DCIT 9(2), MUMBAI V. NIKMO FINANCE P. LTD, MUMBAI

ITA 53/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1491 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 13-10-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 03-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Wholly owned subsidiary; Valuation report; Capital receipt; Revenue expenditure
• Section: 143(3)

Judgement Text

J IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.53 /MUM/2014 ( / ASSESSMENT YEAR : 2010-11) D.C.I.T. 9)2), 2 ND FLOOR,ROOM NO. 218 AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. / V. M/S NIKMO FINANCE PVT. LTD., BUSINESS POINT, 349, 8 TH FLOOR, WESTERN EXPRESS HIGHWAY, ANDHERI (E), MUMBAI 400 069. ./ PAN :AABCN9974G ( / APPELLANT ) .. ( / RESPONDENT ) REVENUE BY : SHRI SACHHIDANAND DUBEY , DR ASSESSEE BY : NONE / DATE OF HEARING : 08-11-2016 / DATE OF PRONOUNCEMENT : 21-12-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE REVENUE, BEING ITA NO. 5 3/MUM/2014, IS DIRECTED AGAINST THE APPELLATE ORDER DATED 9 TH OCTOBER, 2013 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 20, M UMBAI (HEREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2010- 11, THE APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARISING FROM THE ASSESSMENT ORDER DATED 12 TH FEBRUARY, 2013 PASSED BY THE LEARNED ASSESSING OFF ICER (HEREINAFTER CALLED THE AO) U/S 143(3) OF THE INC OME-TAX ACT,1961 (HEREINAFTER CALLED THE ACT). ITA 53/MUM/2014 2 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN THE MEMO OF APPEAL FILED WITH THE INCOME-TAX APPELLATE TRIBUNAL, MUMBA I (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) ERRED IN HOLDING ENTERTAINM ENT DUTY COLLECTED BY THE ASSESSEE AS 'CAPITAL RECEIPT' RELYING ON THE DEC ISION OF THE HON'BLE BOMBAY COURT IN THE CASE OF CIT VS. CHAPHALK AR BROTHERS WITHOUT APPRECIATING THE FACT THAT THE DEPARTMENT HAS NO T ACCEPTED THE SAID DECISION AND HAS FILED AN SLP WHICH IS PENDING BEFORE THE HON'BLE SUPREME COURT? 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A} ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFIC ER BE RESTORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF EXHIBITION OF FILMS AND IS A 100% S UBSIDIARY OF GROWEL ENTERTAINMENT PRIVATE LIMITED. AS PER THE AO, CINEM AX BRAND IS ONE OF THE MOST RECOGNIZABLE FILM EXHIBITION BRANDS WHICH STAN D FOR SUPERLATIVE AND INNOVATIVE ENTERTAINMENT FOR FAMILIES AND SOCIAL CO HORTS. IT WAS OBSERVED BY THE A.O. THAT THE ASSESSEE HAS RECEIVED ENTERTAINM ENT TAX OF RS. 2,06,32,715/- COLLECTED DURING THE YEAR WHICH WAS T REATED AS CAPITAL RECEIPT. ON BEING ASKED TO FILE THE EXPLANATION IN RESPECT O F TREATMENT OF ENTERTAINMENT TAX AS CAPITAL RECEIPT, THE ASSESSEE SUBMITTED AS UNDER:- - NIKMO FINANCE PVT. LTD. IS ENGAGED IN THE BUSINE SS OF OPERATING MULTIPLEX THEATRES IN MUMBAI. THE MAHARAS HTRA STATE LEVY TAX ON PAYMENT FOR ADMISSION IN MULTIPLEXES FO R VIEWING THE MOVIES, GENERALLY REFERRED TO AS 'ENTERTAINMENT TAX '. THE BREAKUP OF ENTERTAINMENT TAX COLLECTED OF RS. 2,06, 32,715/- BUT NOT PAID IS ENCLOSED HEREWITH FOR YOUR READY REFERE NCE AS PER ANNEXURE 'A'. ITA 53/MUM/2014 3 - HOWEVER, THE STATE GOVERNMENTS, WITH A VIEW TO EN COURAGE SETTING UP OF MULTIPLEXES IN THE STATE, GRANT EXEMP TION FROM PAYMENT OF ENTERTAINMENT TAX. - THE SCHEMES FOR ENTERTAINMENT TAX EXEMPTION OF ST ATE GOVERNMENTS NORMALLY PROVIDE THE FOLLOWING: - THE SCHEME IS TO ENCOURAGE SETTING UP OF MULTIPLEXES WITHIN THE STATE. - THE AMOUNT ELIGIBLE FOR ENTERTAINMENT TAX EXEMPTION IS RESTRICTED TO THE AMOUNT OF CAPITAL INVESTMENT MADE TO SET UP THE MULTIPLEX. - THE APPLICANT FOR ENTERTAINMENT TAX EXEMPTION SHOULD PROVIDE PROOF OF THE AMOUNT INVESTED IN SETTING UP MUL TIPLEX BY WAY OF A REPORT OF VALUATION REPORT OR A CERTIFICATE B Y A CHARTERED ACCOUNTANT . - THE SCHEME GENERALLY ALLOWS MULTIPLEX OPERATOR TO R ETAIN THE TAX COLLECTED BY HIM. IN SOME SCHEMES IT IS ALSO P ROVIDED FOR EXEMPTION BY WAY OF PAYMENT FIRST AND SUBSEQUENT REF UND. - THE ELIGIBILITY FOR EXEMPTION FROM PAYMENT OF ENTERTAINMENT TAX IS NORMALLY GIVEN