DCIT, Dehradun V. M/s. Shipra Hotels Ltd., Dehradun

ITA 3096/DEL/2014

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5518 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 07-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 19-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAUSHLENDRA TIWARI
• Assessee Lawyers: S K MEHTA
• Keywords: Capital asset; Depreciation; Source of fund; Capital receipt; Revenue expenditure
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES G : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA.NO.3095, 3096 & 3094/DEL./2014 ASSESSMENT YEARS 2009-2010, 2010-2011 & 2008-2009 THE DCIT, CIRCLE-2, 13-A SUBHASH ROAD, DDN, UTTARAKHAND. VS SHIPRA HOTELS LTD., MOSAIC HOTEL, MASONIC LODGE ROAD, MUSSORIE. PAN AAGCS8808K (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI KAUSHLENDRA TIWARI, SR. D.R. FOR ASSESSEE : SHRI S.K. MEHTA, C.A. DATE OF HEARING : 22.03.2018 DATE OF PRONOUNCEMENT : 02.04.2018 ORDER PER BHAVNESH SAINI, J.M. ALL THE APPEALS BY THE REVENUE ARE DIRECTED AGAIN ST DIFFERENT ORDERS OF THE LD. CIT(A)-1, DEHRADUN, DAT ED 06 TH FEBRUARY, 2014, FOR THE A.YS. 2009-2010, 2010-2011 AND 2008- 2009. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. 2 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. 3. THE ISSUE IS SAME IN ALL THE APPEALS THAT WHET HER THE LD. CIT(A) WAS JUSTIFIED IN LAW AND ON FACTS IN TREATING THE ENTERTAINMENT TAX COLLECTED AS CAPITAL RECEIPT AS T HE ASSESSEE WAS SHOWING ENTERTAINMENT TAX RECEIPT AS REVENUE RE CEIPT IN THE ASSESSMENT YEARS EARLIER THAN A.Y. 2008-2009. THE LD. CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE IN A.Y. 2008-2009 AND SAME FINDINGS HAVE BEEN FOLLOWED IN THE REMAINI NG ASSESSMENT YEARS. THEREFORE, FOR THE PURPOSE OF DIS POSAL OF THE DEPARTMENTAL APPEALS, THE APPEAL FOR A.Y. 2008-2009 IS DECIDED AS UNDER. ITA.NO.3094/DEL./2014 A.Y. 2008-2009 : 4. BRIEFLY, THE FACTS OF THE CASE ARE THAT ASSESSE E- COMPANY IS ENGAGED IN THE BUSINESS OF RUNNING OF HO TEL, TRADING OF IMFL, REAL ESTATE AND RUNNING OF MALL AND MULTIP LEXES. THE ASSESSEE REVISED THE RETURN OF INCOME WHEREBY THE ENTERTAINMENT TAX RECEIPT WAS SHOWN AS CAPITAL RECE IPT AGAINST REVENUE RECEIPT SHOWN IN THE ORIGINAL RETURN OF INC OME. THE A.O. ASKED THE ASSESSEE AS TO WHY THE RECEIPT ON ACCOUNT OF 3 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. ENTERTAINMENT TAX SHOULD NOT BE TREATED AS REVENUE RECEIPT. THE ASSESSEE FILED WRITTEN SUBMISSIONS BEFORE THE A.O. WHICH IS REPRODUCED IN THE ASSESSMENT ORDER WHICH READS AS U NDER : 'PERUSAL OF THE LETTER ISSUED BY THE UP STATE GOVT, TO JAM MULTIPLEX A UNIT OF SHIPRA HOTELS LTD. FOR GRAN T OF ENTERTAINMENT TAX SUBSIDY AND BASED ON THE RELEVANT SCHEME OF UP GOVT, (AVAILABLE ON THE WEBSITE OF UP GOVT. TAX DEPTT.) REVEALS THAT THE SUBSIDY WAS GRANTED TO JAM MULTIPLEX UNDER THE UP GOVTS INCENTIVE SCHEME FOR 'PROMOTION FOR CONSTRUCTION OF MULTIPLEX AND THE O VERALL QUANTUM OF SUBSIDY IS LIMITED TO COST OF CONSTRUCTI ON OF JAM MULTIPLEX (EXCLUDING THE COST OF LAND). ENTERTAINMENT TAX SUBSIDY RECEIVED BY JA M MULTIPLEX UNDER UP GOVERNMENT'S SCHEME FOR PROMOTIO N OF CONSTRUCTION OF MULTIPLEXES IS A CAPITAL RECEIPT AS IT IS GIVEN IN THE MANNER OF GRANT IN AID FOR SETTING UP THE MULTIPLEX WHICH IS NOT CHARGEABLE TO TAX.THIS ARGUM ENT GETS SUPPORT OF ALL THE THREE ALLAHABAD HIGH COURT 4 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. JUDGMENTS ATTACHED HEREWITH IN RELATION TO THE SIMI LAR SCHEME LAID DOWN BY THE UP GOVERNMENT. IT IS, THEREFORE, REQUESTED THAT ENTERTAINMENT TAX COLLECTED BY THE ASSESSEE MAY PLEASE BE ALLOWED TO BE TREATED AS CAPITAL RECEIPT AND MAY PLEASE BE TREATE D AS NON TAXABLE. 