thereto, the assessee submitted that the assessee has strategically looked at the home improvement and decor sector as an avenue for future growth especially since it has synergy with the existing line of decorative paints business in India. Further, the assessee submitted that modular kitchen was identified as a key opportunity in this sector with modern kitchen industry poise for greater organised sector play. The assessee further submitted that it has acquired 51% controlling stake in an Ethiopian company, which is one of the leading paint companies in Ethiopia, engaged in manufacturing and selling of decorative paints, industrial paints, automotive paints, other coatings, and adhesives in Ethiopia. Accordingly, the assessee submitted that the aforesaid expenditure is in the nature of revenue expenditure and allowable under section 37(1) of the Act. 13. The AO vide assessment order did not agree with the submissions of the assessee and held that the assessee has been in the field of paints business f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nities, it invited Avalon Consulting to submit a proposal on quick assessment of opportunities. As part of the aforesaid study, Avalon Consulting, inter-alia, submitted its report regarding the home improvement market (including home decor) in India to the assessee. The consideration of Rs. 1,74,40,000 paid by the assessee to Avalon Consulting was partly towards the feasibility report for entry into the home improvement segment. As per the assessee, the expenses on exploratory exercise are incurred out of commercial expediency in as much as they are incurred to expand the existing business by exploring new markets, products, etc. 19. In order to determine whether the home improvement and decor segment is a new line of business or an extension of the existing business conducted by the assessee, it is pertinent to note that the assessee has claimed itself to be the largest manufacturer of paints and enamels in India and a market leader in the Indian paint industry. Further, from the perusal of the annual report of the assessee as well as submissions filed before the AO, we find that home improvement and decor were considered as one such area which offers tremendous growth opportuniti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess and accordingly, the aforesaid expenditure is held to be capital in nature. 17. As regards the expenditure incurred by the assessee on exploring business opportunities in furniture and furnishings, from the perusal of the engagement letter entered into between the assessee and its consultants, forming part of the supplementary factual paper book from pages 2-30, we find that the consultant agreed to assist the assessee in developing a deep understanding of the furniture and furnishings category and develop the business strategy for roll-out. Further, the consultant agreed to assist the assessee in understanding how the capability platform proposed to be developed as part of this exercise can be leveraged for building the overall home improvement business. From the description of the furniture and furnishing, as provided in the aforesaid engagement letter, we find that the same includes beds, cupboards, sofas and seatings, tables, kids' furniture, wall shelves, furniture upholstery, and curtains. From the perusal of the description of the furniture and furnishings, in respect of which the assessee explored business opportunity with the help of the consultant, we are of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quisition due diligence of the paint manufacturing company in Ethiopia. It is pertinent to note that the expenditure was not incurred on exploring the decorative paints market in Ethiopia but the same was in relation to pre-acquisition due diligence of a company, i.e. Kadisco Chemical Industry PLC., Ethiopia, which is manufacturing and selling paints, other coatings and adhesives in Ethiopia. From the perusal of the annual report of the assessee, we find that in April 2014, the assessee s wholly owned subsidiary in Mauritius, Asian Paints (International) Ltd., signed an agreement with shareholders of Kadisco Chemical Industry PLC., Ethiopia to acquire, either directly or through its subsidiaries, 51% of its share capital. Therefore, from the documents available on record, it is evident that the impugned expenditure was incurred towards the process of acquisition of majority shareholding in Kadisco Chemical Industry PLC., Ethiopia, which is a capital transaction. In any case, the expenditure cannot be said to be in line with the existing business of the assessee of manufacturing paints and enamels or an extension of the existing line of business of the assessee, as the expenditure w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuated in Bangladesh and Srilanka, without appreciating the facts of the case. 6. The Ld. CIT (A) erred in allowing Rs. 2.73 Crores on account of various sundry balance written off during the year without appreciating the fact that such claim/deduction of expenses is not allowed under any provision of the Income-tax Act . 7. On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in deleting the addition of Rs. 65,58,58,397/- being subsidy received from Maharashtra Government under Package Scheme of incentives 2007, without appreciating the facts of the case. 8. On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in deleting the addition of Rs. 30,00,000/- being electricity grant received from Haryana Government, without appreciating the facts of the case. 09 The appellant prays that the order of the Id. CIT(A) on the above ground be set aside and that of the Assessing Officer restored. 