GUWAHATI, March 12 - In a major relief to the industries of the Northeastern region, a division bench of the Supreme Court comprising Justice Kurian Joseph and Justice Rohinton Fali Nariman has dismissed the Income Tax Department (Government of India)�s appeal against the judgment of the Gauhati High Court allowing tax exemption on operational subsidies.
The Supreme Court judgement came on March 9.
The Gauhati High Court in the case of CIT v/s Meghalaya Steels Ltd had held that various subsidies such as transport, power, interest and insurance given to the industries of the North-east were operational subsidies and would qualify for deduction u/s 80IB/80IC of the Income Tax Act, 1961.
Upholding the judgment of the Gauhati High Court, the Supreme Court held that all these subsidies are revenue receipts which are reimbursed to the assessees for elements of cost relating to manufacture and sale of their products. Therefore, there was a direct nexus between the profits and gains of the industrial undertaking and reimbursement of such subsidies.
�The Supreme Court has thus put an end to the controversy which had been pending since the last 10-12 years and has threatened the very existence of industries of the North-east,� Federation of Industries of the North Eastern Region (FINER) chairman RS Joshi said.
The FINER hailed the Apex Court judgement which would put an end to the ambiguity, he added.