4.1. THE A.O, HOWEVER, NOTED THAT MULTIPLEXES HAVE BEEN GIVEN RELAXATION IN PAYMENT OF ENTERTAINMENT TAX AF TER THEY HAVE BEEN ESTABLISHED. THE SCHEME OF THE STATE GOVERNMEN T IS REPRODUCED IN THE ASSESSMENT ORDER WHICH INTER ALIA PROVIDES THAT MULTIPLEX OF THE ASSESSEE WOULD START EXHIBITI NG THE FILM FROM 31 ST MARCH, 2005 AND ASSESSEE IS ENTITLED TO RECEIVE ENTERTAINMENT TAX FOR FIRST 05 YEARS WHICH WILL BE EXEMPTED 100% FROM ENTERTAINMENT TAX, SUBJECT TO THE CONDITI ON THAT IF COST OF CONSTRUCTION OF MULTIPLES IS RECOVERED BEFO RE 05 YEARS, THEN, FOR THE REMAINING PERIOD, NO SUCH BENEFIT SHA LL BE GRANTED. THE ENTERTAINMENT TAX IS EXEMPTED FOR BENEFIT OF OW NER OF MULTIPLEXES FOR THE AMOUNT PAYABLE BY HIM WHICH WOU LD BE 5 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. ADJUSTED TO COST. A.O. NOTED THAT ENTERTAINMENT TAX SUBSIDY GRANTED BY STATE OF U.P. IS GIVEN AFTER THE MULTIPL EX HAS STARTED THE OPERATION. THE PURPOSE OF SCHEME IS TO HELP THE MULTIPLEX RUN PROFITABLY. IT IS, THEREFORE, REVENUE RECEIPT. THE ISSUE OF THE TREATMENT METED-OUT TO A SUBSIDY (ENTERTAINMENT TAX GRANT) RECEIVED FROM UTTAR PRADESH GOVERNMENT FOR OPERATIN G MULTIPLEX CINEMA THEATRE. THE CLAIM OF THE ASSESSEE IS FOR TREATING THIS AMOUNT AS CAPITAL RECEIPT, WHEREAS, T HE A.O. HAS TREATED THIS AS REVENUE RECEIPT, WHICH HAS SUBSEQUE NTLY BEEN PLACED OUTSIDE THE PURVIEW OF SECTION 80IB OF THE A CT AND ALSO ON THE GROUND THAT SUCH RECEIPT IS ONLY ATTRIBUTAB LE TO THE BUSINESS AND NOT DERIVED FROM THE SAME. 5. THE ASSESSEE CHALLENGED THE ORDER OF THE A.O. T REATING THE SUBSIDY AS REVENUE RECEIPT AND THEREAFTER, TAKI NG IT AS BEING OUTSIDE THE SCOPE OF RELIEF UNDER SECTION 80IB OF T HE I.T. ACT. THE LD. CIT(A), AFTER CONSIDERING THE EXPLANATION OF AS SESSEE AND PURPOSE OF THE SUBSIDY HELD THAT THE RECEIPT IS CAP ITAL RECEIPT AND ALLOWED THE APPEAL OF ASSESSEE. THE SUBMISSIONS OF 6 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. ASSESSEE AND FINDINGS IN PARAS 4.1 TO 4.4 OF THE OR DER ARE REPRODUCED AS UNDER : 4.1 IT IS AVERRED BY THE APPELLANT THAT THE U.P. GOVERNMENT GAVE SUBSIDY TO PROMOTE SETTING UP OF MULTIPLEXES. THE SCHEME WAS DEVISED TO ALLOW A GRAN T TO BE CALCULATED ON THE BASIS OF COST OF BUILDING AND MACHINERY (EXCLUDING COST OF LAND). AS PER THIS SCH EME A SUBSIDY EQUIVALENT TO THE COST OF BUILDING AND MACH INERY WAS ALLOWED TO BE COLLECTED AS ENTERTAINMENT TAX WI TH THE OPERATOR/OWNER OF THE SAID MULTIPLEX BEING ALLOWED TO RETAIN AN AMOUNT EQUIVALENT TO THE ELIGIBLE AMOUNT OVER A PERIOD OF 5 YEARS. TO CANVASS THE VIEW THAT THIS RE CEIPT IS CAPITAL IN NATURE, THE ID.AR HAS RELIED UPON THE FO LLOWING CASES:- (I) PVR LTD. VS. ADDL. CIT (ITA.NO.897/DEL./2010, ORDER DATED 20.04.2012). (II) ITO VS. BIRLA VXL LTD., (TAX APPEAL NOS.316 TO 318 OF 2012 (GUJARAT). 4.2 THE FACTS OF THE CASE AND POSITION OF LAW HAS BEEN CONSIDERED. IT IS CLEAR THAT THE SAID SUBSIDY IS LINKED TO CAPITAL INVESTMENTS IN SETTING UP MULTIPLEXES. ACCORDINGLY, THE INTENTION OF THE U.P. GOVT, IS CLE ARLY TO PROMOTE THIS LINE OF BUSINESS THROUGH OFFSETTING TH E CAPITAL 7 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. COST TO SOME EXTENT, INCURRED BY THE OWNER/OPERATOR . CLEARLY THIS RECEIPT IS A CAPITAL RECEIPT AND THE C ASE OF PVR LTD. (SUPRA) IS SQUARELY IN FAVOUR OF THE APPELLANT IN THIS REGARD. THE ID. AO IS DIRECTED TO TREAT THIS RECEIP T AS A CAPITAL RECEIPT. 4.3 BEFORE PARTING WITH THIS ISSUE IT NEEDS TO BE MENTIONED THAT SINCE THIS RECEIPT IS LINKED TO THE CAPITAL INVESTMENT, IT WOULD GO TOWARDS REDUCING THE COST O F CAPITAL INVESTMENT. THUS THE ID. AO MUST REDUCE THE COST OF RELEVANT BLOCK OF ASSETS (BUILDING AND MACHINERY) L EADING TO A CONSEQUENTIAL REDUCTION IN CLAIM OF DEPRECIATI ON. THE APPELLANT MUST ASSIST THE ID. AO IN RE-COMPUTING TH E CLAIM OF DEPRECIATION. 4.4 ALSO THE ISSUE OF WHETHER THIS RECEIPT IS TO BE PART OF RELIEF U/S 80-IB OR NOT BECOMES PURELY ACAD EMIC AND NOT RELEVANT FOR NOW. 6. THE LD. D.R. RELIED UPON THE ORDER OF THE A.O. AND SUBMITTED THAT MULTIPLEX HAVE BEEN GIVEN EXEMPTION IN PAYMENT OF ENTERTAINMENT TAX AFTER THEY HAVE BEEN E STABLISHED. THE SUBSIDIES GIVEN FOR MEETING OUT DAY-TO-DAY BUSI NESS AND FOR 8 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. SMOOTH RUNNING OF THE MULTIPLEX. THEREFORE, IT IS R EVENUE RECEIPT. 