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ITAT upheld CIT(A)’s order treating interest subsidy as capital subsidy
ITAT upheld CIT(A)’s order treating interest subsidy as capital subsidy
M/s J.K. Cement was granted 5% interest subsidy and 50% exemption from electricity duty by Rajasthan Government. Assesse declared exemption on electricity duty as revenue receipt, and interest subsidy as capital receipt, utilized by assessee in payment of loan taken from financial institutions. AO treated interest subsidy as revenue receipt and made addition. CIT(A) treated it as capital subsidy and deleted addition. ITAT upheld CIT(A)’s order.-500608
1. M/s J.K. Cement had purchased cement division of J.K. Synthetics Ltd.
2. Assessee under the Raj Investment Promotion Policy- 2003, applied for subsidy and Rajasthan Government granted 5% interest subsidy and 50% exemption from electricity duty.
3. The exemption granted for electricity duty was declared as Revenue receipt whereas interest subsidy was declared as capital receipt.
4. Assessee utilized interest subsidy in payment of loan taken from financial institutions.
5. AO treated the interest subsidy received by the assessee as a Revenue receipt.
6. CIT(A) treated the receipt of interest subsidy as capital receipt, and deleted the addition.
On appeal, the ITAT held as under:
7. We find that in the case of ACIT Vs. Shree Cement Ltd ITA No. 614, 615 & 635/JP/2010 an identical fact that the interest subsidy was considered to be the capital subsidy.
8. Therefore, in the light of aforesaid judgments, we are of the view that the CIT(A) has rightly treated the interest subsidies as a capital receipt as it was received only for repayment of loan acquired for acquisition of capital assets.
9. Accordingly, the Revenue fails on this issue.
Case Reference - Dy. Commissioner of Income Tax Vs M/s J.K. Cement Ltd.
IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH "A", LUCKNOW
BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER
AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER
ITA No.499/LKW/2010
(Assessment Year 2007-08)
