When a receipt is not in the character of income, it cannot form part of the book profit under section 115JB of the Act, 1961.
Principal Commissioner of Income Tax-4, Kolkatta vs M/S Krishi Rasayan Exports Pvt Ltd. (ITA/18/2021)
The question before the Hon High Court was whether the interest subsidy and excise refund would be treated as capital receipt or revenue receipt for the purpose of computation of book profit under the provision of Section 115JB of the Income-Tax Act, 1961?
Hon Calcutta HC held as below:
- The substantial question of law involved in this appeal is squarely covered in favour of the assessee and against the revenue in the light of the decision of the Hon Supreme Court in Commissioner of Income-Tax-I, Kolhapur vs. M/s. Chaphalkar Brothers Pune, (2018) 400 ITR 279 (SC).
- The incentives “interest subsidy” and “power subsidy” are “capital receipts” and do not fall within the definition of “income” under section 2(24) of the Income-tax Act, 1961 and when a receipt is not in the character of income, it cannot form part of the book profit under section 115JB of the Act, 1961.
Interest subsidy is not to be included for calculating MAT.