M/s. Alkoplus Producers Pvt. Ltd., Latur V. Deputy Commissioner of Income-tax, Latur

ITA 1129/PUN/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9375 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-04-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 27-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Cost of acquisition; Capital receipt; Revenue expenditure
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER . / ITA NO.1129/PUN/16 / ASSESSMENT YEAR : 2011-12 M/S. ALKOPLUS PRODUCERS PVT. LTD., PLOT NO.3, ADDITIONAL MIDC, LATUR 413 512 PAN : AABCI5135L VS. DCIT, CIRCLE -3, NANDED (APPELLANT) (RESPONDENT) . / ITA NOS.1222/PUN/16 AND 23/PUN/2017 / ASSESSMENT YEARS : 2011-12 AND 2012-13 DCIT, LATUR CIRCLE, LATUR ACIT, LATUR CIRCLE, LATUR VS. M/S. ALKOPLUS PRODUCERS PVT. LTD., PLOT NO.3, ADDITIONAL MIDC, LATUR 413 512 PAN : AABCI5135L (APPELLANT) (RESPONDENT) C.O. NOS. 37 AND 61/PUN/2018 (ARISING OUT OF ITA NOS. 1222/PUN/2016 AND 23/PUN/2017 / ASSESSMENT YEARS : 2011-12 AND 2012-13 M/S. ALKOPLUS PRODUCERS PVT. LTD., PLOT NO.3, ADDITIONAL MIDC, LATUR 413 512 PAN : AABCI5135L VS. DCIT, LATUR CIRCLE, LATUR CROSS OBJECTOR APPELLANT IN THE APPEAL M/S. ALKOPLUS PRODUCERS PVT. LTD., A.YRS. 2011-12 AND 2012-13 2 / ORDER PER R.S.SYAL, VP : THIS BATCH OF FIVE APPEALS COMPRISES OF 3 CROSS APPEALS INCLUDING A CROSS OBJECTION FOR THE ASSESSMENT YEAR 2011-12 AND TWO CROSS APPEALS FOR THE ASSESSMENT YEAR 2012-13. SIN CE SOME OF THE ISSUES RAISED IN THESE APPEALS ARE COMMON, WE ARE, TH EREFORE, PROCEEDING TO DISPOSE THEM OFF BY THIS CONSOLIDATED ORDER F OR THE SAKE OF CONVENIENCE. A.Y. 2011-12 : 2. THE FIRST GROUND OF THE REVENUES APPEAL (ITA NO.1222/PUN/2016) IS AGAINST THE DELETION OF ADDITION OF RS.11,29,894/- MADE BY THE ASSESSING OFFICER (AO) ON A CCOUNT OF DISALLOWANCE OF COMMISSION PAYMENT. ASSESSEE BY SHRI RAJAN VORA & SHRI RAJENDRA AGIWAL RESPONDENT BY MS. NANDITA KANCHAN DATE OF HEARING 03-04-2019 DATE OF PRONOUNCEMENT 04-04-2019 M/S. ALKOPLUS PRODUCERS PVT. LTD., A.YRS. 2011-12 AND 2012-13 3 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESS EE IS ENGAGED IN THE MANUFACTURING OF EXTRA NEUTRAL ALCOHOL FROM GRAIN (JAWAR). IT PAID COMMISSION OF RS.22,59,788/- TO KASTURCHA ND RAGHUNATH & SONS. ON BEING CALLED UPON TO SUBSTANTIATE THE PAYMENT, THE ASSESSEE SUBMITTED VOUCHERS AND BILLS FOR THE PAYMENT OF SUCH COMMISSION. THE AO OBSERVED THAT SOME O F THE BILLS WERE HANDMADE AND SELF-MADE VOUCHERS AND FURTHER TH ERE WERE DISCREPANCIES IN SOME VOUCHERS AND BILLS. HE MADE DISALLOWANCE AT 50% OF TOTAL COMMISSION PAID BY THE ASSESSEE , WHICH RESULTED INTO AN ADDITION OF RS.11,29,894/-. THE LD. CIT(A) DELETED THE ADDITION. 4. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELEVA NT MATERIAL ON RECORD, IT IS OBSERVED THAT THE ASSESSEE PAID COMMISSION OF RS.22.59 LAKHS TO KASTURCHAND RAGHUNATH & SONS, WHICH FACT WAS CLEARLY STATED BEFORE THE AO AS HAS ALSO BE EN RECORDED IN THE ASSESSMENT ORDER. NOT ONLY THAT, THE ASSES SEE ALSO FURNISHED DETAILS OF COMMISSION. THE AO PROCEEDED TO MAK E AN AD HOC DISALLOWANCE AT 50% OF COMMISSION WITHOUT EVEN ENDEAVORING TO VERIFY THE GENUINENESS OF SUCH PAYMENT FRO M KASTURCHAND RAGHUNATH & SONS. HE SIMPLY STATED THAT VOUC HERS WERE HANDMADE AND THERE WERE DISCREPANCIES IN SOME VOUC HERS AND M/S. ALKOPLUS PRODUCERS PVT. LTD., A.YRS. 2011-12 AND 2012-13 4 BILLS. HE, HOWEVER, FAILED TO SPELL OUT ANY SUCH DISCREPANC Y IN ANY OF THE VOUCHERS PRODUCED BY THE ASSESSEE. UNDER THE GIVEN CIRCUMSTANCES, WE ARE SATISFIED THAT THE LD. CIT(A) WAS JUSTIF IED IN DELETING THE ADDITION. WE, THEREFORE, UPHOLD THE SAME. 5. THE SECOND GROUND OF THE REVENUES APPEAL IS AGAINST DELETION OF ADDITION ON ACCOUNT OF INTEREST ON INTEREST-FREE LOA NS. BRIEFLY STATED, THE FACTS OF THIS GROUND ARE THAT THE AO OBSER VED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE ASSE SSEE GAVE ADVANCE OF RS.2,03,05,669 AND RS.62,65,000/- TO VYAN JAN HOTELS AND INDO SPRINT RESPECTIVELY, WITHOUT CHARGING ANY INTEREST. I T WAS FURTHER FOUND THAT THE ASSESSEE DID PAY INTEREST. THE A O MADE DISALLOWANCE AT 12% OF THE LOAN AMOUNT OF RS.2.65 CRORE, W HICH RESULTED INTO AN ADDITION OF RS.31,88,480/-. THE LD. CIT( A) ALLOWED PART RELIEF AND SENT SOME PART OF THE ADDITION BACK TO THE AO FOR VERIFICATION WITH CERTAIN DIRECTIONS. THOUGH THE ASSES SEE IS ALSO IN APPEAL, BUT THE PART OF THE IMPUGNED ORDER CHALLENG ING THE RE-VERIFICATION BY THE AO, HAS NOT BEEN ASSAILED BEFORE THE TRIBUNAL. THUS, TO THAT EXTENT THE IMPUGNED ORDER HAS ATTAINE D FINALITY. M/S. ALKOPLUS PRODUCERS PVT. LTD., A.YRS. 2011-12 AND 2012-13 5 6. WE HAVE GONE THROUGH THE RELEVANT MATERIAL ON RECORD A ND HEARD BOTH THE SIDES. THE LD. CIT(A) HAS CATEGORICALLY RE CORDED THAT THE ASSESSEE DID CHARGE INTEREST @9% AGGREGATING TO RS.4,34,398/- ON THE ADVANCE OF RS.62,65,000/- GIVEN TO INDO SPRINT. SUCH AN INTEREST WAS SHOWN AS RECEIVABLE IN THE BOO KS OF ACCOUNT OF THE ASSESSEE. THIS FINDING HAS NOT BEEN CONTR OVERTED ON BEHALF OF THE REVENUE. IN OUR CONSIDERED OPINION, NO E XCEPTION CAN BE TAKEN TO THE VIEW CANVASSED BY THE LD. CIT(A) ON TH IS ISSUE IN DELETING THE ADDITION TO THIS EXTENT. 