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2018 (3) TMI 1853 - AT - Income TaxCharacterization of income - sales-tax subsidy received from state government - revenue or capital receipt - HELD THAT - This issue is squarely covered in favour of the assessee in assessee s own case for AY 2003-04 to 2009-10, wherein the ITAT by following its own order in assessee s own group case, M/s Narendra Vegetable Products Pvt Ltd 2015 (7) TMI 1298 - ITAT NAGPUR has allowed the appeal of the assessee. We are of the considered view that sales-tax incentive received from state government being a capital receipt is not exigible to tax. The CIT(A), after considering relevant facts has rightly deleted addition made by the AO. We do not find any error in the order of the CIT(A) - Decided against revenue
Issues:
- Appeal against CIT(A) order pertaining to AY 2011-12 regarding sales-tax incentive received from state government. Analysis: 1. Issue of Disallowance of Sales-tax Incentive: - The appeal filed by the revenue was against the CIT(A)'s order for AY 2011-12, where the assessee company's income was determined by disallowing sales-tax incentive received from the state government. - The CIT(A) deleted the addition based on the decision of ITAT, Nagpur bench in the assessee's own case for AY 2003-04 to 2009-10, stating that sales-tax incentive availed is a capital receipt and not taxable. - The revenue contended that the sales-tax subsidy was revenue in nature and taxable as profits, citing a decision of the Hon’ble Delhi High Court. - The ITAT, considering the previous decisions, upheld that the sales-tax incentive is capital in nature and not subject to tax, consistent with the view taken by the co-ordinate bench. 2. Judgment and Conclusion: - The ITAT upheld the CIT(A)'s decision, stating that sales-tax incentive received from the state government is a capital receipt and not taxable. - The ITAT relied on the precedent set in the assessee's own case for earlier years and dismissed the revenue's appeal. - The ITAT found no error in the CIT(A)'s order and concluded that the sales-tax incentive is not exigible to tax, in line with the view taken by the co-ordinate bench. - The appeal of the revenue was dismissed, and the order was pronounced on 21st March 2018.
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