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2023 (6) TMI 165 - AT - Income TaxDisallowance of claim of sales tax incentive - HELD THAT:- When the issue in question has already been decided in favour of the assessee even in earlier years A.Y. 2003-04 [2009 (12) TMI 945 - ITAT MUMBAI] as well as this issue has also been decided in case of DCIT vs. Reliance Industries Ltd [2003 (10) TMI 255 - ITAT BOMBAY-J] wherein it is held that sales tax subsidy received under the package scheme incentives 1997 is for the purpose of industrial development of the backward districts as well as generation of employment, thus, establishing a direct nexus with the investment in fixed capital assets and as such a capital asset. Revenue has failed to bring on record any distinguishable facts qua the year under assessment vis-à-vis earlier years i.e. A.Y. 2010-11. Decided against revenue. Nature of receipt - Excise duty collected by the assessee was capital in nature - HELD THAT:- When the issue has already been decided in favour of the assessee by examining the objective of grant of excise duty incentive vide memorandum issued by Ministry of Garments & Industry, decision rendered in case of Shree Balaji Alloys [2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT] which has been affirmed in case of Ponni Sugars & Chemicals Ltd. [2008 (9) TMI 14 - SUPREME COURT] holding that excise duty refund granted with the object of social problem of unemployment in the state by accelerating the industrial development was a capital receipt, we find no illegality or perversity in the impugned findings returned by the CIT(A) holding receipt of excise duty by the assessee as capital in nature. Decided against the Revenue. Allowance of foreign exchange fluctuation loss on reinstatement of loan - claim disallowed by the AO on the ground that the assessee company has capitalized it in the books of account - HELD THAT:- CIT(A) by following the order passed u/s 143(3) for A.Y. 2009-10 in which year foreign exchange fluctuation loss amortised in the books was allowed. Assessee company has claimed the foreign exchange fluctuation loss to in the revised return. When the Revenue has itself allowed the claim of the assessee of foreign exchange fluctuation loss amortised in the books in A.Y. 2009-10 and 2011-12 no extraneous reasons have been brought on record by Revenue as to why it should not be allowed for the year under consideration. For earlier two years Revenue has accepted the decision of AO allowing the foreign exchange fluctuation loss amortised in the books .No illegality or perversity in the impugned findings returned by the Ld. CIT(A) - Decided against the Revenue. Weighted deduction on R&D expenses u/s 35(2AB) - claim disallowed by the AO on failure of the assessee to bring on record certificate issued by the prescribed authority [Secretary of Department of Scientific and Industrial Research, Government of India(DSIR)] - CIT(A) allowed the same by thrashing the facts in the light of case of Zeus Numerix Private Ltd [2015 (4) TMI 1247 - ITAT MUMBAI]- HELD THAT:- CIT(A) has discussed the law laid down in case of Sandan Vikas (India) Ltd. [2011 (2) TMI 66 - DELHI HIGH COURT] and Claris Lifesciences Ltd [2008 (8) TMI 579 - GUJARAT HIGH COURT] on the issue in question where it is held that for the purpose of section 35(2AB) existence of recognition is relevant and not the date of recognition or not of date mentioned in the certificate of DSIR or even the date of approval. In the instant case it is undisputed fact that R&D centre to be run by the assessee company has been recognized. When it is so the Ld. CIT(A) has rightly allowed the benefit of deduction claimed by the assessee under section 35(2AB) of the Act. So finding no illegality or perversity in the impugned order passed by the Ld. CIT(A) - Decided against the Revenue. MAT computation - AO disallowed the exclusion of sales tax incentives, excise duty exemption and exclusion of profits on sale of assets while computing the book profit u/s 115JB - HELD THAT:- When a receipt is not in the nature of income it is not to be formed part of the taxable profit and as such sales tax incentive and excise duty exemption and profit on sale of fixed assets are not chargeable to tax, hence rightly ordered to be excluded from computing the book profit under section 115JB by the Ld. CIT(A). No illegality or perversity in the impugned order passed by the Ld. CIT(A). Decided against the Revenue. Disallowance of education cess on income tax and dividend distribution tax u/s 40(a)(ii) - HELD THAT:- As in view of the amendment made vide Finance Act, 2022 with retrospective effect from 01.04.2005 to section 40(a)(ii) for the purpose of section 40, the term ‘Tax’ shall include and shall be deemed to have always included any sur-charge or cess by whatever name called, on such tax - education cess on income tax and dividend distribution tax is integral part of income tax under the Income Tax Act payable by the assessee covered by provision of section 40(a)(ii). Assessee has fairly conceded that as per amendment vide Finance Act, 2022 disallowance made by the Ld. CIT(A) on account of education cess on income tax and dividend distribution tax is not sustainable in the eyes of law. So the deletion of education cess on income tax and dividend distribution tax made by the Ld. CIT(A) is not sustainable in the eyes of law and disallowance made by the AO is ordered to be restored. Hence, ground raised by the Revenue is allowed.
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