The Tax Publishers2012 TaxPub(DT) 1094 (Del-Trib) : (2012) 139 ITD 0628 : (2012) 013 ITR (Trib) 0340

INCOME TAX ACT, 1961

--Capital or revenue receipt--Sales-tax subsidy Subsidy given for industrialization in State's dispersal areas--The assessee-company was engaged in the business of manufacturing BOPP film which was a thin plastic film used for laminating papers and cardboard in the packaging industry. The return of income was filed declaring income at Rs. 16,08,25,590. The issue was regarding sales tax subsidy available to assessee for a period of five years under the Government of Maharashtra policy for the dispersal of industries outside Bombay-Thane-Pune belt and to attract industries to the underdeveloped and developing areas of the State. CIT(A) had granted the relief on the basis of the decision of the Special Bench of the Mumbai, Tribunal in the case of Dy. CIT v. Reliance Industries Ltd. (2005) 273 ITR 168 (Mum-Trib) :. This decision has been upheld by Bombay High Court. It can clearly be seen that a finding has been recorded that the object of the subsidy was to encourage the setting up of industries in the backward area by generating employment therein. Held: Since the relief was granted on the basis of the Special Bench decision of the Tribunal, which had been affirmed by the High Court, the purpose of subsidy remains the same. The facts remain the same, therefore, there was no fault in the order of the CIT(A) and accordingly, revenue's appeal was dismissed.

Income Tax Act, 1961, Section 4

INCOME TAX ACT, 1961

--Depreciation--Higher rateComputer accessories--Computer accessories are integral part of computer system and depreciation against these is liable to be allowed at 60 per cent. Thus, the AO was directed to re-work the depreciation and allow the same accordingly.

Income Tax Act, 1961, Section 32(1)

INCOME TAX ACT, 1961

--Exempt income--Disallowance under section 14AApplicability of rule 8D--The Mumbai High Court's decision in the case of Godrej & Boyce Mfg. Co. Ltd. v. Dy. CIT (2010) 328 ITR 81 (Bom) : 2010 TaxPub(DT) 2182 (Bom-HC), was the only High Court decision available on the applicability of the rule 8D and disallowance under section 14A. Rule 8D read with section 14A(2) is not arbitrary or unreasonable but can be applied only if assessee's method is not satisfactory. Rule 8D is not retrospective and applies from the assessment year 2008-09. For earlier years, disallowance has to be worked out on 'reasonable basis' under section 14A(1).

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