7. AS REGARDS THE SECOND COMPONENT OF DISALLOWANCE OF IN TEREST ON RS.2.03 CRORE, BEING ADVANCE GIVEN TO VYANJAN HOTELS, IT IS SEEN THAT THE ASSESSEE CONTENDED BEFORE THE LD. CIT(A) THAT THIS AMOUNT WAS GIVEN FOR PURCHASE OF SHARES OF THAT COMPANY. TH E ASSESSEE FURNISHED DETAILS OF THE SHARES WHICH IT WAS INTENDING TO PURCH ASE. THE LD. CIT(A) RESTORED THE ISSUE TO THE AO AND DIRECTED H IM TO FIND OUT IF SHARES OF THE COMPANY WERE ALLOTTED TO IT. IF IT W AS FOUND THAT THE SHARES WERE NOT ALLOTTED TO THE ASSESSEE COMP ANY AFTER MAKING THE PAYMENT, THEN THE INTEREST COST WOULD BE TAK EN TO SHARES ACCOUNT AND ADDED TO THEIR COST OF ACQUISITION AND IN THE OTHERWISE SCENARIO IT SHOULD BE TAKEN AS REVENUE EXPENDITURE . WE DO NOT FIND ANY GRIEVANCE ON THE PART OF THE REVENUE IN A SMUCHAS M/S. ALKOPLUS PRODUCERS PVT. LTD., A.YRS. 2011-12 AND 2012-13 6 THE LD. CIT(A) HAS ADOPTED A LEGALLY VALID VIEW. THE LD. AR SUBMITTED THAT THE SHARES WERE IN FACT ALLOTTED AND THE ASSESS EE HAS NO OBJECTION IF THE AMOUNT OF INTEREST WAS CAPITALIZED. UNDER TH E GIVEN CIRCUMSTANCES, WE COUNTENANCE THE IMPUGNED ORDER TO THIS EXTENT. 8. GROUND NO.3 OF THE REVENUES APPEAL IS AGAINST DELETION OF ADDITION OF RS.13,76,60,000/- ON ACCOUNT OF SUBSIDY AND GROUND NO. 1 OF THE ASSESSEES APPEAL IS AGAINST THE DIRECTION OF THE LD. CIT(A) THAT THE AMOUNT OF SUBSIDY SHOULD BE REDUCED FROM THE COST OF ASSETS IN TERMS OF EXPLANATION 10 TO SECTION 43(1) OF TH E INCOME- TAX ACT, 1961 (HEREINAFTER ALSO CALLED ` THE ACT). 9. SUCCINCTLY, THE FACTS OF THESE GROUNDS ARE THAT THE ASSESS EE RECEIVED FINANCIAL ASSISTANCE GRANTED BY THE GOVERNMENT OF MAHARASHTRA TO ELIGIBLE UNITS UNDER THE FINANCIAL ASSISTANCE TO GRAIN DISTILLERY SCHEME, 2007. THE AO HAS HIGHLIGHTED THE IMPORTANT FEATURES OF THE SCHEME IN THE ASSESSMENT ORDER. IT HAS BEEN MENTIONED THAT THE SCHEME WAS BROUGHT OUT TO ENCOURAGE INVESTMENTS IN GRAIN BASED DISTILLERIES IN THE BACKWARD REGIONS OF MAHARASHTRA STATE. SUCH SUBSIDY WAS PAID TO THE ASSESSEE IN THE FORM OF REBATE OF RS.10/- PER LITRE AND EXCISE DUTY WAS R EPAID ON THE PRODUCTS SUPPLIED. THE AO HELD THAT THE SUBSIDY WAS RE VENUE M/S. ALKOPLUS PRODUCERS PVT. LTD., A.YRS. 2011-12 AND 2012-13 7 IN NATURE. THE LD. CIT(A) OVERTURNED THE ASSESSMENT ORDE R ON THIS POINT. HE, HOWEVER, HELD THAT THE AMOUNT OF SUBSIDY SHOULD BE REDUCED FROM THE COST OF ASSETS IN VIEW OF EXPLANATION 10 TO SECTION 43(1) OF THE ACT. BOTH THE SIDES ARE IN APPEAL ON THEIR RESPECTIVE STANDS. 10. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RE LEVANT MATERIAL ON RECORD. IT CAN BE SEEN FROM THE TEXT OF THE SCHEME DATED 08-07-200, RELEVANT PART OF WHICH HAS BEEN REPROD UCED IN THE ASSESSMENT ORDER THAT THE MAIN PURPOSE OF PROVIDING FINAN CIAL ASSISTANCE UNDER THE SCHEME WAS : TO ENCOURAGE INVESTMEN T IN GRAIN BASED DISTILLERIES IN THE BACKWARD REGIONS OF THE MAHARA SHTRA STATE. ONCE THE OBJECT OF THE SCHEME IS TO ENCOURAGE SETTING UP OF NEW UNITS, THE GRANT HAS TO BE HELD AS A CAPITAL RECEIPT. THIS IS A SETTLED LEGAL POSITION WHICH FOLLOWS FROM THE JUDGMENT OF THE HONBLE SUPREME COURT IN CIT VS. PONNI SUGAR AND CHEMICALS LTD. (2008) 306 ITR 392 (SC) IN WHICH IT HAS BEEN CATEGORICALLY HELD