24 Aug PCIT-4, Kolkata Vs Krishi Rasayan Exports Pvt ltd (Calcutta High court)

(ITA/18/2021) IA No.GA/2/2018 (Old No.GA/515/2018)

Sub:-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?”

The division bench of Calcutta High Court in this case was considering the question of inclusion of interest subsidy and excise refund for the computation of book profit u/s 115JB of the Income-tax Act, 1961 dealing with Minimum Alternate Tax (MAT) Computation. The court referred to the decision of the Supreme Court in the case of Commissioner of Income-Tax-I, Kolhapur vs. M/s. Chaphalkar Brothers Pune, (2018) 400 ITR 279 (SC) and also decision of Calcutta high court in the case of Principal Commissioner of Income-Tax vs. Ankit Metal And Power Ltd., (2019) 416 ITR 591 (Cal), the purport of which decision was that where a receipt is not in the nature of income at all it cannot be included in the book profit for the purpose of computation under section 115JB of the Income-tax Act, 1961 and interest subsidy being a capital receipt does not fall within the meaning of income as defined in Section 2(24) of the Income-tax Act,1961 and thus the same cannot be included in the computation of book profit. Thus the question of law was answered against the department and the appeal was dismissed.

This judgement will be of enormous help to compute the book profit as often the question comes up regarding the inclusion of capital receipts in the book profit.