7. ON THE OTHER HAND, LEARNED COUNSEL FOR THE ASSE SSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW AND SUBMITTED THAT SUBSIDY WAS GRANTED UNDER THE UT TAR PRADESH GOVERNMENT INCENTIVE SCHEME FOR PROMOTION F OR CONSTRUCTION OF MULTIPLEXES AND THE OVERALL QUANTUM OF THE SUBSIDY IS LIMITED TO THE COST OF CONSTRUCTION OF T HE MULTIPLEXES, WHICH IS CAPITAL RECEIPT. HE HAS SUBMITTED THAT IDE NTICAL ISSUE HAVE BEEN DECIDED BY THE HONBLE SUPREME COURT IN T HE CASE OF CIT-1, KOLHAPUR VS. M/S. CHAPHALKAR BROTHERS, PUNE IN CIVIL APPEAL NOS.6513 6514 OF 2012, DATED 07 TH DECEMBER, 2017. HE HAS, THEREFORE, SUBMITTED THAT THE ISSUE IS COVE RED IN FAVOUR OF THE ASSESSEE BY THE ABOVE JUDGMENT OF THE HONBL E SUPREME COURT. COPY OF THE SAME IS PLACED ON RECORD AND PRO VIDED TO LD. D.R. ALSO. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CONSIDERED THE MATERIAL ON RECORD. IN THE CASE OF C IT-1, 9 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. KOLHAPUR VS. M/S. CHAPHALKAR BROTHERS, PUNE (SUPRA) , THE CIVIL APPEALS RELATED TO MAHARASHTRA ARE CONCERNED, THE S UBSIDY SCHEME OF THE STATE GOVERNMENT TOOK THE FORM OF AN EXEMPTION OF ENTERTAINMENT DUTY IN MULTIPLEX THEATRE COMPLEXE S NEWLY SET- UP, FOR A PERIOD OF 03 YEARS AND THEREAFTER, PAYMEN T OF ENTERTAINMENT DUTY @ 25% FOR THE SUBSEQUENT 02 YEAR S. THE OBJECT OF INTRODUCING THE NECESSARY AMENDMENTS IN T HE BOMBAY ENTERTAINMENT DUTY ACT TO EFFECTUATE THE AFORESAID SUBSIDY SCHEME DONE BY WAY OF ORDINANCE AND THEN BY AMENDED ACT. THE OBJECT AND REASONS OF THE SCHEME ARE REPRODUCED IN THE JUDGMENT OF THE HONBLE SUPREME COURT IN WHICH THE GOVERNMENT DECIDED TO GRANT CONCESSION IN ENTERTAIN MENT DUTY TO MULTIPLEX THEATRE COMPLEX TO PROMOTE CONSTRUCTIO N OF NEW CINEMA HOUSES IN THE STATE. THE SUBSIDY WAS FOR FIR ST 03 YEARS FROM THE DATE OF COMMENCEMENT OF THE MULTIPLEX THEA TRE COMPLEX, ON WHICH, NO DUTY WAS CHARGED AND FOR THE SUBSEQUENT 02 YEARS, IT HAS CHARGED @ 25%. THE HON BLE SUPREME COURT DECIDED THE ISSUE AS UNDER : 10 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. TO TAKE THE FACTS OF ONE OF THE MATTERS BEFORE US, NAMELY, CIVIL APPEAL NOS. 6513-6514 OF 2012, THE ASSESSMENT ORDER IN THAT CASE (DATED 21.01.2006) FO UND THAT THE AFORESAID SCHEME WAS REALLY TO SUPPORT THE ON- GOING ACTIVITIES OF THE MULTIPLEX AND NOT FOR ITS C ONSTRUCTION. SINCE THE SCHEME TOOK THE FORM OF A CHARGE ON THE G ROSS VALUE OF THE TICKET AND CONTRIBUTED TOWARDS THE DAY TO-DAY RUNNING EXPENSES, THE ASSESSMENT OFFICER HELD THAT IT WAS IN THE NATURE OF A REVENUE RECEIPT. THE APPEAL FILED BEFORE THE COMMISSIONER MET WITH T HE SAME FATE AND WAS DISMISSED SUBSTANTIALLY ON THE SA ME REASONING. HOWEVER, THE INCOME-TAX APPELLATE TRIBUNAL BY ITS JUDGMENT DATED 30.06.2009, WENT INTO THE MATTER IN SOME DETAIL, AND AFTER SETTING OUT THE OBJECT OF THE AFO RESAID SCHEME WENT ON TO HOLD AS FOLLOWS : 9.2 ONE ASPECT OF THE SCHEME IN QUESTION IS UNDISPUTED; AFTER CONSIDERING THE CLAUSES OF THE SCHEME, THAT T HE SCHEME DO NOT PROVIDE ANY ASSISTANCE FOR REIMBURSEMENT OF DAY TO DAY REVENUE EXPENDITURE BUT THE SCHEME IS MEANT TO BUILD UP AND TO PROMOTE NEW MULTIPLEX CINEMA HALLS WHICH ARE NOTHING BUT FOR THE CONSTRUCTION PURPOSE HENCE REIMBURSEMENT IS TO COVER-UP THE CAPITAL EXPENDITUR E. 11 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. XXXXXXXXX 10. IN THE LIGHT OF THE ABOVE DISCUSSION, W E CAN THEREFORE SUMMARIZE OUR CONCLUSION THAT BROADLY SPEAKING THE SUBSIDY CAN BE OF TWO TYPES: (I) FOR THE PURPOSE OF HELPING THE GROWTH OF AN IND USTRY; (II) FOR THE PURPOSE OF SUPPLEMENTING THE PROFITS O F AN INDUSTRY. 10.1. TO ASCERTAIN WHETHER IN A PARTICULAR C ASE THE SUBSIDY IN QUESTION FALL UNDER THE CATEGORY (I) OR (II) ONE HAS TO CAREFULLY EXAMINE THE FORM AS WELL AS SUBSTANCE OF THE IMPUGNED SCHEME. WE HAVE DONE THAT EXERCISE, AND ON CLOSE EXAMINATION UNDISPUTEDLY IT WAS NOTICED THAT THE SCHEME IN QUESTION HAD FALLEN IN THE FIRST CATEGORY I.E. FOR THE PURPOSE OF HELPING THE GROWTH OF AN INDUSTRY. T HOUGH THE COLLECTION WAS IN THE FORM OF AN ENTERTAINMENT DUTY VIA SALE OF TICKETS FOR A LIMITED PERIOD BUT ITS UTILIZ ATION WAS PREDETERMINED AND GRANTED WITH AN ASSURANCE TO COVE R UP THE COST OF CONSTRUCTION. ONCE IT IS DEMONSTRATED B EFORE US THAT TOO UNDISPUTEDLY THAT IT WAS NOT ATTRIBUTED IN ANY MANNER TOWARDS SUPPLEMENTING OF DAY-TO-DAY EXPENDIT URE OR IN THE FURTHERANCE OF THE PROFITS THAN IT CANNOT BE SAID TO BE IN THE CHARACTER OF A REVENUE RECEIPT. CONTRARY TO THIS IT WAS IN THE NATURE OF A CAPITAL RECEIPT BEING AN INC ENTIVE TO 12 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. SUPPLEMENT THE CONSTRUCTION EXPENDITURE OF NEW SET UP OF MULTIPLEXES HENCE IN THE NATURE OF CAPITAL RECEIPT. TO ARRIVE AT THIS CONCLUSION WE DRAW SUPPORT FROM A PLETHORA OF DECISIONS, FEW OF THEM ALREADY CITED ABOVE. WITH TH E RESULT WE DECIDE THE GROUND IN FAVOUR OF THE ASSESSEE. TH E APPEAL BEFORE THE HIGH COURT WAS DISMISSED. THE HIGH COURT 'S JUDGMENT DATED 08.06.2011 REFERRED TO TWO SUPREME C OURT JUDGMENTS, NAMELY, SAHNEY STEEL & PRESS WORKS LTD., HYDERABAD VS. COMMISSIONER OF INCOME-TAX, A.P.