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TMI Blog2019 (9) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... nt gave the subsidy to enhance indian export potential in the international market. It was not granted to meet the cost of expenditure to meet the competition of the Indian textile market. ITAT took note of judgment in Ponni Sugars Chemicals Ltd.(supra) and held that the amount was not an export incentive, but rather capital receipt and therefore, not taxable. This Court is of the opinion that there is no infirmity with the reason. As far as the electricity subsidy is concerned, the third ground i.e. electricity subsidy under the Rajasthan Investment Promotion Scheme was held to be a capital receipt by the CIT(A). It was held that this was granted in larger public interest and it was linked to capital interest, a similar scheme was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of interest, as it were. Under para 8 of the Technology Upgradation Fund programme (the amounts which were released under an agreement dated 12.07.2005) the amounts were to be treated as non-interest bearing term loans by the Bank and the repayment was to be worked out excluding the subsidy amount and the subsidy to be adjusted against the term loan account of the beneficiary after a lock in period of three years. The agreement pertinently provided as follows: Para8. to prevent mis-utilization of capital subsidy and to provide an incentive for repayment, the capital subsidy will be treated as a non interest bearing term loan by the Bank/Fis. The repayment schedule of the term loan however will be worked out excludi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to reimburse the interest charged on the lending agency on purchase of technology upgradation or to give capital subsidy on the investment in compatible machinery. In the present case, the assessee has taken term loans for technology upgradation and subsidy was released under agreement dated 12.7.2005 with Small Industry Development Bank of India. The relevant clause of the agreement under which the subsidy was given is as under:- Para8. to prevent mis-utilization of capital subsidy and to provide an incentive for repayment, the capital subsidy will be treated as a non interest bearing term loan by the Bank/Fis. The repayment schedule of the term loan however will be worked out excluding the subsidy am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in CIT vs. Gloster Jute Mills Ltd. [(2018) ITL 3046 (CAL)(HC)]. 8. As far as the question with regard to Focus Marketing Scheme was concerned, apparently the Central Government gave the subsidy to enhance indian export potential in the international market. It was not granted to meet the cost of expenditure to meet the competition of the Indian textile market. The ITAT took note of judgment in Ponni Sugars Chemicals Ltd.(supra) and held that the amount was not an export incentive, but rather capital receipt and therefore, not taxable. This Court is of the opinion that there is no infirmity with the reason. 9. As far as the electricity subsidy is concerned, the third ground i.e. electricity subsid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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