THAT IF SUBSIDY IS GIVEN, INTER ALIA, FOR EXPANSION, THEN IT IS A CAPITAL RECEIPT IRRESPECTIVE OF THE FACT THAT IT IS GIVEN IN ANY FO RM. ADVERTING TO THE FACTS OF THE INSTANT CASE, WE FIND THAT THE SUBSIDY WAS GIVEN TO THE ASSESSEE TO ESTABLISH THE INDUSTRIAL UNIT IN BACKWARD REGIONS OF THE MAHARASHTRA STATE. EVEN IF SUCH S UBSIDY M/S. ALKOPLUS PRODUCERS PVT. LTD., A.YRS. 2011-12 AND 2012-13 8 WAS QUANTIFIABLE IN THE FORM OF REBATE OF RS.10/- PER LITRE O N THE EXCISE DUTY, BUT THE PURPOSE OF ITS GRANT, WHICH IS TO ACCE LERATE THE INDUSTRIAL DEVELOPMENT IN GRAIN BASED DISTILLERIES IN THE BACKWARD REGIONS OF THE MAHARASHTRA STATE, DOES NOT ALTER THE NATURE O F SUBSIDY FROM CAPITAL TO A REVENUE RECEIPT. CONSIDERING THE MANDATE OF THE SCHEME ISSUED BY THE GOVERNMENT OF MAHARA SHATRA, IT BECOMES CLEAR THAT THE SUBSIDY IS A CAPITAL RECEIPT NOT A RE VENUE RECEIPT. THE IMPUGNED ORDER IS UPHELD TO THIS EXTENT. 11. AT THIS STAGE, IT IS RELEVANT TO MENTION THAT THE HONBLE SUPREME COURT IN CIT VS. P.J. CHEMICALS (1994) 210 ITR 830 (SC) HELD THAT SUBSIDY RECEIVED IN CENTRAL SCHEME IS A CAPITAL RECEIP T AND THE SAME SHOULD NOT BE REDUCED FROM THE COST OF ASSE TS FOR DEPRECIATION. THE LEGISLATURE INTRODUCED EXPLANATION 10 TO SECTIO N 43(1) WITH EFFECT FROM THE ASSESSMENT YEAR 1999-2000 PRO VIDING THAT SUBSIDY ON ASSETS ACQUIRED AFTER THIS DATE SHOULD BE RED UCED FROM THE COST OF ASSET. THE LD. CIT(A) HAS TAKEN COGNIZA NCE OF EXPLANATION 10 IN DIRECTING THAT THE AMOUNT OF SUBSIDY SHOULD BE REDUCED FROM THE COST OF ASSET. IN OUR CONSIDERED OPINIO N, THE VIEW SO ADOPTED BY THE LD. CIT(A) IS NOT IN ACCORDANCE WITH LAW IN ASMUCHAS THIS EXPLANATION GETS ACTIVATED WHERE THE SUBSIDY IS SPECIFICALLY RELATABLE TO COST OF A PARTICULAR ASSET. THE LANGU AGE OF M/S. ALKOPLUS PRODUCERS PVT. LTD., A.YRS. 2011-12 AND 2012-13 9 EXPLANATION 10 CLEARLY STATES THAT : WHERE A PORTION OF THE COST OF AN ASSET ACQUIRED BY THE ASSESSEE HAS BEEN MET DIRECTLY OR INDIRECTLY BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT OR ANY AUTHORITY ESTABLISHED UNDER ANY LAW OR BY ANY OTHER PER SON, IN THE FORM OF A SUBSIDY OR GRANT OR REIMBURSEMENT (BY WHA TEVER NAME CALLED), THEN, SO MUCH OF THE COST AS IS RELATABLE TO SU CH SUBSIDY OR GRANT OR REIMBURSEMENT SHALL NOT BE INCLUDED IN THE ACTUAL COST OF THE ASSET TO THE ASSESSEE. PROVISO TO THIS EXP LANATION STATES THAT : WHERE SUCH SUBSIDY OR GRANT OR REIMBURSEMENT IS OF SUCH NATURE THAT IT CANNOT BE DIRECTLY RELATABLE TO THE ASSET ACQU IRED, SO MUCH OF THE AMOUNT WHICH BEARS TO THE TOTAL SUBSIDY OR REIMBURSEMENT OR GRANT THE SAME PROPORTION AS SUCH ASSET BEARS TO ALL THE ASSETS IN RESPECT OF OR WITH REFERENCE TO WHICH THE SU BSIDY OR GRANT OR REIMBURSEMENT IS SO RECEIVED, SHALL NOT BE INCLUDE D IN THE ACTUAL COST OF THE