ACIT vs. Inox Leisure Ltd. - (Income Tax Appellate Tribunal) (16 Jun 2023)

When object of subsidy schemes of State Governments is to encourage development of Multiple Theatre Complexes, incentives are held to be capital in nature

MANU/IB/0285/2023

Direct Taxation

The instant appeal filed by the Revenue is directed against the order passed by the Ld. Commissioner of Income Tax (Appeals) treating entertainment tax exemption in respect of Multiplexes of 9,89,90,747 as capital receipt, not eligible to tax.

The assessee company mainly engaged in the business of entertainment industry including operating multiplex entertainment complexes and related services including sale of food and beverages, advertisement by screen display, standees etc. giving parking facilities, receipt of charges from retail showrooms, restaurants etc. and also distribution of films and generation of power both captive use and sales to third parties, declared sales/turnover and other income at Rs.424.77 Crores for the year under consideration.

The matter is squarely covered by the judgment passed by the Supreme Court in the case of CIT-1, Kolhapur vs. Chaphalkar Brothers Pune.Present Tribunal have gone through the judgment passed by the Apex Court wherein the identical issue has been raised out of an order passed by the Bombay High Court in favour of the assessee and the issue has been decided in favour of the assessee by upholding the order passed by the Bombay High Court to this effect that where object of respective subsidy schemes of State Governments was to encourage development of Multiple Theatre Complexes, incentives has been held to be capital in nature and not revenue receipts.

Thus, on identical facts and circumstances of the case and in view of the order passed by the Apex Court, Learned CIT(A) has rightly held in favour of the assessee. Impugned order is without ambiguity so as to warrant interference and thus, the same is upheld. Revenue's appeal dismissed.

Tags : ENTERTAINMENT TAX EXEMPTION LEGALITY