2011 (6) TMI 1011

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....ection 80IB of Income tax Acton Excise refund received by the assessee. 2. That Excise Duty has got direct nexus with business of assessee and is an income derived from the business of the assessee. 3. Even otherwise Excise Duty refund is capital in the hands of the assessee and not revenue receipt. 4. That the ld. CIT(A) was not justified in refusing deduction under section 80IB on an amount of ₹ 59,580/- expenses added back in accordance with provision of section 40(a)ai) of Income tax Act." 3. The assessee has raised the following additional grounds of appeal:- "1. That the ld. CIT(A), Jammu, was not at all justified in treating the sum of ₹ 76,06,332/- as revenue receipt. The ld. CIT(A), did not appreciate that this....

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....y of an assessee." 4.1 In our view, the additional ground raised by the assessee is a question of law arising from the facts, which are on record in the assessment proceedings, and, therefore, respectfully following the ratio laid down by the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. (supra), we admit the additional ground of appeal and proceed to decide the same in the succeeding paragraphs.. 5. Briefly stated, the facts of the case are that the assessee is engaged in manufacturing of Menthol Crystals & Allied Products. During the year under consideration, the assessee has received a sum of ₹ 76,06,332/- on account of excise duty refund. On the aforesaid amount, the assessee also claimed deduction u/s.80I....

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....5 (J&K) decided the issue, observing as under:- ""In this view of the matter, the incentives provided to the industrial units, in terms of the new industrial policy, for accelerated industrial development in the State, for creation of such industrial atmosphere and environment, which would provide additional permanent source of employment to the unemployed in the State of Jammu and Kashmir, were in fact, in the nature of creation of new assets of industrial atmosphere and environment, having the potential of employment generation to achieve a social object. Such incentives, designed to achieve public purpose, cannot, by any stretch of reasoning, be construed as production or operational incentives for the benefit of assessees alone. Thu....

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.... of unemployment in the State by accelerated industrial development. For all what ha been said above, the finding of the Tribunal on the first issue that the excise duty refund, interest subsidy and insurance subsidy were production incentives, hence revenue receipt, cannot be sustained, being against the law laid down by the hon'ble Supreme Court of India in Sahney Steel case [1997] 228 ITR 253 and Ponni Sugars case [2008] 306 ITR 391. The finding of the Tribunal that the incentives were revenue receipt is, accordingly, set-aside holding the incentives to be capital receipts in the hands of the assessee. In view of our above finding on the first issue, there is no need to opine on the second issue, which was raised in the alternative....