-I, HYDERABAD 1997 (7) SCC 765 AND COMMISSIONER OF INCO ME TAX, MADRAS VS. PONNI SUGARS AND CHEMICALS LIMITED 2008 (9) SCC 337 AND AFTER DISCUSSING THESE JUDGMENTS, H ELD : SINCE THE OBJECT OF SUBSIDY WAS TO PROMOTE CONSTRUCTION OF MULTIPLEX THEATRE COMPLEXES, IN OUR OPINION, RECEIPT OF SUBSIDY WOULD BE ON CAPITAL ACCOUNT. THE FACT THAT THE SUBSIDY WAS NOT MEANT FOR REPAYING THE LOAN TAK EN FOR CONSTRUCTION OF MULTIPLEXES CANNOT BE A GROUND TO H OLD THAT SUBSIDY RECEIPT WAS ON REVENUE ACCOUNT, BECAUSE, IF THE OBJECT OF THE SCHEME WAS TO PROMOTE CINEMA HOUSES B Y CONSTRUCTING MULTIPLEX THEATRES, THEN IRRESPECTIVE OF THE FACT THAT THE MULTIPLEXES HAVE BEEN CONSTRUCTED OUT OF O WN FUNDS OR BORROWED FUNDS, THE RECEIPT OF SUBSIDY WOULD BE ON CAPITAL ACCOUNT. IN THE LIGHT OF THE AFORESAID OBJE CTS OF THE SCHEME FRAMED BY THE STATE GOVERNMENT, THE DECISION OF THE 13 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. INCOME TAX APPELLATE TRIBUNAL THAT THE AMOUNT OF SU BSIDY RECEIVED BY THE ASSESSEE IS ON CAPITAL ACCOUNT CANN OT BE FAULTED. ACCORDINGLY, BOTH THE APPEALS ARE DISMISSE D WITH NO ORDER AS TO COSTS SHRI P.S.NARASIMHA, LEARNED ASG APPEARING ON BEHALF OF THE REVENUE, ASSAILS THE JUDGMENT PASSED BY THE HIGH COURT. ACCORDING TO HIM, THERE MAY BE NO DOUBT THAT THE LARGE OBJECT SAID TO BE ACHIEVED IN THE GRANT OF SU BSIDY BY WAY OF COMPLETE AND THEN PARTIAL ROLL BACK OF ENTER TAINMENT DUTY MAY BE IN THE NATURE OF SUBSIDY RELATING TO CO MPLEXES WHICH ARE HIGHLY CAPITAL INTENSIVE AND REQUIRE GOVE RNMENT SUPPORT. BUT ACCORDING TO HIM, THE FACT THAT THE SU BSIDY KICKS IN ONLY AFTER THE MULTIPLEXES STARTED FUNCTIO NING AND ISSUED TICKETS ON WHICH ENTERTAINMENT DUTY IS THEN WAIVED, WOULD SHOW THAT IN REALITY WHAT HAS ALREADY BEEN SE T UP IS NOT THE IMMEDIATE OBJECT OF THE SUBSIDY BUT THAT IT IS REALLY IN THE NATURE OF A HELPING HAND FOR RUNNING OF THE DAY TO- DAY BUSINESS OF THE MULTIPLEXES. HE RELIED HEAVILY UPON THE JUDGMENT IN SAHNEY STEEL (SUPRA) TO BUTTRESS HIS SU BMISSION AND STATED THAT ON FACTS, THIS WAS A CASE SIMILAR T O SAHNEY STEEL. ON THE OTHER HAND, HE DISTINGUISHED THE JUDG MENT IN PONNI SUGARS (SUPRA) STATING THAT ON THE FACTS OF T HAT CASE, IN PARAGRAPH 10, IN PARTICULAR, IT WAS VERY CLEARLY HELD THAT THE BENEFIT OF THE SCHEME HAD TO BE UTILISED ONLY F OR RE- 14 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. PAYMENT OF LOAN. THEREFORE, IT WAS OBVIOUSLY CAPITA L IN NATURE, AND NOT REVENUE. ON THE OTHER HAND, SHRI JAHANGIR MISTRY, LEARNED SENIOR COUNSEL APPEARING FOR THE RESPONDENTS, AND S HRI S.GANESH, LEARNED SENIOR COUNSEL APPEARING FOR SOME OF THE RESPONDENTS, HAVE ARGUED THAT IF SAHNEY STEEL IS TO BE READ IN ITS ENTIRETY, THE JUDGMENT ON FACTS SUPPORTS THE PROPOSITION THAT IT IS ONLY THE PURPOSE OF THE SCHE ME THAT IS THE TEST FOR FINDING OUT WHETHER THE SCHEME IS, IN FACT, CAPITAL OR REVENUE IN NATURE. THE SOURCE OF FUNDS FOR THE S CHEME AND THE FORM OF THE SCHEME ARE IRRELEVANT AND IF IT IS CLEAR THAT THE PURPOSE IS IN ORDER THAT CAPITAL EXPENSES BE MET OUT OF THE SUBSIDY GRANTED IN THE SCHEME, THEN THE OBJE CT OF THE SCHEME POINTS TO RECEIPT OF FUNDS BEING CAPITAL IN NATURE. THEY BOTH STRESSED THE FACT THAT THE STATEMENT OF O BJECT AND REASONS SPECIFICALLY STATE THAT MULTIPLEXES ARE TRU LY CAPITAL INTENSIVE, THEIR PERIOD IS LONG AND, THEREFORE, THE Y NEED GOVERNMENT SUPPORT. THEY ALSO RELIED UPON THE STATE MENT THAT THE GRANT OF CONCESSION TO SUCH MULTIPLEXES WA S TO PROMOTE CONSTRUCTION OF NEW CINEMA HOUSES IN THE ST ATE. HAVING HEARD LEARNED COUNSEL FOR BOTH SIDES, IT BECOMES NECESSARY TO ANALYZE THE JUDGMENTS RELIED U PON. 15 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. IN