ACIT, Ichalkaranji Circle, Ichalkaranji V. M/s. Mahesh Textile Processors, Kolhapur

ITA 34/PUN/2013

• Counselvise Citation: 3424514 RSA 2013
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 03-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Business income; Depreciation; Capital receipt; Unabsorbed depreciation
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER. ITA.NOS.34 TO 36/PN/2013 (ASSESSMENT YEARS 2004-05 TO 2006-07) DY.CIT, ICHALKARANJI CIRCLE, ICHALKARANJI, DIST : KOLHAPUR .. APPELLANT VS. M/S. MAHESH TEXTILE PROCESSORS, PLOT NO.37/39, LAXMI INDUSTRIAL ESTATE, HATKANNAGALE, DIST : KOLHAPUR .. RESPONDENT PAN NO.AACFM3207B ITA.NOS.2486 TO 2488/PN/2012 (ASSESSMENT YEARS 2004-05 TO 2006-07) M/S. MAHESH TEXTILE PROCESSORS, PLOT NO.37-39, SHRI LAXMI CO-OP INDUSTRIAL ESTATE, HATKANANGALE, DIST : KOLHAPUR .. APPELLANT PAN NO.AACFM3207B VS. DY.CIT, ICHALKARANJI CIRCLE, ICHALKARANJI, DIST : KOLHAPUR .. RESPONDENT CO NOS.08 TO 10/PN/2014 (ASSESSMENT YEARS 2004-05 TO 2006-07) M/S. MAHESH TEXTILE PROCESSORS, PLOT NO.37/39, LAXMI INDUSTRIAL ESTATE, HATKANNAGALE, DIST : KOLHAPUR .. CROSS OBJECTOR PAN NO.AACFM3207B VS. DY.CIT, ICHALKARANJI CIRCLE, ICHALKARANJI, DIST : KOLHAPUR .. APPELLANT IN TH E APPEAL ASSESSEE BY : SHRI M.K. KULKARNI REVENUE BY : SHRI S.P. WALIMBE DATE OF HEARING : 06-02-2014 DATE OF PRONOUNCEMENT : 18-02-2014 2 ORDER PER BENCH : THE APPEALS FILED BY THE REVENUE AND THE CROSS APP EALS AS WELL AS CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER DATED 16-10-2012 OF THE CIT(A), KOLHAPUR RELA TING TO ASSESSMENT YEARS 2004-05 TO 2006-07 RESPECTIVELY. SINCE COMMO N ISSUES ARE INVOLVED IN THE CROSS APPEALS AND THE CROSS OBJECTIONS, THER EFORE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON O RDER FOR THE SAKE OF CONVENIENCE. ITA NO.34/PN/2013 (BY REVENUE) (A.Y. 2004-05) : 2. THIS IS THE SECOND ROUND OF LITIGATION BEFORE TH E TRIBUNAL. FACTS OF THE CASE, IN BRIEF ARE THAT THE ASSESSEE FIRM IS EN GAGED IN THE BUSINESS OF PROCESSING OF CLOTH AND GENERATION OF POWER FROM WI ND MILL. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE IMPUGNE D ASSESSMENT YEAR ON 31- 10-2004 DECLARING TOTAL INCOME AT RS.47,58,127/- AF TER CLAIMING DEDUCTION U/S.80IA & 80IB. THE ASSESSMENT WAS COMPLETED U/S. 143(3) ON 23-10-2006 ON A TOTAL INCOME OF RS.49,71,630/-. SUBSEQUENTLY, THE CIT-II, KOLHAPUR, ON NOTICING THAT THE CLAIM OF DEDUCTION MADE BY THE ASSESSEE U/S.80IA WAS ERRONEOUS, PASSED ORDERS U/S.263 SETTING ASIDE THE ORDER OF THE ASSESSING OFFICER FOR FRESH ASSESSMENT. THE ASSESSEE CHALLEN GED THE ORDER PASSED U/S.263 BEFORE THE TRIBUNAL AND THE TRIBUNAL VIDE O RDER DATED 16-10-2012 DIRECTED THE ASSESSING OFFICER TO REFRAME THE ASSES SMENT DENOVO. THEREAFTER, THE ASSESSING OFFICER ISSUED NOTICE TO THE ASSESSEE CALLING FOR CERTAIN DETAILS ON THE LINES OF THE ORDER U/S.263 A ND THE DECISION OF THE ITAT. 3 2.1 DURING THE COURSE OF SUCH SETTING ASIDE ASSESSM ENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD ADJUS TED THE LOSSES FROM WIND MILL AGAINST THE INCOME DERIVED FROM ITS OTHER BUSI NESS AND PROFITS WERE SHOWN IN ITS ACCOUNTS IN SUBSEQUENT YEARS IN WIND M ILL ACCOUNT ON WHICH CLAIM OF DEDUCTION U/S.80IA WAS MADE. HE WAS OF TH E VIEW THAT THE ASSESSEE HAD, WHILE CLAIMING DEDUCTION U/S.80IA, IG NORED THE PROVISIONS OF SECTION 80IA(5) WHICH PROVIDED THAT THE PROFIT AND GAIN OF ELIGIBLE BUSINESS SHOULD BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WER E THE ONLY SOURCE OF ITS INCOME. THE ASSESSEES CONTENTION IN THIS REGARD W ERE THAT (I) SECTION 80IA HAS TO BE READ ALONG WITH SECTION 80AB AND OTHER SE CTIONS 70 TO 79 RELATING TO SET OFF AND CARRY FORWARD OF LOSSES, (II) DEDUCT ION IS ALLOWABLE IF THE GROSS TOTAL INCOME INCLUDED PROFITS AND GAINS OF WINDMILL AND (III) THAT THE ASSESSEE HAD THE OPTION TO CHOOSE THE INITIAL ASSES SMENT YEAR IN WHICH THE DEDUCTION WAS TO BE CLAIMED. THESE CONTENTIONS WER E NOT ACCEPTABLE TO THE ASSESSING OFFICER. HE OBSERVED THAT THE ASSESSEE H AD FAILED TO CONSIDER BROUGHT FORWARD DEPRECIATION IN RESPECT OF WINDMILL BEFORE CLAIMING DEDUCTION U/S.80IA AND THAT THESE WERE SET OFF AGAI NST INCOME FROM ITS OTHER BUSINESS. KEEPING IN VIEW THE PROVISIONS OF SECTIO N 80IA(5), THE ASSESSING OFFICER REWORKED THE ASSESSEES MANUFACTURING AND P ROFIT AND LOSS ACCOUNT IN RESPECT OF THE WIND MILL DIVISION WHEREIN ASSESS MENT YEAR 2002-03 WAS TAKEN AS THE FIRST YEAR. SINCE THIS WORKING SHOWED UNABSORBED DEPRECIATION IN RESPECT OF THE WINDMILL BUSINESS, THE ASSESSING OFFICER HELD THAT THE ASSESSEE WAS NOT ENTITLED FOR CLAIM OF DEDUCTION U/ S.80IA OF THE ACT. 4 3. BEFORE THE CIT(A) IT WAS SUBMITTED THAT THE FIRS T ASSESSMENT YEAR OUT OF TEN CONSECUTIVE YEARS WAS LEFT TO THE CHOICE OF THE ASSESSEE TO CLAIM DEDUCTION U/S.80IA. IT WAS EXPLAINED THAT THE INIT IAL ASSESSMENT YEAR AS PER SUB-SECTION (5) IS DIFFERENT FROM THE WORDS BEGINN ING FROM THE YEAR AS REFERRED TO IN SUB-SECTION (2) OF SECTION 80IA. TH EREFORE, WHEN THE OPTION IS EXERCISED, ONLY LOSSES OF THE YEARS BEGINNING FROM INITIAL ASSESSMENT YEAR ARE TO BE BROUGHT FORWARD AND NOT LOSS OF EARLIER Y EARS, WHICH WERE ALREADY SET OFF AGAINST THE INCOME OF THE ASSESSEE. 4. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S. PREETAM ENTERPRISES VIDE ITA NO.544 AND 545 AND 613/PN/2009 ORDER DATED 29-04- 2011 ALLOWED THE CLAIM OF THE ASSESSEE BY HOLDING A S UNDER : 8. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT. AN IDENTICAL ISSUE HAD COME UP IN APPEAL BEFORE ME IN THE CASE OF M /S. PREETAM ENTERPRISES. IN THAT CASE, FOR ASSESSMENT YEARS 2004-05 A ND 2006-07 THE HONOURABLE ITAT, PUNE BENCH A, PUNE VIDE ORDER IN ITA NO.544, 545 AND 613/PN/2009 DATED 29/04/2011 WHILE ALLOWING THE CLA IM OF DEDUCTION HELD AS UNDER : 2.1 WE ALSO FIND THAT IN THE CASE OF VELAYUDHASWAMY S PINNING MILLS (P) LTD. VS. ACIT (2010) 231 CTR (MAD.) 368 HON BLE MADRAS HIGH COURT HAS HELD THAT LOSSES AND DEPRECIATION OF THE YEARS EARLIER TO THE INITIAL ASSESSMENT YEAR WHICH HAVE ALREADY BEEN ABSORBED AGAINST THE PROFITS OF OTHER BUSINESS CANNOT BE NOTIONAL LY BROUGHT FORWARD AND SET OFF AGAINST THE PROFITS OF THE ELIGIBL E BUSINESS FOR COMPUTING THE DEDUCTION U/S.80IA. FOLLOWING THIS JUD GMENT OF HONBLE MADRAS HIGH COURT, THIS ISSUE IS DECIDED IN FAVO UR OF THE ASSESSEE. THE ASSESSEE IS ENTITLED TO CLAIM FOR DEDUCTION U/S.80IA(4)(IV)(A) OF THE ACT. 9. THUS, SINCE THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE ARE IDENTICAL, THE DECISION OF THE HONOURABLE JURISDICTIO NAL ITAT IS SQUARELY APPLICABLE. RESPECTFULLY FOLLOWING THE ABOVE DECISIO N, I HOLD THAT THE APPELLANT IS ENTITLED TO CLAIM OF DEDUCTION U/S.80IA AND ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEDUCTION U/S.80IA IN RESPECT OF INITIAL ASSESSMENT YEAR AND ENSUING YEARS AS PER THE CLAIM OF ASSESSEE . 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 5 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) WAS NOT CORRECT IN DIRECTING TO ALLOW DEDUCTI ON U/S.80IA. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, T HE CIT(A) WAS NOT JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE U/S.80IA, WHEN THE ASSESSEE DID NOT SUBMIT FULL DETAILS AND WORKING OF DEDUCTION U/S.80IA READ WITH SECTION 80IA(5), ON ENQUIRY MADE BY THE A.O. IN PURSU ANCE TO DIRECTIONS OF THE HONBLE ITAT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE TH E CIT(A) FAILED TO APPRECIATE THAT THERE WAS NO PROFIT AVAILABLE TO THE ASSESSEE AFTER ADJUSTING DEPRECIATION, IN TERMS OF SEC.80IA(5) OF THE ACT, AN D THEREFORE, WAS NOT ENTITLED TO CLAIM OF DEDUCTION U/S.80IA OF THE ACT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) ERRED IN NOT APPRECIATING THE RATIO OF DECISI ON OF THE SPECIAL BENCH ITAT, AHMEDABAD IN THE CASE OF GOLDMINE SHARES AND FI NANCE PVT. LTD., (116 TTJ 705), WHEREIN IT IS CATEGORICALLY HELD THAT NEI THER THE INCOME OR LOSS OF A BUSINESS OTHER THAN THE ELIGIBLE BUSINESS OF ANY YEAR CAN BE TAKEN INTO CONSIDERATION; NOR THE EARLIER YEARS LOSSES OF THE ELIGI BLE BUSINESS CAN BE IGNORED IN COMPUTING THE PROFITS AND GAINS TO DETERMI NE THE QUANTUM OF THE DEDUCTION UNDER THIS SECTION. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW THE CIT(A) ERRED IN APPLYING THE DECISION IN THE CASE OF PREETAM ENTERPRISES, WHEN THE SAME IS YET TO REACH FINALITY. 7. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A), KOLHAPUR BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND AN I DENTICAL ISSUE HAD COME UP BEFORE THE COORDINATE BENCH OF THE TRIBUNAL IN T HE CASE OF SERUM INTERNATIONAL LTD. AND THE TRIBUNAL VIDE ITA NOS. 2 90 TO 292/PN/2010 ORDER DATED 28-09-2011 HAS DECIDED THE ISSUE IN FAV OUR OF THE ASSESSEE BY OBSERVING AS UNDER : 8. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVANC ED BY THE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW , A ND MATERIAL AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON BY THEM. 9. THE LD. A.R HAS BASICALLY REITERATED THE SUBMISSION S MADE ON BEHALF OF THE ASSESSEE BEFORE THE AUTHORITIES BELOW ON THE ISSUE . IN SUPPORT, HE HAS PLACED RELIANCE ON THE FOLLOWING DECISIONS : 1) VELAYUDHASWAMY SPINNING MILLS (P) LTD VS. ACIT (2010) 38 DTR (MAD.) 57. 6 2) PONNAWALLA ESTATE STUDE AND AGRO FARM PVT. LTD. VS. ACIT, ITA 92/PN/2008, (A.Y. 2004-05), ORDER DT. 29 SEPTEMBER 2010 3) G.B. RUBBER PRODUCTS V/S. DCIT, ITA NO. 1466/PN/2009 (A.Y. 2005- 06) ORDER DATED 25 TH MAY 2011. 4) ACIT VS. AURANGABAD HOLIDAY RESORTS (P) LTD (2009), 1 18 ITD 1 (PUNE) 5) COMMISSIONER OF CENTRAL EXCISE VS. M/S. VALSON DYEING, BLEACHING AND PRINTING WORKS, 2010 TIOL 710 HC MUM CX. 10. THE LD. D.R., ON THE OTHER HAND, TRIED TO JUSTI FY THE ORDERS OF THE AUTHORITIES BELOW AND PLACED RELIANCE ON THE FOLL OWING DECISIONS IN SUPPORT THERETO : 1) ACIT VS. GOLDMINE SHARES AND FINANCE (P) LTD. (2008), 116TTJ (AHD.)(SB) 705 2) PRIMA PAPER ENGG (P) LTD. VS. ITO, ITA NO. 1755 & 1 205/PN/2007 (A.YS. 2002-03 AND 2003-04), ORDER DT. 31 ST JANUARY 2011. 3) LIBERTY INDIA VS. CIT (2009), 317 ITR 218 (SC) 4) JCIT VS. CIPLA LTD. (2005), 2 SOT 617 (MUM) 5) ADDL. CIT VS. ASHOK ALCO CHEM LTD. (2005), 96 ITD 160 (MUM). 6) HYDERABAD CHEMICALS VS. ACIT, ITA NO. 352/HYD/2005 & OTHERS (A.YS. 2001-02 TO 2003-04 & 2005-06), ORDER DT. 21 ST JANUARY 2011. 11. THE ISSUE RAISED BEFORE THE BENCH IS AS TO WHETHER I N VIEW OF THE PROVISIONS OF SEC. 80IA(5) OF THE I.T. ACT 1961, THE PROFIT FROM THE ELIGIBLE BUSINESS FOR THE PURPOSE OF DEDUCTION U/S. 80IA OF THE ACT HAS TO BE COMPUTED AFTER DEDUCTION OF THE NOTIONAL BROUGHT FO RWARD LOSSES AND DEPRECIATION OF ELIGIBLE BUSINESS EVEN THOUGH THEY HAV E BEEN ALLOWED SET OFF AGAINST OTHER NON-ELIGIBLE BUSINESS INCOME IN EARLIER Y EARS. THE SUBMISSION OF THE LD A.R. REMAINED THAT ON THE WIND MILLS SET UP IN THE PREVIOUS YEAR RELEVANT TO A.Y. 2002-03, THE ASSESSEE HAD CLAIMED DEPR ECIATION AT THE RATE OF 100% THEREON I.E. RS. 3.54 CRORES, WHICH WAS FULLY SET OFF AGAINST THE ANOTHER INCOME IN THE SAID A.Y. 2002-03 ITSELF. IN THE A.Y. 2004-05, THE ASSESSEE HAD POSITIVE INCOME FROM THE SAID GENERATION ACT IVITY AND THERE WERE NO BROUGHT FORWARD LOSSES/ UNABSORBED DEPRECIATION OF THE PRECEDING YEAR, WHICH HAD REMAINED TO BE SET OFF IN THE A.Y. 2 004-05. THE A.O., NOTIONALLY BROUGHT FORWARD UNABSORBED DEPRECIATION F OR THE A.Y. 2003-04 TO THE IMPUGNED A.Y. 2004-05 AND DENIED THE CLAIM FOR DEDUCTION MADE BY THE ASSESSEE U/S. 80IA IN RESPECT OF THE PROFIT EARNED BY IT IN A.Y. 2004-05. THE LD. A.R. SUBMITTED THAT SUB-SECTION (2) OF SECTION 80I A PROVIDES AN OPTION TO THE ASSESSEE TO CHOOSE 10 CONSECUTIVE A.YS. OUT OF 15 YEA RS FOR CLAIMING THE DEDUCTION. HE SUBMITTED THAT THE TERM INITIAL YEAR IN SUB-SECTION (5) OF 80IA IS NOT DEFINED AND IS USED IN CONTRADICTION TO THE WO RDS BEGINNING FROM THE YEAR USED IN SUB-SECTION (2). HE SUBMITTED THAT THE ASSESSEE CHOSE A.Y. 2004-05 AS INITIAL A.Y BEING THE FIRST YEAR IN WHICH IT CLAIMED DEDUCTION U/S. 80IA AND THEREFORE, LOSSES/DEPRECIATION BEGINNING FRO M A.Y. 2004-05 ALONE COULD ONLY BE BROUGHT FORWARD AND SET OFF. DEPRECIAT ION OF THE PRECEDING A.Y. 2002-03 COULD NOT HAVE BEEN NOTIONALLY BROUGHT FORWARD AND SET OFF AGAINST PROFIT FOR THE A.Y. 2004-05. THE LD. A.R. P LACED HEAVY RELIANCE ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD VS. ACIT (SUPRA). HE SUBMITTE D THAT THE DECISION OF HONBLE MADRAS HIGH COURT WILL PREVAIL UPON THE DECI SION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. GOLDMIN E SHARES AND FINANCE (P) LTD. (SUPRA) FOLLOWED BY THE PUNE BENCH OF THE TRIBUNAL IN ITS RECENT DECISION IN THE CASE OF PRIMA PAPER ENGG (P) LTD. VS. ITO (SUPRA) AND THERE THE ASSESSEE DID NOT DISPUTE THE FACT THAT THE AUTHORIT IES BELOW HAVE DECIDED THE ISSUE FOLLOWING THE DECISION OF SPECIAL BE NCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. GOLDMINE SHARES.. THE LD. A.R. P OINTED OUT THAT DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYUDH ASWAMY SPINNING 7 MILLS (P) LTD VS. ACIT (SUPRA) WAS NOT CITED BEFORE TH E PUNE BENCH IN THE CASE OF PRIMA PAPER ENGG (P) LTD. VS. ITO (SUPRA). THE LD. A.R. HAS ALSO CITED THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. AURANGABAD HOLIDAY RESORTS (P) LTD., (SUPRA) HOLDING THAT EVEN A DECISION OF NON-JURISDICTIONAL HIGH COURT IS A BINDING PRECEDE NT FOR THE TRIBUNAL UNTIL A CONTRARY DECISION IS GIVEN BY ANY OTHER COMP ETENT HIGH COURT. SIMILAR VIEW HAS BEEN EXPRESSED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF CENTRAL EXCISE VS. M/S. VALSON DY EING, BLEACHING AND PRINTING WORKS (SUPRA). 12. THE CONTENTION OF THE LD. D.R. ON THE OTHER HAN D REMAINED THAT DEDUCTION U/S. 801 AND 801A COVERED INTER ALLIA, IN DUSTRIAL UNDERTAKINGS. THE POWER GENERATION UNITS FOUND A SPECIFIC MENTION FOR THE FIRST TIME W.E.F. 1.4.1993. IN ALL THE YEARS FROM 1.4.1981 TO 31 TO 31 ST MARCH 2000 IN BOTH U/S. 80I AND 80IA, THE TERM INITIAL A.Y WAS DEFINED AND M EANT THE FIRST A.Y. RELEVANT TO THE PREVIOUS YEAR IN WHICH THE ELIGIBLE UNIT COMMENCES PRODUCTION/POWER GENERATION. ONLY FROM 1.4.2000, W HEN SECTIONS 80IA WAS REPLACED WITH SECTION 80IA AND 80IB, THE DEFINITION OF INITIAL A.Y. DID NOT FIND A MENTION. BUT NOWHERE, IN THE PARLIAMENT SPE ECH OF MEMORANDUM EXPLAINING THE FINANCE BILL HAS ANY MENTION THAT TH ERE WAS ANY INTENTION TO IGNORE LOSSES AND DEPRECIATION FROM FIRST YEAR OF POWER GENERATION/PRODUCTION AND THAT SUCH LOSSES TILL FIRST YE AR OF CLAIM OF DEDUCTION IS TO BE IGNORED. THE VIEW CANVASSED BY T HE ASSESSEE DOES NOT FIND ANY SUPPORT. HE SUBMITTED THAT THERE IS NO DISCER NIBLE CHANGE IN LAW OR INTENTION OF PARLIAMENT W.E.F. 1.4.2000. THE LD. D .R. SUBMITTED THAT THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF GOLDMINE SHARES AND FINANCE (P) LTD. (SUPRA) IS FULLY APPLICABLE IN THE PRESENT CASE. HE POINTED OUT THAT IN ITS RECENT DECISION DT. 21 ST JANUARY 2011, THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF HYDERABAD CHEMICAL SUPPL IES LTD. VS. ACIT (SUPRA) HAS ALSO DECIDED AN IDENTICAL DECISION IN FAVO UR OF THE REVENUE FOLLOWING THE DECISION OF SPECIAL BENCH OF THE TRIBU NAL IN THE CASE OF ACIT VS. GOLDMAN SHARES & FINANCE (P) LTD. (SUPRA). HE SUB MITTED THAT THE HYDERABAD BENCH OF THE TRIBUNAL WHILE DECIDING TH E ISSUE HAS ALSO DISCUSSED THE DECISION OF HONBLE MADRAS HIGH COURT I N THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD VS. ACIT (SUPRA ). THE LD. D.R. SUBMITTED THAT EVEN IN THE CASE OF LIBERTY INDIA VS. C IT (SUPRA), THE HONBLE SUPREME COURT HAS BEEN PLEASED TO EXPLAIN THE INTENTI ON OF PARLIAMENT AND SCOPE OF DEDUCTION U/S. 80IA AND 80IB OF THE ACT. T HE HONBLE SUPREME COURT HAS BEEN PLEASED TO HOLD THAT SUCH PROFITS ARE T O BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS IS THE ONLY SOURCE OF INCOME OF TH E ASSESSEE. THE DEVICES ADOPTED TO REDUCE OR INFLATE THE PROFIT OF E LIGIBLE