ASSET TO THE ASSESSEE. ON GOING THROUGH THE LANGUAGE OF THE EXPLANATION 10, IT IS MANIFEST THAT IT IS ATTRACTED ONLY WHEN THE OBJECT OF THE SCHEME IS TO SUBSIDIZE THE COST OF AN ASSET AND NOT OTHERWISE. PROVISO ALSO REFERS TO `SUCH SUBS IDY ONLY. IF THE OBJECT OF THE SCHEME IS TO ACCELERATE THE INDUSTRIAL DEVELOPMENT OF THE STATE, THEN THE CASE IS NOT CAUGHT WITHIN THE MANDATE OF THE EXPLANATION 10. SIMILAR VIEW HAS BEEN TAKEN B Y VARIOUS BENCHES OF THE TRIBUNAL IN SEVERAL DECISIONS, INCLUDING M/S. ALKOPLUS PRODUCERS PVT. LTD., A.YRS. 2011-12 AND 2012-13 10 SASISRI EXTRACTIONS LTD. VS. ACIT (2010) 122 ITD 428 (VISAKHAPATNAM) . THE MUMBAI BENCH OF THE TRIBUNAL IN GODREJ AGROVET LTD. VS. ACIT IN ITA NO. 1629/MUM/09 HAS ALSO TAKEN A SIMILAR VIEW VIDE ITS ORDER DATED 17.9.2010. THOUGH THE DEPARTMENT PREFERRED AN APPEAL AGAINST THIS TRIBUNAL ORDER , BUT DID NOT CHALLENGE THE FINDING RETURNED BY THE TRIBUNAL ON THIS ASPE CT. COPY OF THE TRIBUNAL ORDER AND THE JUDGMENT OF THE HONB LE BOMBAY HIGH COURT HAVE BEEN PLACED ON RECORD. 12. TO DEAL WITH SUCH A SITUATION, THE FINANCE ACT, 2015, W. E.F. 1.4.2016, HAS ENLARGED THE DEFINITION OF INCOME GIVEN U/S 2 (24) BY INSERTING SUB-CLAUSE (XVIII), WHICH READS AS UNDER :- `(XVIII) ASSISTANCE IN THE FORM OF A SUBSIDY OR GRA NT OR CASH INCENTIVE OR DUTY DRAWBACK OR WAIVER OR CONCESSION OR REIMBURSEMENT (BY WHATEVER NAME CALLED) BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT OR ANY AUTHORITY OR BODY OR AGENCY IN CASH OR KIND TO THE ASSESSEE OTHER THAN THE SUBSIDY OR GRANT OR REIMBURSEMENT WHICH IS TAKEN INTO ACCOUNT FOR DETERMINATION OF THE ACTUAL COST OF THE ASSET I N ACCORDANCE WITH THE PROVISIONS OF EXPLANATION 10 TO CLAUSE (1) OF SECTION 43; 13. A BARE READING OF THE ABOVE PROVISION MAKES IT EXP LICIT THAT NOW SUBSIDY GIVEN BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT OR ANY AUTHORITY ETC. FOR ANY PURPOSE, EXCEPT WHERE IT IS TAKEN INTO ACCOUNT FOR DETERMINATION OF THE ACTUAL M/S. ALKOPLUS PRODUCERS PVT. LTD., A.YRS. 2011-12 AND 2012-13 11 COST OF THE ASSET UNDER EXPLANATION 10 SECTION 43(1), HAS BECOME CHARGEABLE TO TAX. EVEN IF A SUBSIDY IS GIVEN TO A TTRACT INDUSTRIAL INVESTMENT OR EXPANSION, WHICH IS A OTHERWISE A CAPITAL RECEIPT UNDER THE PRE-AMENDMENT ERA, SHALL BE TREATED AS INCOME CHARGEABLE TO TAX, EXCEPT WHERE IT HAS BEEN TAKEN INTO ACCOUNT FOR DETERMINING THE ACTUAL COST OF ASSETS IN TERM S OF EXPLANATION 10 TO SECTION 43(1). THIS AMENDMENT IS PATENTLY PROSPECTIVE. AS THE ASSESSMENT YEAR UNDER CONSIDERATION IS 2011-12 AND THE AMENDMENT IS EFFECTIVE FROM ASSESSMENT YEAR 2016-17, NEW HOLD THAT SECTION 2(24) (XVIII) WILL HAVE NO APPLICATION. IN VIEW OF THE FOREGOING DISCUSSION , WE ARE SATISFIED THAT THE SUBSIDY RECEIVED BY THE ASSESSEE FROM THE GOVERNMENT OF MAHARASHTRA IS A CAPITAL RECEIPT AND ACCORDINGLY NOT CHARGEABLE TO TAX AND AT THE SAME TIME, IT IS NOT LIABLE TO BE REDUCED FROM THE COST OF ASSETS FOR THE PURPOSES OF DEPRECIATION IN THE YEAR UNDER CONSIDERATION. THUS, THE GROUND RAISED BY THE REVENUE IS DISMISSED AND TH AT OF THE ASSESSEE IS ALLOWED. 