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TMI Blog2018 (9) TMI 1957X X X X Extracts X X X X X X X X Extracts X X X X ..... volved in all the three appeals are similar and are arising from same set of facts, these appeals are taken up together for adjudication and are disposed of vide this common order. 3. The brief facts of the case as emanating from records are: The assesseecompany is engaged in generation of power through Windmill. The assessee is also engaged in the business of trading in land and land development. During the period relevant to assessment year under appeal, the assessee received Sales Tax Benefit under policy of the State Government published on 12.03.1998. The assessee treated Sales Tax Benefit received from the Government as income derived from generation of power and accordingly, claimed deduction u/s.80IA of the Income Tax Act, 1961 (hereinafter referred to as the Act ) on the same. The Assessing Officer rejected assessee s claim of deduction u/s.80IA of the Act on the Sales Tax Benefit received by the assessee. 4. Aggrieved by the withdrawal of deduction u/s.80IA of the Act on Sales Tax Benefit , the assessee filed appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) after placing reliance on the decision of Tribunal in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and development. The assessee received Sales Tax Benefit under the policy of the State Government of Maharashtra published on 12.03.1998. Sales Tax Benefit was available equivalent to the qualifying investment on wind energy generation project. Energy generated was to be sold to Maharashtra Electricity Board as per prescribed rate. Sales Tax Benefit was available only when the wind mill operated with a minimum of 12% plant load factor. Year wise amount of Sales Tax Benefit received are as below- Sl. No. A.Y. Amount (Rs.) 1 2006-07 22,82,347/- 2 2007-08 21,43,166/- 3 2008-09 21,71,001/- The assessee considered these receipts as integral part of its gross receipt and credited the amount in the Profit And Loss Account in the respective assessment years. The assessee claimed deduction under section 80IA(4) in respect of the Sales Tax Benefit. The Revenue held that these receipts were not derived from the industrial undertaking, i.e., the wind mill, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s decisions on which, both the sides have placed reliance to support their contentions. The assessee has received Sales Tax Benefit from State Government in respect of generation of power from Windmill. The assessee has treated Sales Tax Benefit as income derived from generation of power through Windmill. The Authorities below have held that the assessee has wrongly claimed benefit of deduction u/s. 80IA(4) on Sales Tax Benefit received from the State Government. We find that identical issue had come up before the Tribunal in the case of Dy.CIT Vs. Indo Enterprises Pvt. Ltd. and M/s. Patankar Wind Farm Pvt. Ltd. (supra.). The Tribunal after considering various decisions including the decision rendered in the case of CIT Vs. Meghalaya Steels Ltd., reported as 383 ITR 217 held as under: 10. The Co-ordinate Bench of the Tribunal in the case of Rasiklal M. Dhariwal (HUF) Vs. Dy. Commissioner of Income Tax (supra) had occasion to consider the nature of subsidy received in the form of sales tax incentive for generation of power in the State of Maharashtra. The Tribunal after analyzing the scheme of subsidy threadbare concluded that the subsidy received under the scheme is reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case, it is not the timing of the subsidy alone but the grant is linked to achieving operational efficiencies and that too for only six continuous years. If a unit which is otherwise eligible for incentive, does not achieve the plant load factor of 12% or above, it would not be entitled to receive the sales tax benefit. Therefore, in our considered opinion, though the object of the Scheme is to promote generation of energy through non conventional sources but the same is sought to be achieved by the Government in the form of supporting the units to perform more efficiently and profitably. 17. In fact the Hon ble Supreme Court in the case of Ponni Sugars Chemicals Ltd. (supra) clearly noted that the subsidy received therein was to be utilized only for repayment of term loans taken by the assessee for setting up new units/expansion of existing business. In the present case, there is no such restriction or obligation on the part of the assessee to utilize the incentives availed. In fact, on this aspect the instant scheme is akin to the scheme noted by the Hon ble Supreme Court in the case of Sahney Steels (supra) wherein the assessee was found free to use the money in its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incentive as capital receipt. Since, facts in present case are distinguishable, the ratio laid down in Garden Silk Mills Vs. Commissioner of Income Tax and Another (supra) would not apply. Similarly, in the cases of Commissioner of Income Tax Vs. Chaphalkar Brothers (supra) and DCIT Vs. Inox Leisure Ltd. (supra) entertainment subsidy/exemption of sales tax as subsidy was given to promote construction of multiplex theatres. The subsidy was given to recoup capital investment and thus, was held to be capital receipt. Since, the facts of the above referred cases are entirely different, they would not in any manner support the connections of the assessee. 