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TMI Blog2019 (1) TMI 1195X X X X Extracts X X X X X X X X Extracts X X X X ..... d have resorted to revisionary jurisdiction u/s.263. This is not done in the case of the assessee which means that Revenue has all throughout accepted that assessment was completed in the case of the assessee u/s.143(3) and the facts that the subsidy received are capital in nature. Then in similar facts and circumstances in the present assessment year i.e. 2014-15, in absence of any new material and evidence, taxing subsidy as ‘Revenue Receipt’ by the Revenue Authority is the exercise which can be termed as arbitrary, unjudicious, unwarranted and bad in law and therefore, liable to be deleted. - decided in favour of assessee. - ITA No.76/RPR/2018 - - - Dated:- 17-1-2019 - Shri Anil Chaturvedi, AM And Shri Partha Sarathi Chaudhury, JM For the Assessee : Shri Nikhilesh Begani For the Revenue : Shri P.K. Mishra ORDER PERPARTHA SARATHI CHAUDHURY, JM : This appeal preferred by the assessee emanates from the order of the Ld. CIT(Appeals)-1, Civil Line, Raipur dated 26.03.2018 for the assessment year 2014-15 as per following grounds of appeal on record: Ground No.1 On the facts and circumstances of the case as well as in law, the learned Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re Revenue Receipt and accordingly, it has been taxed. The Ld. CIT(Appeals) has observed and held as follows: 2.3 Facts being as above, the assesse is a corporation of Chhattisgarh Government. It is engaged in the business of exploitation of mines in the state. The amount in question was provided to the corporation for the purpose of opening a mine which was allotted by MOC, GOI. Once the mine is opened the assessee will have a stream of income attracting income tax. In addition to the existing sources of income, the assessee will have a further source of income. The expenditure in question will thus augment the business of the assessee. Whereas expenditure has been incurred to enhance the business and commerce, it has been held by the Honourable Supreme Court in the case of M/s. Sahney Steel Press Works Ltd. Ors (supra.) as a revenue item and the source of this expenditure will be income. The basic principle to be applied for determination is whether a subsidy payment is to be assist in assessee s business. If the funds are made available to the assessee to assist it in carrying on its trade or business and the object of the subsidy was to enable the assessee to ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been dealt with in the case of [1996] 89 TAXMAN 56 ( Ker.) Commissioner of Income tax Vs. Udaya Pictures (P.) Ltd. The issue was taxability of subsidy received by assessee from Government for producing new regional films is a revenue receipt. The assessee company was engaged in the business of production of cinematographic films. It has received ₹ 37,500/- as subsidy from the Kerala Government for producing new regional films. In the return filed the amount was sown as capital receipt. The Assessing Officer agreed with the assessee s claim and did not include the said amount in the assessee s total income. The Commissioner, however, invoked the provisions of section 263 and directed the Assessing Officer to include the amount in total income. On appeal, the Tribunal held that the subsidy received by the assesse was not taxable. On reference the Hon ble Kerala H.C. that in view of the decision of the Kerala High Court in Kesaria Tea Co. Ltd. Vs. CIT [1989] 120 ITR 134 and from the material available in the instant case it was crystalline that what was received by the assessee from the Government was not a capital receipt but a subsidy and, therefore, it was income li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant i.e. to say, the appellant was designated as the Implementation Agency/Nodal Agency for carrying out the Mine Development Work. It was further stipulated that the Coal produced from the aforesaid mines are to be used majorly for the purposes of supplying It to another Public Utility Enterprise viz. CSEB to be used for Generation of Electricity In its proposed Bhaithan Thermal Power Station i.e. the final product (electricity) is also to be used for the purpose of benefit of public at large. (Copy of the aforesaid Approval/Allotment Letter at Page No.30 31 PB). 3. That subsequently, the Mineral Resources Department, Government of Chhattisgarh finding It expedient to make special provisions for creation of Mineral Development Fund (hereinafter referred to as the MDF ) for the State of Chhattisgarh and' utilisation towards mineral exploration and development of mining activities in the State and for matters connected therewith or incidental thereto, formulated the Chhattisgarh Mineral Development Fund Act, 2003 (No.22 of 2003) (hereinafter referred to as the CMDFA ) with effect from 25th September, 2003 (Date of Publication in the Official Gazette of the CG Govt.). Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncurred keeping In view the Major Head which clearly is indicative of the fact that the Major Head in which the Financial Assistance has been granted to the appellant is towards incurment of Capital Expenditure only for Mineral Exploration Development - Mining/Excavation purposes. 