2021 (9) TMI 1553 - AT - Income Tax

Characterization of receipt - receipt of excise refund capital receipt or revenue receipt - it is the case of the assessee that the entire cost has been paid by the assessee for plant and machinery and as such, it cannot be reduced from the cost of asset - HELD THAT -We find that in the assessment years 2012-13 2013-14 2020 (4) TMI 86 - ITAT DELHI held as based upon the decision rendered by Hon ble Apex Court in CIT vs. Meghalaya Steels Ltd. 2016 (3) TMI 375 - SUPREME COURT we are of the considered view that the excise refund is in the nature of revenue receipt forming part of profits and gains arising from the business and as such cannot be reduced from the cost of plant and machinery. So, the findings returned by Ld. CIT(A) on this issue are confirmed. AO as well as CIT(A) have erred in making addition by disallowing the claim of depreciation of the asset made u/s. 32 of the Act which would further entitle to the assessee the benefit of deduction u/s. 80IC on profits enhanced by such disallowances made u/s. 32 of the Act. Consequently, appeal filed by the assessee is partly allowed. Thus on identical facts in preceding years, Revenue s appeal is dismissed.

Summary

Issues:
Deletion of addition of Rs. 4,12,17,481/- by the Ld. CIT(A) for Assessment year 2014-15.

Analysis:
The appeal filed by the Revenue challenged the deletion of an addition of Rs. 4,12,17,481/- by the Ld. CIT(A) for the Assessment year 2014-15. The Assessee argued that the issue was similar to those decided in their favor by the ITAT, Delhi in earlier years. The Assessee cited precedents from previous assessment years (2011-12, 2012-13, and 2013-14) where the ITAT had ruled in their favor. The Assessee requested that the present issue be decided in their favor following the precedents set by the ITAT in earlier years.

The Revenue, on the other hand, contended that appeals had been filed before the Hon'ble Delhi High Court against the ITAT's decisions in the Assessee's favor in earlier years. The Revenue sought the allowance of the present appeal based on this argument.

After hearing both parties and examining the records, including the ITAT's decisions in the Assessee's own case in previous assessment years, the Tribunal found that the issue in dispute had been consistently decided in favor of the Assessee by the ITAT, Delhi Bench in earlier years. The Tribunal referred to specific observations made in the assessment years 2012-13 & 2013-14, where the ITAT had ruled in favor of the Assessee regarding the treatment of excise refund as a revenue receipt. The Tribunal upheld the order of the Ld. CIT(A) based on the precedents set in earlier years and dismissed the Revenue's appeal.

The Tribunal emphasized that on identical facts in preceding years, the ITAT, Delhi Bench had consistently decided the issue in dispute in favor of the Assessee in the Assessee's own case. Therefore, the Tribunal upheld the order of the Ld. CIT(A) and ruled in favor of the Assessee, dismissing the Revenue's appeal.