10. The Appellant craves leave to amend or alter any ground or add a new ground which may be necessary. 25. The issue arising in ground no.1, raised in Revenue s appeal, pertains to allowability of expenditure under section 35(2AB) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... research and development, then the addition made by the AO will stand confirmed. Being aggrieved, the Revenue is in appeal before us. 29. Having considered the submissions of both sides and perused the material available on record, we find that while deciding a similar issue the coordinate bench of the Tribunal in assessee s own case in Asian Paints Ltd v/s Addl. CIT, in ITA No. 2178/Mum./2012, vide order dated 20/12/2013, for the assessment year 2007-08, restored the issue to the file of the AO with a direction to decide the same afresh after verifying whether the expenditure in question has been incurred by the assessee on research and development, which is eligible for deduction under section 35(2AB) of the Act. The relevant findings of the coordinate bench, in the aforesaid decision, are reproduced as under:- 13. We have heard the arguments of both the sides on this issue and also perused the relevant material on record. In support of the assessee's case, the Id. Counsel for the assessee has relied on the decision of the Hon'ble Gujarat High Court in the case of CIT vs Cadila Health Care Itd. 87 DTR 56. A perusal of the judgment passed by the Hon'ble Gujarat High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this position is not disputed even by the Id. DR at the time of the hearing before us. He, however, has contended that the claim of the assessee of having incurred the expenditure in question on R D which is eligible u/s 35(2AB) has not been examined either by the AO or by the ld. CIT(A). He has urged that the matter may therefore be restored to the file of AO for giving him an opportunity to verify the same. We find merit in this contention of the Id. DR and since the Id. Counsel for the assessee has also not raised any objection in this regard we restore this issue to the file of the AO with a direction to decide the same afresh after verifying whether the expenditure in question has been incurred by the assessee on research and development which is eligible for deduction u/s 35(2AB). The appeal of the assessee is accordingly treated as allowed for statistical purpose. 30. We find that similar directions were rendered by the coordinate bench of the Tribunal in assessee s own case in subsequent assessment years, i.e. 2009-10, 2010-11, 2011-12, 2012-13, and 2013-14. The learned DR could not show us any reason to deviate from the aforesaid decision and no change in facts and law was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is in appeal before us. 35. We have considered the submissions of both sides and perused the material available on record. We find that the coordinate bench of the Tribunal in assessee s own case in Addl. CIT v/s Asian Paints Ltd., in ITA No. 749/Mum./2017, for the assessment year 2011-12, vide order dated 28/07/2022, decided the similar issue in favour of the assessee by following the earlier decisions rendered in assessee s own case. The relevant findings of the coordinate bench, in the aforesaid decision, are reproduced as under:- 35. Considered the rival submissions and material placed on record, we observe that similar issue was considered and adjudicated by the Coordinate Bench in assessee's own case for the A.Y. 2010-11 and decided the issue in favour of the assessee. While holding so the Coordinate Bench held as under: - 035. Ground number 6 is in relation to allowing the additional depreciation at the rate of 10% amounting to Rs 1,51,65,251/-. The claim of the assessee is that according to the provisions of Section 32 (1) (iiia) the assessee is eligible to claim 20% additional depreciation on any Machinery or plant, acquired after 31st of March 2005. As per the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer. 40. The learned Departmental Representative supporting the decision of the Assessing Officer submitted, additional depreciation is a onetime allowance granted to the assessee for installing new v plant and machinery. Any unclaimed amount cannot be set off in the subsequent assessment year 41. The learned Counsel for the assessee strongly relying upon the decision of the first appellate authority submitted, the issue is now squarely covered by a number of judicial precedents including the decision of the Tribunal in assessee's own case. 42. We have considered rival submissions and perused materials on record. The facts on record clearly reveal that assessee had purchased and installed new plant and machinery in the preceding assessment year, which is eligible for additional depreciation @20%. However, since the new assets were put to use for less than 180 days in the preceding assessment year, the claim of additional depreciation allowable at 20% was restricted to half of it, i.e. 50%. Thus, in effect, the assessee was allowed additional depreciation of 10%. Now, it is well settled by a number of judicial precedents that if for use of new plant and machinery f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealer in the form of luxury foreign/local tours and travels. During the assessment proceedings, the assessee was asked to furnish