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2022 (10) TMI 1246 - AT - Income TaxAssessment u/s 153A - incriminating materials as found during search proceedings or not? - HELD THAT - The Hon ble Delhi High Court in the case of Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT has categorically held that a non-abated assessment can only be reopened u/s. 153A of the Act if during the course of the search proceedings some incriminating materials have been found. Since this is not the situation in the impugned assessment year A.Y.2007-08, therefore, the assessment framed u/s. 153A of the Act becomes bad in law and deserve to be quashed. Nature of receipt - incentive / subsidy - revenue or capital receipt - Deduction as per the West Bengal Incentives Scheme 2000 by which sales tax subsidy and power incentive has been provided in the scheme mainly for sustaining the units in backward year - CIT(A) concluded by holding just because the scheme of West Bengal Government talks about generation of employment or development of the area does not make any incentive / subsidy as capital receipts in the hands of the assessee - HELD THAT - West Bengal Incentive Scheme 1999 was discontinued pursuant to the national policy. However, the state of West Bengal decided to introduce the West Bengal Incentive Scheme 2000 which also covered the district of Howrah and, therefore, the units of the assessee are eligible for the incentive scheme. It is provided that the industrial unit to get State capital investment subsidy on the investment made in the fixed capital depending on location with direct employment generation of 200 or more. The minimum investment qualified for special package of benefits as mega projects is Rs. 25 crores and it is provided that the waiver of electricity duty on electric consumption for production/ operation for 5 years. The 2000 scheme was generally be applicable to all large, medium, cottage and small scale projects to which / medium sector tourism units to be set up and also to expansion projects of existing units on or after 1.01.2000. Eligibility criteria is concerned the unit at Jangalpur Distt. Howrah is eligible and there is no quarrel in respect of its eligibility. The only reason for denying the scheme of the assessee given by the CIT(A) is that the purpose of the subsidy is to be decided by utilization of subsidy. This is not what the Hon ble Supreme Court has decided in the case of VSSV Meenakshi Achi 1965 (12) TMI 34 - SUPREME COURT has held that the character of the of the subsidy in the hands of the recipient is to be determined having regard to the purpose for which the subsidy has been given. As in the case of Ponni Sugar and Chemicals Limited 2008 (9) TMI 14 - SUPREME COURT had the occasion to consider the taxability of incentive bestowed on new / expanded sugar factories and the Hon ble Supreme Court following Sahaney Steel and Press Works Ltd. 1997 (9) TMI 3 - SUPREME COURT held that the subsidy received by the assessee was in the nature of capital receipt since the object behind the same was to assist entrepreneurs in setting up of new unit/ expansion of existing business. We are of the considered view that the purpose for which the incentive have been given can be gauged from the objects and reasons behind introduction of the policy and as per the policy discussed elsewhere, it can be safely concluded that the intention of the State Government of West Bengal behind providing incentives were to promote industrialization, development of State, Generation of Employment, being objects in larger public interest. Thus we direct the AO to allow the claim of the assessee for A.Y. 2009-10 and 2012-13. Appeals of the assessee are allowed.
Issues Involved:
Three separate appeals by the assessee against a consolidated order of CIT(A)-30, New Delhi dated 11.05.2015 pertaining to A.Y. 2007-08, 2009-10, and 2010-11. A.Y. 2007-08: The assessee claimed deductions of sales tax incentive and power incentive, which were rejected by the AO. The issue was whether the assessment u/s 153A was valid since no incriminating materials were found during the search. The Hon'ble Delhi High Court's decision in Kabul Chawla was cited. The Tribunal held that the assessment was bad in law and quashed it, not delving into the denied claim. A.Y. 2009-10 and A.Y. 2012-13: The assessee claimed deductions for sales tax and power incentives under the West Bengal Incentive Scheme. The CIT(A) rejected the claims, citing the Goetze India case. The Tribunal disagreed, emphasizing the purpose of the subsidies and the decisions of the Hon'ble Supreme Court. The Tribunal directed the AO to allow the claims for both assessment years based on the purpose of the incentives and relevant judicial precedents. Separate Judgement: The Tribunal, comprising Accountant Member Sh. N.K. Billaiya and Judicial Member Sh. Kul Bharat, allowed all three appeals of the assessee on 19.10.2022.
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