TMI Blog2022 (9) TMI 653X X X X Extracts X X X X X X X X Extracts X X X X ..... appeals is covered against the Revenue. Assessing Officer in the subsequent cases for the A.Y. 2014-15 and 2015-16, has allowed the excise duty refund and interest subsidy as capital receipts . Addition made under MAT provisions - Once the foundation lost its existence, then the building would automatically collapse. In simple meaning, once it is determined that receipt is not in the nature of income, then it cannot be considered in the book profit for the purpose of computation u/s. 115JB of the Act. As the addition in the instant case could not survive under normal provision of the Act, thus the addition under MAT provisions also will not survive, hence stands deleted. Consequently, decision of the ld. Commissioner on this issue is set aside and the appeal of the Assessee is allowed. - ITA No. 3297/Del/2017 And ITA No. 4873/Del/2017 - - - Dated:- 12-9-2022 - Dr. B.R.R. Kumar, Accountant Member And Shri N.K. Choudhry, Judicial Member For the Appellant : Sh.Ved Jain, Ld. Advocate, Ms.Supriya Mehta, Ld. CA For the Respondent : Ms.Sapna Bhatia, Ld. CIT/DR ORDER PER N.K. CHOUDHRY, J.M. These cross appeals have been preferred by the Assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese aspects vide order sheet entry dated 22.02.2016 and was asked to file complete details, documentary evidence and prove as to how the amount in question was capital receipts and was not revenue receipt . 2.3 The Assessee while relying upon the Excise Notifications No. 56/57 dated 14.11.2012 issued by the Central Excise Department and the judgments of the Hon ble Supreme Court in the case of CIT vs. Ponni Sugars Chemical Ltd. (2008) 306 ITR 392(SC), wherein it was held that the excise duty refund are purely capital receipts, hence, not chargeable to tax and of the Hon ble High Court of Jammu Kashmir in the case of Shree Balaji Alloys vs. CIT (2011) 333 ITR 335(J K) wherein it was 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 accelerating industrial development is capital receipt , requested the Assessing Officer to consider the excise duty refund and interest subsidy to the tune of Rs.10,67,03,009/- and Rs.4,17,16,506/- respectively, as capital in nature . 2.4 The Assessing Officer declined to accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (ii) generation of employment in the State of Jammu Kashmir. Amendment introduced to the Office Memorandum vide notification of 28th Nov., 2003 of the Government of India, Ministry of Commerce and Industry (Department of Industrial Policy and Promotion) eloquently demonstrates the Central Government's intention in extending the incentives. The Government's objective, as conveyed by the Prime Minister at Srinagar on 19th April, 2003, was, for creation of one la (employment and self-employment opportunities in Jammu Kashmir State. To achieve this purpose and objective, it was, inter alia, provided in the Central excise notifications that the exemptions contained in the notifications would be available only on production of certificate from General Manager of the concerned District Industry Centre to the jurisdiction at Dy. CC/E or the Asstt. CCE, as the case may be, to the effect that the unit had created required additional regular employment, which would not, however, include employment provided by the industrial units to daily wagers or casual employees engaged in the units. A close reading of the Office Memorandum and the amendment introduced thereto with para No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. For all what has been said above, the finding of the Tribunal that the excise duty refund, interest subsidy and insurance subsidy were production incentives, hence revenue receipt cannot be sustained. The finding of the Tribunal that the incentives were revenue receipt is, accordingly, set aside holding the incentives to be capital receipt in the hands of the Assessees. 5. The order dated 19/04/2016 of the Hon'ble Apex Court in the Revenue's SLP/appeal against the above order is also reproduced here in under:- IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 10061 OF 2011 C.I.T., JAMMU ANR. Appellant(s) VERSUS M/S SHREE BALAJI ALLOYS Respondent(s) WITH CIVIL APPEAL NO. 10666 OF 2013 CIVIL APPEAL NO. 8491 OF 2012 CIVIL APPEAL NO. 8495 OF 2012 CIVIL APPEAL NO. 8492 OF 2012 CIV ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration to the peculiar facts and circumstances of the case and are of the considered view that the decision of the ld. Commissioner on the issue in hand is not only based on thepeculiar facts and circumstances but also upon the judgment of the Hon ble Jammu Kashmir High court in the case of Shree Balaji Alloys Ors. (supra), wherein the Hon ble High Court while considering the Central Excise Notifications No. 56/57 of 11.11.2002 which arepari-materiato the notifications No. 56/57 dated 14.11.2012 issued by the Central Excise Department as involved in the instant case, on the basis of which the Assessee had claimed deduction u/s. 80IB for its unit at Samba and Udhampur ( Jammu Kashmir), has clearly held that excise duty refund and interest subsidy were production incentives and capital receipts in the hands of the Assessee. 6.1 The said judgement of the Hon ble High Court has also been scrutinized and approved by theHon ble Apex Court in the case of CIT, J K and Anr. Vs. ShriBalaji Alloys, Civil Appeal No. 20666 of 2013 and others, order dated 19.04.2017, wherein the Hon ble Apex Court dismissed the appeal filed by the Revenue by holding that the issue raised i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uded 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 Appollo 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 not fall within the definition of Income under Section 2(24) of Income Tax Act, 1961 and when a receipt is not on in the character of income it cannot form part of the book profit under Section 115JB of the Act, 1961. In the case of Appollo Tyres Ltd. (supra) the income in question was taxable but was exempt under a specific provision of the Act as such it was to be included as a part of the book profit. But where a receipt is not in the nature of income at all it cannot be included in book profit for the purpose of computation under Section 115JB of the Income Tax Act, 1961. For the aforesaid reason, we hold that the interest and power subsidy under the schemes in question would have to be excluded while computing book profit under Section 115 JB of the Income Tax Act, 1961. 7.4.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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