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TMI Blog2019 (6) TMI 1210X X X X Extracts X X X X X X X X Extracts X X X X ..... note that the subsidy received under TUF scheme is capital receipt and therefore we delete the addition made by the Ld. CIT(A). - ITA No. 2055/Kol/2018 - - - Dated:- 12-6-2019 - SHRI S. S. VISWANETHRA RAVI, JM AND DR. A. L. SAINI, AM For The Appellant : Shri S.Jhajharia, FCA For The Respondent : Shri Radhey Shyam, CIT DR ORDER Per Dr. Arjun Lal Saini, AM: The captioned appeal filed by the assessee , pertaining to Assessment Year 2012-13, is directed against an order passed by the Commissioner of Income Tax(Appeals)-4, Kolkata which in turn arises out of an assessment order passed by the Assessing Officer u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ), dated 30.03.2015. 2. However, in this appeal, the assessee has raised multiple grounds of appeal but at the time of hearing the main grievance of the assessee is confined to ground nos. 3 to 5 which relates to treatment of the subsidy received under technical upgradation fund scheme (TUF scheme). Whether TUF subsidy is capital in nature or revenue in nature. 3. Grounds n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital receipt only. We have already submitted in our written submission earlier a number of judgment and had also enclosed copy of order of ITAT of Kolkata Bench judgment in Gloster Jute Mills Ltd. which has now been affirmed by Hon'ble Calcutta High Court, hence the aforesaid sum may kindly be treated as capital receipt and as non-taxable. Copy of the said order is enclosed at Annexure A 11. In view of decision of Jurisdictional High court decision in the case of Hon'ble Calcutta High Court in CIT(A)-4, Kolkata vs. MJ s. Golster Jute Mills Ltd. (ITAT No. 200 of 2014), G.A. No. 3980 of 2014 GA. No. 3981 of 2014 dt. 18.06.2018) holding TUF subsidy as Capital receipt, I am allowing this ground of the appellant and therefore interest subsidy should be not chargeable to tax . Having said that, I would like to mention that from the scheme it is evident that the said subsidy has been granted towards the interest to be paid on loan taken for upgradation of technology/purchase of new machineries, therefore, it is directly related with the fixed assets acquired by loan. Hence, by virtue of provision of Sec. 43(1) r.w. Explanation 10 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No. 1398/Kol/2011 for the A.Y 2007-08, wherein the Tribunal following the decision of the Hon ble Supreme Court in the case of P.J. Chemicals Ltd upheld the order of the CIT-A in allowing the claim on depreciation on capital subsidy. The ld. AR submits that the said order was challenged by the appellant revenue before the Hon ble High Court of Calcutta, wherein the Hon ble High Court of Calcutta was pleased to dismiss the question of law framed by the revenue in challenging the finding dt. 02-04-2014 of the Tribunal, thereby the order dt. 02-04-2014 supra is binding on the appellant Revenue. We further find that the Coordinate Bench of this Tribunal in assessee s case in ITA Nos. 1989 1010/Kol/2013 for the A.Ys 2008-09 2009-10 vide its order dt. 14- 08-2015 followed the decision of the Hon ble High Court of Calcutta and dismissed the appeal of revenue. We also find that the CIT-A followed the decision of the Hon ble High Court of Calcutta in the case of CIT Vs. Rasoi Limited in GA No. 2684 of 2014/ITAT No. 138 of 2014 dt. 05-09-2014 for the year under consideration and deleted the addition made by the AO in this year also, copy of the same is on record. For the sake of con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that if the subsidy is asset specific, such subsidy goes to reduce the actual cost. If the subsidy is to encourage setting up of the industry, it does not go to reduce the actual cost, even though the amount of subsidy was quantified on the basis of the percentage of the total investment made by the assessee. 7. The law is already settled on the subject. Now, the only wavering is with reference to Explanation 10 provided under sec. 43(1). The said Explanation provides that where a portion of the cost of an asset acquired by the assessee has been met directly or indirectly by the Central Government or a State Government or any authority established under any law or by any other person, in the form of subsidy or grant or reimbursement ( by whatever name called), then, so much of the cost as is relatable to such subsidy or grant or reimbursement shall not be included in the actual cost of the asset to the assessee. It is further, provided thereunder that where such subsidy or grant or reimbursement of such nature that it cannot be directly relatable to the asset acquired, so much of the amount which bears to the total subsidy or reimbursement or grant the same propo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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