ASSISTANT COMMISSIONER OF INCOME-TAX vs. M S S INDIA PVT. LTD., NASHIK

आदेश / ORDER आदेश आदेश आदेश

PER VIKAS AWASTHY, JM :

This appeal by the Revenue is directed against the order of CIT(A)-1, Nashik dated 29-06-2016 for the assessment year 2011-12.

“1. Whether on the facts and in the circumstances of the case, the ld. CIT(A)-1, Nashik was justified in treating the incentive received by the assessee from Govt. of Maharashtra in the form of Octroi Refund of Rs.1,68,52,440/- as capital subsidy. 2. Whether on the fact and circumstances of the case, the ld. CIT(A) was right in treating Octroi refund as capital subsidy without appreciating the fact that it was given for as an assistance for carrying on the business of the assessee and not for acquiring a capital asset. 3. Whether on the facts and circumstances of the case, the ld. CIT(A)-1, Nashik erred in ignoring the facts that the assessee company had not filed any revised return of income to make such claim that Octroi refund received from Govt. of Maharashtra is capital receipt and had made the said claim only during assessment proceedings?

at the outset that the assessee is engaged in manufacturing of electrical

equipments and electrical components including cable lugs, connectors,

etc. The assessee filed its return of income for the impugned

assessment year on 29-11-2011 declaring total income of

Rs.13,32,82,942/-. During scrutiny assessment proceedings, the

assessee filed a request letter dated 02-02-2015 stating that the

incentive received by the assessee from Maharashtra State Government

in the form of refund of Octroi Rs.1,68,52,440/- be treated as capital

incentive. The ld. Authorized Representative pointed that in the return

of income, the assessee had not claimed Octroi refund incentive as

capital receipt. The Assessing Officer in assessment proceedings

rejected the claim of assessee in the light of decision of Hon’ble

Supreme Court of India in the case of Goetz (India) Ltd. Vs. CIT 284 ITR

323.

27-02-2015. The CIT(A) following the decisions of Hon’ble Bombay High

Court in the case of CIT Vs. Kirloskar Oil Engines Vs. CIT 364 ITR 88 and CIT Vs. Chaphalkar Brothers 351 ITR 309 held Octroi refund as

capital in nature.

received Octroi refund incentive under Maharashtra Government

Package Scheme of Incentives, 2007. The scheme is similar to Package

Scheme of Incentives, 1993. The Coordinate Bench of the Tribunal in

the case of ACIT Vs. M/s. Universal Construction Machinery and

Equipments Ltd. in ITA No.2312/PUN/2016 for A.Y. 2012-13 decided

on 03-08-2018 following the decision rendered in the case of CIT Vs.

Reliance Industries Ltd. 339 ITR 632 held that subsidy received by the

assessee therein is capital in nature. The case of the assessee is

squarely covered by aforesaid decision of the Tribunal.

Department vehemently defended the assessment order. The ld. DR

submitted that the assessee claimed subsidy received under Package

Scheme of Incentives, 2007 as capital in nature at the time of

assessment proceedings. The assessee never made this claim either in

the return or income or by filing revised return of income. The

Assessing Officer has no power to entertain fresh claim of the assessee

at the time of scrutiny assessment.

solitary issue raised by the Revenue in appeal is against CIT(A) allowing

incentive received by the assessee from Govt. of Maharashtra in the

form of Octroi refund as capital subsidy. It is an admitted fact that the assessee has received incentive in the form of Octroi refund under

Govt. of Maharashtra Package Scheme of Incentives, 2007. We find

that the Coordinate Bench of the Tribunal in the case of ACIT Vs.

M/s.Universal Construction Machinery and Equipments Ltd. (supra) in

an identical set of facts has held subsidy received by the assessee under

Package Scheme of Incentives, 2007 as capital in nature. Relevant

extract of the order of Tribunal reads as under:

“5. We have heard the submissions made by Id. DR and have perused the material available on record. Before the Assessing Officer the assessee has submitted that during the period relevant to the assessment year 2012-13 has received subsidy of Rs.13,37,61,000/- up to 31-03-2012 and the balance amount of Rs.2,36,05,000 / - is stated to be receivable as on 31-03-2012. The subsidy was sanctioned to the assessee under the Package Scheme of Incentives, 2007 of the State Government, against investment of Rs.26.77 crores made by the assessee in land, factory building, plant and machinery, electrical installation etc. The Commissioner of Income Tax (Appeals) granted relief to the assessee by following the order of Tribunal in the case of M/ s. John Deere Equipments Pvt. Ltd. Vs. Dy. Commissioner of Income Tax (supra). We find that the Co-ordinate Bench of the Tribunal in the aforesaid case has placed reliance on the decision in the case of Commissioner of Income Tax Vs. Reliance Industries Ltd. reported as 339 ITR 632, wherein subsidy sanctioned to the assessee under similar Package Scheme of Incentives, 1993 was held to be capital in nature. The Id. DR has failed to controvert the findings of Commissioner of Income Tax (Appeals). In the absence of any contrary material on record, we uphold the findings of First Appellate Authority in deleting the addition in respect of subsidy received by the assessee holding it to be capital in nature. Accordingly, the appeal of the Revenue is dismissed being devoid of any merit.”

in the said case. We do not find any infirmity in the impugned order.

Accordingly, the same is confirmed and the appeal of Revenue is

dismissed.

Order pronounced on Wednesday, the 02nd day of January, 2019.

Sd/- Sd/- (R.S.SYAL) (VIKAS AWASTHY) उपा�य�/ VICE PRESIDENT �याियक उपा�य� �याियक सद�य सद�य /JUDICIAL MEMBER उपा�य� उपा�य� �याियक �याियक सद�य सद�य

पुणे Pune; �दनांक Dated : 02nd January, 2019 सतीश

आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to : अ�ेिषत

अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. आयकर आयु�(अपील) / 3. The CIT (Appeals)-1, Nashik आयकर आयु� / The Pr. CIT-1, Nashik 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “बी बी” / 5. बी बी DR ‘B’, ITAT, Pune; गाड� फाईल / Guard file. 6.

आदेशानुसार आदेशानुसार/ BY ORDER,स आदेशानुसार आदेशानुसार

// True Copy //

Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune.

Date 1. Draft dictated on 01-01-2019 Sr.PS 2. Draft placed before author 01-01-2019 Sr.PS 3. Draft proposed & placed before the AM second member 4. Draft discussed/approved by Second AM Member. 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order.