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TMI Blog2022 (2) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... ote of it is evidently clear from the scheme that the subsidy was for the purpose of encouraging establishment of large, medium and small scale industrial units in the State of West Bengal. As pointed out by the Hob ble Supreme Court the object of the assistance under the subsidy scheme was to enable the assessee to set up a new unit and, therefore, the receipt of the subsidy was on capital account. The test to be applied is the object for which the subsidy/assistance is given under the incentive scheme and the form or mechanism through which the subsidy is given would be irrelevant. The decision in Ponni Sugars and Chemicals Ltd. [ 2008 (9) TMI 14 - SUPREME COURT] was taken note of and this court has granted relief to the assessee in Rasoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the facts of the assessee s case the Tribunal has held assessee has not claimed any deduction in the earlier year towards the sales tax portion of the subsidy and hence the provision of Section 41(1) of the Act cannot be invoked in the facts of the assessee s case. The findings rendered by the Tribunal clearly point out the correct legal position. - Decided against revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... al Incentive Scheme 2000 could be taxed in the assessment years under consideration. The other question which would fall for consideration is whether the decision in the case of Sahney Steel and Press Works Limited Vs, CIT reported in 228 ITR 253 S.C. has to be applied. The Tribunal perused the West Bengal Incentive Scheme 2000 and noted that the scheme was intended to accelerate industrial development in the State of West Bengal and incentive was given for setting up industries in the State and for such purpose the amount of subsidy which was given, was in the nature of reimbursement of 75% of the Sales Tax/VAT actually paid by the assessee. The Tribunal rightly applied the "purpose test" and found that the quantification of the subsidy a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p of the new industry and only after commencement of production and, therefore, such a subsidy could only be treated as assistance given for the purpose of carrying on the business of the assessee. Consequently, the contentions raised on behalf of the assessee on the facts of that case stood rejected and it was held that the subsidy received by Sahney Steel could not be regarded as anything but a revenue receipt. Accordingly, the matter was decided against the assessee. The importance of the judgement of this court in Sahney Steel case lies in the fact that it has discussed and analysed the entire case law and it has laid down the basic test to be applied in judging the character of a subsidy. That test is that the character of the receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Hob'ble Supreme Court the object of the assistance under the subsidy scheme was to enable the assessee to set up a new unit and, therefore, the receipt of the subsidy was on capital account. The test to be applied is the object for which the subsidy/assistance is given under the incentive scheme and the form or mechanism through which the subsidy is given would be irrelevant. The decision in Ponni Sugars and Chemicals Ltd. (supra) was taken note of and this court has granted relief to the assessee in Rasoi Ltd.(supra). Subsequently in the case of Principal Commissioner of Income Tax-I, Kolkata Vs. Shyam Steel Industries Ltd. [2018] 93 taxmann. Com 495 (Calcutta), following the decision in Ponni Sugars and Chemicals Ltd. it was pointed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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