BUSINESS HAS GOT TO BE REJECTED IN VIEW OF THE OVERRIDING PROVISIONS OF SUB-SECTION (5) OF SECTION 80IA OF THE ACT. 13. HAVING BEEN CONSIDERED THE ABOVE SUBMISSIONS, WE FIN D THAT THE ISSUE RAISED IN GROUND NO. 1 AS TO WHAT WOULD BE THE IN ITIAL A.Y FOR THE PURPOSES OF SECTION 80IA(5) OF THE ACT HAS BEEN DECID ED IN FAVOUR OF THE ASSESSEE BY THE PUNE BENCH OF THE TRIBUNAL IN THE CASE O F POONAWALLA STUD AND AGRO FARM PVT. LTD. VS. ACIT (SUPRA). IN THAT C ASE AFTER DISCUSSING THE ISSUE IN DETAIL, THE TRIBUNAL HAS COME TO THE CONCLUSIO N THAT THE INITIAL A.Y FOR THE PURPOSE OF CLAIMING DEDUCTION U/S. 80IA WAS TH E FIRST YEAR IN WHICH THE ASSESSEE CLAIMED THE DEDUCTION U/S. 80IA (1) AFTER E XERCISING HIS OPTION AS PER THE PROVISIONS OF 80IA (2) OF THE ACT. IT WAS H ELD THAT THE LD CIT(A) HAS ERRED IN HOLDING THAT THE INITIAL A.Y FOR THE PU RPOSES OF SECTION 80IA(2) R.W.S. 80IA (5) WAS THE YEAR IN WHICH THE ASSESSEE STARTED GENERATING ELECTRICITY FROM THE WIND MILL ACTIVITY. WE ALSO FI ND THAT THE ISSUE RAISED IN GROUND NO. 2 REGARDING THE ELIGIBILITY OF THE ASSESSEE TO CLAIM DEDUCTION U/S. 80IA UNDIMINISHED BY UNABSORBED LOSSES AND DEPRECIAT ION ALSO SET OFF IN EARLIER YEARS AGAINST THE OTHER INCOME, IS FULLY CO VERED BY THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWA MY SPINNING MILLS 8 (P) LTD VS. ACIT (SUPRA) HOLDING THAT AS PER SUB-SECT ION (5) OF SECTION 80IA, PROFITS ARE TO BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS I S THE ONLY SOURCE OF INCOME OF THE ASSESSEE. WHEN THE ASSESSEE EXERCISES THE OPTI ON, ONLY THE LOSSES OF THE YEARS BEGINNING FROM THE INITIAL A.Y. ARE TO BE BROUGHT FORWARD AND NOT THE LOSSES OF THE EARLIER YEARS WHICH HAVE BEEN ALREADY SET OFF AGAINST THE INCOME OF THE ASSESSEE. THE HONBLE MADRAS H IGH COURT HAS BEEN FURTHER PLEASED TO HOLD THAT REVENUE CANNOT NOTIONAL LY BRING FORWARD ANY LOSS OF EARLIER YEARS WHICH HAD ALREADY BEEN SET OFF A GAINST THE OTHER INCOME OF ASSESSEE AND SET OFF AGAINST THE CORRECT INCOME OF TH E ELIGIBLE BUSINESS. FICTION CREATED BY SUB-SECTION (5) OF SECTION 80IA D OES NOT CONTEMPLATE SUCH NOTIONAL SET OFF, HELD THE HONBLE HIGH COURT. T HE HONBLE MADRAS HIGH COURT IN THAT DECISION HAS ALSO REFERRED THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS. CIT (SUPRA) A ND THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF GOLDMAN SHARES & FINANCE (P) LTD. (SUPRA). THERE IS NO DISPUTE THAT EVEN A DECISION OF NON-JURISDICTIONAL HIGH COURT IS A BINDING PRECEDENT FOR THE TRIBUNAL UNTIL A CONTRARY DECISION IS GIVEN BY ANY OTHER COMPETENT HIGH COURT. IN THIS RE GARD, WE FIND STRENGTH FROM THE RECENT DECISION OF HONBLE JURISDICTIONAL BO MBAY HIGH COURT IN THE CASE OF COMMISSIONER OF CENTRAL EXCISE VS. VALSON DYEING , BLEACHING AND PRINTING WORKS (SUPRA) WHEREIN THE HONBLE BOMBAY HI GH COURT HAS BEEN PLEASED TO HOLD IN A CASE OF EXCISE MATTER THAT TRIBUN AL IS BOUND BY THE DECISION OF HIGH COURT , EVEN OF A DIFFERENT STATE, SO LONG AS THERE IS NO CONTRARY DECISION OF ANY OTHER HIGH COURT. THE HONB LE BOMBAY HIGH COURT HAS BEEN PLEASED TO HOLD FURTHER THAT THE TRIBUNAL HA D NO OPTION BUT TO FOLLOW THE JUDGMENT OF THE MADRAS HIGH COURT. AN AU THORITY LIKE AN INCOME TAX TRIBUNAL ACTING ANYWHERE IN THE COUNTRY HAS TO R ESPECT THE LAW LAID DOWN BY THE HIGH COURT, THOUGH OF A DIFFERENT STATE , SO LONG AS THERE IS NO CONTRARY DECISION OF ANY OTHER HIGH COURT ON THAT QU ESTION. WE THUS RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HO NBLE JURISDICTIONAL HIGH COURT IN THE CASE OF COMMISSIONER OF CENTRAL EXCISE VS. VAKSON DYEING, BLEACHING AND PRINTING WORKS (SUPRA) HOLD THAT THE TRIBUNAL IS BOUND BY THE DECISION OF THE HONBLE MADRAS HIGH COURT ON AN I DENTICAL ISSUE IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD VS. ACIT (SUPRA). WE THUS RESPECTFULLY FOLLOWING THE DECISION TAKEN BY THE HON BLE MADRAS HIGH COURT IN THAT CASE ON AN IDENTICAL ISSUE UNDER ALMOST SIMILAR FACTS, HOLD THAT WHEN THE ASSESSEE EXERCISING THE OPTION, ONLY THE LOSSES OF TH E YEAR BEGINNING FROM THE INITIAL A.Y. ARE TO BE BROUGHT FORWARD AND NOT THE LOSSES OF EARLIER YEAR WHICH HAVE BEEN ALREADY SET OFF AGAINST THE OTHE R INCOME OF THE ASSESSEE. THE REVENUE CANNOT NOTIONALLY BRING FORWARD ANY LOSS OF EARLIER YEARS WHICH HAS ALREADY BEEN SET OFF AGAINST ANY OTHER INCOME OF THE ASSESSEE AND SET OFF THE SAME AGAINST THE CURRENT INCOME O F THE ELIGIBLE BUSINESS. WE THUS SET ASIDE THE ORDERS OF THE AUTHORITI ES BELOW AND DIRECT THE A.O TO ALLOW THE CLAIMED DEDUCTION U/S. 80IA WITHOUT BRINGING THE NOTIONALLY BROUGHT FORWARD ANY LOSS OR DEPRECIATION OF EARLIER YEARS WHICH HAS ALREADY BEEN SET OFF AGAINST OTHER INCOME OF THE A SSESSEE. THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF PRIMA PAPER ENGINEERING P.LTD. VS. ITO (SUPRA) CITED BY THE LD. DR IS ALSO NOT HELPFU L TO THE REVENUE SINCE FIRSTLY THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD. VS. ACIT (SUPR A) ON THE ISSUE WAS NOT CITED BEFORE THE BENCH AND SECONDLY THE LD. AR F AIRLY AGREED THAT THE ISSUE RAISED WAS COVERED AGAINST THE ASSESSEE BY THE DECISION OF SPECIAL BENCH IN THE CASE OF ACIT VS. GOLDMINE SHARES & FINAN CE (P) LTD. (SUPRA) FOLLOWED BY THE AUTHORITIES BELOW. THE LD. AR THERE IN THUS CONTENDED THAT THOUGH THE ISSUE MAY BE DECIDED AGAINST THE ASSESSEE IN VI EW OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. GOLDMI NE SHARES & FINANCIAL (P) LTD., BUT IT SHOULD NOT BE CONSTRUED AS ACQUIESCENC E FROM THE SIDE OF THE ASSESSEE AS THE LEGAL POSITION ON THE SUBJECT IS YET NOT SET TLED. THE GROUND NO. 2 IS THUS DECIDED IN FAVOUR OF THE ASSESSEE. 9 6.1 WE FIND THAT FOLLOWING THE ABOVE DECISION, THE TRIBUNAL IN THE CASE OF DHUMAL INDUSTRIES VS. CIT HAS ALLOWED THE CLAIM OF THE ASSESSEE VIDE ITA NOS. 1040 AND 1041/PN/2012 ORDER DATED 29-08-2013. 6.2 RESPECTFULLY FOLLOWING THE DECISIONS OF THE COO RDINATE BENCH OF THE TRIBUNAL CITED (SUPRA) AND IN ABSENCE OF ANY CONTRA RY DECISION BROUGHT TO OUR NOTICE THE ORDER OF THE CIT(A) ON THIS ISSUE IS UPHELD AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. ITA NO.35 & 36/PN/2013 (BY REVENUE) (A.YRS.2005-06 & 2006-07) : 7. AFTER HEARING BOTH SIDES WE FIND THE GROUNDS RAI SED IN THE ABOVE 2 APPEALS ARE IDENTICAL TO THE GROUNDS RAISED IN ITA NO.34/PN/2013. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUNDS RAI SED BY THE REVENUE HAVE BEEN DISMISSED. FOLLOWING THE SAME RATIO, THE GROU NDS RAISED BY THE REVENUE IN THE ABOVE 2 APPEALS ARE DISMISSED. ITA NO.2486/PN/2012 (BY ASSESSEE) (A.Y. 2004-05) : 8. GROUNDS OF APPEAL NO.1 TO 3 BY THE ASSESSEE READ AS UNDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD.CIT(A) KOLHAPUR ERRED IN UPHOLDING THE ACTION OF THE A.O. IN EXCLUDING SALES-TAX INCENTIVES WHILE COMPUTING THE DEDUCTION U/S.80IA OF THE ACT. THE DEDUCTION U/S.80IA BE ALLOWED TO THE ASSESSEE WITHOUT EX CLUDING THE SALES- TAX INCENTIVES WHICH ARE DIRECTLY DERIVED FROM THE I NDUSTRIAL UNDERTAKING. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE SALES-TAX INCENTIVES IS BEING PROFIT LINKED INCENTIVES AS PROVIDE D IN CH.VI-A OF THE ACT AND AMOUNTS TO PROFIT DERIVED FROM THE SOURCES COVERED NOT BEYOND THE FIRST DEGREE. THE DEDUCTION U/S.80IA ON THIS INCENTIVE DER IVED FROM BUSINESS BE ALLOWED AS PER SETTLED PROVISIONS OF LAW AND PRECEDENTS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W THE LD.CIT(A) KOLHAPUR IN REJECTING THE ALTERNATIVE PRAYER MADE B EFORE HIM THAT THE SALES TAX BENEFIT IS A SUBSIDY FOR PROMOTION OF WIND MILL AN D HENCE NOT TAXABLE BEING CAPITAL RECEIPT. THE LD.CIT(A) IN HOLDING TH AT NO ADJUDICATION IS REQUIRED SINCE THIS GROUND WAS NOT RAISED. IN VIEW OF SETTLED LAW THE ASSESSEE IS ENTITLED TO RAISE THIS GROUND EVE FOR THE FIRST TIME. IT BE HELD ACCORDINGLY. 10 8.