D.b. Income Tax Appeal v. M/S Shree Cement Limited, Bangur Nagar, Masuda Road, Beawar

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR 1. D.B. Income Tax Appeal No. 27 / 2012 Commissioner of Income Tax-I, Ajmer ----Appellant Versus M/s Shree Cement Limited, Bangur Nagar, Masuda Road, Beawar. ----Respondent 2. D.B. Income Tax Appeal No. 28 / 2012 Commissioner of Income Tax, Ajmer ----Appellant Versus M/s Shree Cement Limited, Bangur Nagar, Masuda Road, Beawar. ----Respondent 3. D.B. Income Tax Appeal No. 226 / 2016 Pr. Commissioner of Income Tax, Ajmer ----Appellant Versus M/s Shree Cement Limited, Bangur Nagar, Masuda Road, Beawar. ----Respondent _____________________________________________________For Appellant(s) : Mrs. Parinitoo Jain with Ms. Shiva Goyal For Respondent(s) : Mr. S. Ganesh, Sr. Adv. with Mr. Anant Kasliwal, Mr. Neeraj Seth, Ms. Charu Pareek and Mr. Nitin Jain _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGH Judgment 22/08/2017 1.In all these appeals common question of law and facts are involved hence they are decided by this common judgment. 2. By way of these appeals, the appellant has challenged thejudgment and order of the Tribunal whereby Tribunal hasdismissed the appeal of the department and confirmed the orderof the CIT(A). 3.This court while admitting the appeals framed followingsubstantial questions of law:- 3.1Appeal no.27/2012 “Whether in the facts and circumstances ofthe case, the tribunal was justified in holdingthat the sales tax subsidy received by theassessee for Rs.21,92,36,206/- in the formof sales tax exemption was a capital receiptand not a revenue receipt and also not to beincluded in book profit u/s 115JB ignoringthe purpose of subsidy which was given toenhance the production employment andsales in the State of Rajasthan which arepost operational activities?” 3.2Appeal no.28/2012 “Whether in the facts and circumstances ofthe case, the tribunal was justified in holdingthat the sales tax subsidy received by theassessee for Rs.25,53,71,477/- in the formof sales tax exemption was a capital receiptand not a revenue receipt and also not to beincluded in book profit u/s 115JB ignoringthe purpose of subsidy which was given toenhance the production employment andsales in the State of Rajasthan which arepost operational activities?” 3.3Appeal no.226/2016 “Whether the tribunal was legally justified inholding the order of CIT(A) whereby the addition of Rs.21,92,36,206/- was deletedon account of sales tax subsidy made by theassessing officer u/s 154 by treating thesales tax subsidy of revenue nature insteadof capital nature for the computation ofincome under the normal provisions of theAct?” 4.In view of our decision taken today, in tax appeal no.204/2010 where we have held it to be a capital receipt and notrevenue receipt holding as under:- “6.1In view of the contentions which havebeen raised by the counsel for thedepartment and discussions made by the AOas well as CIT(A) in our considered opinion,the tax liability, we have considered originalpurpose for which the Scheme has beenfloated by the State Government by goingthrough the Scheme. 6.2It is very clear that because at therelevant time the State Government needemployment generation therefore it hascome out with the Generation ofEmployment for which capital investmentwas necessary and therefore to boost capitalinvestment scheme has been floated forexemption of sales tax which can becapitalised against the capital which hasbeen invested against the loss of interestwhich they have made investment apartfrom 1.50 crores and over a period of 11years they have to realised the investmentmade. 6.2It is very clear that because at therelevant time the State Government needemployment generation therefore it hascome out with the Generation ofEmployment for which capital investmentwas necessary and therefore to boost capitalinvestment scheme has been floated forexemption of sales tax which can becapitalised against the capital which hasbeen invested against the loss of interestwhich they have made investment apartfrom 1.50 crores and over a period of 11years they have to realised the investmentmade. 6.3We have gone through the Schemeand relevant Budget Speech of the FinanceMinster and all other documents and moreparticularly the tribunal while consideringthe Scheme has analyised completely inpara no.5.13 and has come to the conclusionin view of the observations made by theSupreme Court in Pony Sugar (supra). 6.4In our considered opinion, the tribunalhas not committed any error and view takenby the Tribunal is just and proper. It is nothing but capital investment by investinghuge amount of 1.57 crores. 6.5In our considered opinion, the viewtaken by the tribunal is required to beupheld and the same is upheld. 7.In that view of the matter, the issue isanswered in favour of the assessee andagainst the department.” 5.In view of the above, the basis on which the AO has passedthe order will not survive. 6.The issue is answered in favour of the assesee and against the department. 7.The appeals stand dismissed. (INDERJEET SINGH)J. (K.S.JHAVERI)J. Bmg 52, 53 & 58.