2013 (9) TMI 1168 - AT - Income Tax

Summary

Issues involved:
The appeal concerns the addition of a specific amount by the Assessing Officer under Section 28(iv) of the Income-tax Act, 1961, which was subsequently deleted by the Commissioner of Income Tax (Appeals) as a 'Capital Receipt' not chargeable to tax.

Summary:

Issue 1: Addition under Section 28(iv) of the Act
The Revenue appealed against the deletion of an addition of Rs. 88,08,322/- made by the Assessing Officer under Section 28(iv) of the Act, contending it to be a revenue receipt. The Commissioner of Income Tax (Appeals) held it to be a 'Capital Receipt' not chargeable to tax, following the decision of the Special Bench of the Tribunal in the case of Sulzer India Ltd. The Tribunal affirmed the CIT(A)'s decision, stating that the deferred sales tax liability was a 'Capital Receipt' based on the scheme of the Maharashtra Government, and hence not taxable as a revenue receipt. The appeal of the Revenue was dismissed, upholding the decision of the CIT(A) based on the precedent set by the Special Bench of the Tribunal.

Conclusion:
The Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) that the amount in question was a 'Capital Receipt' and not chargeable to tax under Section 28(iv) of the Income-tax Act, 1961, based on the scheme of the Maharashtra Government.