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASS ESSEE HAS RECEIVED SALES TAX BENEFIT (SUBSIDY) AT RS.29,28,050/- FOR THE IMP UGNED ASSESSMENT YEAR (WHICH ACCORDING TO THE ASSESSEE IS RS.17,50,820/-) AND THE SAME WAS CLAIMED AS EXEMPT BEING CAPITAL SUBSIDY). ON BEING QUESTIONED BY THE ASSESSING OFFICER THE ASSESSEE ENCLOSED COPIES OF R ENEWAL CERTIFICATE FOR SALES TAX BENEFITS AND CONDITIONS OF SCHEME ETC. C ERTAIN DECISIONS WERE ALSO BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER TO STATE THAT IT IS A CAPITAL SUBSIDY AND OUTSIDE THE PURVIEW OF TAXATION. THE A SSESSING OFFICER NOTED THAT THE ASSESSEE HAS CLAIMED PROFIT FROM SALE OF S UCH SALES TAX BENEFIT BY CONSIDERING THE SAME AS INCOME DERIVED FROM ELIGIBL E BUSINESS FOR CLAIMING DEDUCTION U/S. 80IA. ACCORDING TO THE ASSESSING OF FICER SUCH SALE OF SALES TAX BENEFIT COULD BE SAID TO BE ATTRIBUTABLE TO THE BUSINESS OF THE POWER GENERATION BUT COULD NOT BE SAID TO BE DERIVED FROM THE SAID BUSINESS AS PER THE PROVISIONS OF SECTION 80IA(I). THE ASSESSING O FFICER RELIED HEAVILY ON THE DECISIONS OF THE HONBLE SUPREME COURT IN THE C ASES OF PANDIAN CHEMICALS LTD. VS. CIT REPORTED IN 268 ITR 278 , CI T VS. STERLING FOODS REPORTED IN 237 ITR 579, CAMBAY ELECTRIC SUPPLY IND USTRIAL CO. LTD. VS. CIT REPORTED IN 113 ITR 84 WHEREIN THE EXPRESSIONS ATTRIBUTABLE TO AND DERIVED FROM WERE DEALT WITH ELABORATELY. THE AS SESSING OFFICER ACCORDINGLY CONCLUDED THAT THE RECEIPTS FROM SALES TAX BENEFIT WAS NOT THE INCOME DERIVED FROM POWER GENERATION AND THEREFORE THE ASSESSEE IS NOT ELIGIBLE TO CONSIDER THE SAME WHILE CLAIMING DEDUCT ION U/S.80IA OF THE I.T. ACT. 11 8.2 BEFORE THE CIT(A) IT WAS ARGUED THAT SINCE THE SALES TAX BENEFIT IS SUBSIDY FOR PROMOTION OF WIND MILL UNDERTAKING IT I S A CAPITAL RECEIPT. FOR THIS PROPOSITION, THE DECISION OF THE HONBLE ANDHR A PRADESH HIGH COURT IN THE CASE OF CIT VS. TIRUMALA BRICKS AND TILES FACTO RY REPORTED IN 217 ITR 547 WAS BROUGHT TO THE NOTICE OF THE CIT(A). IT WA S ARGUED THAT THE SOURCE OF THE SALES TAX BENEFIT BEING INSTALLATION OF WIND MILL, IT HAS TO BE TREATED AS INCOME DERIVED FROM WIND MILL UNDERTAKING AND TH AT SALE OF SALES TAX BENEFIT IS NOT TAXABLE. HOWEVER, THE LD.CIT(A) WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. DISTINGUISHING THE VARIOUS DECISIONS CITED BEFORE HIM AND AFTER ANALYSING THE WIND POWER GENERATION POLICY OF THE GOVERNMENT OF MAHARASHTRA WHICH SPELLS OUT THE SUBSIDY POLICY, THE LD.CIT(A) HELD THAT THE SALES TAX BENEFIT CANNOT BE CONSIDERED AS DERIVED FROM ELIGIBLE BUSINESS. HE ACCORDINGLY U PHELD THE ORDER OF THE ASSESSING OFFICER ON THIS ISSUE. 8.3 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US. 9. AFTER HEARING BOTH THE SIDES, WE FIND AN IDENTIC AL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN THE CASE OF LAP FINANCE AND CONSULTANCY (P) LTD. VS. ADDL. CIT WHEREIN THE TRIBUNAL VIDE ITA NO.1292/PN/ 2010 ORDER DATED 28-02-2012 HAS DECIDED THE ISSUE AGAINST THE ASSESS EE BY OBSERVING AS UNDER: 5. THE NEXT ISSUE INVOLVED IN GROUND NOS. (2), (3), & (4) RELATES TO DEDUCTION UNDER SECTION 80IA OF THE ACT OF AN AMOUNT OF RS 56,87,500/- RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER APPEAL O N TRANSFER OF SALES TAX INCENTIVE. AFTER CONSIDERING THE SUBMISSIONS OF RIVA L SIDES, WE FIND THAT IDENTICAL ISSUE WAS A SUBJECT MATTER OF CONSIDERATION BE FORE OUR CO-ORDINATE BENCH IN THE CASE OF RASIKLAL M DHARIWAL (HUF), PUNE V. DCIT CIR. 2, PUNE IN ITA NOS. 575/PN/07 AND 150/PN/08 AND VIDE ITS ORDER D ATED 31.3.2011, THE TRIBUNAL HAS DECIDED THE ISSUE AGAINST THE ASSESSEE. THE RE LEVANT PORTION OF THE ORDER OF THE TRIBUNAL IN THE AFORESAID DECISION I S EXTRACTED BELOW: 12 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTI ONS. IN TERMS OF THE POLICY ON WIND POWER GENERATION FORMULATED BY THE GOVERNMENT OF MAHARASHTRA, VIDE RESOLUTIONS DATED 12.3.1998 (SUPRA), AND 1.10.1999 (SUPRA), THE ASSESSEE AVAILED OF SALES-TAX BENEFIT OF A SUM OF RS 63,74,291/-. THE ASSESSEE CL AIMED THAT SUCH AMOUNT IS A CAPITAL RECEIPT NOT SUBJECTED TO TAXATION. ON THE CONTRARY, AS PER THE REVENUE SUCH AMOUNT IS A REVENUE RECEIPT CHARGEABLE TO TAX. 9. BEFORE WE TOUCH UPON THE DIFFERING STANDS OF THE ASSESSEE AND REVENUE ON THE ISSUE, IT WOULD BE APPROPRIATE TO CULL OUT THE FACT S HAVING A BEARING ON THE ISSUE. THE APPELLANT IS AN HUF WHICH IS, INTER ALIA, ENGAGED I N A RANGE OF BUSINESS ACTIVITIES VIZ. MANUFACTURE AND SALE OF MANICKCHAND ZARDA, PAN MAS ALA, CONSTRUCTION ACTIVITIES, MANUFACTURING OF TILES ETC. INCLUDING GENERATION AN D SALE OF POWER. IN THE COURSE OF ITS ACTIVITIES, THE ASSESSEE COMPANY SET UP WIND MILLS IN THE STATE OF MAHARASHTRA FOR GENERATION OF WIND POWER. THE GOVERNMENT OF MAHARAS HTRA IN TERMS OF ITS POLICY ON WIND POWER GENERATION GRANTED VARIOUS BENEFITS, INCLUDIN G SALES-TAX BENEFIT. IN TERMS OF THE PROCEDURE FOR AVAILING SALES-TAX BENEFITS ON NON-CO NVENTIONAL ENERGY GENERATING PROJECTS, SUCH AS WIND MILLS, ASSESSEE WAS ALSO ENT ITLED TO THE FACILITY OF TRANSFERRING THE SALES-TAX BENEFIT TO THE THIRD PARTY. THE ASSESSEE AFTER OBTAINING THE REQUISITE PERMISSION FROM THE STATE GOVERNMENT TRANSFERRED THE SALES-TAX BENEFIT ENTITLEMENTS TO A THIRD PARTY AND THE CONSIDERATION THEREOF AMOUNTING TO RS 63,74 ,291/- WAS CLAIMED AS A CAPITAL RECEIPT. AT THIS STAGE, IT WOULD BE APPROPRIATE TO BRIEFLY TOUCH UPON THE RESOLUTION OF THE STATE GOVERNMENT DATED 12.3.1998 (SUPRA), THE RELEV ANT PORTION OF WHICH IS REPRODUCED AS UNDER: PREAMBLE THE STATE GOVERNMENT HAS A POLICY TO PROMOTE GENERA TION OF ENERGY THROUGH NON- CONVENTIONAL SOURCES TO SUPPLEMENT THE EVER INCREAS ING DEMAND OF ELECTRICITY IN THE STATE. IT WAS FOUND AFTER A SURVEY THAT THERE IS AN IMMENSE POTENTIAL FOR GENERATION OF WIND POWER IN THE STATE. SURVEYS CONDUCTED BY MEDA IN ASSOCIATION WITH MNES, NEW DELHI AND IITM, BANGALORE INDICATE THAT THE POTENTI AL IS ABOUT 300 TO 400 MW. EIGHT DIFFERENT SITES HAVE BEEN SELECTED FOR THIS PURPOSE AND FURTHER SURVEY IS BEING CARRIED OUT. THE STATE GOVERNMENT HAD ENUNCIATED ITS POLICY ON G ENERATION THROUGH NON- CONVENTIONAL SOURCES IN JANUARY, 1996. THIS POLICY HOWEVER COULD NOT ATTRACT THE PROMOTERS. DURING THE INTERVENING PERIOD, THE GOVER NMENT OF INDIA HAD ISSUED CERTAIN GUIDELINES REGARDING WIND ENERGY GENERATION. THESE GUIDELINES FROM GOVERNMENT OF INDIA, WIND POWER GENERATION POLICIES OF OTHER STAT E GOVERNMENTS AND THE PROBLEMS BEING FACED BY PROMOTERS OF WIND ENERGY GENERATION WERE UNDER ACTIVE CONSIDERATION OF THE STATE GOVERNMENT. RESOLUTION : IN PARTIAL MODIFICATION OF ITS EXISTING POLICY TO P ROMOTE WIND ENERGY GENERATION, THE STATE GOVERNMENT HAS TAKEN FOLLOWING DECISIONS TO PROMOTE WIND ENERGY GENERATION IN THE STATE:- (1) TARIFF : MAHARASHTRA STATE ELECTRICITY BOARD SHALL PURCHASE ENERGY GENERATED FROM WIND POWER PLANTS AT A RATE OF 225 PAISE PER UNIT. THE FINANCI AL YEAR 1994-95 WILL BE TAKEN AS BASE YEAR FOR THIS RATE WHICH WILL BE INCREASED AT A RAT E OF 5% PER ANNUM. THIS 5% ESCALATION WILL BE AVAILABLE TO THE DEVELOPERS FOR THE FIRST 1 0 YEARS OF THE PROJECT LIFE. THE LIABILITY OF THE PROJECT REDUCES AFTER REPAYMENT OF DEBT. DUE TO THIS, FOR THE NEXT 3 YEARS THERE WILL BE NO ESCALATION AND THE RATE WILL BE KEPT CONSTANT . THEREAFTER, FOR THE BALANCE LIFE OF THE PROJECT (7 YEARS), AN ESCALATION OF 5% PER ANNUM WI LL BE AVAILABLE TO THE DEVELOPERS. (2) BANKING IN LINE WITH THE CENTRAL GOVERNMENT POLICY, WIND PO WER DEVELOPERS WOULD BE GIVEN PERMISSION TO BANK THE ENERGY GENERATED FROM WIND P OWER PLANTS WITH MSEB. BANKING CAN BE DONE ANY TIME OF THE DAY AND NIGHT. THE ENER GY BALANCE AT THE END OF ONE YEAR SHALL NOT BE TAKEN INTO ACCOUNT NEXT YEAR. THE BALA NCE OF ENERGY ACCOUNT WILL BE SETTLED BETWEEN THE MSEB AND PROMOTERS AT THE END OF THE YE AR AS PER THE TARIFF APPLICABLE DURING THAT YEAR. (3) TRANSMISSION LOSSES: MSEB SHALL BEAR THE TRANSMISSION LOSSES FOR WIND EN ERGY TRANSMISSION FOR THE FIRST THREE YEARS. THEREAFTER, TRANSMISSION LOSSES WILL BE LEVI ABLE AT THE RATE OF 1%. 