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TMI Blog2022 (10) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 (5) TMI 5 - SUPREME COURT] observed that the income in question, in that case was taxable but was exempt under specific provision of the Act, as such it was to be included as a part of book profit. But since a receipt is not in the nature of income at all, it cannot be included in book profit for the purpose of computation u/s 115JB and accordingly held that interest in power subsidy under the scheme have to be excluded while computing book profits u/s 115JB. The Co-ordinate Bench in M/s. Insecticides (India) Ltd. [ 2022 (9) TMI 653 - ITAT DELHI] while dealing with question and treatment of capital receipts in computation of profit u/s 115JB had relied judgment of Hon ble Calcutta High Court in Ankit Metal and Power Ltd. (supra) and Co-ordinate Bench decision in SRF Ltd. [ 2022 (2) TMI 758 - ITAT DELHI] ITAT Delhi judgment dated 07.02.2022, and had held that since the receipt is not in nature of income, then it cannot be considered in the book profits for the purpose of computation u/s 115JB of the Act. Thus held that Appellant company has rightly reduced Capital Receipts of the nature excise refund and interest subsidy for working out Book Profits. The appeal is allowed X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturing of Agro Chemical, Insecticides and set-up manufacturing unit ('unit') at Samba in the state of Jammu & Kashmir. The said unit being in a notified area is entitled for the benefit of excise duty refund in accordance with the Excise Notification Nos.56/57, dated 14/11/2002 issued by the Central Excise Department, under the scheme/policy of the Government of India, Ministry of Commerce & Industry. The Appellant has submitted that the Company had stated in the Notes forming part of accounts that the said receipts is not includible for computing book profit u/s 115JB of the Act, even though it is credited to Profit and Loss account. The Appellant further contended that the Appellant company has rightly reduced ' Capital Receipts' of Rs. 7,08,09,466/- for working out Book Profit since the same is completely exempt from Income Tax. It is seen that these incentives has been credited by the Appellant Company to the P&L account. While filing the return of income, the Appellant Company has excluded these incentives from the book profit by claiming as exempt. The AO has discussed in detail the reasons for the addition and it is clearly established that the sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even if it is credited to the P&L A/c prepared in terms of Part-II & III, Schedule-VI of the Companies Act. Alternatively, since the said profit does not fall under the definition of income at all and since it does not enter into computation provision at all, there is no question of including the same in the book profit as per the provision of Section 115JB of the Act. 6.That the Capital Receipts (such as Subsidy etc.) which have no element, have to be excluded from the book profits even if it is credited to the P&L A/c. The genesis of Sec. 115 J, thereafter section 115JA and now section 115JB was to ensure that the assessee, while making profit from operations, should not enjoy tax free status due to various deductions available under the Income Tax Act. There was never any intention of the legislature to tax what is not income at all. In a recent decision, the Hon'ble Apex Court in the case of Indo Rama Synthetics (I) Ltd. Vs. CIT (2011) 330 ITR 363 (SC) has held that the object of MAT provisions is to bring out the real profit of the companies. The thrust is not to find out the real working results of the company. Inclusion of receipt in the computation of MAT would defeat tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Ltd. Vs. Principal Commissioner of Income Tax, Kolkata, 2020 (3) TMI 114 - ITAT Kolkata - Dated.- February 26,2020 8. On the other hand, Ld. DR relied judgment of Hon'ble Karnataka High Court in B & B Infratech Ltd. vs. Income Tax Officer, Ward 12(1), Bangalore (2016) 76 taxmann.com 188 to contend that Hon'ble High Court was considering the question, "Whether the profit shown in the books of account for the purpose of taxable liability as per the provisions of Section 115- JB of the Income-tax Act, 1961 can be altered on any subject or item which otherwise is not falling in the Explanation to Section 115JB of the Act ?"and has observed that provisions of Section 115JB is a complete code in itself and the increase or reduction of income is permissible only to the extent provided under the explanation to the said section and following the judgment of Hon'ble Supreme Court of India in Appollo Tyres Ltd. vs. CIT [2002] 255 ITR 273/122 taxman 562 had held that the Tribunal in that case had not committed any error while characterizing both capital receipts and revenue receipts in a like manner for the computation of book profits u/s 115JB of the Act. 9. Giving thoughtful consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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