9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (7) TMI 1298 - AT - Income TaxAssessment u/s 153A - disallowance of sales tax incentive - capital receipt or revenue receipt - Held that - Assessee was justified in its claim that the sales-tax incentives received in terms of the Government scheme constituted the capital receipt and therefore, not to be taken into account in computation of total income. Since a view has been taken in respect of this very scheme by the respected Special Bench then we have no reason to take any other view but to follow the view already expressed in this precedent. In respect of subsidy in the shape of entertainment duty in the case of Chaphalkar Brothers 2013 (6) TMI 73 - BOMBAY HIGH COURT has opined that the object of the subsidy was to promote construction of multiplex theatre complexes. Such receipt of subsidy was held on capital account . If object of subsidy scheme was to enable the assessee to run business more profitability, then receipt was to be considered as on revenue account . But if object of assistance under subsidy scheme was to enable the assessee to set up new unit, then receipt of subsidy is to be considered on capital account . In the said case it was found by the Hon ble Bombay High Court that under the incentive package offered by the State Government was for the purpose of setting up a new industry in the State. The assessee had applied for such special capital incentive from SICOM. We are of the view that considering the scheme of the State Government, the assessee is entitled for the exemption of the sales-tax incentive being a capital receipt in the hands of the assessee and that the claim being lawful in nature ought to have been entertained by the Assessing Officer while completing the assessment under section 153A of I.T. Act. - Decided in favour of the assessee.
Issues Involved:
1. Classification of Sales Tax Incentive as Capital Receipt. 2. Eligibility of Fresh Claims under Section 153A Proceedings. 3. Interest Liability under Section 234C of the I.T. Act, 1961. Detailed Analysis: 1. Classification of Sales Tax Incentive as Capital Receipt: The primary issue was whether the Sales Tax incentive availed by the assessee for setting up an industrial undertaking should be classified as a capital receipt or a revenue receipt. The assessee claimed it as a capital receipt, citing various precedents including Reliance Industries Ltd. and Haldiram Foods International. The Assessing Officer (A.O.) and the CIT(A) rejected this claim, stating that fresh claims for deductions cannot be allowed under Section 153A proceedings, referencing the Supreme Court decision in CIT v/s. Sun Engineering Works Pvt. Ltd. [1992] 198 ITR 297 (SC). The Tribunal, however, found that the Sales Tax incentive under the Government of Maharashtra's scheme was intended to promote industrial development in backward areas, thus qualifying as a capital receipt. This conclusion was supported by the Special Bench decision in Reliance Industries Ltd. 88 ITD 273 (Mum) (SB), which established that such incentives are not for assisting in business operations but for setting up the industry, making them capital receipts. 2. Eligibility of Fresh Claims under Section 153A Proceedings: The Tribunal examined whether fresh claims could be made under Section 153A proceedings. The CIT(A) and A.O. had rejected the claim based on the principle that Section 153A assessments are "revenue beneficial" and do not permit fresh claims. However, the Tribunal referred to the ITAT Mumbai decision in DCIT v/s. Eversmile Construction Co. P. Ltd., which clarified that Section 153A allows for the reassessment of total income and does not restrict the assessee from making new claims. The Tribunal emphasized that the purpose of Section 153A is to assess the correct total income, including any legitimate claims that were previously omitted. 3. Interest Liability under Section 234C of the I.T. Act, 1961: The assessee contested the liability to be assessed to interest under Section 234C, arguing that the levy was unjustified and excessive. The Tribunal did not provide a detailed adjudication on this issue, deeming it consequential and unnecessary to address in the context of the primary issues. Conclusion: The Tribunal allowed the appeals, concluding that the Sales Tax incentive should be treated as a capital receipt and that fresh claims are permissible under Section 153A proceedings. The decision emphasized the importance of assessing the correct total income and acknowledged the legitimacy of the assessee's claims based on the Maharashtra Government's incentive scheme and relevant judicial precedents. The Tribunal reversed the lower authorities' decisions and ruled in favor of the assessee on all substantial grounds.
|
