Sales Tax Subsidy is Capital Receipt, Not Taxable: ITAT [Read Order]

The Kolkata bench of Income Tax Appellate Tribunal in Deputy Commissioner of Income Tax vs M/s. Indian Oil Petronas Pvt. Limited decided that sales tax subsidy is capital receipt and it is not taxable.

The bench comprising of Judicial Member S.S. Viswanethra Ravi and Accountant Member P.M. Jagtap, held while considering the instant appeal of revenue against the impugned order of CIT (A) whereby granted relief to the assessee on account of sales tax subsidy by treating it as capital receipt not liable to tax by entertaining the claim made by the assessee for the same without filing a revised return.

Assessee is a company engaged in the business of manufacturing, trading and terminalling of liquefied petroleum gas. During the year under consideration assessee filed its return of income therein later claimed an amount of 14 crores on the ground that the same was capital receipt not chargeable to tax.

Since the same claim was produced after filing return of income the CIT (A) did not entertain the same by relying on the decision of the Supreme Court in the case of Goetz India Limited [284 ITR 323] and proceeded to complete the assessment under section 143(3) without considering the claim of the assessee for exclusion of sales tax subsidy.

Aggrieved assessee carried the matter before CIT (A) wherein appellate authority after considering assessee’s submission and the case laws supporting his view admitted the claim of the Assessee for exclusion of the sales tax subsidy.

Being aggrieved with the order of CIT (A) Revenue appealed before Tribunal bench wherein bench stated that the CIT (A) has urged that such opportunity even otherwise deserves to be given to the Assessing Officer in the interest of substantial justice.

The Tribunal also added the relevance of High Court decision in the case of Rasoi Limited (supra) there Court has given relief to the assessee on this issue by relying on the said decision.

Accordingly Tribunal uphold the impugned order of the CIT (A) allowing the claim of the assessee for exclusion of sales tax subsidy by treating the same as capital receipt not liable to tax.