IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “B”, PUNE BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील स.ं / ITA No.201/PUN/2025 Assessment Year : 2015-16 Shriniwas Engineering Auto Vs. ACIT, Circle-6, Components Pvt. Ltd., Pune Office No.5, Mansara Apartments, Near LIC Building, Shivajinagar, Pune 411016 Maharashtra PAN : AAJCS8944F Appellant Respondent Appellant by : Shri Hari Krishan Respondent by : Shri Amit Bobde Date of hearing : 13.10.2025 Date of pronouncement : 10.12.2025 आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER :

The captioned appeal at the instance of assessee is directed against the order dated 26.11.2024 framed by National Faceless Appeal Centre, Delhi emanating out of Assessment Order dated 30.12.2017 passed u/s.143(3) of the Income Tax Act, 1961 (in short ‘the Act’).

2. Assessee has raised following grounds of appeal :

“The following grounds of appeal are taken independently and without prejudice to one another.

1. The Ld. CIT(Appeals) has erred in dismissing the Ground No. (i) of the assessee in respect of the addition of ₹37,84,89,268 made by the Assessing Officer on account of the capital subsidy received from the Maharashtra Government under the Package Scheme of Incentives (2007), by treating it to be of revenue nature.

2. The Ld. CIT(Appeals) has erred in holding that the incentives of ₹37,84,89,268 received from the Maharashtra Government under the package of incentive Scheme 2007 claimed during the year are of revenue nature and the action of the Assessing Officer in bring these to tax is upheld.

The CIT(Appeals) has failed to appreciate that, since the subsidy of ₹37,84,89,268 has been taken into account for determination of the actual cost of the asset in accordance with the provisions of Explanation 10 to clause (1) of section 43, therefore by application of the explanation 10 to clause 1 of s. 43 of the Act, the amount of subsidy will not be treated as income u/s 2(24)(xviii) of the Act.

3. The appellant craves leave to add to or amend/modify or delete any or all of the above grounds of appeal.”

3. Brief facts of the case are that the assessee is a Private Limited Company engaged in the business of manufacturing ₹

and Job work of Automobile Goods. Loss of 30,26,69,877/- claimed in the return e-filed on 30.09.2015. Case processed u/s.143(1) of the Act. Subsequently, case selected for scrutiny through CASS followed by validly serving of statutory notices u/s.143(2) and 142(1) of the Act. So far as the issue raised in the instant appeal is concerned, ld. Assessing Officer during the course of assessment proceedings observed that the ₹

assessee has credited an amount of 37,84,89,268/- in profit and loss account towards Subsidy received/accrued under the Package Scheme of Incentive, 2007 of the Government of Maharashtra for Mega Projects vide Notification dated 30.03.2007. Ld. AO observed that in the computation of income assessee has claimed the said subsidy/incentive as Capital Receipt and reduced it from its Net Profit as per profit and loss account. The assessee during the course of assessment proceedings has pleaded that it is Capital Receipt and not liable to tax. However, ld. AO concluded the proceedings observing that the subsidy in question is not given to the assessee for establishment of business, i.e. it was not meant to be used prior to commencement or commercial business so as to make the same as Capital Receipt which is not in form of Fixed Asset but said sum has been given to the assessee after commencement of business. Ld. AO accordingly denied the claim of the assessee of treating the subsidy received as Capital Subsidy and added it back to the total income shown by the assessee and assessed income at ₹

7,58,19,390.

4. Aggrieved assessee preferred appeal before ld.CIT(A) but failed to succeed as ld.CIT(A) observed that by no stretch of imagination can subsidies by way of refund of Sales Tax or Relief of Electricity Charges or Water Charge