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TMI Blog2016 (9) TMI 1269X X X X Extracts X X X X X X X X Extracts X X X X ..... m Tulsian ORDER PER N.K. PRADHAN, A.M The above appeals have been filed by the Revenue. The relevant assessment years are 2011-12 and 2012-13. The appeals are directed against the order of the Commissioner of Income Tax (Appeals)-16, Mumbai, and arise out of the assessment completed u/s 143(3) of the Income Tax Act 1961, ('the Act'). In this batch of appeals, the controversy raised being similar, they were heard analogously and are disposed of by a common order. 2. The first ground raised by the Revenue in this appeal is that the ld. CIT(A) erred in deleting the addition made by the Assessing Officer (AO) on account of interest subsidy amounting to ₹ 2,84,21,657/- for the A.Y. 2011-12 and ₹ 2,48,57,810/- for the A.Y. 2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to tax. He also relied on the above decision stating that subsidy granted to an assessee after it started production in the form of refund of sale tax, recoupment of power charges and exemption from the payment of water charges was revenue receipt. The payment of subsidy to assist an assessee in carrying on trade or business as distinct from the subsidy to help the assessee to set up an industry or complete a project is production incentive or operational subsidy and is not capital subsidy and hence as per the AO, it is chargeable to tax as revenue receipt. He also relied upon the decision of Hon'ble Supreme Court in the case of CIT vs. P. J. Chemicals (1994) 210 ITR 830 (SC) wherein the dispute was whether the capital subsidy went to reduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Ltd. (2008) 306 ITR 392 (SC) and held that the subject subsidy is a capital receipt. The ld. CIT(A) followed the above decision and allowed the appeal filed by the assessee before him. 5. Before us, the ld. DR supported the order passed by the AO. Specific reference was made by him to the decision in the case of Sahney Steel and Press Works Ltd. (supra). 6. Before us, the ld. Counsel of the assessee relied on the order of the ld. CIT(A). Specific reference was made by him to the decision in the case of (i) CIT vs. Sham Lal Bansal (supra) (ii) M/s SVG Fashions Ltd. vs. DCIT-4(3), ITAT, Mumbai 'E' Bench (ITA No.8565/M/2010 & ITA No. 296/M/2012 dated 23/12/2005) and (iii) Gloster Jute Mills Ltd vs. ACIT (2014) 33 ITR (Tribunal) 322 (Kol). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of carrying on of the business of the assessee and the same were of revenue character." 7.2 We then turn to the decisions relied on by the ld. Counsel of the assessee. In the case of Sham Lal Bansal (supra), the assessee was engaged in manufacture and sale of woollen garments. He received subsidy for a payment of loan taken for building and plant and machinery under the Credit Linked Capital subsidy Scheme under TUFS of Ministry of Textile and claimed the same as capital receipt. The AO, however, treated the same as a revenue receipt and added to the income of the assessee. On appeal, the Commissioner (Appeals) upheld the plea of the assessee and same was confirmed by the Tribunal observing that the objective of the subsidy sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the subsidy is to enable to the assessee to run the business more profitably, it would be taxable, but where it is to enable the assessee to set up a new unit or expand its existing unit it should not be taxable. 7.4 In M/s SVG Fashions Ltd. (supra), the issue before the ITAT 'E' Bench Mumbai, was whether the interest subsidy granted under TUF Scheme was revenue or capital in nature. The Tribunal followed the judgment in Ponni Sugars and Chemicals Ltd. (supra) and directed the AO to treat the subsidy as capital in nature. We may mention here that similar TUF Scheme is in dispute in the instant appeal. 7.5 In Gloster Jute Mills Ltd. (supra), the assessee received subsidy from the Central Government under the TUF Scheme by way of inter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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