TaxTMI 
TaxTMI 
2025 (6) TMI 573
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....t order dated 15.05.2024 (DIN & Order No. ITBA/NFAC/S/250/2024- 25/1064909200(1) passed by the Ld. CIT(A)/NFAC, Delhi, arising out of assessment dated 26.12.2018 (Order No. ITBA/AST/S/143(3)/2018- 19/1014577646(1) passed by the ACIT, Circle 19(2), Delhi under Section 143(1) of the Act. Since some common issues are involved for adjudication, all these matters were heard together and are being disposed of by this common order for the sake of convenience. ITA No. 2581/Del/2024 (Revenue's appeal for A.Y. 2015-16): 2 The appeal filed by revenue assessee is time barred by 8 days. The learned DR during the course of hearing has made request for condonation of delay and learned AR has not seriously disputed the delay aspect. Thus delay of 8 days in filing the instant appeal by the revenue is condoned. 3. The Revenue has raised following grounds of appeal: 1. Whether on the facts and in the circumstances of the case, the Ld.CIT(A) was right in allowing the claim of the assessee in treating the share issue expenses as revenue in nature, which is in contravention to the provisions of Section 35D of the Act, relying on the decision of the Hon'ble ITAT in assessee's own case withou....
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....aised Rs. 601.28 crores by issue of share capital to the public through Initial Public offer (IPO). In connection with the issue, the appellant incurred expenditure aggregating to Rs. 38 crores. 1.2 Out of the total proceeds of Rs. 601.28 crores, the appellant incurred Rs. 41.02 crores on setting up of new showrooms Rs. 475.83 crores for the procurement of Inventory Rs. 46.43 crores for General corporate purposes and balance Rs. 38 crores for the share issue expenses. 1.3 From the perusal of the above it can be seen that the appellant has utilized 92% of the receipts on account of public issue on working capital and balance 8% was spent on capital expenditure. 1.4 The appellant claimed Rs. 60.80 lacs [1/5th of Rs. 3.04 crores (being 8% of the share issue expenses i.e. 38 crores)]to be allowed as deduction in each of the five successive previous years (commencing from A.Y. 2013-14) u/s 35D of the Act as an additional ground before Hon'ble ITAT. Hon'ble ITAT in the appellant's own case has allowed the aforesaid claim of the appellant vide order dated 07-12-2021. Copy of the order is attached as Annexure- 2. (Refer page no. 15 to 42 of PB). 1.5 The assessment year ....
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....tis mutandis in Assessment Year 2016-17 having regard to the identical facts and circumstances of the matter. 8. The revenue has raised objections in regard to admission of appeal filed by assessee before the Ld. CIT(A) as the same is found to be barred by limitation. In this particular case the appeal is barred by limitation for about 1537 days in support of which the assessee explained as follows before the Ld. CIT(A): "1.1 The appellant is a public limited company inter-alia engaged in the business of manufacturing and trading of jewellery. The appellant filed its return of income on 30-11-2015, declaring total income of Rs. 4,22,28,69,410/- under the normal provisions of the Income Tax Act, 1961 ("the Act") and book profits of Rs. 3,78,22,63,064/- u/s 115JB of the Act. 1.2 The aforesaid return of income was processed by Central Processing Centre, Bengaluru ("Ld. CPC") u/s 143(1) of the Act vide intimation dated 24-07-2016 at the same returned income of Rs. 4,22,28,69,410/- under the normal provisions of the Act and book profit of Rs. 5,39.31,62,130/- u/s 115JB of the Act thereby raising a demand of Rs. 10,68,47,020/- on account of short credit of Tax Deducted at Source of ....
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.... is attached as Annexure-2. 4.0 Further, reliance in this regard is placed on the order of Hon'ble Supreme court in Miscellaneous application no. 21 of 2022 regarding cognizance for Extension of Limitation has extended the period of limitation and held that the period from15-03-2020 till 28-02-2022 shall also stand excluded in computing the periods prescribed under Sections 23(4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws. Copy of the order is attached as Annexure-3. 5.0 Further, it is stated that the appellant has no intention to jeopardize the interest of revenue by delaying the filing of appeal and requests your goodself to condone the delay caused in filing of appeal. 2.1 Hon'ble Supreme Court has passed order on 10/01/2022 in In Re: Cognizance directed that for Extension of Limitation (Supreme Court of India) Miscellaneous Application No. 21 of 2022, date of order: 10/01/2022, wherein the Hon'ble Supreme Court has the period from 15/03/2020 to 28/02/2022 be excluded for the purpose of limitations as pres....