13 (4) THIRD PARTY SALE : PROMOTERS WILL BE PERMITTED TO SELL EXPORTABLE POWE R TO ANY TWO (INDUSTRIAL OR COMMERCIAL) CONSUMERS PER MW. WHEELING CHARGES FOR THIS WILL BE LEVIABLE AT THE RATE OF 2%. (5) EVACUATION ARRANGEMENT: MSEB SHALL INITIALLY BEAR THE EXPENDITURE FOR ERECT ION OF HIGH TENSION SUB-STATION AND TRANSMISSION INFRASTRUCTURE. MEDA SHALL RECOVER 50% OF THIS EXPENDITURE FROM WIND POWER PROJECT PROMOTERS AND WILL GIVE IT TO MSEB. D EVELOPERS SHALL BEAR THE COST OF TRANSMISSION LINES FROM THE SUB-STATION TO THE PROJ ECT AND ALL OTHER RELATED EQUIPMENT. (6) APPROACH ROADS : MEDA SHALL BEAR THE COST OF CONSTRUCTION OF ROADS T O THE PROJECT SITES. MEDA WOULD BE ENTITLE TO GOVERNMENT GRANTS FOR THIS EXPENDITURE. (7) CAPITAL SUBSIDY : WIND POWER PROJECTS WILL BE GRANTED STATUS OF SMALL SCALE INDUSTRIES. MEDA SHALL GIVE A SUBSIDY UPTO 30% OR THE FIXED CAPITAL INVESTMENT (L IMITED TO RS 20 LAKHS) TO THE PROMOTERS SUBJECT TO A CONDITION THAT WIND POWER PL ANT HAS SUCCESSFULLY OPERATED WITH A MINIMUM 12% PLANT LOAD FACTOR FOR AT LEAST ONE YEAR . (8) ENTRY TAX/OCTROI REFUND : ENTRY TAX/OCTROI AS PAID Y PROMOTERS WHILE MAKING C APITAL EXPENDITURE WILL BE REIMBURSED BY MEDA. (9) SALES TAX BENEFITS : INVESTMENTS IN PLANT AND MACHINERY, NEW BUILDING, L AND DEVELOPMENT, TECHNICAL DEVELOPMENT AND DESIGN IN A WIND POWER PROJECT WOUL D BE CONSIDERED AS QUALIFYING INVESTMENT. PROMOTER SHALL BE ENTITLED TO SALES-TAX BENEFITS UPTO THE AMOUNT OF QUALIFYING INVESTMENT. THIS BENEFIT WOULD BE GIVEN IN 6 EQUAL INSTALMENTS OVER A PERIOD OF 6 YEARS (1/6 OF THE QUALIFYING INVESTMENT AMOUNT EVERY YEAR ) ONLY UNDER THE CONDITION THAT THE PLANT HAS SUCCESSFULLY OPERATED EVERY YEAR WITH A M INIMUM OF 12% PLANT LOAD FACTOR. THIS BENEFIT MAY ALSO BE AVAILABLE TO ANY OTHER COM PANY ASSOCIATED WITH THE PROMOTERS. DETAILED INSTRUCTIONS ABOUT THE MODUS OPERANDI ABOU T SALES TAX BENEFITS WILL BE SEPARATELY ISSUED BY THE FINANCE DEPARTMENT. BY ORDER AND IN THE NAME OF THE GOVERNOR OF MAHARAS HTRA. SD/-(L.V.NILESH) DEPUTY SECRETARY TO GOVERNMENT 10. A PERUSAL OF THE PREAMBLE TO SUCH RESOLUTION RE VEALS THAT THE STATE GOVERNMENT HAS A POLICY TO PROMOTE GENERATION OF EN ERGY THROUGH NON CONVENTIONAL SOURCES TO SUPPLEMENT THE EVER INCREASING DEMAND OF ELECTRICITY IN THE STATE OF MAHARASHTRA. IT WAS FOUND THAT THERE IS IMMENSE POT ENTIAL FOR GENERATION OF WIND POWER IN THE STATE AND DIFFERENT SITES WERE SELECTED BY T HE GOVERNMENT FOR THIS PURPOSE. IT APPEARS THAT THE STATE GOVERNMENT HAD ENUNCIATED IT S POLICY OF GENERATION THROUGH NON CONVENTIONAL SOURCES IN JANUARY 1996, WHICH WAS NOT FOUND ATTRACTIVE BY THE PROMOTERS. IN TERMS OF THE SAID RESOLUTION THE GOVERNMENT MODI FIED ITS EXISTING POLICY TO PROMOTE WIND ENERGY GENERATION BY ANNOUNCING CERTAIN CONCES SIONS AS INCENTIVES ENUMERATED THEREIN. SUCH INCENTIVES RELATED TO TARIFF STRUCTU RING, BANKING OF POWER GENERATED BY WIND MILLS WITH MSEB, BEARING OF TRANSMISSION LOSSES BY MSEB, PERMITTING PROMOTERS TO SELL POWER TO THIRD PARTIES, BEARING INITIAL EXPENDITURE FOR ERECTION OF HIGH TENSION AND SUB- STATION AND TRANSMISSION INFRASTRUCTURE, BEARING TH E COST OF CONSTRUCTION OF ROADS TO PROJECT SITES, REIMBURSEMENT OF ENTRY TAX/OCTROI TO THE PROMOTERS, CAPITAL SUBSIDY UPTO 30% OF THE FIXED CAPITAL INVESTMENT (LIMITED TO RS 20 LAKHS), AND SALES-TAX BENEFITS. SINCE THE PRIMARY DISPUTE BEFORE US IS IN RELATION TO THE SALES-TAX BENEFITS AVAILABLE UNDER THE SCHEME, IT WOULD BE IN THE FITNESS OF THI NGS THAT WE MAY LOOK AT IT IN SLIGHT DETAIL. THE SCHEME INTENDED THAT INVESTMENTS IN PLA NT AND MACHINERY, NEW BUILDING, LAND DEVELOPMENT, TECHNICAL DEVELOPMENT AND DESIGN IN A WIND POWER PROJECT WOULD CONSTITUTE QUALIFYING INVESTMENT AND A PROMOTER SHA LL BE ENTITLED TO SALES-TAX BENEFITS UPTO THE AMOUNT OF SUCH QUALIFYING INVESTMENT. SUCH SALES-TAX BENEFIT WAS TO BE GIVEN IN SIX EQUAL INSTALMENTS OVER A PERIOD OF SIX YEARS, I .E. 1/6 TH OF THE QUALIFYING INVESTMENT AMOUNT EVERY YEAR ON THE CONDITION THAT THE PLANT SUCCESSFULLY OPERATES EVERY YEAR WITH A MINIMUM OF 12% PLANT LOAD FACTOR. IN TERMS OF SUC H BROAD FRAMEWORK OF THE SALES-TAX BENEFIT, THE STATE GOVERNMENT ISSUED SEPARATE DETAI LED INSTRUCTIONS ABOUT THE MODUS OPERANDI TO AVAIL SUCH BENEFITS, BY WAY OF GOVERNME NT RESOLUTION DATED 1.10.1999 (SUPRA)S. THE RELEVANT PORTION OF THE SAID RESOLUTI ON DATED 1.10.1999 IS AS UNDER: 14 PREAMBLE: WITH A VIEW TO ENCOURAGE INSTALLATION OF WIND ENERG Y GENERATOR UNITS, STATE GOVERNMENT HAS PUBLISHED A POLICY VIDE ABOVE MENTIONED GOVERNM ENT RESOLUTION. ACCORDING TO THE SAID POLICY SALES TAX BENEFIT IS AVAILABLE, EQUIVAL ENT TO THE QUALIFYING INVESTMENT ON WIND ENERGY GENERATION PROJECTS. TO AVAIL THE SALES TAX BENEFIT A PROCEDURE HAS BEEN LAID DOWN BY THE FINANCE DEPARTMENT VIDE NOTIFICATION NO. STA 1098/CR-45/TAX ATION 2, DATED 24.8.1998 AND NOTIFICATION NO VKN-1298/CR-33/TAXATION-1 DATED 24. 8.1998. HOWEVER, EVEN AFTER RELEASE OF THE SAID NOTIFICATIONS THE INDUSTRIALIST S HAVE EXPRESSED CERTAIN DIFFICULTIES WHICH HAVE BEEN BROUGHT TO THE NOTICE OF THE GOVERN MENT. TAKING INTO CONSIDERATION THE REQUESTS OF THE WIND POWER PROMOTERS AS WELL AS THE IR DIFFICULTIES, THE PROPOSAL FOR MODIFIED DETAILED PROCEDURE FOR AVAILING SALES TAX BENEFIT WAS UNDER CONSIDERATION OF THE GOVERNMENT. GOVERNMENT RESOLUTION : CONSIDERING THE DIFFICULTIES OF THE INDUSTRIALISTS AND WITH A VIEW TO MAKE AVAILABLE SALES TAX BENEFIT, GOVERNMENT HAS DECIDED TO SIMPLIFY THE PROCEDURE AS FOLLOWS: 1. THE SALES TAX BENEFIT WILL BE AVAILABLE ON ELECT RICITY GENERATING UNITS IN RELATION TO ACHIEVEMENT OF PLANT LOAD FACTOR AS FOLLOWS: S.NO. PLANT LOAD FACTOR SALES TAX BENEFIT EQUIVALENT OF 1//6 TH OF QUALIFYING INVESTMENT WITHOUT BANK GUARANTEE WITH BANK GUARANTEE 1 12% 60% 50% 2 13% 70% 60% 3 14% 80% 70% 4 15% 90% 80% 5 16% 100% 90% 6 17% 100% 100% THE SALES TAX BENEFIT CAN BE AVAILED BY ALL PROJECT S WHICH ARE COMMISSIONED AS WELL AS CONNECTED TO THE TRANSMISSION LINES FROM TWO MONTHS AFTER THE DATE OF PUBLICATION OF THE GOVERNMENT RESOLUTION. SALES TAX BENEFIT WILL BE AV AILABLE FOR CONTINUOUS 6 YEARS AFTER OBTAINING THE ENTITLEMENT CERTIFICATE FROM THE SA LES TAX DEPARTMENT. 2. WHILE DETERMINING THE PLANT LOAD FACTOR, THE AVA ILABILITY OF THE TRANSMISSION LINES DURING THE MONTHS FROM MAY TO SEPTEMBER OF THAT FIN ANCIAL YEAR AVERAGE AVAILABILITY OF TRANSMISSION LINES SHALL BE TAKEN INTO CONSIDERA TION AND THIS PERCENTAGE WILL BE INCREASED PROPORTIONATELY TO 100%, AND THEN THE PLA NT LOAD FACTOR WILL BE DETERMINED. FOR EXAMPLE, IF TRANSMISSION LINES AVAI LABILITY IS 85%, THEN THAT YEARS AVERAGE PLANT LOAD FACTOR WILL BE INCREASED PROPORT IONATELY TO CORRESPOND TO 100% AVAILABILITY OF TRANSMISSION LINES AND THE SALES TA X BENEFIT WILL BE INCREASED PROPORTIONATELY. THE AVAILABILITY OF THE TRANSMISSI ON LINES DURING THE MONTHS FROM MAY TO SEPTEMBER OF THAT FINANCIAL YEAR WILL BE DEC IDED BY MAHARASHTRA ENERGY DEVELOPMENT AGENCY (MEDA), PUNE. 3. SALES TAX BENEFIT WILL BE AVAILABLE FOR THE PROM OTERS FROM THE DATE OF OBTAINING OR ENTITLEMENT CERTIFICATE, FOR A PERIOD OF CONTINUO US 6 YEARS. AND FOR EVERY YEAR, SUCH BENEFIT WILL BE LIMITED TO 1/6 TH OF THE QUALIFYING INVESTMENT. HOWEVER, IN ANY ONE YEAR, PLANT LOAD FACTOR OF 12% IS NOT ACHIEVED THEN THAT YEARS SALES TAX BENEFIT WILL GET CANCELLED AND THAT UNIT WILL HAVE TO LOSE SALES TAX BENEFIT FOR THAT YEAR FOREVER. ANY TWO YEARS SALES TAX BENEFIT WILL NOT BE ALLOWE D TO DEDUCT TOGETHER TO CLAIM IN ONE YEAR. TO AVAIL THE SALES TAX BENEFITS THE PERIOD WI LL BE COUNTED FOR CONTINUOUS 6 (SIX) YEARS. THE FINANCIAL YEAR PERIOD WILL BE FROM 1 ST APRIL TO 31 ST MARCH. 