details of advertisement and sales promotion expenses. On perusal of these details, it was observed that the assessee has incurred an expenditure of Rs. 91,36,40,661 under its Trip Scheme for its dealers. The AO vide assessment order disallowed the aforesaid expenditure on the basis that in the entire trip of the dealers, there was no conference, exhibition, or meeting abroad to justify that the expenses were for business purposes. The AO held that the expenditure was incurred for the pure leisure trip for the dealers and accordingly cannot be said to have been expended wholly and exclusively for the purpose of the business. Accordingly, the AO disallowed the entire expenditure of Rs. 91,36,40,661. Further, in the alternative, the AO held that even if these expenditures are considered in the nature of commission paid by the assessee directly to its dealers, in the absence of deduction of TDS under section 194H, these expenses are disallowable under section 40(a)(ia) of the Act. 39. The learned CIT(A), vide impugned order, allowed the ground raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. 46. The learned Counsel for the submitted, there is no question of payment of any commission to the dealers and distributors as there is no principal agent relationship between the assessee and them. He submitted, the transactions with the distributors were carried out purely on principal-to-principal basis. Therefore, there is no liability to deduct tax under section 194H of the Act. In support, the learned Counsel relied upon the following decisions:- 1. CIT, Pune vs. Intervet India Pvt. Ltd. (ITA 1616/2011-Bombay High Court 2. Pr. GT vs. Reliance Communication Infrastructure Ltd. (ITA No. 702 of 12017-Bombay High Court 3. DOT vs. BCH Electric Ltd. (ITA 1336/Kol/2012) 4. ACIT vs. Raymond Ltd. ITA 5889/M/10 5. CIT vs. Piramal Healthcare Ltd. 230 Taxman 505 (Bom) 6. CIT vs. Qatar Airways 332 ITR 253 (Bom) 7. Radhasaomi Satsang vs. CIT (193 ITR 321 (SC) 47. Without prejudice, the learned Counsel submitted, since no amount has been paid or credited to the distributors, question of deduction of tax at source does not arise. Further, he submitted, whatever amount the assessee has paid to SOTC has been subjected to TDS provisions. Therefore, there cannot be any further disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence, we uphold the order of the learned CIT A deleting the above disallowance of Rs. 252,660,686/-. Accordingly, ground number 7 of the appeal is dismissed. 41. We find that similar findings were rendered by the coordinate bench in assessee s own case for the assessment years 2011-12, 2012-13, and 2013-14. We find that this issue is recurring in nature and has been decided in favour of the assessee in the preceding assessment years. The learned DR could not show us any reason to deviate from the aforesaid decision and no change in facts and law was alleged in the relevant assessment year. Thus, respectfully following the judicial precedents in assessee s own case cited supra, ground no.4 raised in Revenue s appeal is dismissed. 42. The issue arising in ground no.5, raised in Revenue s appeal, pertains to the deletion of addition on account of waiver of Royalty received from two subsidiaries. 43. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee has various associated enterprises all over the globe situated in various countries from which income in the form of Royalty is received for providing them with Brand Name along with oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g various factors into consideration. As per the transfer pricing study report, forming part of the paper book, it is claimed that the overseas subsidiaries are charged a Royalty of 1% to 3% on net sales realised product manufactured using the technology transferred by the assessee. The assessee entered into an agreement with its indirect subsidiaries, i.e. Asian Paints (Bangladesh) Ltd and Asian Paints (Lanka) Ltd, according to which the assessee was to receive a Royalty of 3% of net sales. However, considering the financial position of the group companies, the assessee agreed to waive the charges of the Royalty until the subsidiary company achieves breakeven. As a result, during the year under consideration, the assessee has accounted for Royalty income at 1% net sales basis and received Royalty income of Rs. 24,18,244 from Asian Paints (Lanka) Ltd and Rs. 92,54,784 from Asian Paints (Bangladesh) Ltd. It is pertinent to note that the assessee declared the aforesaid international transaction pertaining to the receipt of Royalty income from its subsidiaries in Bangladesh and Sri Lanka in Form 3CEB and benchmarked the same by comparing it with the rate of Royalty charged to overseas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o basis in the impugned addition made by the AO. As a result, ground no. 7 raised by the Revenue is dismissed. 46. We find that this issue is recurring in nature and has been decided in favour of the assessee in the preceding assessment years. Thus, respectfully following the judicial precedent in assessee s own case cited supra, ground no.5 raised in Revenue s appeal is dismissed. 