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TMI Blog2022 (12) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... . on account of 'Served from India Scheme Scrips" treating the same as revenue income; ii. In a sum of Rs.32,184/- on account of interest paid on late deposit of TDS." 3. In ITA No. 4199/Del/2019, following grounds have been raised by the Revenue: "1. Whether on the facts and the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition on account of revenue receipt i.e. SFIS scrips of Rs.118.44 [i.e. Rs.129.24 Cr. - Rs.10.80 Cr. (utilized scrips)] ignoring the facts that SFIS scrips were received in the form of subsidy." 4. The subject cross appeals involve primarily one issue, i.e. the reckoning of credit under the "Served From India Scheme" (SFIS) for the purposes of the Act, i.e. as to whether such cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 was issued to provide for the credit. In terms of Clause (ii) thereof the Notification only capital goods could be reckoned for excise credit against SFIS certificates. It was reiterated that the credit shall be permitted on actual user condition, and was not transferable. 'Capital Goods' were assigned the meaning as in the Trade Policy. 7. The authorities below have wrongly held SFIS credit to be a revenue receipt. a. The Assessing Officer held that the eligible credit of Rs. 129.24 crores to be a receipt in the Assessee's hands and added the entire credit under SFIS. b. The ld. CIT(A) noted that out of the total eligible credit, the Assessee had utilized sums of Rs. 4.36 crores and Rs. 6.44 crores respectively against excise duty a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion No.34/2006 dated 14.06.2006 also contains clear and specific restrictions as to credit being available only in respect of "Capital Goods" as defined in the Foreign Trade Policy. 11. SFIS is a credit receipt used for making payment of excise duty on domestic purchases. Scrips under SFIS are enticements which can be set off against excise duty while making purchase / import of capital goods. In no case has any amount been received by the Assessee under SFIS. All the purchases have been capitalized and hence new assets have come into existence. 12. The Assessee has not reckoned SFIS credit in its Profit & Loss account, since such credit for its nature as well as built-in conditions, could never have been an item on revenue account. Wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e through a specific certificate as furnished to each vendor has been utilized to make purchases of capital goods at net of Excise prices. Those capital assets have then been capitalized at the purchase value. Clearly therefore, SFIS credit is not in the nature of income. Thus it is clear that SFIS credit goes to reduce the cost of capital goods purchased by the Assessee and the SFIS credit given to the assessee can be utilized only against purchase of capital goods and to set off a portion of excise duty and customs duty only and do not constitute taxable income of the assessee as per the Clause (xviii) to section 2(24) of the Income tax Act 1961. 15. In the result, the appeal of the assessee is allowed and that of the Revenue is dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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