MEGHALAYA PLYWOOD LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) These three appeals, involving a common question of law, were heard together and are being disposed of by this common judgment. The common substantial question of law so formulated is as follows : "Whether, on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal had erred in law in holding that the Commissioner of Income Tax, Shillong had the jurisdiction to pass the impugned order dated 25.09.1998 under Section 263 of the Income Tax Act, 1961 and in dismissing the Appellant's Misc. Case No. 6 (Gau) of 2003 in ITA No.421/Gau/98 ?"

(2.) Both Mr. V. K. Jindal, the learned senior counsel for the appellant and Ms. PDB Baruah, the learned counsel for the Revenue have been extensively heard by us.

(3.) The material facts giving rise to these appeals are that the Assessing Officer had treated the transport subsidies amounting to Rs. 17,45,426/-, Rs. 55,72,770/- and Rs. 40,31,346/- for the assessment years 1994-95 1995-96 and 1996-97 as non-taxable items. The Assessing Officer had based his decision on the law as interpreted by this Court in CIT V. Assam Asbestos (215 ITR 847) holding that transport subsidy is not a taxable item. The Special Leave Petition filed by the Department against the decision in Assam Asbestos (supra) was dismissed by the Apex Court on 29.11.1996. No statutory appeal was preferred by the Department'thereafter. Subsequently, the Apex Court in Sahney Stell and Press Works Lid. V. CIT, (1997) 7 SCC 764, was called upon to decide as to, among others whether a subsidy received by an assessee on the power consumed for production in the accounting year relevant to a particular assessment year was taxable as revenue receipt or not. The Apex Court held that to determine this question, it was necessary to ascertain the purpose for the subsidy and if the subsidy was in the nature of operational subsidy, it would be taxable. Since subsidy in question was not given as in aid of setting up of the industry of the assessee, held the Apex Court, it was an operational subsidy and, therefore, exigible to tax.