Case Law Details
Insecticides (India) Ltd. Vs DCIT (ITAT Delhi)
It was noticed by Assessing Officer that in revised return, Assessee has reduced an amount of Rs. 14,84,20,415/- out of total income under the head of business claiming to be ‘capital receipts’, which was actually shown as ‘revenue receipts’ in the original return of income.
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’.“
The Assessing Officer declined to accept the claim of the Assessee on the ground that with regard to the decision of Hon’ble High Court of Jammu & Kashmir in the case of Shree Balaji Alloys (supra), it may be mentioned that the facts of the instant case appear to be identical to the facts of the stated judgment, but it has come to the notice that the department has not accepted the said judgment of the Hon’ble High Court and has filed a SLP before the Apex Court which is pending. Ultimately, the Assessing Officer treated the aforesaid amount of Rs.14,84,20,415/- as ‘revenue receipts; and consequently added to the total income under the normal provisions and book profit under MAT as well.
The Assessee, being aggrieved also challenged the said addition before the ld. Commissioner, who vide impugned order allowed the claim of the Assessee to the extent of treating excise duty and interest subsidy as ‘revenue receipts’ and deleted the addition on that account under the normal provisions of the Act.
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