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2017 (6) TMI 83 - HC - Income TaxEntitlement to deduct under section 80-IB - transport subsidy and excise refund receipt - Held that - The appellant is entitled to deduction under section 80-IB in respect of excise duty refund of Income Tax Act. Supreme Court in Commissioner of Income Tax v. M/S Meghalaya Steels Lld. 2016 (3) TMI 375 - SUPREME COURT and in case M/S Shree Balaji Alloys v. Commissioner of Income Tax and anr, (2011 (1) TMI 394 - Jammu and Kashmir High Court ) held excise refund to be capital receipts in the hands of assesses and deduction u/s 80 IB of the Act allowed. In so for as the transport subsidy is concerned in the case of Commissioner of Income Tax income Tax Vs. M/S Meghalaya Steels Ltd, reported in (2016 (3) TMI 375 - SUPREME COURT ) 3 Scale 192, the Supreme Court held that the benefit of deduction under section 80-IB of the Income Tax Act is applicable to transport subsidy.A circular No. 39/2016 dated November 29th, 2016, issued by Government of India, Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, New Delhi is also on the aforesaid terms. - Assessee appeal allowed.
Issues:
1. Whether the Assessee is entitled to deduct under section 80-IB of the Income Tax Act for receiving transport subsidy and excise refund. 2. Whether the revenue earned in disallowed amount can be claimed by the Assessee from the income. 3. Whether the interest earned on FDR is eligible for deduction under section 80-IB of the Income Tax Act. Analysis: 1. The Court rephrased the questions of law to focus on the Assessee's eligibility for deduction under section 80-IB of the Income Tax Act for receiving transport subsidy and excise refund. The Assessee, a cement manufacturer, claimed exemptions for excise duty refund and transport subsidy. The Assessing Officer denied the benefit, which was upheld by the Commissioner Appeals and the Tribunal. The Court analyzed previous judgments and held that excise refund is a capital receipt, entitling the Assessee to deduction under section 80-IB of the Act. This decision was supported by the Supreme Court's rulings in relevant cases. 2. The Court addressed the issue of revenue earned in disallowed amount and the Assessee's claim from the income. The Tribunal's finding that the incentives were revenue receipts was set aside, declaring them as capital receipts. This decision was based on the purpose of the incentives to promote industrial development and employment generation, aligning with public interest objectives. The Assessee was deemed entitled to deduction under section 80-IB for excise duty refund. 3. Regarding the interest earned on FDR, the Assessee agreed to pay the amount without prejudice, reserving the right to raise the issue in future proceedings if necessary. The Court allowed this plea. The second question of law was not pursued, leaving the focus on the Assessee's eligibility for deduction under section 80-IB for excise duty refund and transport subsidy. The Court's decision favored the Assessee, allowing the appeal based on the interpretations of relevant legal provisions and precedents, including circulars issued by the Government of India. In conclusion, the judgment clarified the Assessee's entitlement to deductions under section 80-IB of the Income Tax Act for excise duty refund and transport subsidy, emphasizing the capital nature of such receipts and aligning with the objectives of promoting industrial development and employment generation.
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