4. THE FACILITY OF TRANSFERRING THE SALES TAX BENEF IT TO THE THIRD PARTY THE PROMOTERS OF THE PROJECT, IF SELL ELECTRICITY T O THE THIRD PARTY, FOR SUCH THIRD PARTY, TRANSFERRING OF SALES TAX BENEFIT WILL BE PERMITTED . THE PROMOTERS OF THE PROJECT CAN CHOOSE THE THIRD PARTY FOR THIS FACILITY AND IT WIL L BE APPLICABLE FOR THAT YEAR ONLY. HOWEVER, NO PERMISSION WILL BE GIVEN DURING THAT PERIOD TO C HANGE THE NAME OF THE THIRD PARTY. THIRD PARTY UNITS CAN AVAIL THE BENEFIT UPTO THE AM OUNT MENTIONED IN PARAGRAPH 1. FOR THIS, ELIGIBILITY CERTIFICATE WILL BE GIVEN BY DI RECTOR, MAHARASHTRA ENERGY DEVELOPMENT AGENCY. PROMOTERS OF THE PROJECT WILL BE ALLOWED TO CHOOSE, A THE MOST TWO NAMES OF THE THIRD PARTY UNITS TO GET THE SALES TAX BENEFIT. THE ENTITLEMENT CERTIFICATE FOR UNITS OF THIRD PARTY WILL E CERTIFIED BY COMMISSIONER OF SALES TAX . AMOUNT OF SALES TAX BENEFIT IS RELATED TO THE WIND ENERGY GENERATION AND THEY ARE NOT RELA TED TO THE AMOUNT OF ELECTRICITY SOLD TO THE THIRD PARTY. AFTER OBTAINING THE ENTITLEMEN T CERTIFICATE FOR SALES TAX BENEFIT THE 15 PROMOTERS OF THE PROJECT CAN TRANSFER TO THE THIRD PARTY TO WHOM THEY HAVE SOLD THE ELECTRICITY. AMOUNT OF SALES TAX BENEFIT IS RELATED TO THE QUALIFYING INVESTMENT AND PLANT LOAD FACTOR. THE ELECTRICITY SOLD TO THE UNIT/UNITS OF THIRD PARTY CAN AVAIL SALES TAX BENEFIT LIMITED ONLY TO THE QUALIFYING INVESTMENT AND PLANT LOAD FACTOR. THE ELECTRICITY SOLD TO THE UNIT/UNITS OF THIRD PARTY CAN AVAIL SALES TAX BENEF IT LIMITED ONLY TO THE QUALIFYING INVESTMENT AS MENTIONED IN PARAGRAPH 1. 5. AFTER SATISFYING THE CONDITION OF AVERAGE PLANT LOAD FACTOR, SALES TAX BENEFIT CAN BE AVAILED BY THE ELIGIBLE WIND ENERGY GENERATION UNIT IN THE IMMEDIATE FOLLOWING YEAR. HOWEVER, IF SOME PROMOTERS DESIRE TO AVAIL THIS BEN EFIT IN THE CURRENT FINANCIAL YEAR IMMEDIATELY ON COMMISSIONING OF WIND ENERGY PROJECT , THEY CAN AVAIL THE BENEFIT ON THE FOLLOWING CONDITIONS: A) BANK GUARANTEE EQUIVALENT TO QUALIFYING INVESTME NT WILL HAVE TO BE GIVEN EVERY YEAR FOR AVAILING SALES TAX BENEFIT OF FOLLOWING FINANCI AL YEAR. B) IF THE CONDITION OF PLANT LOAD FACTOR IS NOT FUL FILLED, THE BANK GUARANTEE AMOUNT WILL BE FORFEITED AT THE END OF THE YEAR. THE FORFEITED AMO UNT OF BANK GUARANTEE WILL BE TRANSFERRED TO SALES TAX DEPARTMENT BY MAHARASHTRA ENERGY DEVELOPMENT AGENCY. 6. FACILITY TO BULK LICENSEES IF THE BULK LICENSEE HAS INSTALLED WIND ENERGY GENE RATION UNIT, PERMISSION WILL BE GRANTED TO AVAIL BY ADJUSTMENT IN THE TAX ON SALE OF ELECTR ICITY, SALES TAX BENEFIT DETERMINED ON QUALIFYING INVESTMENT IN THE PROJECT. FOR THAT PURP OSE ENTITLEMENT CERTIFICATE WILL BE GIVEN BY ENERGY DEPARTMENT OF GOVERNMENT OF MAHARAS HTRA AND ELIGIBILITY CERTIFICATE WILL BE ISSUED BY MAHARASHTRA ENERGY DEVELOPMENT AG ENCY. 7. IF THE PROMOTERS DO NOT ABIDE BY TERMS AND CONDI TIONS OF MAHARASHTRA ENERGY DEVELOPMENT AGENCY AND SALES TAX DEPARTMENT, THEN T HE DIRECTOR OF MAHARASHTRA ENERGY DEVELOPMENT AGENCY AND COMMISSIONER OF SALES TAX RESERVE THE RIGHT TO CANCEL THE ENTITLEMENT CERTIFICATE AND THE ELIGI BILITY CERTIFICATE. 8. SALES TAX BENEFIT CAN BE AVAILED ON THE FINISHED PRODUCT AS WELL AS ON THE RAW MATERIALS USED AND ITS PROCEDURE SHALL BE AS PER PA CKAGE SCHEME OF INCENTIVE (PSI), 1993 AND AMENDMENT THEREON FROM TIME TO TIME . 9. THE PROMOTER WILL NOT BE ELIGIBLE FOR SALES TAX BENEFIT FOR USE OF SECOND HAND MACHINERY AND ON OLD WIND ELECTRIC GENERATOR. IF SU CH CASES ARE NOTICED, THEN THE DIRECTOR, MAHARASHTRA ENERGY DEVELOPMENT AGENCY HAS RIGHT TO CANCEL ENTITLEMENT CERTIFICATE AND ELIGIBLE CERTIFICATE. 10. THE SITES APPROVED BY MINISTRY OF NON-CONVENTIO NAL ENERGY SOURCES, GOVERNMENT OF INDIA, NEW DELHI WILL BE ELIGIBLE FOR SALES TAX BEN EFIT. THE NO OBJECTION CERTIFICATE WILL BE ISSUED BY MA HARASHTRA ENERGY DEVELOPMENT AGENCY ONLY AFTER SUBMISSION OF UNDERTAKING FROM TH E CONCERNED MANUFACTURER AND PROMOTER THAT THE MACHINERY USED FOR WIND GENERATIO N PROJECT IS NEW. 11. THERE IS NO RESTRICTION FOR EXPANSION OF PROJEC TS. HOWEVER, CAPACITY OF THE WIND ENERGY GENERATOR SHOULD BE MINIMUM 200 KW 12. PROCEDURE FOR AVAILING THE SALES TAX BENEFIT WI LL BE APPLICABLE TO ALL PROJECTS SUCH AS THE WIND ENERGY GENERATOR UNITS/WIND SPV DIESEL HYBRID, SELF STARTING GENERATOR (HYBRID STAND ALONE SYSTEM) AND AS PER MA HARASHTRA GOVERNMENTS DECLARED POLICY PUBLISHED IN THIS CONNECTION. BY THE ORDER AND ON BEHALF OF GOVERNOR OF MAHARASHTRA SD/- (P.D. KARKHANIS) SECTION OFFICER (ENERGY). 11. AS IS EVIDENT, THE SAID RESOLUTION DEALS WITH T HE MANNER IN WHICH THE INTENDED SALES-TAX BENEFITS CAN BE AVAILED OF BY THE PROMOTE RS. IT IS CLEAR THAT THE SALES-TAX BENEFITS CAN BE AVAILED BY ALL PROJECTS WHICH ARE C OMMISSIONED AS WELL AS CONNECTED TO THE TRANSMISSION LINES FROM TWO MONTHS AFTER THE DA TE OF PUBLICATION OF THE SAID RESOLUTION. IT IS ALSO PROVIDED THAT THE SALES-TAX BENEFIT IS AVAILABLE ON ELECTRICITY GENERATING UNITS IN RELATION TO ACHIEVEMENT OF PLAN T LOAD FACTOR. THE PROCEDURAL REQUIREMENT ALSO ENTAILS THAT THE SALES-TAX BENEFIT WILL BE AVAILABLE FOR THE PROMOTERS FROM THE DATE OF OBTAINING OF ENTITLEMENT CERTIFIC ATE FOR A PERIOD OF CONTINUOUS SIX YEARS, AND FOR EVERY YEAR SUCH BENEFIT WILL BE LIMI TED TO 1/6 TH OF THE QUALIFYING INVESTMENT. IT IS ALSO PROVIDED THAT IN ANY ONE YEAR, IF PLANT LOAD FACTOR OF 12% IS NOT ACHIEVED, THEN THAT YEARS SALES-TAX BENEFIT WILL GET CANCELLED AN D THAT SUCH UNIT WOULD LOOSE SALES-TAX BENEFIT OF THAT YEAR FOR EVER. ANOTHER PERTINENT PR OCEDURE OUTLINED IN THE RESOLUTION PERMITTED THE FACILITY OF TRANSFERRING THE SALES-TA X BENEFIT TO THIRD PARTIES. IN TERMS OF SUCH FACILITY, THE PROMOTERS OF THE PROJECT WERE PERMITT ED TO TRANSFER SALES-TAX BENEFIT TO THIRD 16 PARTY, IF IT SOLD ELECTRICITY TO SUCH THIRD PARTY. SUCH TRANSFER WAS SUBJECT TO ISSUANCE OF THE ENTITLEMENT CERTIFICATE TO BE ISSUED BY THE COM MISSIONER OF SALES-TAX. THE SAID RESOLUTION ALSO PROVIDED THAT THE SALES-TAX BENEFIT CAN BE AVAILED ON THE FINISHED PRODUCT AS WELL AS ON THE RAW MATERIALS USED. IT IS FURTHER NOTIFIED BY THE STATE GOVERNMENT THAT THE PROMOTER WILL NOT BE ELIGIBLE F OR SALES-TAX BENEFIT FOR USE OF SECOND HAND MACHINERY AND ON OLD WIND ELECTRIC GENERATOR. THE POLICY FURTHER PROVIDED THAT THERE WAS NO RESTRICTION FOR EXPANSION OF PROJECT. HOWEVER, THE MINIMUM CAPACITY OF WIND MILL GENERATION WAS STATED TO BE 200 KW. IN TE RMS OF THE AFORESAID SCHEME, THE ASSESSEE OBTAINED THE ENTITLEMENT CERTIFICATE AND TRANSFERRED THE SALES-TAX BENEFIT TO A THIRD PARTY. THE ASSESSEE AVAILED THE SALES-TAX BEN EFIT FOR ITS WIND POWER PROJECT INSTALLED AT VILLAGE KUSHI (VANKUSAWADE) TAL. SATAR A, DIST. SATARA AND SUCH BENEFIT AMOUNTING TO RS 63,74,291/- PERTAINING TO THE YEAR UNDER CONSIDERATION HAS BEEN CLAIMED AS A CAPITAL RECEIPT. FACTUALLY SPEAKING, O N THE ASPECT OF THE ASSESSEE HAVING RECEIVED THE SAID AMOUNT IN TERMS OF THE SCHEME OF THE STATE GOVERNMENT AS SALES-TAX BENEFIT UNDER THE AFORESAID GOVERNMENT RESOLUTIONS, IS NOT IN DISPUTE. 