14. THERE IS NO OTHER EFFECTIVE GROUND RAISED BY THE ASSE SSEE IN ITS APPEAL. M/S. ALKOPLUS PRODUCERS PVT. LTD., A.YRS. 2011-12 AND 2012-13 12 15. THE CROSS OBJECTION FILED BY THE ASSESSEE IS IN SUPPORT OF THE IMPUGNED ORDER WHICH HAS BECOME ACADEMIC IN VIEW OF OUR DECISION ON THE APPEAL FILED BY THE REVENUE. 16. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED; TH AT OF THE ASSESSEE IS ALLOWED; AND THE CROSS OBJECTION IS DISMISSED AS HAVING BECOME INFRUCTUOUS. A.Y. 2012-13 : 17. THE ONLY ISSUE RAISED BY THE REVENUE IN ITS APPEAL IS A GAINST THE DIRECTION OF THE LD. CIT(A) TO TREAT THE SUBSIDY RECEIVED BY THE ASSESSEE IN THE INSTANT YEAR FROM GOVERNMENT OF MAHARASH TRA UNDER GRAIN DISTILLERY SCHEME, AS A CAPITAL RECEIPT AND THE ASSESSE E IS AGGRIEVED BY THE DECISION OF THE LD.CIT(A) IN HOLDING THAT THE AMOUNT OF THE SUBSIDY SHOULD BE REDUCED FROM THE COST OF ASSETS FOR THE PURPOSES OF DEPRECIATION. 18. THE FACTUAL PANORAMA OF THE ISSUE IS THAT THE ASSESSEE RECEIVED SUBSIDY OF RS.6,30,40,000/- DURING THE YEAR UN DER THE SAME SCHEME AS CONTINUING FROM THE PRECEDING YEAR. THE AO TREATED THE AMOUNT AS OF REVENUE CHARACTER. THE LD. CIT( A) HELD THE AMOUNT TO BE IN THE NATURE OF CAPITAL RECEIPT BUT ALSO APPLIE D EXPLANATION 10 TO SECTION 43(1). M/S. ALKOPLUS PRODUCERS PVT. LTD., A.YRS. 2011-12 AND 2012-13 13 19. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RE LEVANT MATERIAL ON RECORD. A COMMON SUBMISSION HAS BEEN MADE B Y BOTH THE SIDES THAT THE FACTS AND CIRCUMSTANCES OF THE INSTANT APPEA LS ARE MUTATIS MUTANDIS SIMILAR TO THOSE OF THE PRECEDING YEAR. FOLLOWING THE VIEW TAKEN HEREIN ABOVE, WE UPHOLD THE ACTION OF THE LD. CIT(A) IN TREATING THE SUBSIDY AS A CAPITAL RECEIPT AND OVERTU RN HIS VIEW ON THE QUESTION OF APPLICATION OF EXPLANATION 10 TO SECTION 43(1) OF THE ACT TO THE FACTS OF THE INSTANT CASE. 20. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AN D THAT OF CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH APRIL 2019. SD/- SD/- (VIKAS AWASTHY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESID ENT PUNE; DATED : 04 TH APRIL, 2019 M/S. ALKOPLUS PRODUCERS PVT. LTD., A.YRS. 2011-12 AND 2012-13 14 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-2, AURANGABAD 4. 5. THE PR. CIT-2, AURANGABAD , , B / DR B, ITAT, PUNE; 6. / GUARD FILE. // TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 03-04-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 03-04-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *