Capital receipts mistakenly offered to tax is a mistake apparent on record

Ritum Jain Vs DCIT (ITAT Kolkata)

ITAT Held that sales tax subsidy is capital receipt mistakenly offered by the assessee as income is mistake apparent on record. Accordingly, appropriate relief/ refund available to assessee.

Facts- The brief facts of the case are that the assessee received an amount of Rs. 2,92,39,388/- as sales tax subsidy from the West Bengal Government. The assessee offered the same for taxation in the return of income and the assessment was accordingly framed by the Assessing Officer u/s 153A r.w.s. 143(3) of the Income Tax Act vide order dated 29.12.2016. However, subsequently the assessee realized that the said amount offered by the assessee as income, in fact did not fall in the category of taxable income of the assessee, rather, the same, as settled by the various High Courts as well as by the Hon’ble Apex Court of the country, was non-taxable capital receipt. The assessee moved an application u/s 154 of the Act for rectification and pleaded that the amount of subsidy was wrongly offered for taxation under a mistaken belief, whereas, the same did not constitute taxable income of the assessee. It was, therefore, requested that a rectification order may be passed and the aforesaid sales tax subsidy should be excluded from the taxable income of the assessee.

The Assessing Officer dismissed the aforesaid application holding that any fresh claim could have been lodged by the assessee by way of filing a revised return of income u/s 139(5) of the Income Tax Act. He held that no new claim can be lodged before Assessing Officer by way of filing rectification letter during course of assessment proceedings. He also rejected the contention of the assessee on merits observing that the said sales tax subsidy received by the assessee was a revenue receipt and not a capital receipt.

CIT(A) dismissed the appeal of the assessee. Being aggrieved, the assessee preferred the present appeal.

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