THE COMMISSIONER OF INCOME TAX-CITY-IV, MUMBAI. vs RELIANCE INDUSTRIES LTD.

Judgment text excerpt

2025:BHC-OS:9937-DB Megha 401_itxa_505_2023_fc.docx IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION. INCOME TAX APPEAL NO.505 OF 2003 Bajaj Auto Limited ...Appellant V/s. Dy. Commissioner of Income Tax ...Respondent WITH INCOME TAX APPEAL NO.156 OF 2003 The Commissioner of Income Tax-3 ...Appellant V/s. M/s. Reliance Industries Limited ...Respondent ______________ Mr. P.J. Pardiwalla, Senior Advocate with Ms. Vasanti Patel for the Appellant in ITXA/505/2003. Mr. Suresh Kumar for the Appellant in ITXA/156/2003 and for Respondent in ITXA/505/2003. Mr. J.D. Mistri, Senior Advocate with Mr. Madhur Agarwal, Mr. Fenil Bhatt, Mr. P.C. Tripathi, Mr. Punit J. Shah, Mr. Ketan Dave and Mr. Pratik Shah i/b. M/s. A.S. Dayal and Associates for the Respondent in ITXA/156/2003. ______________ CORAM: ALOK ARADHE, CJ. & SANDEEP V. MARNE, J. Judgment reserved on: 26 JUNE 2025. Judgment pronounced on: 03 JULY 2025. Page No. 1 of 36 Megha 401_itxa_505_2023_fc.docx JUDGMENT (PER: SANDEEP V. MARNE, J.) A. THE CHALLENGE 1. These Appeals, filed under Section 260A of the Income Tax Act,1961, (the Act) raise a common question of law as to whether an incentive received in sales tax liability under a Scheme formulated by the State Government would be on capital account, exempt to taxation, or on revenue account, liable for taxation. The State Government had introduced schemes from time to time for encouraging setting up of industries in specified backward areas of the State, by providing sales tax incentives. In Income Tax Appeal No.156 of 2003 filed by the Revenue, the Income Tax Appellate Tribunal (ITAT) has treated the amount received towards such incentive to be capital receipt, exempt from taxation, whereas in Income Tax Appeal No.505 of 2003 filed by the Assesse