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TMI Blog2021 (3) TMI 504X X X X Extracts X X X X X X X X Extracts X X X X ..... e has been held to be capital in the earlier year by the ld. CIT (A) as well as by the Tribunal by following the principle laid down by the Hon ble Supreme Court in the case of Ponni Sugars and Chemicals Ltd., [ 2008 (9) TMI 14 - SUPREME COURT] Similarly, the relevant finding on the issue of interest subsidy on term loan for technical upgradation fund scheme by the Central Government. As relying on INDOCOUNT INDUSTRIES LTD. [ 2018 (2) TMI 2024 - ITAT DELHI] subsidy received by the assessee is capital in nature. Appeal of the revenue is dismissed. - I.T.A. No.7505/DEL/2017 - - - Dated:- 6-1-2021 - Shri Amit Shukla, Judicial Member And Shri O.P. Kant, Accountant Member For the Appellant : Ms. Sunita Singh, CIT-D.R. For th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax subsidy and refund of interest subsidy of term loan is to be treated as capital receipts. 4. None appeared on behalf of the assessee. However, ld. CIT-DR candidly admit that this issue stands covered in favour of the assessee by the decision of the Tribunal in assessee s own case for Assessment Year 2012-13 wherein Revenue s appeal has been dismissed. 5. On perusal of the record and the impugned order, it is seen that the Package Scheme of Incentives (PSI) introduced by the Government of Maharashtra was for the purpose of encouraging entrepreneurs set up/expansion units in the developing region of the State. Further PSI was revised for intensifying and accelerating the process of dispersal of industries to the less developed areas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the customized package, or the amount of tax payable under MVAT, 2002 and CST Act, 1956 by the eligible Mega Projects in respect of sale of finished products etc., whichever is lower. d. Recital 1 of the Memorandum of Understanding dated 26-09- 2007 entered into by the appellant company with the Govt, of Maharashtra (copy placed at page 114 to 121 of the APB) also highlights the purpose for which the subsidy in question was given. It reads, to quote,(page 114 of the APB), WHEREAS : 1. The GOVERNMENT has framed a policy for rapid industrialization of the Developing regions of the State of Maharashtra as a whole and for the purpose the GOVERNMENT has felt it necessary to reduce progressively disparities in the development between d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate. Setting up of industrial units in the backward areas being the purpose for which subsidy has been granted, it is submitted, the same is clearly capital in nature not chargeable to tax. (g) In terms of the Circular No.142 dated 1st August, 1974 issued by the CBDT, any incentive received for helping growth of industries and not for supplementing profits is capital in nature not chargeable to tax. 6. Since the object of the subsidy was setting up of Industrial units in backward areas the same has been held to be capital in the earlier year by the ld. CIT (A) as well as by the Tribunal by following the principle laid down by the Hon ble Supreme Court in the case of Ponni Sugars and Chemicals Ltd., (2008) 306 ITR 392 (S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, be treated in the nature of a capital receipt and not liable to tax under the provisions of the Act. I have gone through the contention of the appellant and find merit in its case, as has been elaborately discussed what is important to decide the case as to whether the subsidy is on capital field or revenue field is the purpose for which the subsidy is granted if the subsidy is granted for setting up of units in backward area or for that matter it is allowed on capital outlays the same is deemed to be capital receipt and if the same is granted for supporting trading receipt the same is revenue in nature and that method and mode of payment is not the determinative factor to decide the same. The jurisdictional ITAT Delhi has in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme was given for technological upgradation, in order to incentive-wise the textile industry and for promoting capacity expansion, globalization of textile trade and employment generation. Thus, applying the purpose test laid down in Ponni Sugar, such subsidy is held to be in the nature of capital receipt. It is noticed that the aforesaid issue is also clearly covered by the Punjab Haryana High Court in the case of Shamlal Bansal relied upon by the A/R of the appellant, a copy whereof has been placed ON RECORD. On perusal of the said decision, it is noticed that the Punjab Haryana High Court held that subsidy received under the TUF scheme is in the nature of capital receipt. Considering the facts of the case and also takin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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