THE PR. COMMISSIONER OF INCOME TAX V. M/S SUNBEAM AUTO PVT. LTD.

23483-2018

AI Insights

The case involves the Principal Commissioner of Income Tax as the petitioner and M/s Sunbeam Auto Pvt. Ltd. as the respondent. The core issue was the classification of a sales tax subsidy received by the respondent-assessee, which was contested by the Revenue. The High Court had previously ruled that the subsidy should be treated as a capital receipt, a decision which the Revenue challenged in the Supreme Court through special leave petitions. The Supreme Court, referencing its earlier decisions and similar cases, upheld the High Court's decision, confirming the subsidy as a capital receipt and not part of the taxable income.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 344179 (SC)
• Appeal Type: Supreme court cases
• Pronouncement Date: 30-01-2024
• Other Referred Cases: Dy. Commissioner of Income Tax vs. M/s Munjal Auto Industries Limited, Commissioner of Income Tax vs. M/s Chaphalkar Brothers, Commissioner of Income Tax Central-II vs. Ellora Time Private Limited, C.I.T. Central-II vs. Ajanta Limited
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: SUPREME COURT
• Department Lawyers: MAHUA KALRA
• Assessee Lawyers: N VENKATRAMAN; RUPESH KUMA R
• Keywords: Capital receipt; Income Tax; Sales tax subsidy
• Section: 143(3)

