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Issues involved: Appeal by Revenue against deletion of addition on account of remission of sales tax under West Bengal Incentive Scheme for Industrialization.
Summary: The appeal was filed by the Revenue against the order of the Income Appellate Tribunal, Kolkata, which had dismissed the appeal against the deletion of an addition made on account of remission of sales tax under the West Bengal Incentive Scheme for Industrialization. The main issue in this appeal was whether the assistance received by the assessee was in the nature of a capital receipt and thus excluded from taxation under the Income Tax Act. The Division Bench referred to a previous judgment in the case of Commissioner of Income Tax, West Bengal-II, Kolkata vs. Rasoi Limited, where it was held that the object of the subsidy in the scheme was for the expansion of capabilities, modernization, and improving marketing capabilities, which are assistance on capital account. The Bench relied on the Supreme Court decision in Senairam Doongarmall vs. Commissioner of Income Tax, Assam, to emphasize that the quality of the payment determines its character as capital or revenue. In this case, the payment was deemed to be capital in nature. Based on the precedent set in the Rasoi Limited case, the Bench concluded that the Tribunal was justified in dismissing the Revenue's appeal. As a result, the appeal was found to not involve any substantial question of law and was summarily dismissed. The parties were directed to be provided with a certified copy of the order upon application and compliance with formalities.
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