FOR A PERIOD OF 3 TO 5 YEARS FROM THE DATE OF COMMENCEMENT OF OPERATION OF MULTIPL EX. - THE COMPANY HAS AVAILED ENTERTAINMENT TAX EXEMPTI ON IN RESPECT OF THE MULTIPLEX THEATRE KNOWN AS CINEMAX SITUATED AT GROWELL MALL, KANDIVLI (E), MUMBAI. THE A.O. REJECTED THE CONTENTION OF THE ASSESSEE AN D OBSERVED THAT THE ISSUE IS RECURRING IN NATURE AND IN THE ASSESSEES OWN CA SE FOR ASSESSMENT YEARS 2008-09 AND 2009-10, ADDITIONS HAVE BEEN MADE ON SI MILAR ISSUE AND HENCE THE A.O. TREATED THE ENTERTAINMENT TAX COLLECTED BY THE ASSESSEE AS REVENUE RECEIPT VIDE HIS ORDER DATED 12 TH FEBRUARY, 2013. THE A.O. ALSO OBSERVED THAT THE LEARNED CIT(A) UPHELD THE ACTION OF THE AO FOR THE ASSESSMENT YEAR 2008- 09 , WHILE LEARNED CIT(A) ALLOWED THE RELIEF TO THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-10 WHICH DECISION OF LEARNED CIT(A) IS CH ALLENGED BY REVENUE BEFORE THE TRIBUNAL AS THE DECISION OF THE FIRST AP PELLATE AUTHORITY WAS NOT ITA 53/MUM/2014 4 ACCEPTED BY THE DEPARTMENT. THUS , THE AO HELD THAT THE ENTERTAINMENT TAX COLLECTED BY THE ASSESSEE OF RS.2,06,32,715/- BE TR EATED AS REVENUE RECEIPT IN THE HANDS OF THE ASSESSEE VIDE ASSESSMENT ORDER DAT ED 12.02.2013 PASSED BY THE AO U/S 143(3) OF THE ACT. 4. AGGRIEVED BY THE ASSESSMENT ORDER DATED 12.02.20 13 PASSED BY THE A.O. U/S 143(3) OF THE ACT, THE ASSESSEE FILED ITS FIRST APPEAL BEFORE THE LD. CIT(A). 5. BEFORE THE LD. CIT(A) , THE ASSESSEE SUBMITTED AS UNDER: AGAINST THE ABOVE FINDING AND REASONING APPELLANT HAS SUBMITTED THAT ITS CASE IS COVERED BY THE BOMBAY ENTERTAINMEN T DUTY (AMENDMENT ACT). APPELLANT HAS ALSO SUBMITTED ELIGI BILITY' CERTIFICATE FOR EXEMPTION FROM PAYMENT OF TAX GRANT ED BY THE COLLECTOR OF MUMBAI. THIS ISSUE HAS BEEN DECIDED BY THE CIT(A) AGAINST THE FINDING OF THE ASSESSING OFFICER IN A.Y . 2008-09 AND 2009-10. THE A.R. OF THE APPELLANT HAS SUBMITTED A S UNDER: 'THE APPELLANT IS ACTUALLY IN RECEIPT OF ENTERTAINM ENT TAX WHICH HAS BEEN COLLECTED ALONG WITH SALE OF TICKETS . THE PRICE OF A TICKET IS A COMPOSITE AMOUNT INCLUSIVE O F ENTERTAINMENT DUTY. BY VIRTUE OF INCENTIVE GRANTED, THE OWNER IS ENTITLED TO RETAIN THE ENTERTAINMENT DUTY COLLECTED & EXEMPTED FROM PAYMENT OF THE SAME TO THE STATE GOVERNMENT. THE GOVERNMENT OF MAHARASHTRA HAS PRONOUNCED A SCHE ME FOR PROMOTION OF NEW CINEMA HOUSES TERMED AS 'MULTI PLEX THEATRE COMPLEX'. THE OBJECT AND THE STATEMENT FOR PRONOUNCEMENT OF THIS SCHEME BY BOMBAY ENTERTAINMEN T DUTY (REVISED ORDINANCE 2001) (ADMINISTRATIVE ORDER S FOR ENFORCEMENT OF MAHARASHTRA ORDINANCE NO: XXIV OF 20 01) (COPY ENCLOSED). ON PERUSAL OF THE SAME, IT IS FOUN D THAT THAT TO PROMOTE THE MULTIPLEX THEATRE COMPLEXES IN THE STATE, THE SCHEME WAS PRONOUNCED. THE MAIN REASON, AS ASSIGNED IN THE AFOREMENTIONED SCHEME WAS THAT THE MULTIPLEX THEATRE COMPLEXES ARE HIGHLY CAPITAL INCE NTIVE & ALSO HAVING LONG GESTATION PERIOD THUS NEED SUPPORT FROM ITA 53/MUM/2014 5 THE GOVERNMENT. GOVERNMENT WANTED CONSTRUCTION OF N EW MULTIPLEXES WITHIN THE SPECIFIED PERIOD & TO PROMOT E SUCH ACTIVITIES, THE FINANCIAL SUPPORT WAS PROMISED IN T HE FORM OF ALLOWANCE OF ENTERTAINMENT DUTY TO BE RETAINED BY T HE OWNERS. IT WAS CASH ASSISTANCE FROM THE GOVERNMENT AND THE MODE OF PAYMENT WAS DECIDED BY THE GOVERNMENT, EITH ER PAYMENT OF A DIRECT CASH OR COLLECTION OF DUTY ON B EHALF OF GOVERNMENT & RETAINED IT FOR A SPECIFIED PERIOD OF TIME. HOWEVER, IN EITHER WAY THE PURPOSE WAS TO DIRECTLY ASSIST THE DEVELOPER OF MULTIPLEXES BY GRANTING INCENTIVES . THE SCHEME DO NOT PROVIDE FOR ANY ASSISTANCE FOR REIMBURSEMENT OF DAY TO DAY REVENUE EXPENDITURE BUT THE SCHEME IS MEANT TO BUILD UP & TO PROMOTE THE NEW MULTIPLEX CINEMA HALLS WHICH ARE NOTHING BUT FOR TH E CONSTRUCTION PURPOSE. THE PURPOSE FOR WHICH A GRANT IS GIVEN IS THE AREA OF PARAMOUNT IMPORTANCE RATHER TH E SOURCE, WHICH IS QUITE IMMATERIAL AS HELD THE VARIO US COURTS. IT IS FOR THE GOVERNMENT TO DECIDE & IF THE GOVERNMENT FOUND IT CONVENIENT TO ADOPT A POLICY OF ENABLING THE MULTIPLEX ENTREPRENEUR TO FUND THE CAP ITAL COST FOR SETTING UP AND ESTABLISHING MULTIPLEX