12. Now, we proceed to decide the second issue i.e. whether the sales tax subsidy received by assessee on generation of power through windmill is eligible for deduction u/s.80IA of the Act. Similar issue was raised before the Co-ordinate Bench of the Tribunal in the case of M/s.Patankar Wind Farm Pvt. Ltd. Vs. Dy. Commissioner of Income Tax (supra). The Tribunal after considering the decision of Hon ble Gauhati High Court in the case of Commissioner of Income Tax Vs. M/s. Meghalaya Steels Ltd. (supra) held as under: 24. Anoth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia in an appeal by the Department in the case of Commissioner of Income Tax Vs. Meghalaya Steels Ltd. (supra) has held that subsidies which goes to reimbursement of cost production of goods of a particular business would also have to be included under the head profits and gains of business or profession , and not under the head income from other sources . The contention of the ld. AR is that the word subsidies used by the Hon ble Apex Court in para 28 of the judgment includes all sorts of subsidies including sales tax subsidy and is not merely restricted to transport, power and interest subsidies. Therefore, the appeals may be remitted back to Commissioner of Income Tax (Appeals) for reconsideration of the issue in the light of decision of Hon ble Apex Court in the said case. To further support his contentions the ld. AR placed reliance on the decision of Mumbai Bench of the Tribunal in the case of Rupinder Singh Arora Vs. ITO (supra). 14. The Hon ble Apex Court in appeal by the Department has merely affirmed the decision of Hon ble Gauhati High Court. There is no reference or discussion on sales tax subsidy either by Hon ble High Court or by the Hon ble Supreme Court of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Patankar Wind Farm Pvt. Ltd. Vs. Dy. Commissioner of Income Tax (supra) has held that Sales Tax subsidy is not an operational subsidy and is not linked to the profits of industrial undertaking. The scheme under which the present assessee has received Sales Tax subsidy is same, therefore, there is no reason to take a different view. 15. The reliance placed by the ld. AR on CBDT Circular No. 39/2016 dated 29-11-2016 is again misplaced. The said circular specifically deals with transport, power and interest subsidies received by industrial undertaking. The ld. AR has drawn our attention to the words business subsidies used in para 2 of the said circular to contend that business subsidies includes sales tax subsidy. We are not in consonance with ld. AR in interpretation of expression business subsidies as used in para 2 of the said circular. The CBDT circular is with specific reference to transport power and interest subsidies. The expression business subsidies used in the body of circular refer to only those subsidies that are contained in subject of circular. Thus, the expression business subsidies in body of circular cannot be linked to any other subsidy. 16. The ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne (supra.), the State Government floated a scheme providing exemption of entertainment duty in Multiplex Theatre Complexes newly set up, for a period of three years and thereafter, payment of entertainment duty at rate of 25 percent for subsequent two years. The Hon'ble Apex Court after applying Purpose Test as envisaged in the case of Sahney Steel Press Works Ltd s Vs. CIT reported as 228 ITR 253 held that the payment received by the assessee under the scheme was capital in nature. In the present case, the Co-ordinate Bench of the Tribunal in the case of M/s. Patankar Wind Farm Pvt. Ltd. Vs. Dy. CIT (supra.), for assessment years 2004-05 2005-06 after considering the Sales Tax Benefit Scheme, threadbare and after discussing catena of judgments, concluded that the Sales Tax Benefit received by the assessee from the State Government is revenue receipt in the hands of assessee and the assessee is not eligible for claiming deduction u/s.80IA(4) of the Act. Since, the facts and purpose of subsidy received by the assessee in the present set of appeals is entirely different from purpose of subsidy received by assessee in the case of CIT Vs. Chaphalkar Brothers Pune (su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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