5. That further, the appellant incurred/utilized a sum of ₹ 273.5614 Cr. towards development of Tara Coal Block from the Assessment Year 2006-07 onwards (including a sum of ₹ 171.5614 Cr. incurred in the assessment year under appeal). Details of Utilization of Funds (expenditure) received from MDF at Page No.2B 29 PB. In accordance with the objectives of development of coal block, a Joint Venture Company by the name CMDC-ICPL Coal Ltd. was formed with the objective of Development of Tara Coal Project for undertaking the Mining, Selling Supplying the Coal from aforesaid Coal Block to meet the coal requirements of the proposed Thermal Power Project of IFFCO Chhattisgarh Power Ltd. It is further submitted that the Grant/Financial Assistance received have been utilized only for Development of Tara Coal Block i.e. only for Capital Purposes for incurment of Capital Expenditure only such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates that The Fund shall be regulated and administered by the Department and its utilisation shall be subject to the approval of the Advisory Committed Provided that the Fund shall not be utilized for any purposes other than those for which it is created. That in terms of formulation of CMDFAr.w. CMDFR,the CG Govt. had been disbursing Public Funds in the shape of Grants/Financial Assistance to the appellant corporation with specific purpose/directive (as per section 5 of CMDFA) of applying the disbursed funds from MDF towards the Development of Tara Coal Block only i.e. for Development of a Capital Asset or for augmenting the Capital Base/Investment of the CG Govt. i.e. inextricably for setting up of the mines for exploitation exploration of minerals and which did not have any material bearing or vital link with the factum of commercial production of captioned coal mines and it was explicitly stipulated by the provisions of section 6 of CMDFA that the funds received from MDF shall not be utilized for any purposes other than those for which it is created i.e. to say, the appellant was obligated under the statutory provisions of CMDFAr.w. CMDFRto utilize/spend the funds recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purpose of opening a mine which was allotted by MO ( GOI. Once the mine is opened .. but however, ascribes to the reasoning that the whenever the mine would be operational, it will generate a stream of income for the appellant which will be in addition to the existing sources of income and hence, such expenditure incurred by CG Govt would augmentthe business of the and hence, would be a revenue receipt chargeable to tax. Hence, the confirmation of addition by Ld.CIT(A)is highly unjustified, unwarranted, against the settled principles of law and based on incorrect assumption of facts. 10. That the judgments relied upon by the Ld. CIT(A) in the cases of V.S.S.V. Meenakshi Achi Vs. CIT (1966) 60 ITR 253 (SC) and CIT Vs. Udaya Pictures (P) Ltd. (1997) 225 ITR 394 ( Ker. HC) have been rendered on entirely different distinguishable facts wherein the purpose of giving subsidies were given as a helping hand to conduct the business in a more portable manner. 11. That the Appellant respectfully submits that applying the 'Purpose Test' that determines the character of receipt in the hands of the assessee for which the subsidy is given, since, the object of giving finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same has to be regarded as a capital receipt. Reliance in support is placed upon the Judgment of the Hon'ble Calcutta High Court in the case of PCIT Vs. State Fisheries Development Corporation Ltd (2018)94 taxmann.com 466 (Cal. HC) (Refer Pg.No. 140 to 145 PB). 12. Without prejudice to the above, it is further submitted that it is an uncontroverted fact that the appellant corporation has been receiving such Capital Grants in preceding assessment years as per details furnished and the assessment cases for such years have also been completed under scrutiny assessment procedure under section 143(3) of the I.T.Act by erstwhile Learned Assessing Officers accepting and assessingthe nature of Capital Grants as such and further, the said assessments have already attained finality in this regard and there are no change in fundamental aspects (nature of grant mode of disbursements from MDF remains unaltered) in the assessment year under reference vis-a-vis the preceding assessment years hence, in the absence of any justifiable reason for departure from already taken confirmed view, applying the Rule of Consistency with definiteness in approach and to achieve finality in assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes to be applied for capital outlays or incurment of capital expenditure would be in the nature of capital receipts not chargeable to tax and further, that grant in aid received for specific purposes cannot be treated as income and would constitute a capital receipt not chargeable to tax. Further, the Hon ble Calcutta High Court in the case of PCIT Vs. State Fisheries Development Corporation Ltd. reported as 94 taxmann.com 466 has held that where the assessee is a wholly owned Government Company, hence, the amounts received from MDF may be considered to be in the nature of financial assistance so as to ensure the survival of the company and in such cases, also the same has to be regarded as a capital receipt. 5. The Ld. DR vehemently argued that every year is separate year so far as income tax is concerned and the doctrine of res-adjudicata does not apply to the income tax proceedings. 6. Per contra, the Ld. AR of the assessee contended that Hon ble Apex Court has laid down the principle of statusquo should be maintained by the Revenue Authority. Therefore, when on the similar facts and circumstances prevailing in present assessment year as compared with same facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iformity in treatment and consistency when the facts and circumstances are identical particularly in the case of the assessee. The Assessing Officer cannot take a different view for the assessment year under consideration where the facts and circumstances are identical. 7. The Ld. DR conceded to the facts that all the facts and circumstances as existed from assessment year 2006-07 onwards are same with the present assessment year i.e. assessment year 2014-15. It is also undisputed that all throughout the years, assessment was completed u/s.143(3) of the Act and the subsidy has been accepted as Capital Receipt . If in this assessment year i.e. 2014-15,the assessment was something erroneous and prejudicial to the interest of the Revenue then the Ld. CIT(Appeals) could have resorted to revisionary jurisdiction u/s.263 of the Act. This is not done in the case of the assessee which means that Revenue has all throughout accepted that assessment was completed in the case of the assessee u/s.143(3) of the Act and the facts that the subsidy received are capital in nature. Then in similar facts and circumstances in the present assessment year i.e. 2014-15, in absence of any new material ..... X X X X Extracts X X X X X X X X Extracts X X X X
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