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TMI Blog2015 (11) TMI 1882X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Maharastra State. We have also examined the legal aspect whether the subsidy in question is capital in nature or revenue in nature. After going through the decisions cited before us and few of them already discussed by the learned CIT (A), we are of the considered opinion that the issue is squarely covered by those decisions especially by the decision of Reliance Industries Ltd. [ 2003 (10) TMI 255 - ITAT BOMBAY-J] - We are not discussing all the decision delivered on this issue although discussed during the course of hearing. Assessee company was justified in claiming the sales tax incentives as exempt and not to be taken into account in computing the taxable income. The view taken by the CIT (A) is accordingly confirmed. The ground of appeal raised by the Revenue is dismissed. - I.T.A. No.314/Nag/2014 - - - Dated:- 24-11-2015 - SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. Appellant by : Shre Narendra Kane, DR Respondent by: Ms. Vasanti R. Patel, AR O R D E R Per Mukul K. Shrawat, J.M. This is an appeal filed by the Revenue emanating from the order of the learned CIT (A)-I, Nagpur dated 07-03-2014. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pported by Form C or D was Rs.3,64,47,897/-. On this value sales tax subsidy was worked out @4%. This comes to Rs.14,57,916/-. The total sales tax subsidy claimed comes to Rs.97,47,804/-. Perusal of the sale bill raised by the assessee the assessee reveals that the assessee did not charge any amount under the head Sales Tax. In the invoices prepared issued to the purchasers, the column under ST/CST/VAT was written as Nil. The assessee did not maintain any separate Sales Tax Account / incentive account nor has shown any amount outstanding liability under the head. Assessee furnished the Xerox copies of Sales Tax return given to the Sales Tax Authority in support of their claim. The assessee also furnished the certificate of the entitlement issued by the Dy. Commissioner of Sales Tax, Nagpur and DIC, Nagpur. iii) Under the scheme assessee was not required to pay any Sales Tax to the Government during the specified period. iv) The turnover was exempt from the levy of Sales Tax for a specified period. It is not deferment but complete exemption from payment of Sales Tax. v) The notional Tax liability @12.5% 4% cannot be deducted from the profit simply because the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e conclusion when the issue before him is sub-judiced before the higher authority/court. There is substantial force in the contentions of the appellant therefore; I decline to agree with the version of the AO. The Ld. AO ought to have considered the decision of the Special Bench of ITAT, Mumbai, in the case of Reliance Industries Ltd. on the identical facts. Thus, taking into consideration the judicial decisions relied upon by the AR, I am of the considered opinion that the claim of the appellant for exemption of subsidy as capital in nature is allowable. Therefore, the addition made by the AO is directed to be deleted . 4. From the side of the Revenue, the learned DR, Mr. Narendra Kane appeared and supported the action of the AO mainly on the ground that the assessee was not required to pay any sales tax although calculated as per the sales tax bills, hence, it was in the nature of sales collection, therefore, not to be claimed as exempted amount. The learned DR has also pleaded that as per the observation of the AO the assessee was not maintaining a separate invoice or account in respect of the claim of incentives and sales tax collected. In the absence of any sales tax s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit which has been considered by the Appellant as the starting point for computation of income for the captioned assessment year. Thus, the Appellant has treated the sales tax collected as item of revenue in its books of accounts as also in the original return of income filed by it. However, in the revised return of income the Appellant has claimed the sales tax collected as capital receipt not liable to tax under the Act. A reliance was placed on the decision of the ITAT Mumbai Special Bench in the case of CIT Vs Reliance Industries Ltd. , 88 ITD 273, Sahney Steels, 228 ITR 253, CIT Vs Ponni Sugars and Chemicals, 306 ITR 392 (SC), CIT Vs Ruby Rubber Works Ltd., 178 ITR 181 [Ker.], CIT Vs PJ Chemicals , 201 ITR 830 (SC) etc. 6. We have heard both the sides at some length and carefully perused the materials before us in the light of the evidences filed and the precedence cited. Although, the issue in hand is now discussed at length by various Hon ble Courts and the legal points now stood settled but, it is always advisable to compare the facts of the present case with the facts of the precedence cited. In this regard, our attention has been drawn on a chart placed before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of product i.e. sales tax could not be collected before the month of production and its sale/ The assessee was entitled to receive subsidy after the manufacture and sale of product i.e. sales tax could not be collected before the month of production and its sale. Therefore, from the facts of the case, it is evident that the assessee had set up a unit at Sawanga District, Nagpur, a notified backward area. An investment in the initial fixed capital was made at Rs.283.01 lacs. An application was made to the District Industries Centre for issue of eligibility certificate for exemption from payment of sales tax under 1990 Scheme. The appellant was granted the eligibility certificate on 09-06-2000. As per the said eligibility certificate; the assessee was entitled for exemption from payment of sales tax up to Rs.254.70 lacs for a period of ten years from 15th July, 2000 to 14th July, 2010. Later on, further investment was enhanced and accordingly renewed eligibility certificate was granted. We have also considered the object of 1993 Scheme and the main feature was to grant incentive to the industries established in the backward areas for development of un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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