DCIT Vs Jindal Saw Ltd (ITAT Delhi)
ITAT Delhi by applying purpose test held that excise duty refund under Incentive Scheme 2001 received by company is not liable to tax as it is in the nature of capital receipt.
Facts- The assessee is in the business of manufacture of pipes used in supply of oil / gas and water pipelines, having plants at various locations ie. Kosi, Mundra, Nashik apart from a stainless steel cold rolling plant. It has got an Export Oriented Unit (EOU) at Mundra since 25.11.2000 and an overseas branch in United States of America (USA) whose financial results were merged into the accounts of the assessee. The translation income / loss arrived at while converting the balance sheet and profit and loss account of the US Branch from USD to INR , being notional in nature, was not given effect to while computing the taxable income by the assessee company. During the year under consideration, the conversion resulted in translation gain of Rs 3,32,46,356/- which was excluded by the assessee while computing the taxable income as it being notional in nature. However, the same was disallowed by AO. CIT(A) deleted the disallowance.
Further, revenue also contested that whether the ld. CIT(A) was justified in treating the excise duty refund of Rs 1,63,15,661/- as capital receipt, which were earlier treated as revenue receipt, in the facts and circumstances of the case.
