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TMI Blog2018 (8) TMI 1947X X X X Extracts X X X X X X X X Extracts X X X X ..... TRIES LTD. VERSUS DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-6 (2) , MUMBAI [ 2019 (4) TMI 1847 - ITAT MUMBAI] . - S/Shri B.R.Baskaran (AM) AND Amarjit Singh (JM) For the Appellant : Shri Jitendra Jain For the Respondent : Ms. N. Hemalatha ORDER Per B.R. Baskaran (AM) :- The appeal filed by the revenue and the cross objection filed by the assessee are directed against the order passed by Ld CIT(A) and it relates to the assessment year 2010-11.The revenue is aggrieved by the decision of Ld CIT(A) in holding that the Sales tax incentive received by the assessee is capital receipt and not liable to tax. The assessee has filed Cross objection contending therein that the Sales tax subsidy, being capital receipt, should be excluded while computing book profit u/s 115JB of the Act. 2. The registry has noted down that the appeal of revenue is barred by limitation by 365 days. The Ld D.R submitted that the date of receipt of order of Ld CIT(A) has been wrongly mentioned as 06-05-2015 in From No.36 and hence the Registry has computed the delay accordingly. He submitted that the Ld CIT(A) has passed the order on 04-05-2016 and the same has been received by the AO on 13.5.2016. The pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d therein is to determine the correct tax liability of the assessee, since tax appeal cannot be considered as a lis between the assessee and the revenue. He submitted that the Hon ble Madras high Court has held in the case of CIT Vs. Indian Express (Madurai) P Ltd (1983)(140 ITR 0705) that the assessee is not precluded from raising new contentions and the Tribunal was not precluded from examining and determining those contentions, merely on the score that it had not been put forward at the earlier stages of the proceedings in assessment and in the first appeal. He further submitted that the issue urged in the Cross objection is a legal issue and all the facts relating thereto are available on record. Accordingly he prayed that the delay be condoned and the Cross objection be admitted. 6. We have heard rival contentions on this preliminary issue. From the copy of return of income filed by the assessee, we notice that the assessee has put a specific note that the sales tax incentive is a capital receipt and the claim for exclusion of the same shall be made at the time of assessment. We notice that both the assessee as well as the assessing officer ignored the note so put in the state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the earlier years. 10. Since the Tribunal is consistently holding that the Sales tax incentive is a capital receipt by following the decision rendered by the Special bench in the case of Reliance Industries Ltd (supra) and since the Ld CIT(A) has followed the decision rendered by the Tribunal in the assessee s own case, we do not find any infirmity in the order passed by Ld CIT(A) on this issue. 11. We shall now take up the Cross objection filed by the assessee, wherein the assessee is contending that the Sales tax incentive, being a capital receipt, should be excluded from Net profit, while computing Book profit u/s 115JB of the Act. 12. The Ld A.R submitted that the assessee has credited the Sales tax incentive to the credit of Profit and Loss account and hence the same is included in the net profit. Since the capital receipts are not liable to be taxation, the same should be excluded while computing book profit u/s 115JB of the Act. In this regard, he placed reliance on host of case laws, more particularly, the decision rendered by Mumbai bench of Tribunal in the case of Alok Industries Ltd (ITA No.1017/Mum/2017 dated 21-05-2018); the decision rendered by Kolkata bench of Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and outside the ambit of section 4 of Income Tax Act. Accordingly, the said receipt cannot be taxed as income of the Company. Article 265 of the Constitution of India lays down that no taxes shall be levied or collected except with the authority of law. Further, entry 82 of the Seventh Schedule to the Constitution of India lays down that the Central Government has the right to levy tax on income. Further, section 4 of the Income Tax Act 1961 which provides for the charge, specifies that every assessee shall be charged for any assessment year income tax in respect of the total income of the previous year. 27. The main charging section provides for levy of income tax only in respect of income of the assessee. Once an item is not considered as income of the person as the same constitutes capital receipt, it shall not be subjected to tax under this Act, Therefore, once the subsidy received under the TUF scheme is held to be capital in nature, it comes outside the meaning of the term 'income' and therefore outside the ambit of section 4 i.e, the charging section. Unless, specifically made taxable such subsidy cannot be taxed as income. Once the subsidy received cannot be taxed u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P) Ltd. Kolkata ITAT 80 taxmann.com 87 Excise Duty Subsidy (exemption) 24 to 26 5 JSW Steel Ltd. Mumbai ITAT 923/Bang/2009 Waiver of loan taken from acquisition of a capital asset 21, 23 6 L.H. Sugar Factory Lucknow ITAT 46 CCH 354 Sales of carbon credit being a capital receipt 50 7 Binani Industries Ltd. Kolkata ITAT 178 TTJ 658 Forfeiture of share Warrants 4.3.1, .3.2, 4.4, 4.5 4.6 8 Nilgiri Tea Estate Ltd. Cochin ITAT 65 SOT 14 Profit on sale of agricultural land which is not a capital asset 7 8 9 Shivalik Venture Pvt. Ltd. Mumbai ITAT 173 TTJ 238 Profit arising on transfer of development rights 26 to 28 10 Metal Chromium Plater (P) Ltd. Madras ITAT 76 taxmann.com 229 Long-term capital gain exempt u/s. 54EC 6 7 11 Sutlej Cotton Mills Ltd. Kolkata Special bench 45 ITD 22 Capital gain resulting from sale of capital asset which was exempt 19.2 19.5 12 Frigsales (India) Ltd. Mumbai ITAT 4 SOT 276 Profit on sale of depreciable asset which was not taxable due to purchase of another depreciable asset as provided in Section 50 3.2 13 Mcnally Bharat Engineering Co. Ltd. Kolkata ITAT 100/Kol/2011 Retention money 41 to 43 14 Delhi Gymkhana Club Ltd. Delhi ITAT 3585/Del/2006 Income exempt a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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