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These cross appeals preferred by the assessee and the Revenue emanates from the common order of Commissioner of Income Tax (Appeals)-11, Pune, dated 25.01.2019 for A.Ys.2013-14 & 2014-15 as per the grounds of appeals on record.

ITA Nos.488, 489, 756 & 757/PUN/2019 Parag Milk Foods Pvt. Ltd.

2. Both the appeals filed by the assessee are time barred by 41 days. The assessee has explained the cause of delay by filing condonation application and affidavit. After going through the contents therein, it is observed that the delay caused was neither deliberate nor intentional, which may be attributed to the conduct of the assessee if any, and rather such delay was circumstantial. Ld.DR did not raise any objection regarding condonation of delay. Therefore, delay in assessee‟s appeals is condoned and the matter is heard on merits. ITA No. 756 & 757/PUN/2019 (Assessee)

3. That, on perusal of the grounds of appeals, the first issue emerges from ground No.1 is with regard to disallowance u/sec. 14A r.w.r.8D(2)(iii). The other issue is with regard to direction of the ld.CIT(A) to the AO for reducing the amount of subsidy from the cost of acquisition/WDV of the fixed assets of the eligible projects and this issue is comprised in ground Nos. 2 & 3. Ground No.4 is general in nature.

4. Ground No.1 is with regard to disallowance u/sec. 14A r.w.r.8D(2)(iii). It is contended by the ld.AR that assessee has not earned any exempt income. He further submitted that ld. CIT(A) has not dealt with this issue in his order, though, the ground was raised before him. We have perused the order of the ld. CIT(A) and even the ld.DR before us conceded that the issue remains un-adjudicated by the ITA Nos.488, 489, 756 & 757/PUN/2019 Parag Milk Foods Pvt. Ltd.

6. We find that Pune tribunal on this issue in the case of DCIT v. Haldex India Pvt. Ltd. in ITA No. 852/PUN/2019, dated 19/05/2022 by ITA Nos.488, 489, 756 & 757/PUN/2019 Parag Milk Foods Pvt. Ltd.

applying the ratio of the Hon'ble Supreme Court in the case of CIT vs. Chaphalkar Brothers, 400 ITR 297 (SC) after referring to its earlier decision in the case of CIT vs. Ponni Sugars & Chemicals Ltd., 306 ITR 392 (SC) has held that since the subsidy was granted actually as an incentive for development and formation of industries in the less developed areas of the State of Maharashtra, the subsidy cannot be treated as revenue receipt. The relevant paras are extracted as under:-

6.1 That, after going through the contents of the incentive scheme, it is observed that such incentives have been provided to encourage and develop the industries in less developed and backward areas. For the same reasons, the Pune Tribunal in the following cases has held that subsidy received by the assessee under the PSI 2007 from ITA Nos.488, 489, 756 & 757/PUN/2019 Parag Milk Foods Pvt. Ltd.