12. IN ORDER TO EXAMINE THE TAXABILITY OF SUCH AMOU NT, IT WOULD BE APPROPRIATE TO REFER TO THE PROPOSITIONS BASED ON THE CASE LAWS RE FERRED TO US. IN THE CASE OF SAHNEY STEELS (SUPRA), THE QUESTION BEFORE THE HONBLE SUP REME COURT WAS WHETHER THE SUBSIDY RECEIVED BY THE ASSESSEE THEREIN FROM ANDHRA PRADES H GOVERNMENT WAS TAXABLE AS A REVENUE RECEIPT OR NOT. THE ANDHRA PRADESH GOVERNM ENT HAD NOTIFIED CERTAIN FACILITIES AND INCENTIVES FOR ALL THE NEW INDUSTRIAL UNDERTAKI NGS COMMENCING PRODUCTION ON OR AFTER 1.9.1969 WITH INVESTMENT CAPITAL (EXCLUDING WORKING CAPITAL) NOT EXCEEDING RS 5 CRORES. THE INCENTIVES WERE TO BE ALLOWED FOR A PERIOD OF F IVE YEARS FROM THE DATE OF COMMENCEMENT OF PRODUCTION AND SUCH CONCESSION WAS ALSO AVAILABLE FOR SUBSEQUENT EXPANSION OF 50% AND ABOVE OF THE EXISTING CAPACITI ES, PROVIDED SUCH EXPANSION WAS LOCATED IN A CITY OR TOWN OR PANCHAYAT AREA OTHER T HAN THAT IN WHICH THE EXISTING UNIT WAS LOCATED. THE HONBLE SUPREME COURT NOTICED THAT TH E SALIENT FEATURE OF THE SCHEME FORMULATED BY THE ANDHRA PRADESH GOVERNMENT WAS THA T THE INCENTIVES WERE NOT AVAILABLE UNLESS AND UNTIL PRODUCTION HAD COMMENCED AND THAT THE SAME WAS LIMITED TO A PERIOD OF 5 YEARS FROM THE DATE OF COMMENCEMENT O F PRODUCTION. THE HONBLE SUPREME COURT NOTED THAT ALL THE INCENTIVES ARE PRO DUCTION INCENTIVES IN THE SENSE THAT THE COMPANY WOULD BE ENTITLED TO THESE INCENTIVES O NLY AFTER IT GOES INTO PRODUCTION AND THAT THE SCHEME WAS NOT TO MAKE ANY PAYMENT DIRECTL Y OR INDIRECTLY FOR THE SETTING UP OF INDUSTRIES. ON FACTUAL ANALYSIS OF THE SCHEME, IT WAS INFERRED THAT THE SUBSIDIES WERE OPERATIONAL SUBSIDIES, INASMUCH AS THEY WERE GIVEN TO ENCOURAGE SETTING UP OF INDUSTRIES IN THE STATE OF ANDHRA PRADESH BY MAKING THE BUSINESS OF PRODUCTION AND SALE OF GOODS IN THE STATE MORE PROFITABLE. THE HONBL E SUPREME COURT OBSERVED THAT THE CHARACTER OF SUBSIDY WHETHER REVENUE OR CAPITAL WIL L HAVE TO BE DETERMINED, HAVING REGARD TO THE PURPOSE FOR WHICH THE SUBSIDY IS GIVE N. THE FOLLOWING OBSERVATIONS ARE RELEVANT: 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 DETE RMINED BY HAVING REGARD TO THE PURPOSE FOR WHICH THE SUBSIDY IS GIVEN. IF IT IS GI VEN Y WAY OF ASSISTANCE TO THE ASSESSEE IN CARRYING ON OF HIS TRADE OR BUSINESS, IT HAS TO E TREATED AS TRADING RECEIPT. THE SOURCE OF THE FUND IS QUITE IMMATERIAL. FOR EXAMPLE, IF THE SCHEME WAS THAT THE ASSESSEE WI LL BE GIVEN REFUND OF SALES TAX ON PURCHASE OF MACHINERY AS WELL AS ON RAW MATE RIALS TO ENABLE THE ASSESSEE TO ACQUIRE NEW PLANT AND MACHINERY FOR FURTHER EXPANSI ON OF ITS MANUFACTURING CAPACITY IN A BACKWARD AREA, THE ENTIRE SUBSIDY MUST BE HELD TO B E 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 FINISHED PRODUCTS MUST BE TREATED AS REVENUE RECEIPT 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 PURP OSE IS TO HELP THE ASSESSEE TO SET UP ITS BUSINESS OR COMPLETE A PROJECT AS IN SEAHAM HAR BOUR DOCK CO.S CASE (1931) 16 TC 333 (HL), THE MONIES MUST E TREATED AS HAVING BEEN RECEIVED FOR A CAPITAL PURPOSE. BUT IF MONIES ARE GIVEN TO THE ASSESSEE FOR ASSISTING H IM IN CARRYING OUT THE BUSINESS OPERATION AND THE MONEY IS GIVEN ONLY AFTER AND CON DITIONAL UPON COMMENCEMENT OF PRODUCTION, SUCH SUBSIDIES MUST BE TREATED AS ASSIS TANT FOR THE PURPOSE OF THE TRADE.. IN THE CASE BEFORE US, THE SUBSIDIES HAVE NOT BEEN GRANTED FOR PRODUCTION OR FOR BRINGING INTO EXISTENCE ANY NEW ASSET. THE SUBSIDIE S WERE GRANTED YEAR AFTER YEAR ONLY AFTER SETTING UP OF THE NEW INDUSTRY AND COMMENCEME NT OF PRODUCTION. SUCH A SUBSIDY COULD ONLY BE TREATED AS ASSISTANCE GIVEN FOR THE P URPOSE OF CARRYING ON OF THE BUSINESS 17 OF THE ASSESSEE. APPLYING THE TEST OF VISCOUNT SIMO N IN THE CASE OF OSTIME (1946) 14 ITR (SUPPL) 45 (HL), IT MUST BE HELD THAT THESE SUB SIDIES ARE OF REVENUE CHARACTER AND WILL HAVE TO BE TAXED ACCORDINGLY. 13. ANOTHER DECISION WHICH HAS BEEN REFERRED TO IS THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF PONNI SUGARS & CHEMICA LS LTD. (SUPRA). IN THIS CASE ALSO, THE ISSUE RELATED TO THE CHARACTER OF SUBSIDY RECEI VED BY SUGAR FACTORIES . THE HONBLE SUPREME COURT REITERATED THE PARAMETERS APPLIED IN THE EARLIER JUDGMENT OF SAHNEY STEEL (SUPRA). AS PER THE HONBLE SUPREME COURT, TH E CHARACTER OF THE RECEIPT OF A SUBSIDY IN THE HANDS OF THE RECIPIENT HAS TO BE DET ERMINED WITH REGARD TO THE PURPOSE FOR WHICH THE SUBSIDY HAS BEEN GRANTED. THE FOLLOWING DISCUSSION IS IMPORTANT TO NOTICE: ON THE FACTS OF THAT CASE, IT WAS HELD THAT THE SU BSIDY GIVEN WAS TO MEET RECURRING EXPENSES. IT WAS NOT FOR ACQUIRING THE CAPITAL ASSE T. IT WAS NOT TO MEET PART OF THE COST. IT WAS NOT GRANTED FOR PRODUCTION OF OR BRINGING INTO EXISTENCE ANY NEW ASSET. THE SUBSIDIES IN THAT CASE WERE GRANTED YEAR AFTER YEAR ONLY 6 AFTER SETTING UP OF THE NEW INDUSTRY AND ONLY AFTER COMMENCEMENT OF PRODUCTION AND, THEREFORE, SUCH A SUBSIDY COULD ONLY BE TREATED AS ASSISTANCE GIVEN FOR THE P URPOSE OF CARRYING ON THE BUSINESS OF THE ASSESSEE. CONSEQUENTLY THE CONTENTIONS RAISED O N BEHALF OF THE ASSESSEE ON THE FACTS OF THAT CASE STOOD REJECTED AND IT WAS HELD T HAT THE SUBSIDY RECEIVED BY SAHNEY STEEL COULD NOT BE REGARDED AS ANYTHING BUT A REVEN UE RECEIPT. ACCORDINGLY, THE MATTER WAS DECIDED AGAINST THE ASSESSEE. THE IMPORTANCE OF THE JUDGMENT OF THIS COURT IN SAHNEY STEEL CASE LIES IN THE FACT THAT IT HAS DISC USSED AND ANALYSED THE ENTIRE CASE LAW AND IT HAS LAID DOWN THE BASIC TEST TO BE APPLIED I N JUDGING THE CHARACTER OF A SUBSIDY. THAT TEST IS THAT THE CHARACTER OF THE RECEIPT IN T HE HANDS OF THE ASSESSEE HAS TO BE DETERMINED WITH RESPECT TO THE PURPOSE FOR WHICH TH E 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 SOURCE IS IMMATERIAL. THE FORM OF SUBSIDY IS IMMATERIAL. THE MAIN ELIGIBILITY CONDITION IN THE SCHEME WITH WHICH WE ARE CONCERNED IN THIS CASE IS THAT THE INCENTIVE MUST BE UTILIZED FOR REPAYMENT OF LOA NS TAKEN BY THE ASSESSEE TO SET UP NEW UNITS OR FOR SUBSTANTIAL EXPANSION OF EXISTING UNITS. ON THIS ASPECT THERE IS NO DISPUTE. IF THE OBJECT OF THE SUBSIDY SCHEME WAS TO ENABLE THE ASSESSEE TO RUN THE BUSINESS MORE PROFITABLY THEN THE RECEIPT IS ON REV ENUE ACCOUNT. ON THE OTHER HAND, IF THE OBJECT OF THE ASSISTANCE UNDER THE SUBSIDY SCHE ME WAS TO ENABLE THE ASSESSEE TO SET UP A NEW UNIT OR TO EXPAND THE EXISTING UNIT TH EN THE RECEIPT OF THE SUBSIDY WAS ON CAPITAL ACCOUNT. THEREFORE, IT IS THE OBJECT FOR WH ICH THE SUBSIDY/ASSISTANCE IS GIVEN WHICH DETERMINES THE NATURE OF THE INCENTIVE SUBSID Y. THE FORM OR THE MECHANISM THROUGH WHICH THE SUBSIDY IS GIVEN ARE IRRELEVANT ONE MORE ASPECT NEEDS TO BE MENTIONED. IN SAHNEY S TEEL AND PRESS WORKS LTD. THIS COURT FOUND THAT THE ASSESSEE WAS FREE TO USE THE MONEY IN ITS BUSINESS ENTIRELY AS IT LIKED. IT WAS NOT OBLIGED TO SPEND THE MONEY FOR A PARTICULAR PURPOSE. IN THE CASE OF SEAHAM HARBOUR DOCK CO. THE ASSESSEE WAS OBLIGED TO SPEND THE MONEY FOR EXTENSION OF ITS DOCKS. THIS ASPECT IS VERY IMPORTANT. IN THE PRESENT CASE ALSO, RECEIPT OF THE SUBSIDY WAS CAPITAL IN NATURE AS THE ASSESSEE WAS O BLIGED TO UTILIZE THE SUBSIDY ONLY FOR REPAYMENT OF TERM LOANS UNDERTAKEN BY THE ASSESSEE FOR SETTING UP NEW UNITS/EXPANSION OF EXISTING BUSINESS. APPLYING THE ABOVE TESTS TO THE FACTS OF THE PRESE NT CASE AND KEEPING IN MIND THE OBJECT BEHIND THE PAYMENT OF THE INCENTIVE SUBS IDY, WE ARE SATISFIED THAT SUCH PAYMENT RECEIVED BY THE ASSESSEE UNDER THE SCHEME W AS NOT IN THE COURSE OF A TRADE BUT WAS OF CAPITAL NATURE. 14. ANOTHER DECISION RELIED UPON BY THE APPELLANT I S IN THE CASE OF RELIANCE INDUSTRIES LTD. (SUPRA). IN THIS CASE, THE FACTS WE RE THAT THE PATALGANGA UNIT OF THE ASSESSEE WAS LOCATED IN A NOTIFIED BACKWARD AREA. T HE SALES-TAX LIABILITY OF THE ASSESSEE WAS EXEMPTED BY THE STATE GOVERNMENT AND UNDER THE SCHEME OF INCENTIVES, ASSESSEE WAS NOT REQUIRED TO PAY ANY SALES-TAX TO THE GOVERN MENT. THE CONTENTION OF THE ASSESSEE WAS THAT NON-PAYMENT OF SALES-TAX BE CONSI DERED AS A SUBSIDY BY THE GOVERNMENT, WHICH IS OF CAPITAL IN NATURE. THE SPEC IAL BENCH OF THE TRIBUNAL FOUND THAT THE INCENTIVES WERE PROVIDED FOR FOLLOWING FOUR OBJ ECTS, NAMELY, DEVELOPMENT OF BACKWARD REGIONS OF THE STATE OF MAHARASHTRA; DISPE RSAL OF INDUSTRIES; PROMOTION OF INDUSTRIES FOR EMPLOYMENT ORIENTED UNITS; AND, PROV IDING LOCAL EMPLOYMENT TO SC/ST. THE TRIBUNAL OBSERVED THAT IN ORDER TO DECIDE THE C HARACTER OF RECEIPT THE PURPOSE OF GRANTING SUBSIDY WAS RELEVANT, WHILE THE MODE OF PA YMENT AND THE APPLICATION OF MONEY FOR CAPITAL OR REVENUE PURPOSES WAS IRRELEVANT. THE REFORE, AS PER THE SPECIAL BENCH THE DECISIVE FACTOR WAS THE OBJECTS WITH WHICH THE INCE NTIVE WAS GIVEN AND, THEREFORE, SUCH 18 SUBSIDY WAS HELD TO BE A CAPITAL RECEIPT. THE SAID DECISION HAS ALSO BEEN FURTHER APPROVED BY THE HONBLE HIGH COURT VIDE ORDER DATED 15.4.2009 (SUPRA). THE HONBLE HIGH COURT APPLIED THE PURPOSE TEST AND FOUND THAT THE OBJECT OF THE SUBSIDY BEING TO SET UP UNITS IN BACKWARD AREAS FOR GENERATION OF EMPLOY MENT, COULD CONSTRUE THE SUBSIDY AS A CAPITAL RECEIPT. 