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.... of the assessee, in the interest of justice the Ld. CIT(A) found it best to decide the matter on merit instead dismissing it on the technical aspect of delay which in our considered opinion is found to be just and proper so as not to warrant interference. Thus this ground of appeal preferred by the revenue is found to be devoid of any merit and hence dismissed. Delay filing of appeal before the Ld CIT(A) for AY 2016-17 12. The appeal preferred by the assessee before the Ld. CIT(A) is found to be barred by limitation for about 635 days which has been tabulated as follows before ld. CIT(A): "1.2 The appellant appealed before Ld. CIT(A) on 06.10.2020 and hence, there is a delay of 1 year and 9 months (635 days). The period of delay is tabulated as under: Sl. No. Particulars Date Period of Delay 1 Date of receipt of order issued u/s 143(3) of the Act 26.12.2018 2 Due date for filing of appeal 25.01.2019 3 Date of filing of appeal 06.10.2020 4 Total Days Delay 635 5 Period of Delay 26.10.2019 to 14.03.2020 414 6 Balance Period due to Covid-19 Pandemic 15.03.2020 to 06.10.2020 221 13. The ld. CIT(A) considered the....
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.... wrongly advised by his chartered accountant earlier not to file an appeal. 2.4 I have gone through the explanation offered by the Appellant. No mala-fides in filing the appeal belatedly are prima-facie evident either from record or the conduct of the Appellant as evident from record. Hence, I feel it would be in the interest of justice to allow the matter to be contested on merits rather than dismiss it on technicalities for delay. Therefore, as an Appellate Authority, I would rather exercise my discretion to further the cause of justice. Furthering the cause of justice can on no account be held to be arbitrary or perverse. "In the case of Improvement Trust, Ludhiana vs. Ujagar Singh &Ors. [2010 (6) TMI 660 - Supreme Court: Other Citation: 2010 (7) SCR 376, 2010 (6) SCC 786, 2010 (6) JT 205, 2010 (6) SCALE 173], it was averred/held, as follows, by the Hon'ble Supreme Court: " ..... After all, justice can be done only when the matter is fought on merits and in accordance with law rather than to dispose it of on such technicalities and that too at the threshold. .......... Apart from the above, appellant would not have gained in any manner whatsoever, by not filing the....
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.... on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs serious risk. 7. It must be grasped that the judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so. ............" 2.6 In the case of N Balakrishnan vs. M. Krishnamurthy [1998 (9) TMI 602 -Supreme Court; Other Citation: 2008 (228) E.L.T. 162 (SC), 1998 AIR 3222, 1998 (1) Suppl.SCR 403, 1998 (7) SCC 123, 1998 (6) JT 242, 1998 (5) SCALE 105], it was averred/held, as follows, by the Hon'ble Supreme Court: "....9. It is axiomatic that condonation of delay is a matter of discretion of the court. Section 5 of the Limitation Act does not say that such discretion can be exercised only if the delay is within a certain limit. Length of delay is no matter; acceptability of the explanation is the only criterion. Sometimes delay of the shortest range may be un-condonable due to a want of acceptable explanation whereas in certain other cases, delay of a very long range can be condoned as the explanation thereof is satisfactory. Once....
