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TMI Blog2016 (8) TMI 645X X X X Extracts X X X X X X X X Extracts X X X X ..... fixed assets and for making repayment of term loans. In a recent decision the Hon’ble Supreme Court has also dismissed an appeal of Revenue in the case of Sh. Balaji Alloys & Ors. Vs. CIT (2011 (1) TMI 394 - Jammu and Kashmir High Court ), wherein the Hon’ble Court relied on its earlier judgment in the case of CIT vs. Ponni Sugars & Chemicals (supra). Therefore, keeping in view the facts and circumstances of the present case and relying on the judgments of Hon’le Supreme Court we hold that the subsidy amount received by assessee was indeed a capital receipt. Grant in aid for making and driving silage pits for cattle - Held that:- The silage pits were to be constructed on the land provided by respective societies and the assessee was only a facilitator for the construction of silage pits. The scheme for construction of silage pits in various parts is placed at (PB page 21 to 27). The scheme was formed to ensure availability of green fodder in kandi area of Dist. Hoshiarpur. We further find that it has not been disputed by authorities below that silage pits had not been constructed by the selected societies. We further find that assessee was not having any beneficiary interest in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he action of learned CIT(A), by which he had confirmed the addition made by Assessing Officer by holding the capital receipts received by assessee as Revenue receipts. 3. In ITA No.42(Asr)/2016, the Revenue is aggrieved with the action of learned CIT(A), by which he had deleted the penalty which the Assessing Officer had imposed u/s 271(1)(c) for claiming the Revenue receipts as capital receipts. 4. The above appeals were heard together and therefore, for the sake of convenience a common and consolidated order is being passed. 5. At the outset, the learned AR invited our attention to the written submissions filed by assessee and from these written submissions the learned AR explained the facts of the case. The learned AR submitted that the assessee is a Co-operative Society deriving income from running Milk Plant. During the year under consideration the assessee received subsidy from the Punjab Govt. and Central Govt. Agencies under rehabilitation scheme, grant for milking machine and grant for silage pit construction which were clearly capital receipts and which the authorities below had wrongly considered to be Revenue receipts. Inviting our attention to objects of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this. The learned AR in this respect, took us to PB page 30 and 31 to highlight that the said amount of ₹ 61.50 lacs was paid to various societies for construction of silage pits in their areas. The learned AR further submitted that assessee had not claimed this payment to various societies as its expenditure, therefore alternatively if the amount of ₹ 61.50 lacs is to be considered as Revenue receipt then the corresponding expenditure of the assessee should also be allowed. 7. Highlighting the facts in ITA No.606(Asr)/2016 for Asst. Year 2011-12, the learned AR submitted that in this year also the facts are similar except the fact that in this year the grant was received to the tune of ₹ 56.05 lacs out of which the assessee had already credited ₹ 36,92,788/- to its P L Account and balance amount of ₹ 19,12,212/- was treated as capital receipt which the authorities below has wrongly held to be as Revenue receipt. 8. Arguing the appeal in ITA No.42(Asr)/2016, the learned AR submitted that Assessing Officer in Asst. Year 2009-10 had imposed penalty u/s 271(1)(c) for concealment of income in view of the fact that assessee had declared part subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27.56 lacs. (ii) DCS Organization Rs.12.90 lacs (iii) Investment in Jeep ₹ 5.64 lacs. (iv) Marketing activities ₹ 3.18 lacs (v) Repayment to NDDB Rs.13.01 lacs (vi) Repayment to Milkfed Rs.9.71 lacs Total ₹ 72.00 lacs Further breakup of investment in machinery is also placed at PB page 14. In the chart placed at page 14, the items of plant and machinery along with name of supplier, the amount paid along with cheque no. against which payment has been made has also been noted therein. Therefore, from the above facts and circumstances we held that the grant in the form of rehabilitation grant was indeed a capital receipt as it was utilized by assessee for the purchase of fixed assets and for making repayment of term loans. The purpose of grant as noted in the objective of scheme was to revitalize the State Diary Cooperative Units which clearly means that the object of the rehabilitation scheme was to revive the sick Cooperativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther find that it has not been disputed by authorities below that silage pits had not been constructed by the selected societies. We further find that assessee was not having any beneficiary interest in the amount received as it was acting as a facilitator only. The assessee has implemented the scheme of Govt. for the welfare of the small farmers located in the kandi area of Dist. Hoshiarpur and Gurdaspur. At (PB page 30-31) is placed a copy of ledger account of assessee wherein it has declared an amount of ₹ 61.50 lacs as having received from the Govt. for making payments to various societies, who had constructed the silage pits. As per this ledger account the assessee had received ₹ 61.50 lacs and had spent the same amount by making cheque payments to various societies for constitution of silage pits. Therefore, the assessee had not derived any benefit from this grant and therefore, the finding of the authorities below is not correct and is not justified. In view of the above facts and circumstances we delete the addition confirmed by learned CIT(A) on this account. 14. In view of the above, the appeal in ITA No. 739(Asr)/2013 is allowed. 15. Now we take appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital receipt- Same was treated as revenue receipt and imposed penalty - Penalty was set aside by tribunal - Held, issue whether amount of grant in aid is capital receipt or a revenue receipt, is a debatable issue - Therefore, there is no error in findings recorded by Tribunal while setting aside penalty - Revenues appeal dismissed. 7. In this decision it was further held that:- In the present case, there is no dispute about the quantum of receipt of grant in aid from the State Government. The assessee reflected the same as capital receipt, whereas it has been treated as to be revenue receipt. The issue; whether the amount of grant in aid is capital receipt or a revenue receipt, is a debatable issue. The findings returned in the judgment relied upon is on fact of non-furnishing of details of expenses. The issue was not debatable as in the present case. Therefore, the reliance on the Division Bench Judgment is misconceived. 8. The ratio of the case of M/s Reliance Petro products ( P) Ltd. 322 ITR 15 is also applicable to this case wherein it was held as under:- CIT V/s Reliance Petro Productes ( P) Ltd. (SC) 322 ITR 1561. A mere making a claim, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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