TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Excise Duty Refund Ruled Non-Taxable Capital Receipt in Employment Incentives Case</h1> <h3>Income Tax Officer, Versus. M/s. Asian Cement, Kathua. & Others</h3> Income Tax Officer, Versus. M/s. Asian Cement, Kathua. & Others - TMI Issues:- Whether the Excise Duty refund is a capital receipt and not liable to be taxed.- Whether the assessees are entitled to deduction under section 80IB of the Act on the excise duty refund and interest subsidy.- Whether the incentives provided were in the nature of creation of new assets for employment generation.- Whether the incentives were production incentives or capital receipts.Analysis:Issue 1: Excise Duty Refund TaxabilityThe appeals questioned the allowance of deduction under section 80IB on Central Excise Duty refund by the CIT(A). The Hon'ble Jurisdictional High Court of Jammu & Kashmir held that the Excise Duty refund is a capital receipt and not taxable. The Court analyzed the industrial policy's objective to accelerate industrial development and generate employment. It emphasized that the incentives were aimed at creating permanent employment opportunities, aligning with public interest. The Court concluded that the Excise Duty refund is a capital receipt, following precedents like the Sahney Steel case.Issue 2: Deduction under Section 80IBThe question of whether the assessees are entitled to deduction under section 80IB on the excise duty refund and interest subsidy was addressed. The High Court's decision on the capital nature of the Excise Duty refund impacted this issue. Since the Excise Duty refund was considered a capital receipt, the question of deduction under section 80IB did not require a separate opinion.Issue 3: Nature of Incentives ProvidedThe Court examined whether the incentives provided were for employment generation and creation of new assets. It highlighted the purpose of the incentives in tackling unemployment and accelerating industrial development. The Court emphasized that the incentives were not mere production incentives but aimed at achieving a social objective in the public interest. The analysis of the industrial policy and statutory notifications supported the view that the incentives were for creating perpetual employment opportunities.Issue 4: Production Incentives vs. Capital ReceiptsThe distinction between production incentives and capital receipts was crucial in this case. The High Court rejected the Revenue's argument that the incentives were production incentives. It emphasized that the incentives were intended to address unemployment issues and accelerate industrial development. The Court's decision favored treating the incentives as capital receipts, aligning with the public interest objective of the industrial policy.In conclusion, the judgment confirmed that the Excise Duty refund is a capital receipt and not taxable, following the decision of the Hon'ble Jurisdictional High Court of Jammu & Kashmir. The appeals filed by the Revenue were dismissed, upholding the orders of the CIT(A) on the tax treatment of the Excise Duty refund.
TaxTMI 
TaxTMI 