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....hould lean against acceptance of the explanation.... 2.7 The Hon'ble Supreme Court in B. Madhuri Goud v. B. Damodar Reddy (2012) 12 SCC 693, by referring various to earlier decisions of Superior Courts and held the following principal must be kept in mind while considering the application for condonation of delay, (i) There should be a liberal, pragmatic, justice oriented, non-pedantic approach while dealing with an application for condonation of delay, for the courts are not supposed to legalise injustice but are obliged to remove injustice. (ii) The terms "sufficient cause should be understood in their proper spirit, philosophy and purpose regard being had to the fact that these terms are basically elastic and are to be applied in proper perspective to the obtaining fact-situation. (iii) Substantial justice being paramount and pivotal the technical considerations should not be given undue and uncalled for emphasis. (iv) No presumption can be attached to deliberate cause of delay but, gross negligence on the part of the counsel or litigant is to be taken note of. (v) Lack of bona fides imputable to a party seeking condonation of delay is a significant and relevant ....
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....12 SCC 693 and the principles laid down therein the delay condone by the ld. CIT(A) is found to be just and proper so as not to warrant interference. Thus this ground of appeal preferred by the revenue is found to be devoid of any merit and hence dismissed. 15. The Revenue has further raised grounds in regard to the decision made by the Ld. First Appellate Authority in holding the excise duty subsidy as capital receipt. It is the case of the Revenue that the same was received by the assessee on revenue account and not for the purpose of acquiring any capital asset. The Revenue has further joined issue to this effect that the above ground raised by the assessee as an additional ground for treatment of excise subsidy as capital receipt whereas the same was itself shown as revenue in nature, by the assessee in the AYs 2010-11 to 2014-15 and in the instant AY 2015-16, particularly when no revised return of income was filed by the assessee for treating the excise subsidy as capital receipt. 16. The brief facts are that the assessee, a public limited company engaged in the business of manufacturing and trading of jewellery and has setup an undertaking at F-50 UPSIDC Industrial area Sel....
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....tled 100% Excise duty exemption for a period of 10 years from the date of commencement of commercial production. During the year under consideration, being the 6th year, the assessee has availed excise duty exemption of Rs. 87,49,36,993/-. The incentive has been included in the total income by assessee and has offered to tax. The assessee has now raised the additional ground that the said incentive be treated as capital in nature. The assessee in its submission has filed various case laws in its favour, copy of the scheme under which exemption was granted, copy of the declaration under notification no. 50/2003, working of the said incentive, copy of the excise returns filed to substantiate its claim for treating the said incentive as capital receipt. From the perusal of the submissions of the assessee with respect to the said scheme, it appears that the objective of the scheme is to achieve industrialization in Uttarakhand and to generate employment opportunities. In the year under consideration, the assessee has claimed deduction u/s 80-IC and accordingly claimed deduction on the said amount and offered 70% for taxation as revenue receipt. The assessee has now relied upon vari....
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.... Limited vs. CIT reported in (2006) 157 taxman 1, the Ld. AO commented that there was no mistake in treating the subsidy as revenue receipt by the Department in intimation u/s 143(1) and, therefore, this particular ground of appeal raised by the assessee before the Ld. CIT(A) may not be admitted. The assessee before the First Appellate Authority in support of his claim of excise subsidy to be treated as capital receipt via additional grounds of appeal submitted as follows: "2.1 Before going further, your goodself would appreciate that the Ld. AO in the remand report has specifically stated that the subsidy has been granted for the with an objective to achieve industrialization in Uttarakhand and to generate employment opportunities. As the subsidy has been grated for industrialization and to generate employment opportunities as per the purpose test laid down by J&K High Court in the case of Shree Balaji Alloy -vs.- CIT (198 Taxmann 122) wherein excise duty subsidy and interest subsidy received in terms of New Industrial Policy for accelerated industries development and for generation of employment held to be capital receipt. Further, the same view has also been fortified by Hon&#....
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....tions Ld. AO at Para No. 4.4 has stated that, the claim of excise duty exemption as capital receipt was not claimed by the assessee in the original or revised return and considering the decision of Hon'ble Apex Court in case of M/sGoetze (India) Limited vs. CIT, (157 Taxman 1)the assessee cannot make a claim for deduction otherwise than by filing a return or revised return. The appellant would like to state that, as per Hon'ble Apex Court decision in case of M/s Goetze (India) Limited(supra) assessing officer does not have power to entertain fresh claim otherwise than revised return. However, in the said order, i specifically stated that the appellate authorities has power admit the additional grounds raised for the first time in appellate proceedings. Further, above judgment has duly be considered in the following cases wherein it was held that C Taxman (A) /ITAT has power to admit new claim before CIT(A)/ITAT:- CIT vs. M/s Pruthvi Brokers and Shareholders Private Limited (349 ITR 0336) SesaGoaLtd. vs. Joint Commissioner of Income-tax (117 taxmann.com 96) 3.1 Further reliance in this regard is placed on the various decisions mentioned below in which the additional cla....