47. The issue arising in ground no.6, raised in Revenue s appeal, pertains to sundry balances written off. 48. The brief facts of the case pertaining to this issue, as emanating from the record, are: During the year under consideration, the assessee has written off various old balances lying in its books of accounts. During the assessment proceedings, the assessee was asked to show cause about its allowability. In response thereto, the assessee submitted that during the year it has written off certain balances amounting to Rs. 2,72,48,260 and debited the same to the Profit and Loss account. The assessee also furnished the breakup of the same in treatment given in his return of income. The AO vide assessment order noted that till the assessment year 2011-12, the assessee itself is disallowing the sundry b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The brief facts of the case pertaining to this issue, as emanating from the record, are: During the year under consideration, the assessee credited a sum of Rs. 65.59 crore in its Profit and Loss account as a subsidy received from the Government of Maharashtra but the same was not considered as taxable. During the assessment proceedings, the assessee was asked the reason for its non-taxability. In response thereto, the assessee submitted that the Government of Maharashtra had announced the Package Scheme of Incentives, 2007 to encourage the dispersal of industries to the less-developed areas of the State. It was further submitted that the assessee has put up a manufacturing facility that satisfies the criteria of Mega Project under the Package Scheme of Incentives, 2007. It was submitted that the assessee has credited a sum of Rs. 65.59 crore as a subsidy received from the Government of Maharashtra under the Package Scheme of Incentives, 2007. The AO vide assessment order did not agree with the submissions of the assessee and held that the nature of subsidy appears to be revenue in nature as it is only when the assessee had set up its industry and commenced production that various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jects, etc. The Scheme also provides for various promotional and financial incentives, such as industrial Promotion Subsidy, Interest Subsidy, Exemption from Electricity Duty, Waiver of Stamp Duty, Royalty Refund, Refund of Octroi/Entry Tax in lieu of Octroi, etc. We find that as the assessee proposed to manufacture paints and intermediates at Kesurdi MIDC Area, District Satara, falling in D zone under the Package Scheme of Incentives, 2007, wherein the assessee proposed to invest Rs. 735 crores and provide employment to 300 persons, the Government of Maharashtra vide letter dated 30/06/2009, forming part of the paper book from pages 211-212, conferred the status of Mega Project on the proposed project. We find that in this regard the assessee also entered into a Memorandum of Understanding dated 31/05/2010 with the Government of Maharashtra, forming part of the paper book from pages 213-215, under which the assessee was granted Electricity Duty Exemption, Exemption from payment of stamp duty, and Industrial Promotion Subsidy. 68. We find that the Hon ble jurisdictional High Court in CIT v/s Kirloskar Oil Engines Ltd. [2014] 364 ITR 88 (Bombay) after considering the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note the object and purpose of the same. If that is of the nature specified in the judgments of this court and equally that of the honourable Supreme Court then the Revenue must act accordingly. We hope that this much is enough so as to dissuade the Revenue from bringing such matters repeatedly to this court. Ordinarily and for wasting judicial time and which is precious, we would have imposed heavy costs on the Revenue while dismissing this appeal but we refrain from doing so by giving last opportunity to the Revenue. This appeal does not raise any substantial question of law. It is dismissed. No order as to costs. 69. Upon analysing the incentives/subsidy received by the assessee under the Package Scheme of Incentives, 2007, in light of the purpose test as envisaged by the Hon ble Supreme Court in Ponni Sugars and Chemicals Ltd. (supra) and Sahney Steel Press Works Ltd. (supra), we are of the considered view that incentives/subsidy granted was only to encourage the setting up of industries in the less developed areas of the State and the same was not for the purpose of running the business more profitably. Accordingly, respectfully following the aforesaid decisions, we find no in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal income of the assessee. 60. The learned CIT(A), vide impugned order, by following the decision of the Hon ble Supreme Court in CIT v/s Ponni Sugars and Chemicals Ltd., [2008] 306 ITR 392 (SC) allowed the ground raised by the assessee on this issue and held that the subsidy received by the assessee is capital in nature. Being aggrieved, the Revenue is in appeal before us. 61. We have considered the submissions of both sides and perused the material available on record. From the perusal of the Industrial Policy, 2005 of the Government of Haryana, forming part of the paper book from pages 224-256, we find that the key objective of the Industrial Policy was, inter-alia, to re-establish the industry as a key driver of economic growth and to facilitate spatial dispersal of economic activities particularly in economically and socially backward regions of the State. Under the aforesaid Industrial Policy, incentives and privileges were provided by way of exemption from electricity duty, preferential allotment of land for the IT industry, continuous-uninterrupted power supply for the IT industry, relaxation in floor area regulation, rebate on registration and transfer of property charge ..... X X X X Extracts X X X X X X X X Extracts X X X X
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