CINE MA, IT IS NOT JUSTIFIED TO VIEW THAT THE INCENTIVE BEING GIVE N POST ESTABLISHMENT, THOUGH MEANT EXCLUSIVELY FOR MEETING THE CAPITAL COST, IS A TRADING RECEIPT IN THE HANDS OF APPELLANT. THE PURPOSE FOR WHICH A GRANT IS GIVEN IS THE AREA OF PARAMOUNT IMPORTANCE RATHER THE SOURCE, WHICH IS QU ITE IMMATERIAL AS HELD BY THE VARIOUS COURTS. THE HON'BLE APEX COURT IN THE CASE OF CIT V. PONNI SUGARS & CHEMICALS LTD - 306 ITR 392 HAS OBSERVED T HAT 'ONE HAS TO APPLY THE PURPOSE TEST. THE POINT OF TI ME AT WHICH SUBSIDY IS PAID IS IMMATERIAL. IF THE OBJECT OF THE SCHEME IS TO ENABLE THE ASSESSEE TO SET UP A NEW UN IT OR TO EXPAND THE EXISTING UNIT THEN, THE RECEIPT OF THE S UBSIDY WOULD BE ON CAPITAL ACCOUNT. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF RELIANCE INDUSTRIES LTD HAS NOW AFFIRMED THE DECISI ON OF SPECIAL BENCH (273 ITR 16) AND HELD THAT SUBSIDY WA S ON ITA 53/MUM/2014 6 CAPITAL ACCOUNT WHEREIN THE DECISION OF PONNI SUGAR & CHEMICALS (SUPRA) HAS ALSO BEEN CONSIDERED. THE DECISION IN THE CASE OF FAKIRCHAND HAS HELD THA T 'SUBSIDY REPRESENTING REIMBURSEMENT OF ENTERTAINMEN T TAX IS TAXABLE AS REVENUE RECEIPT.' THIS DECISION IS TA KEN BY THE HONBLE COURT BY RELYING ON THE DECISION IN THE CAS E OF CIT VS. AJANTA TALKIES (2004) 190 CTR (MP) 280: (2005) 143 TAXMAN 40 AND CIT VS. RAJARAM (2001) 170 CTR (SC) 4 27: (2001) 251 ITR 427 (SC). DECISION IN THE CASE OF A JANTA TALKIES WAS TAKEN RELYING ON THE DECISION IN THE CA SE OF CIT VS. RAJARAM (2001) 170 CR (SC) 427: (2001) 251 ITR 427 (SC) IN AJANTA TALKIES, IT IS HELD THAT ENTERTAINME NT TAX SUBSIDY RECEIVED BY ASSESSEE WAS REVENUE RECEIPT. IN THE CASE OF RAJARAM IT WAS HELD THAT 'POWER SUBSIDY RECEIVED BY ASSESSEE WHICH WENT TOWARDS RED UCTION OF THE ELECTRICITY BILLS WAS REVENUE RECEIPT LIABLE TO TAX. RELIANCE WAS PLACED ON THE DECISION IN THE CASE OF SAHNEY STEEL & PRESS WORKS LTD. V, CIT (1997) 142 CTR (SC) 261: (1997) 228JTR 253 (SC). IN THE CASE OF SAHNEY STEEL & PRESS WORKS LTD. & OTHERS (SUPRA), A NOTIFICATION WAS ISSUED BY THE AN DHRA PRADESH GOVERNMENT THAT CERTAIN FACILITIES AND INCE NTIVES WERE TO BE GIVEN TO ALL THE NEW INDUSTRIAL UNDERTAK INGS, WHICH COMMENCED PRODUCTION ON OR AFTER 1ST JANUARY, 1969 WITH INVESTMENT CAPITAL (EXCLUDING WORKING CAP ITAL) NOT EXCEEDING RS.5 CRORES. THE INCENTIVES WERE TO B E ALLOWED FOR A PERIOD OF FIVE YEARS FROM THE DATE OF COMMENCEMENT OF PRODUCTION. CONCESSION WAS ALSO AVAILABLE FOR SUBSEQUENT EXPANSION OF 50 PERCENT AN D ABOVE OF THE EXISTING CAPACITY PROVIDED IN EACH CASE, THE EXPANSION WAS LOCATED IN A CITY OR TOWN OR PANCHAYA T AREA OTHER THAN THAT IN WHICH EXISTING UNIT WAS LOCATED. THE SALIENT FEATURES OF THE SCHEME FORMULATED BY THE AN DHRA PRADESH GOVT. WERE THAT THE INCENTIVES WERE NOT AVA ILABLE UNLESS AND UNTIL THE PRODUCTION HAD COMMENCED; THE AVAILABILITY OF INCENTIVE WOULD BE LIMITED TO A PER IOD OF FIVE YEARS FROM THE DATE OF COMMENCEMENT OF PRODUCTION; THE INCENTIVES WERE TO BE GIVEN BY WAY OF REFUND OF SAL ES TAX AND ALSO BY WAY OF SUBSIDY ON POWER CONSUMED FOR PRODUCTION TO THE EXTENT STATED IN THE NOTIFICATION ;. THE ITA 53/MUM/2014 7 EXEMPTIONS WERE GIVEN FROM PAYMENT OF WATER DRAWN F ROM GOVT. SOURCES. THE ASSESSEE-COMPANY, S, SET UP FACT ORY AT P WHICH WENT INTO PRODUCTION IN THE YEAR 1973. 'THE ASSESSEE MAINTAINED ITS ACCOUNTS ACCORDING TO THE C ALENDAR YEAR. IT WAS, THEREFORE, ENTITLED TO THE BENEFITS O F THE SAID GOVERNMENT ORDER IN THE CALENDAR YEAR 1973, WHICH M EANT THE ASSESSMENT YEAR 1974-75. IN THE SAID ACCOUNTING YEAR, THE ASSESSEE OBTAINED REFUND TOTALING RS. 14,665.70 BEING REFUND OF SALES TAX ON PURCHASE OF MACHINES, PURCHA SE OF RAW MATERIALS AND SALE OF FINISHED GOODS. THE INCOM E-TAX OFFICER, WHILE MAKING THE ASSESSMENT FOR THE YEAR 1 974-75, INCLUDED THE SAID AMOUNT IN THE ASSESSABLE INCOME O F THE ASSESSEE WHICH WAS CONFIRMED ON APPEAL BY THE COMMISSIONER OF INCOME TAX (APPEALS). ON FURTHER AP PEAL, HOWEVER, THE TRIBUNAL UPHELD THE ASSESSEE'S CONTENT ION AND HELD THAT THE AMOUNT OF RS.14,665.70 REFUNDED TO TH E ASSESSEE IN TERMS OF THE SAID