SAHNEY STEEL (SUPRA), THE NOTIFICATION ISSUED BY THE ANDHRA PRADESH GOVERNMENT WAS CONCERNED WITH CERTAI N FACILITIES AND INCENTIVES WHICH WERE TO BE GIVEN TO ALL NEW INDUSTRIAL UNDERTAKINGS WHICH COMMENCED PRODUCTION ON OR AFTER 01.01.1969 WITH INVESTMENT CAPITAL NOT EXCEED ING RS. 5 CRORES. THE INCENTIVES WERE TO BE ALLOWED FOR A P ERIOD OF FIVE YEARS FROM THE DATE OF COMMENCEMENT OF PRODUCT ION. CONCESSION WAS ALSO AVAILABLE FOR SUBSEQUENT EXPANS ION OF 50% AND ABOVE. THE INCENTIVES WERE IN THE FORM OF, INTER ALIA, REFUND OF SALE TAX ON RAW MATERIALS, MACHINER Y AND FINISHED GOODS. THIS COURT HELD, ON THE FACTS OF TH AT CASE, THAT AS NO FINANCIAL ASSISTANCE WAS GRANTED TO THE ASSESSEE FOR SETTING UP OF THE INDUSTRY, THE IDEA OF THE SUB SIDY SCHEME WAS TO PROVIDE A HELPING HAND FOR FIVE YEARS IN ORDER TO ENABLE THE INDUSTRY TO BE VIABLE AND COMPETENT. IN DOING THIS, IN PARAGRAPH 9 OF THE SAID JUDGMENT, THE TEST STATED BY VISCOUNT SIMON IN PONTYPRIDD AND RHONDDA JOINT WATE R BOARD V. OSTIME (1946) 1 ALL ER 668 WAS REFERRED TO . IN PARAGRAPH 10, THE COURT WENT ON TO APPLY THE AFORES AID TEST AND STATED THAT, SINCE FUNDS WERE MADE AVAILABLE TO THE ASSESSEE TO ASSIST IT IN CARRYING ON ITS TRADE AND BUSINESS, THERE CAN BE LITTLE DOUBT THAT THE OBJECT OF VARIO US ASSISTANCES UNDER THE SUBSIDY SCHEME WAS TO ENABLE THE ASSESSEE TO RUN THE BUSINESS MORE PROFITABLY. 16 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. THE JUDGMENT OF THE HOUSE OF LORDS IN SEAHAM HARBOUR DOCK CO. VS. CROOK, 16 TC 333 WAS THEN REFERRED TO AND DISTINGUISHED. WHAT IS IMPORTANT FO R OUR PURPOSE IS THE FACT THAT IN PARA 18 OF THAT JUDGMEN T, THE TEST OF WHETHER THE RECEIPT OF SUBSIDY IS CAPITAL OR REV ENUE IS STATED AS FOLLOWS:- IF ANY SUBSIDY IS GIVEN, THE CHARACTER OF THE SUBS IDY IN THE HANDS OF THE RECIPIENT WHETHER REVENUE OR CAPITAL - WILL HAVE TO BE DETERMINED BY HAVING REGARD TO THE PURPOSE FO R WHICH THE SUBSIDY IS GIVEN. IF IT IS GIVEN BY WAY OF ASSI STANCE TO THE ASSESSEE IN CARRYING ON OF HIS TRADE OR BUSINES S, IT HAS TO BE TREATED AS A TRADING RECEIPT. THE SOURCE OF T HE FUND IS QUITE IMMATERIAL. THE COURT WENT ON, THEREAFTER, T O GIVE A TELLING EXAMPLE IN PARA 19 OF THE AFORESAID JUDGMEN T, WHICH IS SET OUT HEREIN BELOW:- FOR EXAMPLE, IF THE SCHEME WAS THAT THE ASSESSEE W ILL BE GIVEN REFUND OF SALES TAX ON PURCHASE OF MACHINERY AS WELL AS ON RAW MATERIALS TO ENABLE THE ASSESSEE TO ACQUI RE NEW PLANTS AND MACHINERY FOR FURTHER EXPANSION OF ITS MANUFACTURING CAPACITY IN A BACKWARD AREA, THE ENTI RE SUBSIDY MUST BE HELD TO BE A CAPITAL RECEIPT IN THE HANDS OF THE ASSESSEE. IT WILL NOT BE OPEN TO THE REVENUE TO CONTEND THAT THE REFUND OF SALES TAX PAID ON RAW MATERIALS OR 17 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. FINISHED PRODUCTS MUST BE TREATED AS REVENUE RECEIP T IN THE HANDS OF THE ASSESSEE. IN BOTH THE CASES, THE GOVER NMENT IS PAYING OUT OF PUBLIC FUNDS TO THE ASSESSEE FOR A DEFINITE PURPOSE. IF THE PURPOSE IS TO HELP THE ASSESSEE TO SET UP ITS BUSINESS OR COMPLETE A PROJECT AS IN SEAHAM HARBOUR DOCK CO. CASE, THE MONIES MUST BE TREATED AS TO HAVE BEE N RECEIVED FOR CAPITAL PURPOSE. BUT IF MONIES ARE GIV EN TO THE ASSESSEE FOR ASSISTING HIM IN CARRYING OUT THE BUSI NESS OPERATION AND THE MONEY IS GIVEN ONLY AFTER AND CON DITIONAL UPON COMMENCEMENT OF PRODUCTION, SUCH SUBSIDIES MUS T BE TREATED AS ASSISTANCE FOR THE PURPOSE OF THE TRADE. THEREAFTER, THE COURT WENT ON TO DISCUSS CERTAIN HI GH COURT JUDGMENTS AND, IN PARA 30, SPECIFICALLY REFERRED TO THE BOMBAY HIGH COURT JUDGMENT IN SADICHHA CHITRA'S CAS E (1991) 189 ITR 774 AND APPROVED THE VIEW TAKEN BY T HE BOMBAY AND KERALA HIGH COURTS AS THEY ACCORDED WITH THE PRINCIPLE LAID DOWN IN SEAHAM HARBOUR DOCK CO. CASE . THE FACTS IN SAHNEY STEEL WERE DISTINGUISHED FROM THE F ACTS OF THE BOMBAY AND KERALA JUDGMENTS AS FOLLOWS:- IN THE CASE BEFORE US, SUBSIDIES HAVE NOT BEEN GRA NTED FOR PRODUCTION OF OR BRINGING INTO EXISTENCE ANY NEW AS SET. THE SUBSIDIES WERE GRANTED YEAR AFTER YEAR ONLY AFTER S ETTING UP OF THE NEW INDUSTRY AND COMMENCEMENT OF PRODUCTION. SUCH 18 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. A SUBSIDY COULD ONLY BE TREATED AS ASSISTANCE