The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), directed Assessing Officer (AO) to exclude sales tax incentive subsidy for computing book profit, thereby granting relief to Ambuja Cement Limited, the appellant.
The issue concerned in the present appeal is whether, on the facts and in the circumstances of the case and in law, the CIT(A) erred in allowing the exclusion of sales tax incentive and excise duty exemption while computing the Book profit under Section 115JB of the Income Tax Act, whereas the same are in the nature of revenue incentive or not.
The ITAT Jaipur bench, in case of Shree Cement Ltd. had considered an identical issue and held that incentives granted to the assessee is capital receipt and hence, cannot be part of book profit computed u/s 115JB of the Income Tax Act.
Similarly, the ITAT Kolkata Bench, in the case of Sipca India (P.) Ltd. v. Dy. CIT, had considered an identical issue and held that when, subsidy in question is not in the nature of income, it cannot be regarded as income even for the purpose of book profit under Section 115JB of the Income Tax Act, though credited in the profit and loss account and have to be excluded for arriving at the book profit under Section 115JB of the Income Tax Act
A coordinate bench of the Tribunal, in JSW Ltd case, has observed that in those cases the capital receipt is in the nature of income, but by a specific provision, the same has been exempted and hence, the came to the conclusion that, once particular receipt is routed through profit and loss account, then it should be part of book profit and cannot be excluded, while arriving at book profit under Section 115JB of the Income Tax Act.
A Coram consisting of Pramod Kumar (Vice President), and Sandeep S Karhail (Judicial Member) observed that “We see no reasons to take any other view of the matter than the view so taken by the coordinate bench. Respectfully following the same, we uphold the plea of the assessee and direct the Assessing Officer to exclude the sales tax incentive subsidy for computing book profit under section 115 JB of the Income Tax Act. The assessee gets the relief accordingly.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to TaxscanAdFree. Follow us on Telegram for quick updates.
