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| HC justifies incentives to J&K industrial units | | | EARLY TIMES REPORT
JAMMU, Jan 31: Division Bench comprising of Justice JP Singh and Justice Hasnain Masoodi today allowed 20 appeals against order of Income Tax Appellate Tribunal Amritsar.
The Bench had reportedly denied the appellants deductions under Section 80-1B of the Income Tax Act, 1961, on the excise refund and Interest Subsidy, etc., holding that the excise refund and interest subsidy received by them (appellants), in pursuance to the New Industrial Policy and other Concessions announced for the state of Jammu and Kashmir by Union Ministry of Commerce and Industry was revenue receipt, and not capital receipt, hence liable to tax.
Court after hearing the parties observed that incentives provided to the Industrial units, in terms of the new industrial policy, for accelerated Industrial development in the state, for creation of such industrial atmosphere and environment, which would provide additional permanent source of employment to the unemployed in the state of Jammu and Kashmir, were in fact, in the nature of creation of new assets of Industrial Atmosphere and Environment, having potential of employment generation to achieve a social object. Such incentives, designed to achieve Public Purpose, cannot, by any stretch of reasoning, be construed as production or operational incentives for the benefit of assesses alone.
Court said that looking at the purpose of eradication of the social problem of unemployment in the State by acceleration of the industrial development and removing backwardness of the area that lagged behind in Industrial development, incentives provided by the office memorandum and statutory notifications issued in this behalf, to the appellants-assesses, cannot be construed as mere Production and Trade Incentives, as held by the Tribunal.
DB further observed that the finding of the tribunal on the first issue that the excise duty refund, interest subsidy and insurance subsidy were production incentives, hence revenue receipt, cannot be sustained, being against the law laid down by Supreme Court of India in sahney steel and ponni sugars cases. With these observations the finding of the Tribunal that the incentives were Revenue Receipt is, accordingly, set aside holding incentives to be Capital Receipt in the hands of the assesses. |
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