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Income Tax Appellate Tribunal, “B” BENCH KOLKATA
ORDER Per Shri S. S. Viswanethra Ravi, J.M.: These two appeals by the Assessee filed against the separate order dt:18-03- 2013 passed by the CIT-A, Central-I, Kolkata in Appeal nos.319, 265/CC- VII/CIT(A)C-1/10-11 filed against the separate assessment order framed by the AO u/sec 143(3) of the Act for assessment years 2008-09 and 2009-10.
2. The appellant assesse raised the following common grounds: 1. That the CIT-A-C-I , Kolkata erred in holding the power subsidy amounting to Rs.3,97,38,444/- [A.Y 2008-09] & Rs.3,17,13,892/- [A.Y 2009-10], received as grant for the promotion of industrial unit to be revenue receipt as against the claim of assessee that the same is a capital receipt. The Ld. CIT(A) ignored the facts that the object of the subsidy was to enable the assessee was set up a new project at backward the areas of the state of West Bengal and the subsidy so received was also utilised for the repayment of the term loans. The power subsidy may
kindly be directed to be treated as a capital receipt in the hands of assesse.
2. That the assesse claves the leave to add, alter, amend or withdraw any ground or grounds of appeal before or at the time of hearing.
The brief facts of the case are that the assessee received subsidy on account of electricity charges amounting to Rs.3,97,38,444/- and Rs.3,17,13,892/- for assessment year’s 08-09 and 09-10 respectively from the Government of West Bengal for setting up industry in the State especially in the backward areas. The said subsidy was availed of under the West Bengal incentive to power intensive industries scheme 2005 vide notification no- 276 – C1/O/incentive/052/05/1 dated 19-05-2005 of the Department of Commerce and Industries, Government of West Bengal. The assessee was eligible for the said subsidy for setting up new project at Angadpur and Durgapur for manufacturing hot Rolled steel bards, steel ingots/billets and sponge Iron. Based on the above, WBIDC i.e the implementing agency has issued the eligibility certificate dated 2nd March 2006 certifying that subsidy from 27th September 2003 to 26th September 2009. On the basis of said certificate the assessee availed power subsidy amounting to Rs.3,97,38,444/- and Rs.3,17,13,892/- for assessment year’s 08-09 and 09-10 respectively for setting up new unit in the backward area. According to the scheme under which the assessee has received the power subsidy is available to those industries which set up new units in backward areas. The objective of the scheme was to boost resurgence in the industrial scenario in the State and to attract entrepreneurs for setting up industries in the state especially in the backward areas.
Keeping in view the object of the scheme it was considered that the power subsidy is not providing power at a concessional rate but as a boost to set up new industry and as such it was considered as capital receipt. In support of the said stand various case law were also referred. The assessing officer, however did not agree with the claim of the assessee and according to him the power subsidy was only the concession given against the expenditure on account of power consumption by the industry to make it more profitable.
On appeal by the assessee, the Commissioner appeals held that the subsidy in question was revenue receipt and confirmed the order of assessing officer. Aggrieved by the order of Commissioner appeals the assessee preferred present appeals before the Tribunal. The grounds of appeal
of the assessee are common in both the appeals as mentioned above.
6. At the time of hearing, it was brought to our notice that this Tribunal in the assessee’s own case in ITA 65/Kol/10 and ITA 665/Kol/11 for assessment years 2006 – 2007 and 2007 – 2008 held that similar subsidy received by the assessee under very scheme of Government of West Bengal to be capital subsidy not chargeable to tax. Pursuant to the order of Hon’ble President as Third Member, the order of the Tribunal dated 15th July 2016 has been placed on record. The learned DR placed reliance on a decision rendered by the “B” bench of Kolkata Tribunal in the case of Limtex Tea & Industries Limited vs ACIT reported in (2016 ) 65 taxmann.com 222(Kolkata-Trib.) The Hon’ble Third Member decided the issue under reference in favour of the assesse taking into consideration the ratio laid down by the Hon’ble Supreme Court in the case of Ponni Sugars reported in 306 ITR 392, Ld.DR urged the Bench to place such order as part and parcel of the record, but, however, we are of the view that no credence could be given to the said order in view of the fact that this Bench is occasioned to dispose off the present appeals in pursuance of the order of Third Member as it has become binding on us and accordingly, the order placed by the Ld.DR is eschewed from the record. Be that as it may, the order dated 15th July 2016 of the “B” Bench of Tribunal in ITA 65/Kol/10 and ITA 665/Kol/11 is reproduced as under: When these cases came up before the Division Bench, there was a difference of opinion between the Members then constituting the Division Bench. Accordingly the following question was referred for the esteemed views of Hon’ble Third Member - “Whether in the facts and circumstances of the case the power subsidy received by the assessee is capital in nature or revenue in nature?”
Hon’ble President, ITAT, in his capacity as Third Member, has concurred with the conclusions arrived at by the learned Accountant Member. In accordance with the majority view, therefore, the appeals filed by the assessee are allowed.
3. In the result, both the appeals filed by the Assessee are allowed.
In view of the above, we allow the sole ground raised by the Assessee.
In the result the appeals filed by the Assessee are allowed. Order Pronounced in the Open Court on 3rd August, 2016.