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| The Tax Publishers2021 TaxPub(DT) 6400 (Gau-Trib) : (2021) 092 ITR (Trib) 0599 INCOME TAX ACT, 1961
Section 4
Intent of VAT subsidy under the Industrial Promotion Policy of the State was to attract fixed capital investment, accelerate industrial development and generate employment opportunities in the State of Assam. The mode of paying the subsidy was by way of remission of VAT collections, which was disbursed from the date of commercial production. As the object of the subsidy was to accelerate industrial development and generation of employment in the State, the incentive received in the form of VAT exemption was capital in nature and therefore, not chargerable to tax.
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Income - Capital or revenue receipt - VAT Subsidy - Taxability
Assessee received VAT subsidy under the Industrial Promotion Policy of the State of Assam in Category 'B' for substantial expansion and claimed it to be capital in nature. AO taxed the same as revenue receipt. Held: Object of granting subsidy was of the prime importance, and not the manner in which it was disbursed. In the instant case, Subsidy in the form of remission of VAT was granted for undertaking substantial expansion of the existing industrial unit. The intent of subsidy was to attract fixed capital investment, accelerate industrial development and generate employment opportunities in the State of Assam. The mode of paying the subsidy was by way of remission of VAT collections, which was disbursed from the date of commercial production. As the object of the subsidy was to accelerate industrial development and generation of employment in the State, the incentive received in the form of VAT exemption was capital in nature and therefore, not chargerable to tax.
Followed:CIT v. Century Plyboards (I) Ltd. ITA No. 2149/Kol/2019, dated 4-11-2020 : 2020 TaxPub(DT) 5064 (Kol-Trib), Shakti Flour Mills (P) Ltd. v. CIT (2017) 77 Taxmann.com 115 (Gau-HC) : 2017 TaxPub(DT) 110 (Gau-HC) and CIT v. Chapalkar Brothers (400 ITR 279), dated 7-12-2017.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2014-15
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