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TMI Blog2012 (12) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... the liability of the gratuity is unascertained liability. Therefore, the addition of the provision for gratuity while computing the book profit is uncalled for. The same is deleted - assessee’s appeal is allowed. Expense on foreign travel of Directors – held that:- Burden is upon the assessee to establish that the expenditure was incurred wholly and exclusively for the purpose of business. In respect of foreign travel, the only explanation given by the learned counsel was that the directors’ foreign traveling was for exploring the business opportunities abroad. However, this explanation was too vague and also unsubstantiated - no justification to interfere with the orders of lower authorities in this regard - assessee’s appeal is rejected - In the result, appeal of the assessee is partly allowed. - ITA No. 5227/Del/2011 - - - Dated:- 31-1-2012 - SHRI G.D.AGRAWAL AND SHRI A.D.JAIN, JJ. Appellant by : Shri Ashwani Kumar, CA. Respondent by : Shri R.I.S.Gill, CIT-DR. ORDER PER G.D.AGRAWAL, VP : This appeal of the assessee is filed against the order of learned CIT(A) dated 9th August, 2011 for the AY 2008-09. 2. Ground No.1 of the assessee s appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital receipt, it has been deducted from the assessable income for the A.Y 2006-07. 18.1 The assessee was asked by the AO, as to why not the sales tax subsidy may be treated as revenue receipt. The assessee did not reply and the AO, applying the principle of the decision of the Supreme Court in the case of Sahney Steel and Press Works Ltd. vs. CIT 228 ITR 253 (SC) came to the conclusion that the sales tax incentive received by the assessee is clearly on the revenue account and not capital receipt as claimed by it. The addition of Rs.2,46,12,660/- was made. 19. The CIT (Appeals) examined the case of the assessee and gave the following findings: 19. I have considered the submissions of the appellant, findings of the AO and the facts on record. Perusal of the Punjab General Sales Tax Act, 1948 shows that the State Government has exempted certain class of industries from payment of Sales tax which have been defending Punjab General Sales Tax Defined in the Punjab and Exemption Rules, 1991. It is stated that it will apply to Units wherein modernization, expansion or diversification in terms of Industrial policy is carried out. Industrial policy has been defined as the Indus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Bhushan Steels and Strips Ltd vide ITA No. 113/Delhi/2001 which has been relied upon by the appellant has considered the same issue in which the facts of the appellant s case are similar. The Hon ble ITAT has held the subsidy to be a capital receipt. The Hon ble ITAT Mumbai (Special Bench) in the case of DCIT vs. Reliance Industries Ltd 88 ITD 273 has held that if subsidy is given for setting up for expansion of industry in a backward area, it will be capital irrespective or modality or source of funds through or from which it is given and that if money is given for assisting assessee in carrying out business operations only after a condition upon commencement of production it would be revenue. The above findings have been given after considering the decisions in the case of Sawhney Steel and Press Works Ltd and decision of the Hon ble Supreme Court in the case of P.J.Chemicals Ltd. The decisions in the case of CIT vs. Ponni Sugars and Chemicals Ltd and CIT vs. Dusad Industries Ltd have also been considered. In the appellant s case the quantum of the incentive depended on the area in which the industry was located. Further the incentive was subject to monetary ceilings d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. The learned counsel pointed out the scheme provides for two options, one sales-tax exemption and the other deferral scheme. The assessee s unit falls under the exemption scheme, under the same incentive scheme announced by the government. 22. We have carefully considered the rival contentions and gone through the records. The learned D.R has filed the incentive scheme and the assessee has also filed the copy of the eligibility certificate dated 20.06.2003 issued by the Distt. Industries Centre, Ludhiana in support of the claim. We have gone through these details and find that the assessee s manufacturing unit which went into production on 01.03.2002, and in terms of government Notification No. Inc.II/15/43/96-S/1B/4176 dated 1.6.1996 is eligible for grant of incentive of sales-tax exemption for the period of seven years and for the maximum amount of Rs.12,45,30,000/- from 01.03.2002. Exactly the scheme is the same as was examined by the Tribunal in the case of M/s Bhushan Steels Strips Ltd. (supra). The order of the CIT(A) is in conformity with the order and the decision of the Income-tax Appellate Tribunal in the case of M/s Bhushan Steels Strips Ltd. in ITA No.1113/Del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a gratuity on departure which is 15 days salary for each completed year of service subject to a maximum amount of Rs.3,50,000/-. He stated that the provision for the gratuity has been made on the basis of actuarial valuation of the assessee s liability as per the defined policy of the assessee company. Thus, the allegation of the Assessing Officer that the liability of the gratuity was not ascertained is factually incorrect. 7. The learned DR, on the other hand, relied upon the orders of the authorities below. 8. We have heard both the parties and perused the material placed before us. When the assessee has a defined gratuity plan and the liability of the gratuity has been ascertained on the basis of actuarial valuation as per the assessee s gratuity plan, it cannot be said that the liability of the gratuity is unascertained liability. Therefore, the addition of the provision for gratuity while computing the book profit is uncalled for. The same is deleted. Ground No.2 of the assessee s appeal is allowed. 9. Ground No.3 of the assessee s appeal reads as under:- That the order u/s 250 passed by the Learned Commissioner of Income-tax (Appeals) XV, New Delhi is against law ..... X X X X Extracts X X X X X X X X Extracts X X X X
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