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....me view was confirmed by Hon'ble High Court. Copy of the order of Hon'ble ITAT and Hon'ble High Court is attached as Anneuxre-3 & 4 for your kind perusal. 3.5 In view of above and earlier written submission, the appellant humbly requests your goodself to kindly admit the additional ground raised during the appellate proceedings and allow the claim of excise duty as capital receipt based on the merits of the case." 21. The Ld. CIT(A) ultimately admitted the additional grounds of appeal with the following observation, particularly having regard to the judgment passed by the Hon'ble Apex Court in the case of M/s Goetze (India) Limited vs. CIT (157 Taxman 1): "14. The additional ground pertaining to the claim of excise duty exemption as capital receipt has been supported by the appellant with various judgments. The admission of additional ground of appeal has been opposed by the AO relying on the decisions of M Goetze (India) Limited vs. CIT, (157 Taxman 1) only. I have gone through the claims of appellant regarding admission of additional grounds and judgements in favor and the remand report of AO along with Hon'ble SC's judgment in M/s Goetze (India) case. The majo....
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....said notification, the said undertaking was entitled to 100% Excise Duty Exemption for a period of 10 years from the date of commencement of commercial production. During the year consideration, being the 6th year, the appellant has availed excise duty subsidy of Rs. 87.49,36,993/- Working of the said subsidy along with copies of quarterly Excise Return filed by the assessee before Commissioner, Custom and Central Excise is collectively attached as Annexure-485. [Kindly refer page no. 44 to 56 of PB). 1. Our Submission 1. In this regard, kindly note that the said incentive was given to the said undertaking located in the backward area of Uttarakhand in terms of the observation of the then Hon'ble Prime Minister for generation of employment and utilization of local resources. The said fact is evident from Office Memorandum dated 07.01.2003, Copy of the office memorandum and scheme is attached as Annexure-6 for your kind reference. (Kindly refer page no. 57 to 59 of PB] 2. On perusal of the above, it could be seen that incentive in the form of Excise Duty exemption had been given with an objective to achieve industrialization in the specified areas of Uttarakhand and to gen....
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....stries Limited vs. ACIT (ITA No. 232/Gau/2019] held that In the light of above decision as well as the Memorandum issued by the Ministry of Commerce and Industry, we find that the excise duty exemption is purely capital receipt and is neither chargeable to tax under the normal provisions of the Act nor is to be included as part of the book profit for computing the minimum alternative tax as per the provisions of section 115JB of the Act. Copy of the order is attached as Annexure - 10. (Kindly refer page no. 108 to 140 of PB). 1.1. Further, Hon'ble Mumbai ITAT in the case of ACIT vs. Ambuja Cements Limited (ITA No. 2958/Mum/2019) dismissed the appeal of the revenue holding that the excise duty exemption claimed by the assessee is a capital receipt. Copy of the order is attached as Annexure-11 (Kindly refer page no. 141 to 2391 2. Hon'ble Mumbai ITAT in the case of M/s ACC Limited vs. Addl. CIT [ITA No. 6082/Mum/2014) taking the similar view on the identical issue has allowed the appeal of the assessee. Copy of the order is attached as Annexure-12, (Kindly refer page no. 240 to 453 of PB) 1 1. Also, the case of the appellant is identical to the aforesaid relied ju....
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....es from a perusal of the ratio of the judgments cited above, in particular, the judgments rendered by the Supreme Court in GOETZE's case and National Thermal Power Co. Ltd.'s case, and those, rendered by the Division Bench of this Court in Ramco Cements Ltd. and CIT vs Malind Laboratories P. Ltd., as also the judgments of the Delhi High Court in Sam Global Securities Ltd.'s case and Jai Parabolic Springs Ltd.'s case, that, even if, the claim made by the assessee company does not form part of the original return or even the revised return, it could still be considered, if, the relevant material was available on record, either by the appellate authorities, (which includes both the CIT (A) and the Tribunal) by themselves, or on remand by the Assessing Officer.... 14.1 Further, the AO in the remand report herself has outlined the about the scheme of incentive provided to manufacturing and trading entities for establishing their unit into the backward/ special status states. It would be against the objectives of the scheme if the benefits accruing to such units on account excise duty exemption are not allowed by another limb of state i.e. Income Tax Department. In view....
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....Rs. 87,49,36,993/-, which has been included in the total income by the assessee and has offered to tax subject to deduction u/s 80IC of the Act. The return of income filed by assessee was processed u/s 143(1) of the Act, wherein other issues arose were challenged by the assessee before Ld. CIT(A). It is only during the course of appellate proceedings, appellant has claimed the excise duty exemption of Rs. 87,49,36,993/- which has been included in total income of the year under consideration is capital receipt and not revenue receipt. Ld. CIT(A) after receiving remand report from ld. AO on the instant issue, admitted the additional ground of appeal and allowed the claim of assessee. Further revenue has challenged the decision of ld. CIT(A), accepting the additional ground for treatment of excise subsidy as capital receipt, whereby the assessee itself shown the same as revenue in nature in preceding assessment years and instant year and has not revised the claim by way of filing of revised ITR. 26 At the outset it is observed that the revenue in both the ground of appeals has stated the exemption from excise duty notified by the Central Government vide Notification dated 10.06.2003 ....
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....isfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons. The satisfaction of the Appellate Assistant Commissioner depends upon the facts and circumstances of each case and no rigid principles or any hard and fast rules can be laid down for this purpose. 29. Having regard to the observation made by the Ld. CIT(A) and the judgment of Hon'ble High Court of Bombay and Hon'ble Apex Court, we are concurrent with the decision of the learned CIT(A) in accepting the additional ground of appeal. Thus, this ground of appeal as raised by the Revenue, therefore, fails. 30 Now the main issue whether the Excise Duty subsidy and interest subsidy can be treated as capital receipt is to be examined. As noted above vide ground 2 of appeal, revenue has challenged the decision of ld. CIT(A) on the issue that excise duty subsidy is not for the purpose of acquiring any capital asset and it was received on revenue account, therefore ld. CIT(A) has erred in holding it as capital receipts. Thus to decide the issue, it is pertinent to analyse the notification dated 10.06.2003 bearing Notification No. 50/2003 "Goods Manufactured in specified areas in....
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....the jurisdictional Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, as the case may be, with a copy to the Superintendent of Central Excise giving the following particulars, namely :- (a) name and address of the manufacturer; (b) location/locations of factory/factories; (c) description of inputs used in manufacture of specified goods; (d) description of the specified goods produced; (e) date on which option under this notification has been exercised; (iii) The manufacturer may, for the current financial year, submit his option in writing on or before the 30th day of November, 2003.] 2. The exemption contained in this notification shall apply only to the following kinds of units, namely :- (a) new industrial units set up in areas mentioned in Annexure-II and Annexure-III, which have commenced commercial production on or after the 7th day of January, 2003, but not later than the 4[31st day of March, 2010 (b) industrial units existing before the 7th day of January, 2003 in areas mentioned in Annexure-II, but which have i undertaken substantial expansion by way of increase in installed capacity by not less than twenty-five per cent. 3....