15. ON THE BASIS OF THE AFORESAID DECISIONS AN UNDI SPUTED PREMISE WHICH CAN BE DEDUCED IS THAT IN ORDER TO DETERMINE THE CHARACTER OF THE IMPUGNED RECEIPT WHETHER CAPITAL OR REVENUE, THE SAME HAS TO BE DECIDED IN THE LIGHTS OF THE OBJECTS AND PURPOSE FOR WHICH THE SCHEME HAS BEEN FORMULATED BY THE STA TE GOVERNMENT. IT IS QUITE CLEAR THAT THE POINT OF TIME AT WHICH THE SUBSIDY IS PAID OR THE FORM OF INCENTIVE GRANTED UNDER A SCHEME ARE IMMATERIAL CONSIDERATIONS. IN A CASE W HERE THE SUBSIDY/INCENTIVE UNDER A SCHEME IS GRANTED TO ENCOURAGE SETTING UP OF NEW IN DUSTRIES THE SAME IS LIABLE TO BE CHARACTERIZED AS A CAPITAL RECEIPT, WHILE AN INCENT IVE/SUBSIDY GRANTED IN THE COURSE OF TRADE FOR THE PURPOSE OF CARRYING ON THE BUSINESS O F THE ASSESSEE, THE SAME IS LIABLE TO BE REGARDED AS A REVENUE RECEIPT. 16. IN THIS BACKGROUND, WE MAY NOW REVERT BACK AND EXAMINE THE SCHEME UNDER WHICH THE ASSESSEE HAS AVAILED OF THE SALES-TAX BEN EFIT. IN THE PRESENT CASE, AS NOTED EARLIER, THE STATE GOVERNMENT VIDE ITS RESOLUTION DATED 12.3.1998 MODIFIED ITS EXISTING POLICY FOR THE PURPOSES OF PROMOTING WIND ENERGY GE NERATION IN THE STATE OF MAHARASHTRA. THIS POLICY HAS BEEN FORMULATED IN THE BACKGROUND OF THE FACT THAT THE EARLIER POLICY OF THE STATE GOVERNMENT ON GENERATIO N THROUGH NON CONVENTIONAL SOURCES IN JANUARY, 1996 DID NOT ACHIEVE THE DESIRED RESULT S. IN THE SAID POLICY, NINE DIFFERENT INCENTIVES HAVE BEEN LAID OUT, WHICH HAVE BEEN EXTR ACTED BY US IN EARLIER PART OF THIS ORDER. THE DISPUTE BEFORE US IS IN RELATION TO THE SALES-TAX BENEFITS. THE PREAMBLE OF THE POLICY ITSELF REFLECTS THE AREA WHICH IS SOUGHT TO BE ADDRESSED BY THE POLICY WHICH IS THE PROBLEMS BEING FACED BY PROMOTERS OF WIND ENERGY GE NERATION. IT IS QUITE CLEAR THAT THE SALES-TAX BENEFIT IS NOT INTENDED TO BE GRANTED FOR CREATION OF OR BRINGING INTO EXISTENCE ANY NEW ASSET. IT IS ALSO CLEAR THAT THERE IS NO PR ESCRIBED CRITERIA AS TO THE MANNER IN WHICH SUCH INCENTIVES ARE TO BE UTILIZED. THE CLAIM OF THE ASSESSEE IS THAT THE SALES-TAX BENEFIT IS GRANTED HAVING REGARD TO THE QUALIFYING INVESTMENT, WHICH IS STATED TO BE TOWARDS INVESTMENTS IN PLANT AND MACHINERY, NEW BUI LDING, LAND DEVELOPMENT, TECHNICAL DEVELOPMENT AND DESIGN OF WIND PRODUCTS. ACCORDING TO THE APPELLANT, THE INCENTIVE BEING LINKED TO THE QUALIFYING INVESTMENT SHOWS THA T IT IS INTENDED AS A RECOUPMENT OF THE FIXED COST ALREADY INCURRED BY THE ASSESSEE AND , THEREFORE, SUCH INCENTIVES ARE TO BE REGARDED AS CAPITAL IN NATURE. IN OUR CONSIDERED O PINION, SUCH PURPOSE, AS ARTICULATED ON BEHALF OF THE APPELLANT IS NOT EMERGING FROM THE SCHEME OF THE STATE GOVERNMENT. RATHER, THE EMPHASIS ON OF THE GRANT OF SALES-TAX B ENEFIT IS ON ACTUAL RUNNING OF THE PLANT AND THAT TOO UNDER PRESCRIBED EFFICIENCY LEVELS. IN FACT, IN THE RESOLUTION DT 1.10.1999 STAGGERED PLANT LOAD FACTORS ACHIEVED BY THE UNIT E NTITLED THE UNIT TO VARYING LEVELS OF SALES-TAX BENEFIT. THEREFORE, IT COULD NOT BE SAI D THAT THE SALES-TAX BENEFIT IS AVAILABLE MERELY ON COMMENCEMENT OF GENERATION. WE ARE CONSCI OUS THAT MERE TIMING OF THE GRANT OF SUBSIDY IS NOT RELEVANT. HOWEVER, IN THE P RESENT CASE, IT IS NOT THE TIMING OF THE SUBSIDY ALONE BUT THE GRANT IS LINKED TO ACHIEVING OPERATIONAL EFFICIENCIES AND THAT TOO FOR ONLY SIX CONTINUOUS YEARS. IF A UNIT WHICH IS OTHER WISE ELIGIBLE FOR INCENTIVE, DOES NOT ACHIEVE THE PLANT LOAD FACTOR OF 12% OR ABOVE, IT W OULD NOT BE ENTITLED TO RECEIVE THE SALES TAX BENEFIT. THEREFORE, IN OUR CONSIDERED OPI NION, THOUGH THE OBJECT OF THE SCHEME IS TO PROMOTE GENERATION OF ENERGY THROUGH NON CONV ENTIONAL SOURCES BUT THE SAME IS SOUGHT TO BE ACHIEVED BY THE GOVERNMENT IN THE FORM OF SUPPORTING THE UNITS TO PERFORM MORE EFFICIENTLY AND PROFITABLY. 17. IN FACT THE HONBLE SUPREME COURT IN THE CASE O F PONNI SUGARS & CHEMICALS LTD. (SUPRA) CLEARLY NOTED THAT THE SUBSIDY RECEIVED THE REIN WAS TO BE UTILIZED ONLY FOR REPAYMENT OF TERM LOANS TAKEN BY THE ASSESSEE FOR S ETTING UP NEW UNITS/EXPANSION OF EXISTING BUSINESS. IN THE PRESENT CASE, THERE IS NO SUCH RESTRICTION OR OBLIGATION ON THE PART OF THE ASSESSEE TO UTILIZE THE INCENTIVES AVAI LED. IN FACT, ON THIS ASPECT THE INSTANT SCHEME IS AKIN TO THE SCHEME NOTED BY THE HONBLE S UPREME COURT IN THE CASE OF SAHNEY STEELS (SUPRA) WHEREIN THE ASSESSEE WAS FOUN D FREE TO USE THE MONEY IN ITS BUSINESS ENTIRELY AS IT LIKED. IN THE PRESENT CASE ALSO, THE ASSESSEE IS NOT OBLIGED TO SPEND THE MONEY FOR ANY PARTICULAR PURPOSE. THUS, A PPLYING THE PURPOSE TEST TO THE FACTS OF THE PRESENT CASE AND KEEPING IN MIND THE OBJECTS BEHIND THE PAYMENT OF INCENTIVE SUBSIDY, WE ARE SATISFIED THAT THE SALES-TAX BENEFI TS RECEIVED BY THE ASSESSEE UNDER THE INSTANT SCHEME ARE IN THE COURSE OF CARRYING ON ITS TRADE MORE PROFITABLY AND THEREFORE SUCH RECEIPT CANNOT BE CHARACTERIZED AS CAPITAL IN NATURE. THUS, THE ASSESSEE FAILS ON THIS GROUND. 19 6. THOUGH THE LEARNED COUNSEL FOR THE ASSESSEE STATED THA T SIMILAR ISSUE HAS BEEN ADJUDICATED BY THE TRIBUNAL IN THE CASE OF R ASHIKLAL M DHARAVI (HUF) (SUPRA) AGAINST THE ASSESSEE, HOWEVER, IT WAS POINTE D OUT THAT WHILE ADJUDICATING THE ISSUE, THE TRIBUNAL HAS NOT CONSIDERED THE PREAMBLE OF THE GOVERNMENT RESOLUTION DATED 1.10.1999 (SUPRA) AND, TH EREFORE, ITS DECISION THAT THE CHARACTER OF SUBSIDY RECEIVED BEING IN THE N ATURE OF REVENUE RECEIPT, WAS REQUIRED TO BE REVIEWED, AND THAT IT SHOULD BE HE LD AS A CAPITAL RECEIPT. 7. WE HAVE CONSIDERED THE PLEA SET-UP BY THE APPELLAN T AND FIND THAT THE RELEVANT PORTION OF THE GOVERNMENT RESOLUTION DATED 1.10.1999 AS ALSO THE RESOLUTION OF THE STATE GOVERNMENT DATED 12.3.1998 H AVE BEEN DULY CONSIDERED, INASMUCH AS THE RELEVANT PORTION HAS BEEN E XTRACTED BY THE TRIBUNAL IN ITS ORDER. BE THAT AS IT MAY, IN VIEW OF THE PRECEDENT WHICH HAS BEEN RENDERED IN IDENTICAL FACTUAL SITUATION, WE FIN D NO REASONS TO DEVIATE FROM THE SAID PRECEDENT AS IT CONTINUES TO HOLD THE FI ELD. AS A RESULT THEREOF, AS STATED ABOVE, WE DECIDE THE ISSUE AGAINST THE ASSESSEE. THE GROUND NOS. (2), (3) & (4) ARE DISMISSED. 9.1 RESPECTFULLY FOLLOWING THE DECISION OF THE COOR DINATE BENCH OF THE TRIBUNAL CITED (SUPRA) AND IN ABSENCE OF ANY CONTRA RY MATERIAL BROUGHT TO OUR NOTICE THE GROUNDS RAISED BY THE ASSESSEE ARE D ISMISSED. 10. GROUND OF APPEAL NO.4 RELATES TO LEVY OF INTERE ST U/S.234B AND 234C. 10.1 AFTER HEARING BOTH THE SIDES WE ARE OF THE CON SIDERED OPINION THAT LEVY OF INTEREST U/S.234B AND 234C IS MANDATORY AND CONSEQUENTIAL IN NATURE. ACCORDINGLY, THIS GROUND BY THE ASSESSEE I S DISMISSED. ITA NO.2487 & 2488/PN/2012 (BY ASSESSEE) (A.YRS. 20 05-06 & 2006- 07) : 11. AFTER HEARING BOTH THE SIDES, WE FIND THE GROUN DS RAISED BY THE ASSESSEE IN THE ABOVE TWO APPEALS ARE IDENTICAL TO GROUNDS OF APPEAL IN ITA NO.2486/PN/2012. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUNDS RAISED BY THE ASSESSEE HAVE BEEN DISMISSED. FOLLOW ING THE SAME RATIO, THE GROUNDS IN THE ABOVE APPEALS ARE DISMISSED. 20 CO NOS. 08, 09 & 10/PN/2014 (BY ASSESSEE) (A.YRS. 2 004-05 TO 2006- 07): 12. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT THE GROUNDS IN THE CROSS OBJECTIONS FILED BY THE ASSESS EE ARE MERELY IN SUPPORT OF THE ORDER OF THE CIT(A). SINCE WE HAVE ALREADY DISMISSED THE APPEALS FILED BY THE REVENUE, THEREFORE, THE GROUNDS IN THE CO BECOME INFRUCTUOUS AND ACCORDINGLY THE SAME ARE DISMISSED. 13. IN THE RESULT, THE APPEALS FILED BY THE REVENUE AND THE APPEALS AS WELL AS CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMI SSED. PRONOUNCED IN THE OPEN COURT ON 18-02-2014. SD/- SD/- (R.S.PADVEKAR ) ( R. K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE, DATED 18 TH FEBRUARY 2014 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A), KOLHAPUR 4. THE CIT, KOLHAPUR 5. THE DR B BENCH, PUNE. 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE