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2015 (7) TMI 784 - DELHI HIGH COURT

2015 (7) TMI 784 - DELHI HIGH COURT - [2015] 376 ITR 414 (Del) - Refund of excise duty claimed from DGFT - whether is not income under Section 5 read with Section 28(iii)(b) in the hands of Assessee Company as held by ITAT - Held that:- Character of the receipt of subsidy in the hands of the Assessee under the scheme had to be determined with respect to the purpose for which the subsidy was granted. If the object of the assistance under the subsidy scheme was to “enable the assessee to set up a .....

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karo Steel Ltd [1998 (12) TMI 4 - SUPREME Court] - Decided against revenue. - ITA 5/2015 - Dated:- 21-7-2015 - S. Muralidhar And Vibhu Bakhru,JJ. For the Appellant : Mr. P. Roy Chaudhuri, Senior Standing counsel with Mr. Ajit Sharma, Junior Standing counsel For the Respondent : Ms. Shashi M Kapila, Advocate with Mr.R.R. Maurya, Mr. Pravesh Sharma and Mr.Sanjay Kumar, Advocates ORDER 1. This appeal under Section 260A of the Income Tax Act, 1961 ( Act) is directed against the order dated 9th May 2 .....

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is not income under Section 5 read with Section 28(iii)(b) of the Act in the hands of Assessee Company? 3. At the outset question Mr. P. Roy Chaudhuri, learned Senior Standing counsel for the Revenue clarifies that the relevant provision is Section 28 (iiic) of the Act. The above question will stand corrected accordingly. 4. The background facts are that the Assessee is a joint venture of the Tata Power Company Ltd. and Damodar Valley Corporation with 74% and 26% shareholding respectively. The .....

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truction and installation of power plants, pending the grant of mega power status. The Assessee was required to pay excise and customs duty on goods and materials wherever applicable. Accordingly, the Assessee paid excise duty of ₹ 2606.45 lakhs to its vendors. It lodged a claim for ₹ 1246.29 lakhs with the DGFT under para 8.2(g) of the Foreign Trade Policy as deemed export benefits . The DGFT by a letter dated 24th February 2009 admitted the claim of the Assessee to the extent of &# .....

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claiming double deduction of depreciation wherein the capitalized project cost includes depreciation as per company law as well as depreciation under the Act. This disallowance was challenged by the Assessee before the CIT (A) in Grounds 5 and 6. However, in the written submissions filed before the CIT (A), the Assessee clarified that in AY 2009-10, it had transferred the depreciation to capital work in progress and inadvertently reflected it as unabsorbed depreciation in the return filed by it. .....

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the Assessee as income of the Assessee in the year of the claim itself. The AO referred to Section 28(iii) (b) which deals with cash assistance to exporters. Mr. P. Roy Chaudhuri, learned counsel for the Revenue sought to clarify that this was perhaps a typographical error and the AO might have intended to refer to Section 28(iiic) which refers to any duty of customs or excise repaid or repayable as drawback to any person against exports under the Customs and Central Excise Duties Drawback Rule .....

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business of the Assessee had yet not been set up during the AY 2009-10 and that all the costs incurred by it would have to be taken as capital work in progress cannot be faulted. Where there is a refund of excise duty it would go to reduce the project cost/capital work in progress since it is relatable only to the capital assets. Even for the purpose of Section 28 (iiic) of the Act, the excise duty repaid to the Assessee as drawback would have to relate to the business income of the Assessee in .....

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CIT [1975] 98 ITR 167 (SC), the Supreme Court explained that the accepted accountancy rule for determining the cost of fixed assets is to include all expenditure necessary to bring such assets into existence and to put them in working condition . In the facts of that case it was held that the interest incurred before the commencement of production on money borrowed by a newly started company which was in the process of constructing and erecting its plant can be capitalised and added to the cost .....

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that the arrangements between the Assessee and its contractors pertaining to the above three receipts were intrinsically connected with the construction of its steel plant. The receipts had been adjusted against the charges payable to the contractors and had, gone to reduce the cost of construction. Therefore they were rightly held as capital receipts and not income of the assessee from any independent source . 11. The Court in CIT v. Bokaro Steel Ltd (supra) approved the decision of this Court .....

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