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....2 24113/24114 7 Marble and mineral substances not classified elsewhere 2502 00 00 2503 to 2522, 2525 to 2530 14106/14107 8 Flour mill or rice mill 1101 00 00 15311 9 Foundries using coal 10 Mineral fuels, mineral oils and products of their 27 distillation; Bituminous substances: Mineral waxes 27 11 Synthetic rubber products 4002 24131 12 Cement clinkers and asbestos, raw including fibre 2523 10 00, 2524 13 Explosive (including industrial explosives, detonators and fuses, fireworks, matches, propellant powders and other goods of heading No. 36.01 to 36.06) 3601 to 3606 24292 14 Mineral and chemical fertilizers 3102 to 3105 2412 15 Insecticides, fungicides, herbicides and pesticides (basic manufacture and formulation) 3808 24211/24219 16 Fibre glass and articles thereof 7019 26102 17 Manufacture of pulp-wood pulp, mechanical or chemical (including dissolving pulp) 17 21011 18 Branded aerated water or soft drinks (non-fruit based) 2201 to 202202 10 10 15541/15542 19 Paper Writing or printing paper for printing of educational textbooks Paper or paperboard, in the manufactur....
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....n by way of increase in installed capacity by not less than twenty-five per cent. 3 on or after the 7th day of January, 2003, but have commenced commercial production from such expanded capacity, not later than the 31st day of March, 2010. It is, thus, evident that the exemption is for the acquisition of capital asset. Therefore, revenue's ground that exemption is not for the purpose of acquiring any capital asset fails. Furthermore, the Ld. AO in remand report has accepted that it appears that the objective of the scheme is to achieve industrialization in Uttarakhand and to generate employment opportunities. In fact, Ld. AO in Remand Report has not even rebutted the case laws submitted by assessee in its favour and has only made denial on the basis that claim has not been made by revised return, which we have already decided that the additional claim can be validly made even for the first time before First Appellate Authority. 32. Further, the matter stands squarely covered by the order of the Hon'ble Jammu & Kashmir High Court in identical matter in the case of Shri Balaji Alloys Vs CIT 333 ITR 335,placed at pages 1-9 of Paper Book filed by assessee, wherein Hon'ble Court has he....
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...., however, include employment provided by the industrial units to Daily wagers or Casual employees engaged in the Units. 24. A close reading the Office Memorandum and the amendment introduced thereto with para No. 3 appearing in the Central Excise Notification Nos. 56 and 57 of 11-11-2002, thus, makes it amply clear that the acceleration of development of industries in the State was contemplated with the object of generation of employment in the State of Jammu and Kashmir and the generation of employment, so contemplated, was not only casual or temporary; but was on the other hand, of permanent nature. 25. Considered thus, the paramount consideration of the Central Government in providing the incentives to the New Industrial Units and Substantial Expansion of the existing units, was the generation of employment through acceleration of industrial development, to deal with the social problem of unemployment in the State, additionally creating opportunities for self-employment, hence a purpose in Public Interest. 26. 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 St....
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....ained, being against the law laid down by Hon'ble Supreme Court of India in Sahney Steel & Press Works Ltd.'s case (supra) and Ponni Sugars & Chemicals Ltd.'s case (supra). 31. The finding of the Tribunal that the incentives were Revenue Receipt is, accordingly, set aside holding the incentives to be Capital Receipt in the hands of the assessee's. 32. 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. 33. These Appeals, therefore, succeed and are, accordingly, allowed setting aside the orders impugned in the Appeals, made by the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar on the appellants' Appeals. 34. The appellants' Appeals before the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar against the orders of the Commissioner of Income-tax (Appeals), and Income-tax Officers, shall, therefore, revive for passing appropriate consequential orders thereon, in accordance with law, in view of the findings recorded in these Appeals. No orders as to costs." 33. On appeal by the department the Hon'ble Supreme Court while dismissing the appeal held as follows: "....
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....ds are required to be considered, as per Black's Law Dictionary (Sixth Edition) wherein these two words are defined as under:- Exemption: Freedom from a general duty or service; immunity from a general burden, tax, or charge. Immunity from service of process or from certain legal obligations, as jury duty, military service, or the payment of taxes.''Subsidy: A grant of money made by government in aid of the promoters of any enterprise, work, or improvement in which the government desires to participate, or which is considered a proper subject for government aid, because such purpose is likely to be of benefit to the public' 17. From the above definitions, it is apparently clear that the word 'exemption' is used in the conditions when assessee is given freedom from following any rules or regulations whereas subsidy is something which is given to the assessee to meet the cost of its project. In the present case, the assessee is exempted from making payment of excise duty to the extent of 36% of the total excise duty collected. It is not subsidy given to meet cost of project. In our view, the exemption from excise duty do not fall in the definition of income as envisaged u/s 2....
