Tribunal excludes Interest Subsidy & Excise Duty Refund from book profit calculation

The Tribunal ruled in favor of the assessee, allowing the exclusion of Interest Subsidy and Excise Duty Refund from the book profit under section 115JB for the assessment year 2013-14. The decision was based on the principle that receipts not constituting income should not be included in the book profit calculation, as established by a previous judgment of the Calcutta High Court.

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Issues:
Exclusion of Interest Subsidy and Excise Duty Refund from book profit u/s 115JB.

Analysis:

Issue 1: Exclusion of Interest Subsidy and Excise Duty Refund from book profit u/s 115JB
The appeal was filed against the CIT(A) order regarding the exclusion of Interest Subsidy and Excise Duty Refund from the book profit under section 115JB for the assessment year 2013-14. The assessee contended that these amounts were capital receipts and should not be included in the book profit. The assessee had received Interest Subsidy of Rs. 30,01,143/- and Excise Duty Refund of Rs. 4,98,49,144/-, totaling Rs. 5,28,50,287/-, which were credited to the P&L account. The assessee sought reduction of assessable income based on the Supreme Court's judgment that subsidies, including Interest Subsidy and Excise Duty Refund, were capital receipts. The CIT(A) allowed the reduction of assessable income but rejected the claim to reduce the book profit for MAT credit eligibility. The Tribunal referred to a similar case decided by the Calcutta High Court, where it was held that receipts not in the nature of income should be excluded from book profits for section 115JB computation. The Tribunal, following the Calcutta High Court decision, held that since the Revenue accepted that the Interest Subsidy and Excise Duty Refund were capital receipts, they should be excluded from the book profit calculation. Consequently, the Tribunal allowed the appeal, setting aside the CIT(A) order on this issue.

In conclusion, the Tribunal ruled in favor of the assessee, allowing the exclusion of Interest Subsidy and Excise Duty Refund from the book profit under section 115JB for the assessment year 2013-14. The decision was based on the principle that receipts not constituting income should not be included in the book profit calculation, as established by a previous judgment of the Calcutta High Court.

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