GIVEN FOR THE PURPOSE OF CARRYING ON OF THE BUSINESS OF THE ASSES SEE. APPLYING THE TEST OF VISCOUNT SIMON IN THE CASE OF OSTIME IT MUST BE HELD THAT THESE SUBSIDIES ARE OF REVENUE CH ARACTER AND WILL HAVE TO BE TAXED ACCORDINGLY. THE NEXT IMPORTANT JUDGMENT THAT WAS REFERRED TO IS THE JUDGMENT IN PONNI SUGARS & CHEMICALS LIMITED (S UPRA). ON THE FACTS IN THAT CASE, INCENTIVES GIVEN UNDER A SCHEME RELATING TO SUGAR PRODUCTION WERE IN THE NATURE OF A HIGHER FREE SALE SUGAR QUOTA, AND ALSO ALLOWING THE MANUFA CTURER TO COLLECT EXCISE DUTY ON THE SALE PRICE OF FREE SA LE SUGAR IN EXCESS OF THE NORMAL QUOTA BUT TO PAY TO THE GOVERN MENT ONLY THE EXCISE DUTY PAYABLE ON THE PRICE OF LEVY S UGAR. CLAUSE 7 OF THE AFORESAID SCHEME WAS SET OUT IN PAR A 3 OF THE JUDGMENT AS FOLLOWS:- THE BENEFICIARIES OF THE INCENTIVE SCHEME SHALL EN SURE THAT THE SURPLUS FUNDS GENERATED THROUGH SALE OF TH E INCENTIVE SUGAR ARE UTILISED FOR THE REPAYMENT OF T ERM LOANS, IF ANY, OUTSTANDING FROM THE CENTRAL FINANCI AL INSTITUTIONS. THE SUGAR FACTORIES SHOULD SUBMIT UTILISATION CERTIFICATES ANNUALLY FROM CHARTERED/CO ST ACCOUNTANT, HOLDING CERTIFICATE OF PRACTICE. UTILIS ATION CERTIFICATE IN RESPECT OF EACH SUGAR SEASON DURING THE 19 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. INCENTIVE PERIOD SHOULD BE FURNISHED ON OR BEFORE 3 1ST DECEMBER OF THE SUCCEEDING YEAR. FAILURE TO SUBMIT UTILISATION CERTIFICATE WITHIN THE STIPULATED TIME MAY RESULT NOT ONLY IN THE TERMINATION OF RELEASE OF IN CENTIVE FREE SALE QUOTA, BUT ALSO IN THE RECOVERY OF THE IN CENTIVE FREE SALE RELEASES ALREADY MADE, BY RESORTING TO ADJUSTMENT FROM THE FREE SALE RELEASES OF FUTURE YEARS. THE COURT THEN REFERRED TO THE BACKGROUND OF THE INCENTIVE SCHEME AND TO THE FACT THAT THE SAMPAT CO MMITTEE WAS SET UP TO EXAMINE THE QUESTION RELATING TO THE ECONOMIC VIABILITY OF NEW SUGAR FACTORIES. THE COURT THEN FO UND IN PARA 9 OF THE JUDGMENT THAT THE SAMPAT COMMITTEE RE FERRED TO THE FACT THAT THE INCREASE IN THE COST OF NEW SU GAR FACTORIES WAS BECAUSE OF INCREASE IN THE COST OF PL ANT AND MACHINERY. THE COMMITTEE THEN STATED THAT FIVE POSS IBLE INCENTIVES FOR MAKING A SUGAR PLANT ECONOMICALLY VI ABLE COULD BE PROVIDED. IT IS TWO OF SUCH INCENTIVES REF ERRED TO THAT WAS THE SUBJECT-MATTER FOR DECISION BEFORE THI S COURT. IN PARA 10 THIS COURT FOUND: WE HAVE EXAMINED IN THIS CASE THE 1980 AND 1987 SCHEMES. ESSENTIALLY ALL THE FOUR SCHEMES ARE SIMIL AR 20 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. EXCEPT IN THE MATTER OF DETAILS. FOUR FACTORS EXIST IN THE SAID SCHEMES, WHICH ARE AS FOLLOWS: (I) BENEFIT OF THE INCENTIVE SUBSIDY WAS AVAILABLE ONLY TO NEW UNITS AND TO SUBSTANTIALLY EXPANDED UNITS, NOT TO SUPPLEMENT THE TRADE RECEIPTS. (II) THE MINIMUM INVESTMENT SPECIFIED WAS RS.4 CROR ES FOR NEW UNITS AND RS.2 CRORES FOR EXPANSION UNITS. (II) INCREASE IN THE FREE SALE SUGAR QUOTA DEPENDED UPON INCREASE IN THE PRODUCTION CAPACITY. IN OTHER WORDS , THE EXTENT OF THE INCREASE OF FREE SALE SUGAR QUOTA DEP ENDED UPON THE INCREASE IN THE PRODUCTION CAPACITY. (IV) THE BENEFIT OF THE SCHEME HAD TO BE UTILISED O NLY FOR REPAYMENT OF TERM LOANS. AFTER DISCUSSING THE JUDGMENT IN SAHNEY STEEL CASE, THIS COURT THEN HELD: THE IMPORTANCE OF THE JUDGMENT OF THIS COURT IN SA HNEY STEEL CASE LIES IN THE FACT THAT IT HAS DISCUSSED A ND ANALYSED THE ENTIRE CASE LAW AND IT HAS LAID DOWN T HE BASIC TEST TO THE APPLIED IN JUDGING THE CHARACTER OF A S UBSIDY. THE TEST IS THAT THE CHARACTER OF THE RECEIPT IN THE HA NDS OF THE ASSESSEE HAS TO BE DETERMINED WITH RESPECT TO THE P URPOSE 21 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. FOR WHICH THE SUBSIDY IS GIVEN. IN OTHER WORDS, IN SUCH CASES, ONE HAS TO APPLY THE PURPOSE TEST. THE POINT OF TIME AT WHICH THE SUBSIDY IS PAID IS NOT RELEVANT. THE S OURCE IS IMMATERIAL. THE FORM OF SUBSIDY IS IMMATERIAL. THE MAIN ELIGIBILITY CONDITION IN THE SCHEME WITH WHICH WE A RE CONCERNED IN THIS CASE IS THAT THE INCENTIVE MUST B E UTILISED FOR REPAYMENT OF LOANS TAKEN BY THE ASSESSEE TO SET UP NEW UNITS OR FOR SUBSTANTIAL EXPANSION OF EXISTING UNIT S. ON THIS ASPECT THERE IS NO DISPUTE. IF THE OBJECT OF THE SU BSIDY SCHEME WAS TO ENABLE THE