GOVERNMENT ORDER DID NOT' REPRESENT REFUND OF SALES TAX' BUT WAS A DEVELOPMEN T SUBSIDY IN THE NATURE OF A CAPITAL RECEIPT. THE HIG H COURT HELD THAT THE AMOUNT WAS ASSESSABLE. ON APPEAL TO T HE SUPREME COURT BY THE ASSESSEE; HELD, DISMISSING TH E APPEAL, THAT, UNDER THE NOTIFICATION IN QUESTION TH E PAYMENTS WERE MADE TO ASSIST THE NEW INDUSTRIES AT THE COMMENCEMENT OF BUSINESS TO CARRY ON THEIR BUSINESS . THE PAYMENTS WERE NOTHING BUT SUPPLEMENTARY TRADE RECEI PTS. IT WAS TRUE THAT THE ASSESSEE COULD NOT USE THIS MO NEY FOR DISTRIBUTION AS DIVIDEND TO ITS SHARE-HOLDERS. BUT THE ASSESSEE WAS FREE TO USE THE MONEY IN ITS BUSINESS ENTIRELY AS IT LIKED AND WAS NOT OBLIGED TO SPEND THE MONEY FOR A PARTICULAR PURPOSE. THE SUBSIDIES HAD NOT BEEN GRAN TED FOR PRODUCTION OF OR BRINGING INTO EXISTENCE ANY NEW AS SET. THE SUBSIDIES WERE GRANTED YEAR AFTER YEAR, ONLY AFTER THE SETTING UP OF THE NEW INDUSTRY AND COMMENCEMENT OF PRODUCTION. SUCH A SUBSIDY COULD ONLY BE TREATED AS ASSISTANCE GIVEN FOR THE PURPOSE OF ARRIVING ON OF THE BUSINESS OF THE ASSESSEE. THE SUBSIDIES WERE OF RE VENUE NATURE AND WOULD TO BE TAXED ACCORDINGLY. THE PRINCIPLE LAID DOWN IN THE CASE OF SAHNEY STEEL AND PRESS WORKS (SUPRA) IS THAT IF THE PURPOSE OF S UBSIDY IS TO HELP THE ASSESSEE TO SET UP ITS BUSINESS OR COM PLETE A PROJECT, THE MONEYS MUST BE TREATED AS HAVING BEEN RECEIVED FOR CAPITAL PURPOSES. BUT IF MONEYS ARE GI VEN TO THE ASSESSEE FOR ASSESSING HIM IN CARRYING OUT THE BUSI NESS ITA 53/MUM/2014 8 OPERATIONS AND THE MONEYS ARE GIVEN ONLY AFTER AND CONDITIONAL UPON COMMENCEMENT OF PRODUCTION, SUCH SUBSIDIES MUST BE TREATED AS ASSISTANCE FOR THE PUR POSE OF THE TRADE. THE HON'BLE APEX COURT IN THE CASE OF CIT V. PONNI SUGARS & CHEMICALS LTD (3061T.R 392) HAS OBSERVED T HAT ONE HAS TO APPLY THE PURPOSE TEST. THE POINT OF TI ME AT WHICH SUBSIDY IS PAID IS IMMATERIAL. IF THE OBJECT OF THE SCHEME IS TO ENABLE THE ASSESSEE TO SET UP A NEW UN IT OR TO EXPAND THE EXISTING UNIT THEN, THE RECEIPT OF THE S UBSIDY WOULD BE ON CAPITAL ACCOUNT. THE HON'BLE BOMBAY HIG H COURT IN THE CASE OF RELIANCE INDUSTRIES LTD HAS NO W AFFIRMED THE DECISION OF SPECIAL BENCH (273 ITR 16) AND HELD THAT SUBSIDY WAS ON CAPITAL ACCOUNT WHEREIN TH E DECISION OF PONNI SUGAR & CHEMICALS (SUPRA) HAS ALS O BEEN CONSIDERED. THUS, THE DECISION IN THE CASE OF PONNI SUGAR WHICH IS LATER DECISION OF THE HONBLE SUPREME COURT HAS HELD THAT THE PURPOSIVE TEST NEEDS TO BE FOLLOWED TO DEC IDE WHETHER ANY RECEIPT IS REVENUE RECEIPT OR CAPITAL R ECEIPT. THIS TEST WAS NOT SPECIFICALLY SPELT OUT IN THE CAS E OF SAHNEY STEEL. DECISIONS RELIED UPON BY THE LEARNED AO ARE THE DECISIONS GIVEN BEFORE THE DECISION OF PONNI SU GAR: HENCE, THE DECISIONS RELIED UPON BY THE LEARNED A.O . NEEDS TO BE REVIEWED IN LIGHT OF THE DECISIONS GIVEN IN T HE CASE OF PONNI SUGAR.: AS AGAINST THIS THE DECISIONS REFERRE D BY THE APPELLANT IN (VI) BELOW HAVE CONSIDERED THE DECISIO NS ON THE CASE OF PONNI SUGAR. THE OBSERVATIONS MADE BY T HE HON'BLE SUPREME COURT OF INDIA IN A LATER DECISION REPORTED AS MEPCO INDUSTRIES LTD. VS. CIT & ANR. (2009) 227 CTR (SC) 313: (2009) 31 DTR (SC) 305: 2009 (7)SCC 564,. WHERE THE ABOVE DICTUM WAS REITERATED AS FOLLOWS: H ... SAHNEY STEEL. & PRESS WORKS LTD. ETC. (SUPRA) WAS A CASE WHICH DEALT WITH PRODUCTION SUBSIDY, PON NI SUGARS & CHEMICALS LTD. (SUPRA) DEALT WITH SUBSIDY LINKED TO LOAN REPAYMENT WHEREAS THE PRESENT CASE DEALS W ITH A SUBSIDY FOR SETTING UP AN INDUSTRY IN THE BACKWARD AREA. THEREFORE, IN EACH CASE, ONE HAS TO EXAMINE THE NAT URE OF THE SUBSIDY. THE JUDGMENT OF THIS COURT IN SAHNEY S TEEL & PRESS WORKS LTD. ETC. (SUPRA) WAS ON ITS OWN FACTS; SO ALSO, ITA 53/MUM/2014 9 THE JUDGMENT OF THIS. COURT IN PONNI SUGARS & CHEMI CALS LTD. (SUPRA). THE NATURE OF THE SUBSIDIES IN EACH O F THE THREE CASES IS SEPARATE AND DISTINCT. THERE IS NO STRAIGHTJACKET PRINCIPLE OF DISTINGUISHING A CAPITA L RECEIPT FROM A REVENUE RECEIPT. IT DEPENDS UPON THE CIRCUMSTANCES OF EACH CASE. AS STATED ABOVE, IN SAHNEY STEEL & PRESS WORKS LTD. ET C. (SUPRA), THIS COURT HAS