DCIT CIRCLE 12(1), NEW DELHI vs. M/S. INDO RAMA SYNTHETICS (INDIA) LTD., GURGAON

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ITA 5233/DEL/2017Status: DisposedITAT Delhi26 November 2020AY 2013-145 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision, following its own previous orders on identical facts. The Tribunal found that the sales tax subsidy was a capital receipt and not taxable.

What were the facts?

The revenue appealed against the CIT(A)'s order holding a sales tax subsidy of Rs. 61.20 crores as a capital receipt. The Assessing Officer had treated this subsidy as a revenue receipt and taxable income.

What were the issues?

Whether a sales tax subsidy received by the assessee is a capital receipt or a revenue receipt for taxability purposes.

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, DELHI BENCH “C”: NEW DELHI

Before: SHRI N.K. BILLAIYA

For Appellant: Shri Rohit Jain, Advocate
For Respondent: Ms. Sunita Singh, CIT(DR), Shri Rohit Jain, Advocate
Hearing: 24.11.2020

This appeal by the revenue is preferred against the order of the CIT(A)-4, New Delhi dated 20.6.2017 pertaining to assessment year 2013-14.

2.

The solitary grievance of the revenue is that the CIT(A) erred in holding that the sales tax subsidy amounting to Rs. 61,20,12,557/- is a capital receipt.

3.

During the course of the scrutiny assessment proceedings, the AO noticed that the assessee has claimed sales tax subsidy amounting to Rs. 61.20 crores as capital receipt is not liable to tax.

4.

The AO was of the firm belief that the sales tax subsidy of Rs. 61.20 crores received by the assessee is revenue’s receipt and hence taxable. The AO accordingly treated the same as income of the assessee.

5.

The assessee carried the matter before the CIT(A) and referred to the decision of the Tribunal in asstt. Year 1997-98, 2003-04 and 2004-05 and pointed out that such subsidy has been treated as capital receipt by the Tribunal in earlier assessment years. Following the order of the Tribunal, the CIT(A) deleted the addition.

6.

Before us, Ld. DR could not point out any factual/legal infirmity in the findings of the CIT(A). The AR relied upon the order of the Tribunal in earlier years.

7.

We have carefully considered the orders of the authority below. We find force in the claim that the impugned issue is covered in favour of the assessee and against the revenue by the earlier order of the Tribunal in 967/Del/2010 and 5323/Del/2011 wherein the Tribunal held as under :-

“We have heard the rival contentions in light of the material produced and precedents relied upon. We find that Ld. CIT(A) has given a finding that issue in dispute was covered by the Special Bench decision of the Tribunal in the case of Reliance Industries Ltd. (Supra). Though the scheme applicable in the case of Reliance Industries Ltd. was 1979 scheme, however, in the 1993 scheme terms and conditions were of the same nature and intent. For this purpose, a comparative chart was referred by the Ld. CIT(A). As per the comparative chart the terms and conditions applicable in 1979 scheme were of the same nature and intent of the 1993 scheme. We further note that Mumbai Tribunal in the case of Everest Industries Ltd. in IT A No. 814/Mum/2007 has held that salient features of the 1993 scheme are identical to that of 1979 scheme. We further note that the Tribunal in & 679/Del/2012 in the case of M/s Indo Rama Textiles Ltd. on identical facts has held that the decision of the Mumbai Tribunal, Special Bench in the case of Reliance Industries 88 ITD 273 is applicable. Accordingly, in the background of the aforesaid discussion and precedents, we hold that the Ld. CIT(A) has passed a reasonable order which does not need any- interference on our part. Accordingly, we uphold the same."

8.

Respectfully following the same we decline to interfere. Appeal by the revenue is accordingly dismissed.

9.

In the result the appeal filed by the revenue is dismissed.

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