Interest Subsidy and Excise Duty Refund are Capital Receipts, rules ITAT

In a major relief to JMW India, the Income Tax Appellate Tribunal (ITAT), Delhi bench has held that the interest subsidy and the excise duty refund shall be treated as capital receipts and therefore, not subject to income tax while computing book profit under the provisions of the Income Tax Act, 1961. Theassessee, a company engaged in the business of trading and manufacturing of copper products, filed its income tax return declaring total income at Rs.1,23,71,780/-. The Assessing Officer, while completing the proceedings, observed thatthe assessee, had received an amount of Rs.30,01,143/- representing interest subsidy and an amount of Rs.4,98,49,144/- representing Excise Duty refund which are subject to income tax. Before ethe Tribunal, the assessee contended that the interest subsidy of Rs.30,01,143/- and Excise Duty refund of Rs.4,98,49,144/- shall be excluded for the purpose of computing book profit u/s 115JB. While allowing the plea of the assessee, Judicial Member Vijay Pal Rao and Accountant Member R K Panda held that “since, in the instant case, the Revenue has accepted the order of the CIT(A) in holding that interest subsidy and Excise Duty refund are capital receipts, therefore, respectfully following the decision of the Hon’ble Calcutta High Court in the case of Ankit Metal & Power Ltd., cited (supra) and in absence of any contrary material brought to our notice, we hold that the above two receipts being not in the nature of income cannot be included for the purpose of computation u/s 115JB of the IT Act. We, therefore, set aside the order of the ld.CIT(A) on this issue and allow the grounds raised by the assessee.”