OBSERVED THAT THE PRODUCTIO N INCENTIVE SCHEME IS DIFFERENT FROM THE SCHEME GIVIN G SUBSIDY FOR SETTING UP INDUSTRIES IN BACKWARD AREAS . THE OBSERVATIONS MADE BY THE HON'BLE SUPREME COURT OF INDIA IN A LATER DECISION REPORTED AS MEPC O INDUSTRIES LTD. VS. CIT & ANR. (2009) 227 CTR (SC) 313: (2003) 31 STR (SC) 305 WHERE THE ABOVE DICTUM WAS REITERATED AS FOLLOWS: .SAHNEY STEEL & PRESS WORKS LTD. ETC. (SUPRA) WAS A CASE WHICH DEALT WITH PRODUCTION SUBSIDY , PO NNI SUGARS & CHEMICALS LTD. (SUPRA) DEALT WITH SUBSIDY LINKED TO LOAN REPAYMENT WHEREAS THE PRESENT CASE DEALS W ITH A SUBSIDY FOR SETTING UP AN INDUSTRY IN THE BACKWARD AREA. THEREFORE, IN EACH CASE, ONE HAS TO EXAMINE THE NAT URE OF THE SUBSIDY. THE JUDGMENT OF THIS COURT IN SAHNEY S TEEL & PRESS WORKS LTD. ETC. (SUPRA) WAS ON ITS OWN FACTS; SO ALSO, THE JUDGMENT OF THIS COURT IN PONNI SUGARS & CHEMIC ALS LTD. (SUPRA). THE NATURE OF THE SUBSIDIES IN EACH O F THE THREE CASES IS SEPARATE AND DISTINCT. THERE IS NO STRAIGHTJACKET PRINCIPLE OF DISTINGUISHING A CAPITA L RECEIPT FROM A REVENUE RECEIPT. IT DEPENDS UPON THE CIRCUMSTANCES OF EACH CASE. AS STATED ABOVE , IN SAHNEY STEEL & PRESS WORKS LTD. E TC. (SUPRA) , THIS COURT HAS OBSERVED THAT THE PRODUCTI ON INCENTIVE SCHEME IS DIFFERENT FROM THE SCHEME GIVIN G SUBSIDY FOR SETTING UP INDUSTRIES IN BACKWARD AREAS . IN THE CASE OF SHREE BALAJI ALLOYS & ORS. V. COMMISSIONER OF INCOME TAX & ORS (2011) 51 DTR(J&K) 217 (AFTER REFERRING TO ALL THE ABOVE STATED THREE SUPREME COURT DECISIONS) AND AFTER APPLYING THE PURPOSE OF THE SCHEME HAS HELD THAT EXCISE REFUND AND INTEREST SUB SIDY RECEIVED BY THE ASSESSES IN PURSUANCE TO THE INCENT IVES ITA 53/MUM/2014 10 ANNOUNCED AND SANCTIONED ON THE SUBJECT, PERTAINING TO THE INDUSTRIAL POLICY FOR THE STATE OF JAMMU & KASH MIR, IS CAPITAL RECEIPT. RECENTLY, THE HONBLE HIGH COURT IN THE SIMILAR MATTER IN THE CASE OF CIT V. CHAPHALKAR BROTHERS, I TXA NO. 1036 OF 2010 (ORDER DATED 08/06/2011) (COPY ENCLOSE D) HAS CONSIDERED THE ISSUE OF SUBSIDY OF ENTERTAINMEN T TAX BY GOVERNMENT OF MAHARASHTRA & HELD THAT THE FACT TH AT THE SUBSIDY WAS NOT MEANT FOR REPAYING THE LOAN TAKEN F OR CONSTRUCTION OF MULTIPLEX CANNOT BE A GROUND TO HOL D THAT SUBSIDY RECEIPT WAS ON REVENUE ACCOUNT. BECAUSE, IF THE OBJECT OF THE SCHEME WAS TO PROMOTE CINEMA HOUSES B Y CONSTRUCTING MULTIPLEX THEATRES THAN IRRESPECTIVE O F THE FACT THAT THE MULTIPLEXES HAVE BEEN CONSTRUCTED OUT OF O WN FUNDS OR BORROWED FUNDS, THE RECEIPT OF SUBSIDY WOU LD BE ON CAPITAL ACCOUNT. IN THE CASE OF ABHISHEK INDUSTRIES SALES-TA SUBSIDY RECEIVED BY THE ASSESSEE ON RECURRING BASIS AFTER T HE UNIT COMMENCED PRODUCTION IS AN OPERATIONAL SUBSIDY PROV IDED BY THE STATE AND NOT IN THE NATURE OF FINANCIAL ASS ISTANCE FO SETTING UP THE INDUSTRY AND THEREFORE SUCH SUBSIDY CONSTITUTED REVENUE RECEIPT. IN THE CASE OF COMMISS IONER OF INCOME TAX AND ORS V. M/S UDUPI BUILDERS PVT. LTD.( 2010) 319 ITR 440 IT IS HELD THAT THE SUBSIDY HAS BEEN ANNOUNCED BY THE STATE OF KARNATAKA TO ENCOURAGE TH E HOTEL INDUSTRY AND THE STATE IS IN THE HABIT OF REL EASING SUBSIDY AMOUNT DEPENDING UPON THE BUDGETARY ALLOCAT ION IN EACH YEAR. THE COURT HAS COME ACROSS IN SEVERAL CASES THAT THE STATE HAS RELEASED SUBSIDY AMOUNT EVEN AFT ER TEN YEARS OF THE COMMENCEMENT OF THE PROJECT. THEREFORE , THE CONTENTION OF THE REVENUE WAS NOT ACCEPTED. THE REC EIPT WAS TREATED AS A CAPITAL RECEIPT. JURISDICTIONAL MUMBAI ITAT HAS IN THE CASE OF ASSOCIATED CEMENT CO LTD V ADDL. CIT (2011-TIOL-212 - ITAT-MUM) HELD THAT TRANSPORT SUBSIDY GIVEN BY THE STATE GOVT. IS CAPITAL RECEIPT. IN THE CASE OF KALPANA PALACE V. CIT (275 ITR 365) HBLE ALAHABAD HIGH COURT HELD THAT EVEN THOUGH GRA NT-IN- AID WAS GIVEN AFTER THE BUSINESS OF CINEMA HALLS WA S SET UP ITA 53/MUM/2014 11 IN BACKWARD AREA, IT WAS STILL RELATABLE TO THE CON STRUCTION OF CINEMA HALLS AND WAS A CAPITAL RECEIPT. THE LEARNED COMMISSIONER OF INCOME TAX, APPEAL IN THE APPELLANTS OWN CASE FOR A Y 2009-10 HAS ALLOWE D THE CLAIM OF CAPITAL RECEIPT. THE LD. CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE