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TMI Blog2022 (7) TMI 953X X X X Extracts X X X X X X X X Extracts X X X X ..... ) at a total income of Rs.21,87,81,512/-. While doing so, the AO made addition of Rs.19,93,315/- under the provisions of section 14A of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') and also treating the subsidy received from the Govt. of Maharashtra under the Industrial Promotion Subsidy Package Scheme, 2007 of Rs.5,98,28,000/- as revenue receipt. 3. Being aggrieved by the above disallowance, an appeal was preferred before the CIT(A), who vide impugned order had confirmed the disallowance u/s 14A. However, as regards the addition on account of subsidy held that the subsidy received is capital receipt following the decision of Co-ordinate Bench of this Tribunal in the case of Innoventive Industries Ltd. in ITA No.601/PN/2013, order dated 24.03.2017. 4. Being aggrieved by the order of CIT(A) in upholding the disallowance u/s 14A, the assessee is in appeal before us in ITA No.225/PUN/2019 and being aggrieved by the decision of CIT(A) in holding that the subsidy received from the Govt. of Maharashtra as capital receipt which is against the Revenue, Revenue is in appeal in ITA No.199/PUN/2019. 5. Now, we shall take up the assessee's appeal. It is contended before u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arriving at average value of investment, on the similar lines, the decision of the Hon'ble Delhi High Court in the case of ACB India Ltd. Vs. Assistant Commissioner of Income Tax, 374 ITR 108 and the decision of the Madras High Court in the case of Marg Ltd. Vs. CIT, 318 CTR (Mad.) 148 and followed subsequently by the Hon'ble Madras High Court in the case of CIT Vs. Shriram Ownership Trust 318 CTR (Mad.) 233 and also by the Karnataka High Court in the case of Pragathi Krishna Gramin Bank Vs. Jt. CIT, 95 Taxman.com 41 (Kar.). 9. In light of the above decisions, we find merit in the submissions made on behalf of the assessee that the amount of investment which yielded exempt income alone should be taken into consideration for the purpose of arriving at average value of investment as envisaged under sub clause (iii) of sub-rule (2) of Rule 8D of the Rule. Accordingly, we restore the matter back to the file of Assessing Officer for the purpose of computing the amount of disallowance in the above mentioned manner. 10. In the result, the appeal of assessee is partly allowed for statistical purposes. 11. Now, we shall take up the appeal of Revenue in ITA No.199/PUN/2019. The issue in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of benefits by way of Electricity Duty exemption, exemption from payment of Stamp Duty, refund of royalty and any other benefits availed by the eligible Mega Projects under PSI 2001/2007, whichever is lower. A careful perusal of the PSI, 2007 emphatically manifests that the subsidy had been granted to encourage industrial growth in less developed areas of the State. The quantification of subsidy is linked with the amount of investment made in setting up of the eligible units. However, the disbursal of the subsidy is in the form of refund of VAT and CST paid on sale of excavators. In our considered opinion, the decisive factor for considering the nature of subsidy as a capital or revenue receipt is the 'purpose' for which the subsidy has been granted and not the manner of its disbursal. The Hon'ble Supreme Court in Sahney Steel & Press Works Ltd. v. CIT [1997] 94 Taxman 368/228 ITR 253 has held in the facts of that case that the operational subsidy received after the commencement of business was a revenue receipt but simultaneously laid down the ratio decidendi of applying the 'purpose test' for ascertaining the true nature of subsidy. The purpose test has been r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not relevant; the source of the subsidy is immaterial; the form of subsidy is equally immaterial. 22. Applying the aforesaid test contained in both Sahney Steel as well as Ponni Sugar, we are of the view that the object, as stated in the statement of objects and reasons, of the amendment ordinance was that since the average occupancy in cinema theatres has fallen considerably and hardly any new theatres have been started in the recent past, the concept of a Complete Family Entertainment Centre, more popularly known as Multiplex Theatre Complex, has emerged. These complexes offer various entertainment facilities for the entire family as a whole. It was noticed that these complexes are highly capital intensive and their gestation period is quite long and therefore, they need Government support in the form of incentives qua entertainment duty. It was also added that government with a view to commemorate the birth centenary of late Shri V. Shantaram decided to grant concession in entertainment duty to Multiplex Theatre Complexes to promote construction of new cinema houses in the State. The aforesaid object is clear and unequivocal. The object of the grant of the subsidy was in o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the fact that the subsidy took a particular form and the fact that it was granted only after commencement of production would make no difference. 26. In coming to the West Bengal cases, we find that the West Bengal Finance Act, 2003 which amended the Bengal Amusements Tax Act of 1922 also provided: The Bengal Amusements Tax Act, 1922. The provision seeks to provide, in order to encourage development of multiplex theatre complex, a very modern and highly capital-intensive entertainment centre, financial assistance to the proprietors of such complex by allowing them to retain, by way of subsidy, the amount of entertainment tax collected against the value of ticket for admission to such multiplex theatre complex for a period not exceeding four years; 27. Since the subsidy scheme in the West Bengal case is similar to the scheme in the Maharashtra case being to encourage development of Multiplex Theatre Complexes which are capital intensive in nature, and since the subsidy scheme in that case is also similar to the Maharashtra cases, in that the amount of entertainment tax collected was to be retained by the new Multiplex Theatre Complexes for a period not exceeding four year ..... X X X X Extracts X X X X X X X X Extracts X X X X
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