ASSESSEE TO RUN THE BUSINE SS MORE PROFITABLY THEN THE RECEIPT IS ON REVENUE ACCO UNT. ON THE OTHER HAND, IF THE OBJECT OF THE ASSISTANCE UND ER THE SUBSIDY SCHEME WAS TO ENABLE THE ASSESSEE TO SET UP A NEW UNIT OR TO EXPAND THE EXISTING UNIT THEN THE RE CEIPT OF THE SUBSIDY WAS ON CAPITAL ACCOUNT. THEREFORE, IT I S THE OBJECT FOR WHICH THE SUBSIDY/ASSISTANCE IS GIVEN WH ICH DETERMINES THE NATURE OF THE INCENTIVE SUBSIDY. THE FORM OF THE MECHANISM THROUGH WHICH THE SUBSIDY IS GIVEN IS IRRELEVANT. SAHNEY STEEL WAS DISTINGUISHED, IN PARA 16 BY THEN STATING THAT THIS COURT FOUND THAT THE ASSESSEE WAS FREE TO USE THE MONEY IN ITS BUSINESS ENTIRELY AS IT LIKED. FINALLY, IT WAS FOUND THAT, APPLYING THE TEST OF PU RPOSE, THE COURT WAS SATISFIED THAT THE PAYMENT RECEIVED BY TH E 22 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. ASSESSEE UNDER THE SCHEME WAS NOT IN THE NATURE OF A HELPING HAND TO THE TRADE BUT WAS CAPITAL IN NATURE . WHAT IS IMPORTANT FROM THE RATIO OF THIS JUDGMENT I S THE FACT THAT SAHNEY STEEL WAS FOLLOWED AND THE TEST LAID DO WN WAS THE PURPOSE TEST. IT WAS SPECIFICALLY HELD THAT T HE POINT OF TIME AT WHICH THE SUBSIDY IS PAID IS NOT RELEVANT; THE SOURCE OF THE SUBSIDY IS IMMATERIAL; THE FORM OF SUBSIDY I S EQUALLY IMMATERIAL. APPLYING THE AFORESAID TEST CONTAINED IN BOTH SAHNE Y STEEL AS WELL AS PONNI SUGAR, WE ARE OF THE VIEW THAT THE OBJECT, AS STATED IN THE STATEMENT OF OBJECTS AND REASONS, OF THE AMENDMENT ORDINANCE WAS THAT SINCE THE AVERAGE OCCUPANCY IN CINEMA THEATRES HAS FALLEN CONSIDERABL Y AND HARDLY ANY NEW THEATRES HAVE BEEN STARTED IN THE RE CENT PAST, THE CONCEPT OF A COMPLETE FAMILY ENTERTAINMEN T CENTRE, MORE POPULARLY KNOWN AS MULTIPLEX THEATRE COMPLEX, HAS EMERGED. THESE COMPLEXES OFFER VARIOUS ENTERTAINMENT FACILITIES FOR THE ENTIRE FAMILY AS A WHOLE. IT WAS NOTICED THAT THESE COMPLEXES ARE HIGHLY CAPITAL INTENSIVE AND THEIR GESTATION PERIOD IS QUITE LONG AND THEREFORE, THEY NEED GOVERNMENT SUPPORT IN THE FORM OF INCENTIVES QUA ENTERTAINMENT DUTY. IT WAS ALSO ADDE D THAT GOVERNMENT WITH A VIEW TO COMMEMORATE THE BIRTH CENTENARY OF LATE SHRI V. SHANTARAM DECIDED TO GRAN T 23 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. CONCESSION IN ENTERTAINMENT DUTY TO MULTIPLEX THEAT RE COMPLEXES TO PROMOTE CONSTRUCTION OF NEW CINEMA HOU SES IN THE STATE. THE AFORESAID OBJECT IS CLEAR AND UNE QUIVOCAL. THE OBJECT OF THE GRANT OF THE SUBSIDY WAS IN ORDER THAT PERSONS COME FORWARD TO CONSTRUCT MULTIPLEX THEATRE COMPLEXES, THE IDEA BEING THAT EXEMPTION FROM ENTERTAINMENT DUTY FOR A PERIOD OF THREE YEARS AND PARTIAL REMISSION FOR A PERIOD OF TWO YEARS SHOULD GO TOWAR DS HELPING THE INDUSTRY TO SET UP SUCH HIGHLY CAPITAL INTENSIVE ENTERTAINMENT CENTERS. THIS BEING THE CASE, IT IS D IFFICULT TO ACCEPT MR. NARASIMHA'S ARGUMENT THAT IT IS ONLY THE IMMEDIATE OBJECT AND NOT THE LARGER OBJECT WHICH MU ST BE KEPT IN MIND IN THAT THE SUBSIDY SCHEME KICKS IN ON LY POST CONSTRUCTION, THAT IS WHEN CINEMA TICKETS ARE ACTUA LLY SOLD. WE HASTEN TO ADD THAT THE OBJECT OF THE SCHEME IS O NLY ONE -THERE IS NO LARGER OR IMMEDIATE OBJECT. THAT THE O BJECT IS CARRIED OUT IN A PARTICULAR MANNER IS IRRELEVANT, A S HAS BEEN HELD IN BOTH PONNI SUGAR AND SAHNEY STEEL. MR. GANESH, LEARNED SENIOR COUNSEL, ALSO SOUGHT TO RELY UPON A JUDGMENT OF THE JAMMU AND KASHMIR HIGH COURT IN SHRI BALAJI ALLOYS VS. C.I.T . (2011) 333 I.T.R. 335. WHILE CONSIDERING THE SCHEME OF REFUND OF EXCISE DUTY AND INTEREST SUBSIDY IN THAT CASE, IT WAS HELD THAT THE SCHEME W AS CAPITAL IN NATURE, DESPITE THE FACT THAT THE INCENT IVES WERE 24 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. NOT AVAILABLE UNLESS AND UNTIL COMMERCIAL PRODUCTIO N HAS STARTED, AND THAT THE INCENTIVES IN THE FORM OF EXC ISE DUTY OR INTEREST SUBSIDY WERE NOT GIVEN TO THE ASSESSEE EXP RESSLY FOR THE PURPOSE OF PURCHASING CAPITAL ASSETS OR FOR THE PURPOSE OF PURCHASING MACHINERY. AFTER SETTING OUT BOTH THE SUPREME COURT JUDGMENTS REFERRED TO HEREINABOVE, THE HIGH COURT FOUND THAT THE CONCE SSIONS WERE ISSUED IN ORDER TO ACHIEVE THE TWIN OBJECTS OF ACCELERATION OF INDUSTRIAL DEVELOPMENT IN THE STATE OF JAMMU AND KASHMIR AND GENERATION OF EMPLOYMENT IN T HE SAID