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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
आदेश / ORDER
PER SUSHMA CHOWLA, JM:
The appeal filed by assessee is against order of CIT(A)-1, Pune, dated 04.03.2016 relating to assessment year 2011-12 against order passed under section 143(3) of the Income-tax Act, 1961 (in short ‘the Act’).
The assessee has raised the following grounds of appeal:-
In the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) 1, Pune, erred in –
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1) In respect of Industrial Promotion subsidy by way of refund of Sales Tax paid of Rs.305,872,755/- a. in treating subsidy received under the Mega Project under Package scheme of Incentives, 2007 as chargeable to tax as against the assessee claim of capital receipt. The learned CIT appeal failed to appreciate the nature of the scheme and subsidy received in its proper prospective. b. in holding that the said subsidy is in the nature of production incentives and not an Industrial Promotion Subsidy. The Learned CIT(A) further erred in holding that the said subsidy was not for setting up of unit but for incentivizing the assessee in running the unit. The learned CIT(A) failed to appreciate the real nature and true import of the scheme under which the subsidy was granted. c. in holding that the subsidy is revenue in nature merely because the incentives were paid after the production commenced. He failed to appreciate the settled law in this regard in its true perspective.
Despite service of notice, none appeared on behalf of the assessee nor any application was filed for adjournment.
The learned Departmental Representative for the Revenue fairly pointed out that similar issue has been decided by the Pune Bench of Tribunal in assessee’s own case relating to assessment years 2009-10 and 2010-11.
The issue which arises in the present appeal is in respect of Industrial Promotion Subsidy by way of refund of Sales Tax paid of ₹ 30.58 crores.
On perusal of record and after hearing the learned Departmental Representative for the Revenue, we find that the issue which is raised in the present appeal is in respect of claim of assessee that the subsidy received by it by way of refund of sales tax paid is capital in nature. The assessee had reduced the said amount from total income, but however the Assessing Officer held the said amount to be taxable in the hands of assessee treating the said
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receipts as revenue receipts. The CIT(A) upheld the order of Assessing Officer.
We find that similar issue arose before the Tribunal in assessee’s own case in ITA No.601/PN/2013, relating to assessment year 2009-10 and ITA No.215/PN/2014, relating to assessment year 2010-11, wherein vide consolidated order dated 24.03.2017, the Tribunal has elaborately considered the scheme under which the assessee was given the said subsidy and has observed that the said incentive received by the assessee under PSI, 2007 Scheme in the form of refund of sales tax was capital receipt and not liable to tax. The said ratio laid down by the Tribunal is squarely applicable to the facts and issues raised in the present case also, since the subsidy by way of refund of sales tax has been received by the assessee under the said scheme itself. We are referring to the order of Tribunal in this regard but the same is not being reproduced for the sake of brevity. Following the same parity of reasoning, we hold that the subsidy received by assessee under the PSI, 2007 Scheme by way of refund of sales tax is not taxable being capital receipt, in the hands of assessee. The grounds of appeal raised by assessee are thus, allowed.
In the result, appeal of assessee is allowed.
Order pronounced on this 12th day of December, 2018.
Sd/- Sd/- (D.KARUNAKARA RAO) (SUSHMA CHOWLA) ऱेखा सदस्य / ACCOUNTANT MEMBER न्याययक सदस्य / JUDICIAL MEMBER ऩुणे / Pune; ददनाांक Dated : 12th December, 2018. GCVSR
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आदेश की प्रयिलऱपप अग्रेपषि/Copy of the Order is forwarded to : 1. अऩीऱाथी / The Appellant; 2. प्रत्यथी / The Respondent; 3. आयकर आयुक्त(अऩीऱ) / The CIT(A)-1, Pune; 4. The CIT-1, Pune; ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, ऩुणे “ए” / DR 5. ‘A’, ITAT, Pune; 6. गार्ड पाईऱ / Guard file. आदेशािुसार/ BY ORDER, सत्यावऩत प्रतत //True Copy// वररष्ठ तनजी सधिव / Sr. Private Secretary आयकर अऩीऱीय अधधकरण ,ऩुणे / ITAT, Pune