V IDE APPELLATE ORDERS DATED 09-10-2013 , BY HOLDING AS UNDER:- I HAVE CONSIDERED THE FINDING OF THE ASSESSING OFF ICER, RIVAL SUBMISSION OF THE APPELLANT AND BACKGROUND OF THE C ASE, CAREFULLY. I FIND THAT ENTERTAINMENT DUTY COLLECTED BY THE APPELLANT HAS BEEN REGARDED AS SUBSIDY BY THE HON'B LE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT -1, KO LHAPUR VS. M/S. CHAPHALKAR BROTHERS' PUNE IN ITA NO. 1036/1147 OF 2 010. FURTHER, IN THE APPELLANT'S OWN CASE IN AY. 2009-10 MY PREDECESSOR LD. CIT (A) HAS DECIDED THE ISSUE IN TH E FAVOUR OF THE APPELLANT VIDE CIT(A)-20/DCIT9(2)/IT-334/2011-12 DA TED 12.03.2012 AS UNDER:- 3.3. I HAVE PERUSED THE ASSESSMENT ORDER AND WRITTE N SUBMISSIONS OF THE APPELLANT. THE HONBLE BOMBAY H IGH COURT IN CIT VS CHAPHALKAR BROTHERS (ITA NO. 1036 OF 2010 DA TED 08.06.202011) CONSIDERED THE ISSUE OF SUBSIDY OF EN TERTAINMENT. TAX BY GOVERNMENT OF MAHARASHTRA. IT WAS HELD THAT : (I) A SUBSIDY IS A CAPITAL RECEIPT WHEN IT IS FOR T HE PROMOTION OF A NEW INDUSTRY; WHILE IT IS A REVENUE RECEIPT LIABL E TO TAX IF IT IS GRANTED TO SUPPLEMENT THE PROFITS OF AN INDUSTRY, (II) THE SUBSIDY GRANTED BY THE STATE OF MAHARASHTR A, IS FOR THE PROMOTION OF MULTIPLEXES, (III) THE SUBSIDY WAS GRANTED IN THE FORM OF A CONC ESSION ON ENTERTAINMENT DUTY, (IV) THAT THE OBJECT BEHIND THE SUBSIDY WAS TO PROM OTE CONSTRUCTION OF NEW CINEMA HOUSES, ITA 53/MUM/2014 12 (V) THE SATE GOVERNMENT HAD DECIDED TO GRANT THE SU BSIDY IN VIEW OF THE FACT THAT SETTING UP NEW MULTIPLEXES IS HIGHLY CAPITAL INTENSIVE, WITH A LONG GESTATION PERIOD. 3.3.1. THE HON'BLE BOMBAY HIGH COURT RELIED ON PONN I SUGARS (306 ITR 392) WHERE THE HONBLE SUPREME COURT HAD EXPLAINED ITS PREVIOUS JUDGMENT IN SAHNEY STEEL AND PRESS WORKS LTD. C. CI T (228 ITR 253) AS UNDER:- THE IMPORTANCE OF THE JUDGMENT OF THIS COURT IN SA HNEY STEEL CASE LIES IN THE FACT THAT IT HAS DISCUSSED AND ANA LYZED THE ENTIRE CASE LAW AND IT HAS LAID DOWN THE BASIC TEST TO BE APPLI ES IN JUDGING THE CHARACTER OF A SUBSIDY. THAT TEST IS THAT THE CHARA CTER OF THE RECEIPT IN THE HANDS OF THE ASSESSEE HAS TO BE DETERMINED WITH RESPECT TO THE PURPOSE FOR WHICH THE SUBSIDY IS GIVEN. IN OTHER WO RDS, IN SUCH CASES ONE HAS TO APPLY THE PURPOSE TEST. THE POINT OF TIM E AT WHICH THE SUBSIDY IS PAID IS NOT RELEVANT. THE SOURCE IS IMMA TERIAL. THE FORM OF SUBSIDY IS IMMATERIAL. THE MAIN ELIGIBILITY CONDIT ION IN THE SCHEME WITH WHICH WE ARE CONCERNED IN THIS CASE IS THAT THE INC ENTIVE MUST BE UTILIZED FOR REPAYMENT OF LOANS TAKEN BY THE ASSESS EE 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 SUBSIDY SCHEME WAS TO ENABLE THE ASSESSEE TO RUN THE BUSINESS MORE PROFITABLY TH EN THE RECEIPT IS ON REVENUE ACCOUNT. ON THE OTHER HAND, IF THE OBJECT OF THE ASSISTANCE UNDER THE SUBSIDY SCHEME WAS TO ENABLE THE ASSESSEE TO SET UP A NEW UNIT OR TO EXPAND THE EXISTING UNIT THEN THE RECEIP T OF THE SUBSIDY WAS ON CAPITAL ACCOUNT. 3.3.2. THE HON'BLE BOMBAY HIGH COURT HELD THAT THE RATIO OF PANNI SUGARS WAS THAT ONLY THE OBJECT OF THE SUBSIDY SCHE ME MUST BE CONSIDERED AND ON THE FACTS OF THE CASE, THE SUBSID Y WAS INTRODUCED WITH THE OBJECT OF PROMOTING THE CONSTRUCTION OF MU LTIPLEXES ; AND THE POINT OF TIME IN WHICH IT COULD BE AVAILED THE FO RM IN WHICH IT WAS GRANTED WAS NOT RELEVANT. THE HONBLE BOMBAY HIG H COURT HELD:- THE FACT THAT THE SUBSIDY WAS NOT MEANT FOR REPAYI NG THE LOAN TAKEN FOR CONSTRUCTION OF MULTIPLEXES CANNOT BE A G ROUND TO HOLD THAT SUBSIDY RECEIPT WAS ON REVENUE ACCOUNT, BECAUS E, 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 OWN FU NDS OR BORROWED FUNDS, THE RECEIPT OF SUBSIDY WOULD BE ON CAPITAL ACCOUNT. ITA 53/MUM/2014 13 3.3.3. FOLLOWING THE DECISION OF HONBLE BOMBAY HIG H COURT AS DISCUSSED ABOVE, THIS GROUND OF APPEAL IS ALLOWED. HENCE, THE APPEAL OF THE ASSESSEE WAS ALLOWED BY TH E LD. CIT(A) BY FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT -1, KOLHAPUR V. M/S. CHAPHALKAR BROTHERS' PUNE IN ITA NO. 1036/1147 OF 2010 , (2013)351 ITR 309(BOM. HC) . 