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2013 (12) TMI 555 - HC - Income TaxWhether the incentive received is capital or revenue - Held that - Following CIT Vs. Ponni Sugars & Chemicals Ltd 2008 (9) TMI 14 - SUPREME COURT - The incentive had to be utilized for repayment of loan taken by the assessee to set up new units or for substantial expansion of the existing unit. The subsidy received by the assessee was not in the course of a trade but was of capital nature - Decided against Revenue.
Issues:
- Appeals filed by the Department under Section 260-A of the Income Tax Act, 1961 against the judgment and orders passed by the Income Tax Appellate Tribunal for various assessment years. - Whether the production of incentive bonus and incentive amount received by the assessee is of capital nature and liable to be taxed. Analysis: The High Court heard the appeals filed by the Department under Section 260-A of the Income Tax Act, 1961 against the judgment and orders dated 25.11.2004, 28.01.2005, and 02.11.2004 passed by the Income Tax Appellate Tribunal for different assessment years. The issue in all the appeals was identical, and hence, disposed of by a common order. The Department's grievance was that the production of incentive bonus and incentive amount received by the assessee should be considered of capital nature and taxable. The Court referred to a previous order in a similar case where the Tribunal upheld the deletion of the addition of incentive bonus and incentive amount. The Court cited relevant case laws to establish that the incentive received by the assessee was of capital nature and not liable to tax as a revenue receipt. Consequently, all three questions of law were decided in favor of the assessee and against the revenue, leading to the dismissal of the Income Tax Appeal. In summary, the Court dismissed all the appeals at the admission stage as no substantial question of law emerged from the impugned orders. The judgment highlighted the nature of the incentive received by the assessee, emphasizing its capital nature based on relevant case laws and Tribunal findings. The Court's decision was in line with previous rulings and established principles regarding the taxation of incentives.
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