Judgement Text

"IN THE SUPREME COURT OF INDIA EXTRA-ORDINARY APPELLATE JURISDICTION SLP(C) NO. 18572/2018 THE PR. COMMISSIONER OF INCOME TAX PETITIONER(S) VERSUS M/S SUNBEAM AUTO PVT. LTD. RESPONDENT(S) WITH C.A. No. 8500/2018 SLP(C) No. 18575/2018 SLP Dy. No(s). 25081/2018 O R D E R SLP(C) No. 18572/2018, SLP(C) No.18575/2018 and SLP Dy. No(s). 25081/2018: Delay in SLP Dy. No(s). 25081/2018 is condoned. These special leave petitions assail the order dated 07.12.2017, by which, the writ petitions filed by the respondent- assessee were disposed of by holding that the sales tax subsidy received by the respondent-assessee has to be treated as a capital receipt and not to be added as part of the income of the respondent-assessee. The order further states that the consequential order would now be passed by the Assessing Officer in terms of the said order. Being aggrieved, the Revenue has preferred these special leave petitions and appeal. 1 Digitally signed by RADHA SHARMA Date: 2024.02.02 17:42:56 IST Reason: Signature Not Verified We have heard learned senior counsel Mr. Rupesh Kumar for the petitioner and learned counsel Mr. Mayank Nagi for the respondent and perused the material on record. During the course of submissions, our attention was drawn to the fact that this Court, in an identical matter in C.A. No.6226/2013 [Dy. Commissioner of Income Tax vs. M/s Munjal Auto Industries Limited] along with other connected civil appeals, upheld the order of the Gujarat High Court passed in Tax Appeal Nos.450/2012, 451/2012 and 453/2012 dated 28.01.2013, by placing reliance on another judgment of this Court in the case of Commissioner of Income Tax vs. M/s Chaphalkar Brothers (C.A. No.6513-6514/2012 etc]. Learned senior counsel appearing for the petitioner contended that although these special leave petitions may be disposed of in terms of the order passed by this Court on 08.05.2018 in C.A. No.6226/2013, nevertheless the fact remains that this Court while sustaining the order passed in the aforesaid case of M/s Munjal Auto Industries Limited (supra) had also taken note of the fact that, if, the sales tax subsidy is held to be a capital receipt then the natural consequences of the said fact should follow. Our attention was drawn to paragraph ‘2’ of the order of the Gujarat High Court passed in the case of M/s Munjal Auto Industries Limited (supra) which order was sustained by this Court in C.A. No.6226/2023 by placing reliance on another judgment of this Court in M/s Chaphalkar Brothers, Pune. Therefore, the said direction may also be issued in the instant special leave petitions also. 2 Per contra, learned counsel appearing for the respondent- assessee however, drew our attention to another judgment of Gujarat High Court in the case of Commissioner of Income Tax Central-II vs. Ellora Time Private Limited in Tax appeal No.245/2010 which order was also sustained by this Court in SLP (C) No.2300/2012 [C.I.T. Central-II vs. Ajanta Limited] vide order dated 29.04.2016 wherein on an identical question no such consequential direction was issued inasmuch as the special leave petitions were simply dismissed. Having noted the submissions at the Bar, we are conscious of the fact that this Court while dismissing the Civil Appeal which arose in the case of M/s Munjal Auto Industries Limited has sustained the judgment of the Gujarat High Court passed in the said case. In the circumstances, we find that the observations of the Gujarat High Court would have a bearing on the present case and therefore, we observe that consequent upon holding that the sales tax subsidy receipt by the respondent-assessee being treated as a capital receipt, the natural consequences as a result of the said declaration would follow. The special leave petitions are disposed of in the aforesaid terms. Pending application(s), if any, shall stand disposed of. C.A. No. 8500/2018: Following the order passed in SLP(C) No.18572/2018, SLP(C) No. 18575/2018 and SLP Dy. No(s). 25081/2018, this Civil Appeal is also dismissed subject to the observations made in the aforesaid Special 3 leave petitions. Pending application(s), if any, shall stand disposed of. .......................J. ( B.V. NAGARATHNA ) ..........................J. ( AUGUSTINE GEORGE MASIH ) NEW DELHI; JANUARY 30, 2024 4 ITEM NO.25 COURT NO.12 SECTION XIV S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS Petition(s) for Special Leave to Appeal (C) No(s). 18572/2018 (Arising out of impugned final judgment and order dated 07-12-2017 in WP(C) No. 8943/2015 passed by the High Court of Delhi at New Delhi) THE PR. COMMISSIONER OF INCOME TAX Petitioner(s) VERSUS M/S SUNBEAM AUTO PVT. LTD. Respondent(s) WITH C.A. No. 8500/2018 (XIV-A) (IA No. 81415/2022 - AMENDMENT IN CAUSE TITLE) SLP(C) No. 18575/2018 (XIV) Diary No(s). 25081/2018 (XIV) (IA No. 110798/2018 - CONDONATION OF DELAY IN FILING) Date : 30-01-2024 These petitions were called on for hearing today. CORAM : HON'BLE MRS. JUSTICE B.V. NAGARATHNA HON'BLE MR. JUSTICE AUGUSTINE GEORGE MASIH For Petitioner(s) Mr. N Venkatraman, A.S.G. Mr. Rupesh Kumar, Sr. Adv. Mr. Raj Bahadur Yadav, AOR Mr. Shashank Bajpai, Adv. Mr. V C Bharathi, Adv. Mr. Prashant Singh Ii, Adv. Mr. Udai Khanna, Adv. Mr. Harish Pandey, Adv. Mr. Raman Yadav, Adv. Mr. Abhas Upmanyu, Adv. For Respondent(s) Ms. Mahua Kalra, AOR Mr. Mayank Nagi, Adv. Ms. Husnal Nagi, Adv. Mr. Tarun Singh, Adv. UPON hearing the counsel the Court made the following O R D E R 5 SLP(C) No. 18572/2018, SLP(C) No. 18575/2018 and SLP Dy. No(s). 25081/2018: Delay in SLP Dy. No(s). 25081/2018 is condoned. The special leave petitions are disposed of in terms of the signed order. Pending application(s), if any, shall stand disposed of. C.A. No. 8500/2018: The Civil Appeal is dismissed in terms of the signed order. Pending application(s), if any, shall stand disposed of. (RADHA SHARMA) (MALEKAR NAGARAJ) COURT MASTER (SH) COURT MASTER (NSH) (Signed order is placed on the file) 6 "