Income Tax Not Chargeable On Interest Subsidy Received Under Technology Upgradation Fund Scheme: ITAT
Mariya Paliwala
15 Jun 2023 3:00 PM IST
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that income tax is not payable on the interest subsidy received under the technology upgradation fund scheme.The bench of Kuldip Singh (Judicial Member) and Prashant Maharishi (Accountant Member) has observed that interest subsidy received under the technology upgradation fund scheme, though credited in the net off against...
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that income tax is not payable on the interest subsidy received under the technology upgradation fund scheme.
The bench of Kuldip Singh (Judicial Member) and Prashant Maharishi (Accountant Member) has observed that interest subsidy received under the technology upgradation fund scheme, though credited in the net off against the interest expenditure in the books of account, is still capital in nature.
The assessee is a company engaged in diverse businesses such as garments, insulators, fertilizers, viz., cost element young, financial services, et cetera, at different units located across the country. It filed its return of income, declaring total income as per the provisions of the Income Tax Act of 1961 and book profit under Section 115JB.
It was revised as per the normal computation of total income and book profit. The return of income was picked up for scrutiny. The assessing officer passed an assessment order under Section 143 (3) determining the total income of the assessee as per the normal provisions of the act, and book profit remained the same.
The issue raised was whether the subsidy received by the assessee for the technology upgrade fund is a capital receipt not chargeable to tax or a revenue receipt chargeable to tax.
The assessing officer considered it a revenue receipt. On appeal before the CIT, it was found that the subsidy received by the appellant company under the technology upgrade fund scheme is a capital receipt.
The department contended that subsidies have not been granted specifically for the purchase of any capital asset. Therefore, since the purpose has been to compensate for the competitive disadvantage of the business concern, such a subsidy falls into the realm of revenue.
The tribunal held that the subsidy under the technology upgrade fund scheme was capital in nature.
Case Title: Dy. Commissioner of Income-tax Central Circle 1(4) Versus M/s Grasim Industries Ltd.
Case No.: ITA No.84/Mum/2023
Date: 12.06.2023
Counsel For Appellant: Yogesh Thar, Ayushi Modani
Counsel For Respondent: Kishor Dhule