STATE. THUS CONSIDERED, IT WAS OBVIOUS THAT TH E INCENTIVES WOULD HAVE TO BE HELD CAPITAL AND NOT RE VENUE. MR. GANESH, LEARNED SENIOR COUNSEL, POINTED OUT THA T BY AN ORDER DATED 19.04.2016, THIS COURT STATED THAT THE ISSUE RAISED IN THOSE APPEALS WAS COVERED, INTER ALIA, BY THE JUDGMENT IN PONNI SUGARS, AND THE APPEALS WERE, THE REFORE, DISMISSED. WE HAVE NO HESITATION IN HOLDING THAT THE FINDING O F THE JAMMU AND KASHMIR HIGH COURT ON THE FACTS OF THE IN CENTIVE SUBSIDY CONTAINED IN THAT CASE IS ABSOLUTELY CORREC T. IN THAT ONCE THE OBJECT OF THE SUBSIDY WAS TO INDUSTRIALIZE THE STATE AND TO GENERATE EMPLOYMENT IN THE STATE, THE FACT T HAT THE SUBSIDY TOOK A PARTICULAR FORM AND THE FACT THAT IT WAS 25 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. GRANTED ONLY AFTER COMMENCEMENT OF PRODUCTION WOULD MAKE NO DIFFERENCE. IN COMING TO THE WEST BENGAL CASES, WE FIND THAT TH E WEST BENGAL FINANCE ACT, 2003 WHICH AMENDED THE BENGAL AMUSEMENTS TAX ACT OF 1922 ALSO PROVIDED: THE BENGAL AMUSEMENTS TAX ACT, 1922. THE PROVISION SEEKS TO PROVIDE, IN ORDER TO ENCOURA GE DEVELOPMENT OF MULTIPLEX THEATRE COMPLEX, A VERY MO DERN AND HIGHLY CAPITAL-INTENSIVE ENTERTAINMENT CENTRE, FINANCIAL ASSISTANCE TO THE PROPRIETORS OF SUCH COMPLEX BY AL LOWING THEM TO RETAIN, BY WAY OF SUBSIDY, THE AMOUNT OF ENTERTAINMENT TAX COLLECTED AGAINST THE VALUE OF TI CKET FOR ADMISSION TO SUCH MULTIPLEX THEATRE COMPLEX FOR A P ERIOD NOT EXCEEDING FOUR YEARS; SINCE THE SUBSIDY SCHEME IN THE WEST BENGAL CASE IS SIMILAR TO THE SCHEME IN THE MAHARASHTRA CASE BEING TO ENCO URAGE DEVELOPMENT OF MULTIPLEX THEATRE COMPLEXES WHICH AR E CAPITAL INTENSIVE IN NATURE, AND SINCE THE SUBSIDY SCHEME IN THAT CASE IS ALSO SIMILAR TO THE MAHARASHTRA CAS ES, IN THAT THE AMOUNT OF ENTERTAINMENT TAX COLLECTED WAS TO BE RETAINED BY THE NEW MULTIPLEX THEATRE COMPLEXES FOR A PERIOD NOT EXCEEDING FOUR YEARS, WE ARE OF THE VIEW THAT 26 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. WEST BENGAL CASES MUST FOLLOW THE JUDGMENT THAT HAS BEEN JUST DELIVERED IN THE MAHARASHTRA CASE. ACCORDINGLY, THE APPEALS FILED BY THE DEPARTMENT AR E DISMISSED. 8.1. IN THE CASE OF THE ASSESSEE, THE UTTAR PRADES H STATE GOVERNMENT ISSUED A LETTER TO THE ASSESSEE FOR GRAN T OF ENTERTAINMENT TAX SUBSIDY AND BASED ON THE RELEVANT SCHEME OF UTTAR PRADESH GOVERNMENT, IT REVEALS THAT SUBSIDY W AS GRANTED TO MULTIPLEXES UNDER UTTAR PRADESH GOVERNMENTS INC ENTIVE SCHEME FOR PROMOTION FOR CONSTRUCTION OF MULTIPLEX ES AND OVERALL QUANTUM OF SUBSIDY IS LIMITED TO THE COST O F CONSTRUCTION, (EXCLUDING COST ON LAND). ENTERTAINMENT SUBSIDY REC EIVED BY THE ASSESSEE UNDER UTTAR PRADESH GOVERNMENT SCHEME FOR PROMOTION OF CONSTRUCTION OF MULTIPLEXES WAS, THUS, CAPITAL RECEIPT. THE OBJECT OF GRANT OF SUBSIDY WAS IN ORDE R THAT THE PERSONS COME FORWARD TO CONSTRUCT MULTIPLEX THEATRE COMPLEXES. THE IDEA BEING THAT EXEMPTION FROM ENTER TAINMENT DUTY WAS GRANTED FOR 05 YEARS. IT IS ALSO PROVIDED IN THE SCHEME THAT IF THE COST IS RECOVERED PRIOR TO 05 YEARS, FO R REST OF THE 27 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. PERIOD, THE ENTERTAINMENT TAX WOULD BE LEVIABLE. AS PER THE SCHEME, SUBSIDY EQUIVALENT TO THE COST OF BUILDING AND MACHINERY WAS ALLOWED TO BE COLLECTED AS ENTERTAINM ENT TAX WITH THE OPERATOR/OWNER OF THE SAID MULTIPLEX, BEIN G ALLOWED TO RETAIN THE AMOUNT, EQUIVALENT TO THE ELIGIBLE AMOUN T OVER A PERIOD OF 05 YEARS. THE ISSUE IS, THEREFORE, COVER ED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT-1, KOLHAPUR VS. M/S. CHAPHALKAR BRO THERS, PUNE (SUPRA). THE DEPARTMENTAL APPEAL HAS NO MERIT AND THE SAME IS ACCORDINGLY DISMISSED. THE SAME FINDINGS AR E RELEVANT IN THE REMAINING APPEALS FOR THE A.YS. 2009-2010 AN D 2010- 2011. THESE APPEALS ARE ALSO DISMISSED. 9. IN THE RESULT, ALL THE DEPARTMENTAL APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (LP SAHU) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 02 ND APRIL, 2018 VBP/- 28 ITA.NOS.3095, 3096 & 3094/DEL./2014 SHIPRA HOTELS LTD., MUSSORIE. COPY TO 1. THE APP ELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT G BENCH, DELHI 6. GUARD FILE. // BY ORDER // ASSISTANT REGISTRAR : ITAT DELHI BENCHES : DELHI.