LexCOMMISSIONER OF INCOME TAX-I, KOLHAPUR versus MIS. CHAPHALKAR BROTHERS PUNE
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[2017] 12 S.C.R. I 083 COMMISSIONER OF INCOME TAX-I, KOLHAPUR A v. MIS. CHAPHALKAR BROTHERS PUNE (Civil Appeal Nos. 6513-6514 of2012) DECEMBER 07, 2017 [R. F. NARIMAN AND NAVIN SINHA, JJ.] 13 Bombay Entertainment Duty Act, 192 3 - Bombay Entertainment Duty (Amendment) Act, 2001 - s.3(13)(c),(f-l) - Subsidy scheme introduced by the State to encourage development C · of Multiplex Theatre complexes - Nature of - Assessment officer and the commissioner held that scheme took the form of a charge on the gross value of ticket and contributed towards the day to day running expense, therefore it was in the nature of a revenue receipt - Howeve1; Tribunal and the High Court held that subsidy was for the p111pose of helping the growth of an industry, hence it was in D the nature of capital receipt - Held: If the object of the assistance under the Subsic~v Scheme is to enable the asses.see to set up a new unit or to expand the existing unit then the receipt of the subsidy is on capital account - It is the object for which the subsidy/assistance is given which determines the nature of the incentive subsidy - The E form of the mechanism through which the subsidy is given is irrelevant - In instant case, the object of the grant of the subsidy was in order that persons come forward to construct Multiplex Theatre Complexes, the idea being that exemption from entertainment du~v for a period of three years and partial remission for a period of two years should go towards helping the ind11st1y to set up such F highly capital intensive entertainment centers - Appeals filed by Department accordingly dismissed. Dismissing the appeals filed by the Department, the Court HELD: 1. The object of introducing the necessary amendments in the Bombay Entertainments Duty Act to effectuate G the aforesaid subsidy scheme was first done by way of an ordinance before 4th December, 2001, which ultimately became part of an Amendment Act. The said scheme was thereafter set out in the form of an amendment to the Statute contained in Section 3(13) H 1083 1084 SUPREME COURT REPORTS [2017) 12 S.C.R. A sub-clause (c) after which a new sub-clause f(l) was set out. In addition, a new sub-clause (13) was also inserted after Section 3. [Paras 2 and 3] (1086-D; 1087-D-E] 2. Applying the purpose test contained in both Sahney Steel as well as Ponni Sugar cases, the object, as stated in the statement B of objects and reasons, of the amendment ordinance was that since the average occupancy in cinema theatres has fallen considerably and hardly any new theatres have been started in the recent past, the concept of a Complete Family Entcrtainmcn-t Centre, more popularly known as Multiplex Theatre Complex, has emerged. These complexes offer various cntcrtainiucnt C facilities for the entire family as a whole. It was noticed that these complexes arc highly capital intensive and their gestation period is quite long and therefore, they need Government support in the form of incentives qua entertainment duty. It was also added that government with a view to commemorate the birth D centenary of late Shri V. Shantaram decided to grant concession in entertainment duty to Multiplex Theatre Complexes to promutc construction of new cinema houses in the State. The aforesaid object is clear and unequivocal. The object of the grant· E F G H ' of the subsidy was ln order that persons come forward to construct Multiplex Theatre Complexes, the idea being that exemption from entertainment duty for a period of three years and partial remission for a period of hvo years should go towards h.elping the industry to set up such highly capital intensive entertainment centers. This being the case, it is difficult to accept the argument of the Revenue that it is only the immediate object and not the larger object which must be kept in mind in that the subsidy scheme kicks in only post' construction, that is when cinema tickets are actually sold. The object of the scheme is only one - there is no larger or immediate object. That the ubject is carried out in a particular manner is irrelevant, as has been held in both Ponni Sugar and Sahncy Steel cases. (Para 23] (1096-C-G] Shri Balaji Alloys v. C.J.T. (2011) 333 I.T.R. 335 - approved. Sahney Steel & Press Works Ltd., Hyderabad v. Commissioner of Income-Tax, A.P.-1, Hyderabad (1997) COMMISSIONER OF INCOME TAX-I, KOLHAPUR v. 1085 MIS. CHAPHALKAR BROTHERS PUNE 7 SCC 76
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