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TMI Blog2020 (3) TMI 1145X X X X Extracts X X X X X X X X Extracts X X X X ..... aid Rules, it is quite clear that the extent of benefit payable to an Assessee by way of subsidy is quantified with reference to the entertainment tax as specified under Rule 5([k). But for fixing the extent of benefit payable, Annexure A/2 does no where mention that the purpose of subsidy is to promote the trade or business. On the other hand, it is explicitly clear that the said scheme was introduced by the Government to promote the construction of new cinema theaters in the State and as such, the contention raised by the learned Standing Counsel for the Department to the contrary can only be repelled. Subsidy in the given circumstance will definitely constitute capital subsidy and it is to be excluded from assessment of tax under the provisions of the Income Tax Act. - Tax Case No. 10 of 2015 and Tax Case No. 11 of 2015 and Tax Case No. 12 of 2015 - - - Dated:- 24-7-2019 - SHRI P.R. RAMACHANDRA MENON, CHIEF JUSTICE AND SHRI PARTH PRATEEM SAHU, JJ. For Appellant/Assessee : Shri S. Rajeshwar Rao and Shri M.K.Sinha, Advocates For Respondent/Revenue: Ms. Naushina Afrin Ali, Advocate on behalf of Shri Amit Choudhary, Advocate. Per P.R. Ramachandra Menon, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Income tax (Appeals-1) Raipur, who considered the matter and held that the order passed by the Assessing Officer was not liable to be sustained, as the disputed amount was liable to be treated as capital subsidy . It was accordingly that Annexure A/6 order dated 28.02.1997 came to be passed, which, however came to be reversed in the second appeal, by the Appellate Tribunal, as per Annexure A/8 order dated 07.08.2001. 6. The matter was taken up in appeal before this Court by the Assessee. Meanwhile, in respect of the subsequent assessment years, the factual aspect, particularly as to the purpose of the subsidy was got ascertained and the Tribunal finalised the proceedings in favour of the Assessee, treating the amount of subsidy as capital subsidy and not as revenue subsidy. This aspect was brought to the notice of this Court and taking note of the conflicting decisions passed by the Tribunal, the orders under challenge were set aside and the matter was remanded to the Tribunal for fresh consideration, in light of the law declared by the Supreme Court in Sahney Steel Press Works Ltd. Hyderabad v. Commissioner of Income Tax, AP-1, Hyderabad; (1997) 7 SCC 764, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra), in particular, paragraphs 10, 13, 17, 18, 19, 23, 24, 27, 31 and 33, the money given to the Assessee for assisting him was virtually for carrying out the business operation. Hence, such money given much after commencement of the operation could be treated only as an assistance for the purpose of trade and was liable to be treated as part of the revenue subsidy , which is liable to be reckoned for fixation of tax. 10. The learned counsel for the Assessee, submits that there is no dispute with regard to the declaration of law by the Apex Court in Sahney Steel Press Works Ltd. (supra) and that the particular scheme which was considered by the Supreme Court in the said case which obviously was for the purpose of promotion of business, which is not the position in the instant case. The law declared by the Supreme Court is that, the crucial aspect to be looked into is the nature and purpose of the scheme for granting subsidy and not the time of disbursement or the quantum of disbursement. It is further pointed out that, there is nothing against the Assessee so as to support the case of the Revenue as contained in Annexure A/2 Rules, to infer that the nature and purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee for assisting him for carrying out the business operation and the money is given only after and conditional upon commencement of the production, such subsidies must be treated as assistance for the purpose of trade. Applying the said legal position to the given case, the purpose of the scheme as evident from Annexure A/2, and in particular Rule 1, is obviously for promoting the construction of new Cinema Theaters. The effective date is given under Rule 3, as 14.01.1980 . The eligibility conditions are mentioned in Rule 4 and Rule 5 stipulates the measure of subsidy , which could be aspired by the assessee. 14. Going by the said Rules, it is quite clear that the extent of benefit payable to an Assessee by way of subsidy is quantified with reference to the entertainment tax as specified under Rule 5([k). But for fixing the extent of benefit payable, Annexure A/2 does no where mention that the purpose of subsidy is to promote the trade or business. On the other hand, it is explicitly clear that the said scheme was introduced by the Government to promote the construction of new cinema theaters in the State and as such, the contention raised by the learned Standing Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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