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TMI Blog2021 (9) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Ld. CIT (A) was not justified and grossly erred in non-considering the fact and rejecting the appeal by stating that appellant agitated a debatable issue which is not a subject of rectification u/s 154. 2.1 That on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified and grossly erred in non-considering the claim of excise duty subsidy as capital receipt in computing the total income under the normal provision of the Act as well as in computing book profit u/s 115JB. 2.2 That on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified and grossly erred in non-considering the claim of excise duty subsidy as capital receipt as the issue is squarely covered by the decision of Hon'ble Apex Court wherein on the same scheme and same factual scenario, it was held that the excise duty subsidy is capital receipt. 2.3 That on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified and grossly erred in non-considering the Circular No. 68 dated 17- 11-1971 wherein the issue raised in the appeal has been squarely covered 3.0 That on the facts and in the circumstances of the case, the Ld' CIT(A) wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturing of pesticides and insecticides having manufacturing units in the state of Himachal Pradesh and Jammu and Kashmir. The said units due to their presence in the notified area have availed the benefit in the form of excise duty subsidy. The objective of the scheme granting the said subsidy is to generate employment and development of industries in the state of Himachal Pradesh & Jammu and Kashmir. Whether issue falls u/ s 154 or not? 10. The assessment u/ s 143(3) was completed on 29.01.2014 wherein the said subsidy was claimed as revenue receipt. However, later on in 2016 when the SC in identical Scheme has announced the said subsidy as capital receipt, the assessee filed application u/s 154 to treat the said subsidy as capital receipt not chargeable to tax. 11. Now a question arises as to what constitute mistake apparent from record, whether, a Supreme court judgment delivered at later point of time after passing or order can constitute mistake apparent from record or not, whether income tax authority can amend any order, if there is any mistake apparent from record with relevance to a later judgment. 12. We find that CBDT Circular No. 68 dated 17.11.1971 wherein the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Nulux Engineers vs. DCIT in ITA No. 2073/Mum/2017 held that non-consideration of the decision of Hon' ble Supreme Court as well as subsequent interpretation of law by Hon' ble Supreme Court and its non- consideration by Revenue in its order constitute mistake apparent from record which can be rectified u/ s 154 of the Act. 14. The Hon' ble Supreme Court in the case ACIT vs. Saurashtra Kutch Stock Exchange Ltd. [173 Taxman 232] held that non consideration of a decision of Jurisdictional High court or Supreme court can be said to be a 'mistake apparent from record' which can be rectified under section 254(2). After considering the above circular and judicial pronouncements, we hold that the petition submitted by the assessee falls within the scope of section 154 of the Act. Whether Excise Duty refund is capital or revenue receipt ? 15. The Hon' ble High Court of J& K in the case of Shree Balaji Alloys vs. CIT (198 Taxman 122) held that Excise duty refund, Interest subsidy and Insurance subsidy received with the object of creating avenues for perpetual employment, to eradicate the social problem of unemployment in the state by accelerated industrial d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduction, and that these were not required for creation of New Assets cannot be viewed in isolation, to treat the incentives as production incentives, as held by the Tribunal, for the measure so taken, appears to have been intended to ensure that the incentives were made available only to the bona fide Industrial Units so that larger Public Interest of dealing with unemployment in the State, as intended, in terms of the Office Memorandum, was achieved. 29. The other factors, which had weighed with the Tribunal in determining the incentives as Production Incentives may not be decisive to determine the character of the incentive subsidies, when it is found, as demonstrated in the Office Memorandum, amendment introduced thereto and the statutory notification too that the incentives were provided with the object of creating avenues for Perpetual Employment, to eradicate the social problem of unemployment in the State by accelerated industrial development. 30. For all what has been said above, the finding of the Tribunal on the first issue that the Excise Duty Refund, Interest Subsidy and Insurance Subsidy were Production Incentives, hence revenue Receipt, cannot be sustained, being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meant to be taxed cannot be taxed even u/ s 115 JB. 21. The Hon' ble Supreme Court in the case of Apollo Tyres Ltd. 255 ITR 273 held that the revenue cannot go beyond the net profit shown in the P&L account except to the extent provided in the Explanation to Section 115J. The Hon'ble High Court of Karnataka in the case of Hariram Hotels Pvt. Ltd. in ITA No.53/2009 dated 16.12.2015 held that the capital receipts are not subjected to the provisions of Section 115JB. 22. We also find that the Hon'ble Court of Calcutta in the case of Pr. CIT Vs Ankit Metal & Power Ltd. 416 ITR 591 held as under: "Second issue which requires adjudication is as to whether the aforesaid incentive subsidies received by the assessee from the Government of West Bengal under the schemes in question are to be included for the purpose of computation of book profit under Section 115 JB of the Income Tax Act, 1961 as contended by the revenue by relying on the decision in the case of Apollo Tyres Ltd. Vs. CIT reported in 225 ITR 273 (SC). In this case since we have already held that in relevant assessment year 2010 - 11 the incentives ' Interest subsidy' and ' Power subsidy' is a ' capital receipt' and does ..... X X X X Extracts X X X X X X X X Extracts X X X X
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