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TMI Blog2020 (6) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax-II, Jaipur was not justified in setting aside the order of the assessing officer." 2. Briefly stated, the facts of the case are that the assessee company is engaged in the business of manufacturing of winding wires, copper & aluminium products, transformers and parts thereof. The assessment was completed u/s 143(3) vide order dated 16.12.2016 at assessed income of Rs. 4,69,05,210/-. Subsequently, on perusal of the records, the ld. Pr. CIT noted that the case of the assessee was selected for complete scrutiny for various reasons including "large amount not credited to P & L A/c as per schedule A-01". It was further observed by the Ld. Pr. CIT that during the previous year relevant to assessment year under consideration, an amount of Rs. 66,86,280/-was received by the assessee under the scheme of Rajasthan Investment Promotion Scheme, 2010 as Investment and Employment Subsidy and the said amount was credited in Capital Reserve Account instead of being credited in the profit/loss account. It was further observed by the ld. Pr. CIT that where the subsidy is in nature of a capital receipt, as per the law, the subsidy has to be considered under Explanation-10 to section 43(1) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer is erroneous in so far as it prejudicial to the interest of revenue as the said order has been passed by the Assessing Officer in a routine and perfunctory manner without verification of the nature and use of the subsidy received from Rajasthan Government and without examining, the application of Explanation 10 to section 43(1) in the case of the assessee. The order of the Assessing Officer is therefore liable to revision under clause (b) and clause (a) of section 263 of the Income Tax Act. Hence, the assessment order is set aside on the issue of subsidy received from the State Government and as per law to be redone afresh do novo in the light of the observation made in this order and with direction to the Assessing Officer to verify and examine the claim made by the assessee regarding the receipt of the subsidy from the State Government and its use and finalized the assessment in accordance with the prevailing law to quantify the correct income of the assessee liable to tax for AY 2014-15 after according opportunity to the assessee. The order of the AO is, accordingly, set aside on the issues as discussed above." 3. Against the aforesaid findings of ld Pr. CIT, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CLCSS subsidy, the same was reduced from the cost of plant and machinery and on reduced cost, depreciation was allowed. It was further submitted by the ld. AR that similarly for A.Y 2013-14, no addition was made by the AO towards such subsidy received under RIPS 2010 which was received by the assessee amounting to Rs. 6,03,521/-. Further, it was submitted that during the year under consideration, the assessee has received subsidy amounting to Rs. 66,86,280/- and during the course of assessment proceedings, it was submitted before the AO vide submission dated 22.11.2016 that it was capital subsidy which was received by the assessee under the Rajasthan Investment Promotion Scheme, 2010 and which was credited in the Capital Reserve Account and not credited in the profit/loss account and further reliance was placed on the decision of Hon'ble Rajasthan High Court in case of Shree Cement Limited (supra). It was submitted that basis the submission of the assessee and position which has been accepted in the previous assessment years, and taking into consideration the decision of the Hon'ble Rajasthan High Court, the Assessing officer examined the matter and didn't make any addition/adjustm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4, there is no basis in the contention so advanced by the ld. AR that the matter was examined earlier by the AO. The ld CIT DR further submitted that each year has to be examined independently and principle of res judicata does not apply as far as income tax proceedings are concerned. Further, the reliance was placed on the Co-ordinate Bench decision in case of Aashiyana Jaipur Developers (P) Ltd vs. Pr. CIT-III, Jaipur in ITA No. 713/JP/2019 dated 25.11.2019, Sh. Hari Ram Yadav vs. Pr. CIT, Alwar in ITA No. 215/JP/2018 dated 31.12.2018 and decision of Hon'ble Supreme Court in case of Denial Merchants P. Ltd. vs. ITO dated 29.11.2017 6. We have heard the rival submissions and perused the material available on record. We find that the assessee company has been held entitled to the subsidy under Rajasthan Investment Promotion Scheme, 2010 (RIPS 2010) by the District Level Screening Committee. As per the entitlement certificate dated 30.03.2011 issued by the District Level Screening Committee, the assessee company shall be entitled for 30% investment subsidy and 20% employment subsidy for period of 7 years from the date of issuance of the certificate. Besides, the assessee company is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in received subsidy of Rs. 6,03,521/- under RIPS 2010 and the assessment order was passed u/s 143(3) dated 19.02.2016 by the same Assessing officer (ACIT Circle 4, Jaipur) wherein the same was not brought to tax. In the impugned assessment year 2014-15, the assessee company has further received subsidy of Rs. 66,86,280/- under RIPS 2010 and the case was selected for scrutiny and one of the reasons for selection was the amount of subsidy not credited to the profit/loss account. Notice u/s 143(2) was issued on 28.08.2015 and thereafter, notice u/s 142(1) along with questionnaire was issued on 5.7.2016 and in response thereof, the assessee filed written submission and books of accounts were produced which were examined by the AO on test check basis and matter was discussed with the AR of the assessee and the assessment was completed u/s 143(3) vide order dated 16.12.2016 wherein no addition has been made by the Assessing officer (ACIT Circle 4, Jaipur). At the same time, we find that during the course of assessment proceedings, the matter relating to subsidy was taken up for consideration by the Assessing officer and the assessee was asked to file its submissions/explanation which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court at the relevant point in time. Therefore, in such circumstances, where the Assessing officer has followed the decision of the Hon'ble Jurisdictional High Court, the order so passed by him cannot be held as erroneous. The ld Pr. CIT has not pointed out as to how the said decision is not applicable or the same has been wrongly followed by the Assessing officer. In this regard, reference can be drawn to the decision of the Hon'ble Supreme Court in case of CIT vs G.M Mittal Stainless Steel (P) ltd (supra) wherein it was held as under: "5. In this particular case, the CIT has not recorded any reason whatsoever for coming to the conclusion that the Assessing Officer was erroneous in deciding that the power subsidy was capital receipt. Given the fact that the decision of the jurisdictional High Court was operative at the material time, the Assessing Officer could not be said to have erred in law. The fact that this Court had subsequently reversed the decision of the High Court would not justify the CIT in treating the Assessing Officer's decision as erroneous. The power of the CIT under section 263 of the Act must be exercised on the basis of the material that was available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer who had acted in terms of the High Court's decision had acted erroneously." 9. In the instant case, at the time when the power under section 263 was exercised by the ld Pr CIT, there is nothing on record to suggest that the decision of the Hon'ble Rajasthan High Court had been set aside by Hon'ble Supreme Court or has been subject matter of appeal before the Hon'ble Supreme Court, in such circumstances, it would not be open to the ld Pr. CIT to hold that the Assessing Officer who had acted in terms of the High Court's decision had acted erroneously. 10. We have also gone through the decisions cited by the ld CIT DR, however, we find that the same have been rendered in the peculiar facts and circumstances of the case and are thus distinguishable. 11. In the entirety of facts and circumstances of the case and in light of aforesaid discussion and following the decision referred supra, we are of the considered view that the ld Pr CIT was not correct in exercising jurisdiction under section 263 of the Act and the order passed by the ld Pr. CIT passed u/s 263 is accordingly set-aside and the order passed by the AO u/s 143(3) is sustained. In the result, appeal of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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