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TMI Blog2017 (4) TMI 916X X X X Extracts X X X X X X X X Extracts X X X X ..... except where it has been taken into account for determining the actual cost of assets in terms of Explanation 10 to section 43(1). This amendment is patently prospective. As the assessment year under consideration is 2008-09, section 2(24) (xviii) shall have no operation. In view of the foregoing discussion, we are satisfied that the subsidy received by the assessee from the Government of Maharashtra is a capital receipt and accordingly not chargeable to tax. It is a settled legal position that if two views are possible on a particular point and the Assessing Officer has taken one of such possible views, it is not open to the CIT to treat the assessment order erroneous and prejudicial to the interest of the Revenue and impose the other p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment, accepted the treatment given to it by the assessee. However, the ld. CIT, invoking jurisdiction u/s 263 of the Act, came to hold that such subsidy received from the Government of Maharashtra was a revenue receipt and hence chargeable to tax. Characterizing the assessment order as erroneous and prejudicial to the interests of the Revenue, he revised the assessment order and directed the Assessing Officer to include the amount of such subsidy in the total income. The assessee is aggrieved against this order. 3. We have heard the rival submissions and perused the relevant material on record. The short question before us is as to whether the assessment order treating the subsidy from the Government of Maharashtra as capital receip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication is available from page 153 onwards of the paper book. The said Package Scheme of Incentives, 2001 was amended vide Government Resolution dated 02.06.2005, whose copy is available from page 187 onwards of the paper book. The introduction part of this Resolution dated 2nd June, 2005 elaborates that Incentive Scheme 2001 is in existence and special incentives to the medium and large-scale industrial units were to be given with the objective of increasing the flow of industrial investment in the State and creating substantial employment opportunities, to be considered as Mega Projects. Certain categories have been given under the Mega Projects. The assessee falls in B category. Pursuant to such Scheme, the assessee entered into a Mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... took to give additional employment and, as a quid pro quo , the Government agreed to allow exemption from payment of electricity duty and subsidy to the extent of 75% of the fixed capital of investment, in the form of relief from taxes on the increased turnover as a result of the proposed additional investment. It, thus, becomes abundantly vivid that the objective of the Scheme is to accelerate the flow of investment in industry and also to create large-scale employment opportunities and the resultant subsidy is in the shape of exemption from payment of taxes on the increased turnover. The question as to whether a subsidy is a capital or revenue receipt largely depends on the `purpose of the grant and not the mode of its discharge. The re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge Scheme of Incentive 2001, under which the assessee received the above subsidy, is a successor of the 1993 Scheme of Maharashtra Government and 1979 Scheme of Maharashtra Government. All these schemes were/are aimed at increasing the pace of industrialization and the incentive is based on the amount of investment in fixed assets. While considering 1993 Scheme of Maharashtra Government, the Mumbai Bench of the Tribunal in Everest Industries Ltd. vs. ACIT (ITA No.814/Mum/2007) , vide its order dated 04.12.2009, has held such subsidy to be capital in nature. A copy of such order has been placed from page 570 onwards of the paper book. Similar view has been taken by the Pune Bench of the Tribunal in the case of Rohit Exhaust Pvt. Ltd. vs. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent or any authority etc. for any purpose, except where it is taken into account for determination of the actual cost of the asset under Explanation 10 section 43(1), has become chargeable to tax. Even if a subsidy is given to attract industrial investment or expansion, which is a otherwise a capital receipt under the preamendment era, shall be treated as income chargeable to tax, except where it has been taken into account for determining the actual cost of assets in terms of Explanation 10 to section 43(1). This amendment is patently prospective. As the assessment year under consideration is 2008-09, section 2(24) (xviii) shall have no operation. In view of the foregoing discussion, we are satisfied that the subsidy received by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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