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2018 (11) TMI 635 - AT - Income TaxRevision u/s 263 - directions to the AO for examining the twin issues of interest income and export incentive income for their eligibility u/s. 80IB deduction - Held that:- The revenue authorities have to adopt only netting formula whilst excluding assessee’s income to be not derived from eligible business. Such a netting exercise admittedly leaves behind negative interest income of ₹4,21,71,315.15 (supra). This sufficiently indicates that even if the P.CIT’s directions under challenge are upheld at this stage in principle, net result thereof would be assessment of a negative figure only. All this leads us to the conclusion that the AO’s action assessing assessee’s positive interest income of ₹3,48,13,006/- has been wrongly taken as an instance of an assessment both erroneous as well as the one causing prejudice to the interest of the revenue in absence of any revenue loss. P.CIT has erred in law as well on facts in exercising his revision jurisdiction vested u/s 263 of the Act in a revenue neural instance qua the former interest income issue. Accept assessee’s and reject those raised at the Revenue instance on the former issue of non eligibility of interest income amounting ₹3,48,13,006/- for the purpose of computing u/s 80-IB deduction. Revision jurisdiction qua the assessee’s assistance from Government of India under the Foreign Trade Policy SHIS Scheme (State Holder Incentive Scrip) - Held that:- Case records suggest that the assessee has availed Government of India’s assistance / incentive for import of capital goods relating to manufacturing activity in plastic sector. It is thus an instance involving reimbursement of cost of running eligible business forming profits qualifying for sec 80-IB deduction. The assessee’s paper book all the relevant details of the impugned sum of ₹1,16,89,000/- regarding purchase made out Buss Kneader Plant, Varex Coex 7 Layer Blown Film, Flexographic Press Machine, Super Combi Laminating Machine; all purchased in the relevant previous year. Corresponding specimen copies of bills of entry / utilization form part of records between pages 24 and 50 in paper book. The same are not disputed at the Revenue’s behest very fairly. All this sufficiently indicates that the impugned assistance availed under SHIS Scheme has been wrongly treated to be at par with an export incentive. Thus assessee’s assistance received of ₹1,16,89,000/- under SHIS Scheme is towards cost incurred for import of capital goods in polymer manufacturing. It is in the nature of a revenue receipt eligible for sec. 80-IB deduction since the scheme provides for the purpose of importing capital goods utilized in polymer manufacturing thereby reimbursing running cost of business as against that in the nature of DEPB / Duty drawbacks credited in profit and loss account forming subject-matter of adjudication in “Liberty India” [2009 (8) TMI 63 - SUPREME COURT]. CIT-DR fails to rebut the basic fact that this SHIS Scheme states its purpose to be for providing investment its upgradation of technology only. It also imposes actual user conditions. Thus P.CIT has erred in directing the Assessing Officer to frame afresh assessment qua the twin issues of interest as well as incentive subsidy thereby holding the regular assessment in issue to be erroneous causing prejudice to interest of the revenue. - Decided in favour of assessee.
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