The Income Tax Appellate Tribunal, Delhi, has held that excise duty subsidy/ excise rollback is a capital receipt, not taxable.
The assessee, M/s. Modern Papers is a proprietorship firm engaged in the business of manufacturing etc. of all types of agrochemicals. The assessee received a subsidy on account of excise duty refund (excise rollback) in pursuance of the incentives announced and sanctioned by the Government of India. The Assessing Officer treated the amount as a revenue receipt and added it to the total income. The CIT (A) allowed the appeal holding that the excise refund/subsidy received by the assessee was a capital receipt. Aggrieved, Revenue filed an appeal against the order of CIT (A).
The counsel for the assessee by relying the judgment of ITAT Ahmedabad Bench in DCIT vs. M/s. Munnjal Auto Industries submitted that there was no error in the findings of the CIT (A).
The Tribunal observed that the excise duty subsidy and interest subsidies that were given in pursuant to the new industrial policy were held to be capital receipts. No distinction, as attempted by AO, can be drawn on the basis that as earlier income was subject to benefit of weighted deduction at 100% of the profits derived from the undertaking which no more was available, that would change the nature of receipt to revenue instead of Capital.
The Coram of Mr. G. S. Pannu, President, and Mr. Anubhav Sharma, Judicial Member by following the findings in regard to the assessee’s own case for the assessment year 2013-14, held that the grounds cannot be sustained and the appeal of the revenue is dismissed.
Mr. S.S.Nagar, CA and Mr. N.C.Swain appeared on behalf of assessee and revenue respectively.
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