आयकर अपीलीय अिधकरण, अहमदाबाद (cid:17)ायपीठ “डी“,अहमदाबाद ।

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD (cid:21)ी टी.आर. सेti(cid:26)ल कु मार, (cid:17)ाियक सद(cid:28) एवं

(cid:21)ी मकरंद वसंत महादेवकर, लेखा सद(cid:28) के सम"।

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BEFORE SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER &

SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER Sl. आयकर अपील सं/ िनधा(cid:16)रण वष(cid:16)/ Appeal(s) by :

No(s) ITA No(s) Assess-

अपीलाथ(cid:21) / (cid:22)(cid:23)थ(cid:21) /

ment Appellants बनाम/vs. Respondents Year(s)

1. 784/Ahd/2013 2003-04 M/s.Munjal Auto The Income Tax Industries Ltd. Officer

187, GIDC Estate Ward-4(1)

Waghodia, Baroda Baroda 391 760 (Assessee) (Revenue)

PAN: AAACG8588 L

2. 2007/Ahd/2007 2004-05 The DCIT By Assessee Circle-4(1),Baroda

3. 1619/Ahd/2008 2005-06 -do-Revenue By Assessee 4. 1382/Ahd/2009 2003-04 -do-Revenue By Assessee 5. 1383/Ahd/2009 2006-07 -do-Revenue By Assessee Assessee by : Ms. Amrin Pathan, AR Revenue by : Shri Waghe Prasadrao, Sr.DR सुनवाई की तारीख/Date of Hearing : 27 /02/2025 घोषणा की तारीख /Date of Pronouncement: 25 /03/2025 आदेश/O R D E R PER BENCH:

These appeals, filed by the assessee and the revenue, pertain to Assessment Years (AYs) 2003-04 to 2006-07 and arise from separate orders passed by the Commissioner of Income Tax (Appeals)-III, Baroda [hereinafter referred to as “CIT(A)”]. Since the facts and issues involved in these appeals are interconnected, they have been heard together and are being disposed of by this consolidated order.

Background of the case:

2. The present set of appeals arises from disputes regarding the tax treatment of sales tax subsidies received by M/s. Munjal Auto Industries Ltd., the assessee, from the State Governments of Punjab and Haryana. The core issue pertains to whether the sales tax subsidy should be treated as a capital or revenue receipt, and its subsequent impact on depreciation computation and Minimum Alternate Tax (MAT) liability under Section

115JB of the Income Tax Act, 1961 [hereinafter referred to as “the Act”].

2.1. The Co-ordinate Bench had earlier adjudicated these appeals for Assessment Years 2003-04 to 2006-07 vide its order dated 21.12.2011. The appeals included:

• ITA No. 1382/Ahd/2009 & ITA No. 1420/Ahd/2009 – Cross appeals for A.Y. 2003-04.

• ITA No. 2007/Ahd/2007 – Appeal for A.Y. 2004-05. • ITA No. 1619/Ahd/2008 – Appeal for A.Y. 2005-06. • ITA No. 1383/Ahd/2009 – Appeal for A.Y. 2006-07.

2.2. During the first round of litigation, the Assessing Officer [hereinafter referred to as “AO”] treated the sales tax subsidy as a revenue receipt, making it taxable. The CIT(A) held it to be capital in nature, providing relief to the assessee. However, the Co-ordinate Bench while confirming the capital nature of the subsidy, held that the subsidy must be reduced from the cost of fixed assets, thereby reducing depreciation. Consequently, the issue was restored to the AO for re-computation of depreciation. Following this, both the assessee and the Revenue filed appeals before the Hon’ble Gujarat High Court, challenging different aspects of order of Co-ordinate Bench.

2.3. On 28-01-2013 Hon’ble Gujarat High Court first adjudicated the Revenue’s appeal in Tax Appeal No. 450, 451 and 453 of 2012, which challenged the ITAT’s decision of treating the sales tax subsidy as a capital receipt. Following question of law was framed before the Hon’ble High Court-

“Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the sales tax incentive is a capital receipt without considering the fact that subsidy in the form of sales tax deferment was given by the Government of Haryana to the assessee company much after the commencement of business to augment the normal business running of Binola Unit and not for setting up of business and should, therefore, have been treated as a revenue receipt?”

2.4. The Hon’ble High Court dismissed Revenue’s appeals, holding that the Tribunal was correct in treating the subsidy as capital in nature.

2.5. Subse