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....lowed. 20. In the backdrop of the aforesaid discussion, the cross appeals of the department and the assessee are disposed off in the terms indicated as above." 35. In fact the appeal filed by the revenue against the aforesaid decision of Coordinate Bench before the Hon'ble High Court of Jammu & Kashmir And Ladakh in IT Appeal 1 of 2024 in the matter of PCIT vs. Gravita Metal Inc., reported in 168 taxmann.com 379 (Jammu & Kashmir and Ladakh) placed at pages 91-94 of Paper Book, filed by assessee stood dismissed with the following observation: "10. The next contention of the appellant is that in view of insertion of Clause (xviii) to Section 2(24) of the Act, introduced by the Finance Act, 2015, any subsidy, grant, cash incentive, duty drawback, waiver, concession and reimbursement referred to in the said clause is considered as income and only because the word 'exemption' is not mentioned therein, it is not open for the tax payers to interpret the same as per their own convenience. 11. Admittedly, as per Black's Law Dictionary (Sixth Edition) 'exemption' means freedom from a general duty or service; immunity from a general burden, tax, or charge, immunity ....
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....ence of inclusion of word 'exemption' under the said clause, the said amendment is not applicable to it and thus exemption from excise duty is capital receipt for the year under consideration i.e. Assessment Year 2016-17. He, thus, submitted that the scope of the section cannot be enlarged to include exemption by interpreting that it is subsidy. Further in support of this contention, he has also placed reliance upon judgments placed in paper book filed by assessee. 40 We have heard the rival submissions made by the respective parties. On this issue of newly inserted clause to section 2(24) of the Act, by Finance Act' 2015, w.e.f. 01.04.2016, as applicable to Assessment Year 2016-17; which reads as under: "Definitions. 2. In this Act, unless the context otherwise requires,- .. (24) "income" includes- .... (xviii) assistance in the form of a subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement (by whatever name called) by the Central Government or a State Government or any authority or body or agency in cash or kind to the assessee other than the subsidy or grant or reimbursement which is taken into account for determination of the....
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....ffect from Assessment Year 2016-17 without providing any background in the memorandum explaining the Finance Bill. However, in the Income Tax Act, it has been stated that it is applicable with effect from 01.04.2016. Further from the press release dated 06.07.2016 ICDS had been made applicable with effect from Assessment Years 2017-18, copy whereof has also been submitted before us by the Ld. Counsel appearing for the assessee. Apart from that the objective/intention of the legislature in relation to the introduction of this clause could be understood from the explanatory notes issued by another circular No. 19/2015 dated 27.11.2015 which read as "alignment of provisions relating to taxation of government grants with the provision of income computation and disclosure standards (ICDS). The above explanatory note explicitly states that the objective of insertion of clause(xviii) to Section 2(24) of the Act was to align with ICDS. In that view of the matter it is very clear that the amended Section 2(24)(xviii) having been brought into the legislature to align with the provision of ICDS can only be applicable with effect from Assessment Year 2017-18 onwards and not from Assessment Yea....
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.... being capital in nature should also be excluded while computing the book profits under Section 115JB of the Act. At the time of hearing of the instant appeal the Ld. Counsel appearing for the assessee submitted before us that the issue is covered by an under the judgment passed by the Hon'ble Guahati High Court in the case of CIT vs. Greenply industries Ltd, reported in 172 taxmann.com 294 holding that the excise duty exemption being capital in nature not chargeable to tax under the normal provisions of the Act cannot be included as part of book profits for computing the Minimum Alternate Tax under Section 115 JB of the Act, a copy whereof has also been annexed to the paper book. The Ld. DR though raised objections to such, however not been able to cite any judgment contrary to the ratio laid down by the Hon'ble Guahati High Court as discussed hereinabove. 45. We have heard the rival contentions made by the respective parties and we have also perused the relevant materials available on record including the order passed by the Hon'ble Guahati High Court. It appears that while holding that the excise duty exemption being purely a capital receipt not chargeable to tax under the norm....