Reciept — Capital or revenue receipt — Electricity subsidy under the Rajasthan Investment Promotion Scheme was held to be a capital receipt as it was granted in larger public interest and it was linked to Capital Interest.[2019] 52 ITCD 5 (RAJ)
Facts: The assessee is a textile manufacturer. For the relevant year i.e. 2013-2014, it received the Technology Upgradation Fund, pursuant to a scheme drawn by the Union Textile Ministry. The payment of invasion of amounts by deferred repayment of interest, as it were. Under para 8 of the Technology Upgradation Fund programme (the amounts which were released under an agreement dated 12.07.2005) the amounts were to be treated as non-interest bearing term loans by the Bank and the repayment was to be worked out excluding the subsidy amount and the subsidy to be adjusted against the term loan account of the beneficiary after a lock in period of three years. The AO disallowed the amount and sought to tax it under the ground that the subsidy was a taxable income as it fell into Revenue stream. The CIT(A) granted partial relief; the ITAT allowed assessee’s appeal and rejected the Revenue’s appeal. Being aggrieved, revenue went on appeal before High Court.
Held, that as far as the question with regard to Focus Marketing Scheme was concerned, apparently the Central Government gave the subsidy to enhance indian export potential in the international market. It was not granted to meet the cost of expenditure to meet the competition of the Indian textile market. The ITAT took note of judgment in Ponni Sugars & Chemicals Ltd.(supra) and held that the amount was not an export incentive, but rather capital receipt and therefore, not taxable. This Court is of the opinion that there is no infirmity with the reason. As far as the electricity subsidy is concerned, the third ground i.e. electricity subsidy under the Rajasthan Investment Promotion Scheme was held to be a capital receipt by the CIT(A). It was held that this was granted in larger public interest and it was linked to capital interest, a similar scheme was that the amounts received in the similar scheme have to be capital receipt by a Division Bench of this Court in Commissioner of Income Tax, Ajmer vs. Shree Cement [D.B. Income Tax Appeal No.204/2010, decided on 22.08.2017]. This Court notices that the ratio of the rulings in Ponni Sugars & Chemicals Ltd.(supra) and Sahney Steel & Press Works Ltd. & Ors. (supra), applied. Consequently, we find no infirmity with the approach of the ITAT on this aspect as well. For the above reasons, no question of law arises for consideration.