6. AGGRIEVED BY THE DECISION OF THE LD. CIT(A) VIDE APPELLATE ORDERS DATED 09- 10-2013 , THE REVENUE IS IN APPEAL BEFORE THE TRIBU NAL. 7. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE HENCE WE PROCEED TO DISPOSE OF THE APPEAL AFTER HEARING T HE LD. D.R. AND THE MATERIAL PLACED ON RECORD. 8. THE LD. D.R. SUBMITTED THAT THE ASSESSEE IS ENGA GED IN THE BUSINESS OF EXHIBITION OF FILMS. THE ASSESSEE HAS COLLECTED EN TERTAINMENT TAXES WHICH WAS CLAIMED BY THE ASSESSEE AS CAPITAL RECEIPT , WHILE THE REVENUE HAS TREATED IT AS REVENUE RECEIPT IN THE ASSESSMENT ORDER PASSED B Y THE AO. THE LD. CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE BY FOLLOWING THE DECISION OF CIT -1, KOLHAPUR V. M/S. CHAPHALKAR BROTHERS' PUNE IN ITA N O. 1036/1147 OF 2010, (2013)351 ITR 309(BOM. HC). 9. WE HAVE HEARD THE LD. D.R AND PERUSED THE MATERI AL ON RECORD. WE HAVE OBSERVED THAT THE ASSESSEE IS IN THE BUSINESS EXHIB ITION OF FILMS AND IS A 100% SUBSIDIARY OF GROWEL ENTERTAINMENT PVT. LTD. T HE ASSESSEE HAS RECEIVED ENTERTAINMENT TAX TO THE TUNE OF RS. 2,06,32,715/- DURING THE IMPUGNED ASSESSMENT YEAR WHICH HAS BEEN RETAINED BY THE ASSE SSEE AND NOT BEEN PAID TO THE STATE KEEPING IN VIEW THE SCHEME OF MAHARASH TRA STATE TO ENCOURAGE MULTIPLEXES IN THE STATE WHICH IS RESTRICTED TO THE AMOUNT OF CAPITAL ITA 53/MUM/2014 14 INVESTMENT IN MULTIPLEXES. WE HAVE OBSERVED THAT T HE TRIBUNAL IN ASSESSEES OWN CASE HAS DECIDED THE ISSUE IN FAVOUR OF THE ASS ESSEE KEEPING IN VIEW DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF CHAPHALKAR BROTHERS (2013) 351 ITR 309 (BOM.) , WHEREBY THE TR IBUNAL IN ITA NO. 6430/M/2011 FOR THE ASSESSMENT YEAR 2008-09 VIDE IT S ORDERS DATED 16 TH MAY, 2014 ALLOWED THE APPEAL OF THE ASSESSEE BY OBS ERVING AS UNDER:- THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [(HEREINAFTER REFERRED TO AS CIT(A)] DATED 29.07.11. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME TAX, APPEAL 20 ERRED IN LAW & ON FACTS IN NOT TREATING THE ENTERTAINMENT DUTY C OLLECTED OF RS.2,07,92,130/- AS REVENUE RECEIPT. 2. APPELLANT PRAYS THAT THE ENTERTAINMENT DUTY OF R S.2,07,92,130/- COLLECTED DURING THE YEAR UNDER CONSIDERATION SHOUL D BE TREATED AS CAPITAL SUBSIDY NOT LIABLE TO BE TAXED AS REVENUE RECEIPT. 2. THE ONLY QUESTION FOR ADJUDICATION IN THIS APPEA L IS AS TO WHETHER THE ENTERTAINMENT DUTY SUBSIDY GIVEN TO THE ASSESSEE BY THE STATE GOVERNMENT FOR CONSTRUCTION OF MULTIPLEXES IS IN THE NATURE OF REV ENUE RECEIPT OR CAPITAL RECEIPT. 3. AT THE OUTSET, THE LD. A.R. OF THE ASSESSEE HAS STATED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CHAPHALKAR BROTHE RS (2013) 351 ITR 309 (BOM.). THE HONBLE BOMBAY HIGH COURT WHILE ADJUDI CATING ON THE ISSUE HAS OBSERVED AS UNDER: THUS, THE PURPOSES FOR WHICH THE SUBSIDY WAS GIVEN IS THE RELEVANT FACTOR AND IF THE OBJECT OF SUBSIDY WAS TO ENABLE THE ASSESSEE TO SET UP A NEW UNIT THEN THE RECEIPT OF SUBSIDY WOULD BE ON CAPITAL ACCOUNT. IN THE PRESENT CASE, AS NOTED BY THE INCOME-TAX APP ELLATE TRIBUNAL, THE OBJECT OF GRANTING ENTERTAINMENT DUTY SUBSIDY BY THE STATE GO VERNMENT WAS AS FOLLOWS : ITA 53/MUM/2014 15 '1. AS A RESULT OF THE ONSLAUGHT OF CABLE TELEVISIO N AND ADVERTISEMENT IN THE FIELD OF INFORMATION TECHNOLOGY, THE AVERAGE OCCUPANCY IN CINEMA THEATRE HAS FALLEN CONSIDERABLY AND HARDLY ANY NEW THEATRES HAVE BEEN STARTED IN THE RECENT PAST. PUBLIC AT LARGE THESE D AYS PREFER TO SEE MOVIES AT HOME. KEEPING IN VIEW THIS SCENARIO, A CONCEPT OF C OMPLETE FAMILY ENTERTAINMENT CENTRE, MORE POPULARLY KNOWN AS 'MULT IPLEX THEATRE COMPLEX' HAS EMERGED. THESE MULTIPLEX THEATRE COMPLEXES OFFE R VARIOUS ENTERTAINMENT FACILITIES FOR THE ENTIRE FAMILY UNDE R SINGLE ROOF. HOWEVER, THESE COMPLEXES ARE HIGHLY CAPITAL INTENSIVE, THEIR GESTATION PERIOD IS ALSO QUITE LONGER, AND, THEREFORE, NEED GOVERNMENT SUPPO RT AND INCENTIVE IN ENTERTAINMENT DUTY. 2. THE GOVERNMENT HAS, THEREFORE, WITH A VIEW TO CO MMEMORATE BIRTH CENTENARY OF CHITRAPATI LATE SHRI V. SHANTARA M, DECIDED TO GRANT CONCESSION IN ENTERTAINMENT DUTY TO MULTIPLEX THEAT RE COMPLEXES TO PROMOTE CONSTRUCTION OF NEW CINEMA HOUSES IN THE ST ATE.' SINCE