The Tax Publishers2020 TaxPub(DT) 2347 (Kol-Trib)

INCOME TAX ACT, 1961

Section 4

Merely because amount of subsidy given by State Govt. was equivalent to 75% of sales tax paid by assessee, it did not imply that same was in the form of refund of sales tax paid. Since subsidy was for setting up of large/medium/small scale eligible unit in Group B and C areas in the State of West Bengal and competent authority had issued eligibility certificate (WBIDC) to assessee and as assessee fulfilled all the conditions as laid in WBIS, 2000 Scheme, the industrial promotion assistance it received was on capital account.

Income - Capital or revenue receipt - Sales-tax subsidy given by State Govt. as industrial promotion assistance -

Assessee-company received sales-tax subsidy from West Bengal Industrial Development Corporation ('WBDIC') as Industrial Promotion Assistance but did not offer the same to tax. AO taxed the same as revenue receipt in the form of refund of sales-tax paid.Held: For determining nature of incentive/subsidy, object for which subsidy/assistance is given would be the deciding factor and the form or method of payment through which subsidy is given is irrelevant. In assessee's case, merely because amount of subsidy was equivalent to 75% of sales-tax paid by assessee did not imply that same was in the form of refund of sales tax paid. Since subsidy was for setting up of large/medium/small scale eligible unit in Group B and C are as in the State of West Bengal and competent authority WBZIDC had issued eligibility certificate to assessee and as assessee fulfilled all the conditions as laid in WBIS, 2000 Scheme, the industrial promotion assistance it received was on capital account, and, therefore, could not be taxed.

Relied:CIT v. Ponni Sugars & Chemicals Ltd. (2008) 306 ITR 392 (SC) : 2008 TaxPub(DT) 2302 (SC) and Sahney Steel and Press Works Ltd. & Ors. v. CIT 1997 TaxPub(DT) 1342 (SC). Relied:CIT v. Rasoi Ltd. (2012) 335 ITR 428 (Cal.) : 2012 TaxPub(DT) 715 (Cal-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2010-11

IN THE ITAT, KOLKATA BENCH

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