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2017 (5) TMI 1591 - AT - Income TaxSubsidy received - capital receipt OR revenue receipt - Held that:- In the case of DCIT vs Teesta Agro Industries Ltd. [2011 (1) TMI 1501 - ITAT KOLKATA] has observed that the subsidy given in the form of the remission of sales-tax under the West Bengal State Incentive Scheme 1999 is in the nature of capital receipt and therefore not assessable to income tax. In view of above, we are of the opinion that the impugned subsidy is capital in nature and therefore not liable to tax. Simply the assessee has inadvertently offered the same to tax does not mean the capital receipt has become taxable. Receipt of subsidy will not be taxable being capital in nature under the provisions of MAT - Held that:- Hon’ble Supreme Court in the case of Padmaraje R Kadambande Vs CIT [1992 (4) TMI 215 - SUPREME COURT has held that capital receipts are not income within the meaning of section 2(24) of the Act and hence not chargeable to tax. When a receipt cannot be brought to tax under the computation of income under the normal provisions as well as under the deeming provisions of the Act, then such receipt is out of the purview of the provisions of section 115JB. We find the decisions in support of this proposition that a capital receipt which is not chargeable to tax under any provisions of the Act would not be liable for book profits tax u/s 115JB Addition on account of unexpired foreign currency forward contract on Marked to Market (MTM for short) basis - Held that:- Instructions issued by the CBDT are not binding on the Courts. So there is no value in the argument of the DR. However, we disagree with the view of the AO on the ground that the adjustment was made by the assessee in terms of AS 11 issued by ICAI and in pursuance of mercantile system of accounting as notified u/s 145 of the Act. We reject the submission of the Appellant in these appeals that the increase in liability on account of the fluctuation in the rate of foreign exchange remaining on the last day of the financial year is notional or contingent and, therefore, cannot be allowed as a deduction - Decided against revenue
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