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TMI Blog2019 (7) TMI 1762X X X X Extracts X X X X X X X X Extracts X X X X ..... capital field, hence the subsidy received is capital receipt. We accordingly, reject the grounds of appeal raised by Revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... ning to (Financial Year) Nature Amount Rs. Bokaro Capital Investment Subsidy 4,00,00,000 Bokaro 2008-2009 Capital Investment Subsidy (On payment of commercial taxes) 1,16,49,000 Bokaro 2009-2010 Capital Investment Subsidy (On payment of commercial taxes) 4,57,33,000 Sub Total A 9,73,82,000 Jejuri 2009-2010 Industrial Promotion Subsidy (IPC) 9,02,636 Jejuri 2010-2011 Industrial Promotion Subsidy (IPC) 36,22,104 Sub Total B 45,24,740 Grand Total 10,19,06,740 The above subsidy has been given in respect of appellant‟s unit in Bokaro (Jharkhand) and Jejuri near Pune. Coming to the issue of subsidy of Bokaro unit, the appellant has submitted that the company has set up Air Separation Plant in the premises of Bokaro Steel Plant in A.Y. 2008-09 and the Commercial production commenced on 13/12/2008. The appellant claims that the said plant is eligible for Investment Promotion Incentive i.e. Capital Subsidy under Jharkhand Industrial Policy, 2001. As per the scheme the appellant has received capital investment subsidy of 4 crores (5% of fixed capital investment subject to maximum of 4 crores) and 75% of Commercial taxes (VAT and CST) paid. From the perusal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granted and not the manner in which the same was granted. From the Scheme of subsidy granted by both the governments, it is clear that purpose of subsidy was for growth of industrial development and therefore, the same is required to be treated as capital receipt, Accordingly, the AO is directed to delete the addition of ₹ 10,19,06,740/-. Accordingly the ground is allowed." 6. The Revenue is in appeal against order of CIT(A). 7. The learned Authorized Representative for the assessee pointed out that the issue stands covered by the ratio laid down by Pune Bench of Tribunal in Innoventive Industrial Limited Vs. DCIT in ITA Nos.601/PN/2013 and 215/PN/2014, relating to assessment years 2009-10 and 2010-11, order dated 24.03.2017, wherein the scheme of Maharashtra i.e. Package Scheme of Incentive, 2007 (PSI, 2007) was elaborately considered and was for accelerating industrial growth in Maharashtra, which was held to be capital incentive. It was pointed out by the learned Authorized Representative for the assessee that in the hands of assessee, subsidy was received on account of two units; one in Jharkhand for which copy of scheme is placed at pages 61 to 77 of Paper Book, second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly the excise duty payable on the price of levy sugar. Clause 7 of the aforesaid scheme was set out in para 3 of the judgment as follows:- "The beneficiaries of the incentive scheme shall ensure that the surplus funds generated through sale of the incentive sugar are utilised for the repayment of term loans, if any, outstanding from the Central financial institutions. The sugar factories should submit utilisation certificates annually from Chartered/Cost Accountant, holding certificate of practice. Utilisation certificate in respect of each sugar season during the incentive period should be furnished on or before 31st December of the succeeding year. Failure to submit utilisation certificate within the stipulated time may result not only in the termination of release of incentive free sale quota, but also in the recovery of the incentive free sale releases already made, by resorting to adjustment from the free sale releases of future years." The Court then referred to the background of the incentive scheme and to the fact that the Sampat Committee was set up to examine the question relating to the economic viability of new sugar factories. The Court then found in para 9 of the ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unit then the receipt of the subsidy was on capital account. Therefore, it is the object for which the subsidy/assistance is given which determines the nature of the incentive subsidy. The form of the mechanism through which the subsidy is given is irrelevant." Sahney Steel was distinguished, in para 16 by then stating that this Court found that the assessee was free to use the money in its business entirely as it liked. Finally, it was found that, applying the test of purpose, the Court was satisfied that the payment received by the assessee under the scheme was not in the nature of a helping hand to the trade but was capital in nature." 11. The Apex Court in CIT Vs. Chaphalkar Brothers Pune (supra) thus, held as under:- "What is important from the ratio of this judgment is the fact that Sahney Steel was followed and the test laid down was the "purpose test". It was specifically held that the point of time at which the subsidy is paid is not relevant; the source of the subsidy is immaterial; the form of subsidy is equally immaterial." 12. The Apex Court noting the facts before it observes, where the object of scheme was to encourage development of Multiplex Theatre Complexes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anction letter dated 12.03.2012 for ₹ 4 crores and 10.10.2011 for ₹ 4.57 Crores." 14. The sanction letter for capital subsidy of ₹ 400 lacs specifies as under:- "2. The discussion was held for Capital Subsidy payable (first part) for following Mega Industrial Units:- I…….. As the Capital Investment by the unit (Inox Air Products Limited), Bokaro Steel City, Bokaro) is ₹ 214.24 crores, the unit falls under Category "A‟ and hence it is recommended to sanction capital investment subsidy of ₹ 4.00 crores (₹ 400 lacs). The List for Mega project capital investment subsidy (for 1st part) also specifies such subsidy as Capital Investment Subsidy." 15. The sanction letter for payment of Capital Subsidy (Against payment of commercial taxes for FY 2008-09 & FY 2009-10 dated 10.10.2011 specifies as under:- "The sanction towards capital subsidy (Against payment of actual commercial taxes) of ₹ 116.49 lacs for FY 2008-09 is granted vide letter No.2317 dated 10.10.2011. 2. The capital investment (commercial taxes) subsidy sanction is given by Screening Committee meetings held on 02.12.2010 & 22.03.2011 under chairmanship of Chie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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