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TMI Blog2016 (2) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... ards ASIDE was wrongly treated the amount received as a revenue receipt in its books and in view of the above observations, the assessee realised the mistake and rectified the same and filed revised return before due date of filing of return of income. Therefore, we find that the ld. CIT(A) has rightly deleted the addition made by the Assessing Officer and the order passed by the ld. CIT(A) on this issue stands confirmed. - Decided against revenue. Disallowance of unsuccessful project promotional expenses written off - Held that:- The issues is squarely covered by the decision of the Coordinate Bench of the Tribunal in assessee’s own case for earlier assessment years wherein hedl he assessee had been investing in several projects and whenever feasible, promoting new industrial undertakings. If the new undertakings materialized the expenses were transferred and recovered from the new unit. However, if the project was unsuccessful, the assessee wrote off the expenses. The Tribunal held that as the assessee’s business was promotion of new ventures, the project expenditure was incidental to the business and hence could not be treated as preliminary or capital in nature and according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance of unsuccessful projects written off by the assessee company and the second issue is with regard to considering the grant received from the Central Government as revenue receipts disregarding the submission of the assessee that it is a capital receipt. After considering the submissions of the assessee and by following the decision of the Tribunal in assessee s own case, the ld. CIT(A) decided the issue in favour of the assessee. With regard to second issue also, after considering the submissions of the assessee and considering the facts and settled rulings, the ld. CIT(A) decided the issue in favour of the assessee and allowed the appeal filed by the assessee. 4. Aggrieved, the Revenue is in appeal before the Tribunal and the ld. DR has submitted that with regard to written off of the cost of investments in equity shares is not allowable as revenue loss since the investments in general and as per the accounting principles, they are treated as capital in nature, unless the assessee is in the business of trading in such shares or securities. The ld. DR further submitted that the main business of the assessee is development of industries and not trading in shares and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2360/Mds/03 dated 07.09.2006, the AR of the assessee has strongly contended that when the profit on sale of disinvestment is to be treated as income and consequently, when the investments were written off, then the same should be allowed as business loss. The above order of the Tribunal was delivered on different set of facts, wherein, the Tribunal has observed that the investment in question was in the normal course of business and the dividend income received on the shares in question formed part of the business income of the assessee. In the present case, the assessee is holding the investment in shares in capital field and it was not treated as stock-in-trade, the realization of investment and loss arising out of it only in a capital field and it is only a capital loss. For this purpose, the ld. DR placed reliance on the judgement in the case of Spectra Shares and Scrips Pvt. Ltd. v. CIT [2013] 354 ITR 35 (AP). Accordingly, we reverse the order of the ld. CIT(A) on this issue and the ground raised by Revenue is allowed. 7. With regard to the additional ground raised by the Revenue relates to deleting the addition made in respect of the ASIDE grant received by the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugars and Chemicals Ltd. 306 ITR 392 (SC). 10. On the other hand, the ld. Counsel for the assessee strongly supported the order passed by the ld. CIT(A). 11. We have heard both sides, perused the materials on record and gone through the orders of authorities below. The assessee has received the grant of ₹.9.53 crores from Central Government towards ASIDE and wrongly treated the amount received as a revenue receipt in its books. Since the Comptroller and Auditor General of India noticed the mistake, subsequently, the assessee has rectified the mistake and filed the revised return within the due date of filing of return of income. When the matter was carried before the ld. CIT(A), the ld. CIT(A) has observed as under: 5.2 I have considered the submissions of the learned Authorised Representative and I am of the view that the grants received under the ASIDE scheme are not revenue receipts for the following reasons. a. There is a nodal agency nominated by the State Government and there will be a representative of the State Government on the board to decide to whom the loans are to be granted or investments are to be made out of this Grant of Central Government. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectly or indirectly for the setting up of the industries. It is only after the industries had been set up and production had been commenced that the incentives were to be given. However, in the present case, the Central Government has sanctioned the grant to the assessee being a public sector undertaking under the Government of Tamil Nadu for the purpose of promotion of industries in Tamil Nadu by participating in equity and the assessee company has not involved in any production activity, whereas, Sahney Steel Press Works Ltd. is a private limited company and to improve its production activity, the incentive was given by the State Government. Therefore, the case relied on by the ld. DR has no application to the facts of the present case. 14. Further, in the case of CIT v. Ponni Sugars and Chemicals Ltd. (supra) also, the assessee was a cooperative society running a sugar mill and the eligibility condition in the schemes was that the incentive had to be utilized for repayment of loans taken by the assessee to set up new units or for substantial expansion of an existing unit. In the present case, the assessee was not in receipt of the grant to set up new units or for substant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged in the business of promotion of industries in the State of Tamil Nadu, the unsuccessful project promotional expenses written off are in the revenue field and require to be allowed as business expenditure. After considering the submissions of the assessee, the ld. CIT(A) directed to delete the disallowance made by Assessing Officer. 19. The Revenue carried the matter in appeal before the Tribunal and the ld. DR has submitted that the Department has not accepted the decision of the Tribunal in assessee s own case in I.T.A. Nos. 1413/Mds/2000, 100/Mds/1999, 1669/Mds/2000, 936 937/Mds/2003 dated 04.09.2006 and the appeal filed before the Hon ble Madras High Court is pending. Therefore, it was pleaded to reverse the findings of the ld. CIT(A) on this issue. 20. On the other hand, the ld. Counsel for the assessee strongly supported the order passed by the ld. CIT(A), wherein he has followed the decision of the Tribunal in assessee s own case for earlier assessment years. 21. We have heard both sides, perused the materials on record and gone through the orders of authorities below. We find that the issues is squarely covered by the decision of the Coordinate Bench of the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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