Taxability of deferred sales tax waiver: quantified government concession treated as business income after statutory amendment.

Post-amendment, a quantified governmental concession arising from a sales tax deferral scheme and realised through prepayment at net present value is treated as income under section 2(24)(xviii) because the provision brings subsidies, grants, cash incentives, waivers, concessions and reimbursements within the tax net unless specifically excluded. The amount is described as business-linked and revenue in character, so the earlier authorities cited by the assessee are said to be inapplicable under the revised legal position. The note also records that the receipt is taxable under section 28(iv), with the addition sustained against the assessee.

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Issues: Whether the amount credited to the profit and loss account on prepayment of deferred sales tax liability at net present value constituted income under section 2(24)(xviii) of the Income-tax Act, 1961.

Analysis: The amended provision brought within the ambit of income assistance in the form of subsidy, grant, cash incentive, waiver, concession or reimbursement by whatever name called, and the legislative intent was to tax such benefits unless specifically excluded. The amount paid by the assessee at net present value represented a quantified concession arising from a government incentive scheme, not a mere repayment of liability without benefit. The receipt was linked to the assessee's business and was treated as revenue in character. The earlier decisions relied upon by the assessee were held inapplicable in view of the post-amendment legal position. The receipt was also regarded as taxable under section 28(iv) of the Income-tax Act, 1961.

Conclusion: The amount was held to be taxable income and the addition was sustained against the assessee.

Ratio Decidendi: Post-amendment, a quantified governmental concession or incentive received in the course of business is taxable as income even if it arises through prepayment of an existing liability at net present value.

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