ItA 105 of 2012 in Income Tax Appeal. Withdrawal of appeal or dismissal of appellant grievance relative to tax treatment of six crore grant for working capital.
Appeal dismissed upholding Tribunal order treating rupees six crore grant as capital receipt.
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN
&
THE HONOURABLE MR. JUSTICE ASHOK MENON
TUESDAY ,THE 18TH DAY OF DECEMBER 2018 / 27TH AGRAHAYANA, 1940
ITA.No. 105 of 2012
AGAINST THE ORDER/JUDGMENT IN ITA 515/2010 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 25-11-2011
APPELLANT/S:
THE COMMISSIONER OF INCOME-TAX THIRUVANANTHAPURAM.
BY ADV.SRI PKR MENON, SR COUNSEL FOR GOI TAXES, SRI.JOSE JOSEPH, SC, FOR INCOME TAX
RESPONDENT/S:
M/S.KERALA STATE ELECTRONICS DEVELOPMENT CORPORATION LTD. KELTRON HOUSE, VELLAYAMBALAM, TRIVANDRUM-695033.
BY ADVS. SRI.JOSEPH MARKOSE (SR.) SRI.BINU MATHEW SRI.MATHEWS K.UTHUPPACHAN SRI.TERRY V.JAMES SRI.TOM THOMAS SRI.V.ABRAHAM MARKOS
OTHER PRESENT:
THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 18.12.2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
ITA 105/2012
2
JUDGMENT
Vinod Chandran, J.
The Revenue is in appeal from the order of the
Tribunal, raising the following question of law:
Whether on the facts and in the circumstances of the case, the Tribunal was correct in treating the grant of six crores rupees made by the Government to the assessee as a capital receipt ?
and Press Works Ltd. v. C.I.T. The learned Senior
Counsel for the assessee however would point out that there is clear distinction of facts in the cited decision and the present one. It is pointed out that
the Hon'ble Supreme Court was considering the issue of subsidy received from the Government, which was said to be income, having regard to the purpose for which the
subsidy is given. In the present case, the grant was expressly stated to be the Government share for
settling the working capital liability incurred by way
of financial assistance from a consortium of banks. A
ITA 105/2012
3
one-time settlement was offered, which was sought to be
availed, that too in pursuance of a revival programme as formulated by the Board forIndustrial and Financial Restructuring (BIFR).
before the Tribunal and the terms of the one-time settlement as found in the order, was extracted. This
has been handed over, across the Bar, to us, by the
learned Senior Counsel appearing for the assessee. We deem it appropriate to extract the first paragraph of the said order:-
“Kerala State Electronics Development Corporation Limited is a sick company referred to the Board of Industrial and Financial Restructuring (BIFR). As per the BIFR order the company is formulating a revival/restructuring scheme to be submitted to the BIFR through the Operating Agency viz. State Bank of India. The settlement of working capital liability with the Consortium Banks is the major issue pending to be tied up for formulating a revival proposal of the company.”
found in the Tribunal's order puts the issue beyond any
pale of doubt. The grant is for the settlement of working capital liability with the consortium of banks.
ITA 105/2012
4
The Hon'ble Supreme Court held in Sahney Steel and
Press Works Ltd. that “ if the purpose is to help the assessee to set up its business or complete a project the monies must be treated as having been received for
capital purposes. ” In the present case, the grant was made by the major stakeholder, the Government, to settle the working capital liability, which was availed for setting up the business itself. The grant was also
in pursuance of a revival project as proposed by the BIFR. In such circumstances, we are inclined to answer
the question of law in favour of the assessee and against the Revenue and dismiss the Appeal, upholding the order of the Tribunal. No costs.
Sd/-
K.VINOD CHANDRAN
JUDGE
Sd/-
ASHOK MENON
JUDGE
dkr
ITA 105/2012
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APPENDIX
| APPELLANT | (S)' A | NNEXURES: | ||
|---|---|---|---|---|
| ANNEXURE | A | COPY OF THE 143(3) DATED |
ORDER OF 16.12.2 |
THE ASSESSING OFFICER U/S 009 |
| ANNEXURE | B | COPY OF TH INCOME TAX ( |
E ORDER APPEALS) |
OF THE COMMISSIONER OF DATED 25.06.2010 |
| ANNEXURE | C | COPY OF THE DATED 25.11. |
ORDER 2011. |
OF THE APPELLATE TRIBUNAL |
1 issue framed by the court
Whether the Tribunal was correct in treating the grant of six crores rupees made by the Government to the assessee as a capital receipt?
Colour shows how this judgement treated each authority
Sahney Steel and Press Works Ltd. v. C.I.T.Relied on¶45
Sahney Steel and Press Works Ltd. v. C.I.T. [1997] 228 ITR 252
1 provisions across 1 enactments
THE COMMISSIONER OF INCOME-TAX THIRUVANANTHAPURAM
M/S. KERALA STATE ELECTRONICS DEVELOPMENT CORPORATION LTD.
K. VINOD CHANDRAN
ASHOK MENON
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