THE OBJECT OF SUBSIDY WAS TO PROMOTE CONSTRUC TION OF MULTIPLEX THEATRE COMPLEXES, IN OUR OPINION, RECEIPT OF SUBSI DY WOULD BE ON CAPITAL ACCOUNT. THE FACT THAT THE SUBSIDY WAS NOT MEANT FO R REPAYING THE LOAN TAKEN FOR CONSTRUCTION OF MULTIPLEXES CANNOT BE A G ROUND TO HOLD THAT SUBSIDY RECEIPT WAS ON REVENUE ACCOUNT, BECAUSE, IF THE OBJECT OF THE SCHEME WAS TO PROMOTE CINEMA HOUSES BY CONSTRUCTING MULTIPLEX THEATRES, THEN IRRESPECTIVE OF THE FACT THAT THE MULTIPLEXES HAVE BEEN CONSTRUCTED OUT OF OWN FUNDS OR BORROWED FUNDS, THE RECEIPT OF SUBS IDY WOULD BE ON CAPITAL ACCOUNT. IN THE LIGHT OF THE AFORESAID OBJECTS OF T HE SCHEME FRAMED BY THE STATE GOVERNMENT, THE DECISION OF THE INCOME-TAX AP PELLATE TRIBUNAL THAT THE AMOUNT OF SUBSIDY RECEIVED BY THE ASSESSEE IS O N CAPITAL ACCOUNT CANNOT BE FAULTED. ACCORDINGLY, BOTH THE APPEALS AR E DISMISSED WITH NO ORDER AS TO COSTS. 4. SINCE THE QUESTION FOR ADJUDICATION BEFORE US HA S ALREADY BEEN SETTLED BY THE HONBLE BOMBAY HIGH COURT IN THE ABOVE CASE HOLDING THAT THE ENTERTAINMENT DUTY SUBSIDY IS CAPITAL IN NATURE AND THE LD. D.R. HAS NOT BROUGHT ANY CONTRARY DECISION IN THIS REGARD WHICH MAY JUSTIFY DEPARTURE THERE FROM. THE ISSUE IS ACCORDINGLY DECIDED IN FA VOUR OF THE ASSESSEE. ITA 53/MUM/2014 16 THE ASSESSEE HAS COLLECTED ENTERTAINMENT TAXES ALON G WITH THE SALE OF TICKETS AND AS PER THE INCENTIVE GRANTED BY THE STATE GOVER NMENT, THE ASSESSEE IS EXEMPTED FROM THE PAYMENT OF ENTERTAINMENT TAXES SO COLLECTED TO THE STATE TO THE EXTENT OF CAPITAL INVESTMENTS MADE IN MULTIPLEX ES AS STIPULATED IN THE SCHEME FRAMED BY THE GOVERNMENT OF MAHARASHTRA. TH E GOVERNMENT OF MAHARASHTRA PRONOUNCED THIS SCHEME FOR PROMOTION OF NEW CINEMA HOUSES TERMED AS MULTIPLEXES AND THE OBJECT OF THIS SCHEME BY BOMBAY ENTERTAINMENT DUTY (REVISED ORDINANCE 2001) (ADMINI STRATIVE ORDERS FOR ENFORCEMENT OF MAHARASHTRA ORDINANCE NO. XXIV OF 20 01) TO PROMOTE THE MULTIPLEXES IN THE STATE. WE ARE IN AGREEMENT WITH THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CHAPHALKAR BROTHE RS (SUPRA) AS WELL AS THE DECISION OF THE MUMBAI BENCH OF THIS TRIBUNAL IN AS SESSEES OWN CASE IN ITA NO 6430/MUM/2011 FOR ASSESSMENT YEAR 2008-09 AND IN OUR CONSIDERED VIEW THE ENTERTAINMENT TAX COLLECTED BY THE ASSESSEE IS TO BE TREATED AS CAPITAL RECEIPT. HOWEVER, WE HAVE OBSERVED THAT THIS EXEMP TION FROM THE DEPOSIT OF ENTERTAINMENT TAX SO COLLECTED WITH THE STATE IS RE STRICTED TO THE CAPITAL INVESTMENT MADE BY THE ASSESSEE IN MULTIPLEXES AS P ROVIDED BY THE SCHEME PRONOUNCED BY THE STATE GOVERNMENT. AS SUCH, FOR T HE LIMITED PURPOSE, WE ARE SETTING ASIDE AND RESTORING THE ISSUE BACK TO T HE A.O. WITH A DIRECTION TO DETERMINE THE QUANTUM OF ENTERTAINMENT TAX DUTY SO COLLECTED AND WHICH IS NOT BEEN DEPOSITED WITH THE STATE TO BE TREATED AS CAPITAL RECEIPT BEING RESTRICTED TO THE CAPITAL INVESTMENT MADE BY THE AS SESSEE IN MULTIPLEX KEEPING IN VIEW RECEIPTS OF ENTERTAINMENT TAX IN THE PRECED ING YEARS VIS--VIS INVESTMENT MADE IN MULTIPLEX , IN ACCORDANCE WITH T HE TERMS AND CONDITION OF SCHEME OF THE SAID INCENTIVE BEING OFFERED BY THE S TATE. THE ASSESSEE IS DIRECTED TO APPEAR BEFORE THE AO AND PRESENT ENTIRE DATA OF THE PRECEDING YEARS FOR CLAIM OF EXEMPTION OF ENTERTAINMENT TAX T O BE DEPOSITED WITH THE STATE IN ACCORDANCE WITH TERMS AND CONDITIONS OF TH E SCHEME FOR GRANT OF INCENTIVE TO BE TREATED AS CAPITAL RECEIPT BEING RE STRICTED TO CAPITAL INVESTMENT MADE IN MULTIPLEX. THE AO IS DIRECTED TO GRANT SUFF ICIENT AND REASONABLE ITA 53/MUM/2014 17 OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCOR DANCE WITH THE PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LAW. WE ORDER ACCORDINGLY. 10. IN THE RESULT, APPEAL FILED BY THE REVENUE IN I TA NO. 53/MUM/2014 FOR ASSESSMENT YEAR 2010-11 IS ALLOWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST DECEMBER, 2016. # $% &' 21 ST ( ) SD/- SD/- (SAKTIJIT DEY) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 21-12-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI J BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI