Chargeability of Income Excise Duty Refund Whether Income Under Section 2(24)(xviii)—Recent Decision of Jammu and Kashmir High Court

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The Tax Publishers Income Tax--Chargeability of Income Excise Duty Refund Whether Income Under Section 2(24)(xviii)--Recent Decision of Jammu and Kashmir High Court CA. Nisha Bhandari Recently the Jammu & Kashmir High Court has rendered its decision in the case of Pr. CIT v. Gravita Metal Inc. 2024 TaxPub(DT) 5772 (J&K-HC), holding that excise duty refund is not an income as envisaged under section 2(24)(xviii) and hence capital receipt not chargeable to tax. The learned author analyses this decision alongwith related statutory and judicial background. 1. Nature of subsidy receipt Section 2(24)(xvii) as inserted by the Finance Act, 2015 w.e.f. assessment year 2016-17 provides that any assistance in the form of a subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement (by whatever name called) by the Central Government or a State Government or any authority or body or agency in cash or kind to the assessee will be treated as income. However, (i) any subsidy, grant or reimbursement which is taken into account for determination of the actual cost of the asset in accordance with the provisions of Explanation 10 to clause (1) of section 43 will not be so treated as income. (ii) The subsidy or grant received by the Government for the purpose of the corpus of a trust or institution established by the Government, shall also be not considered as income. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Income Tax--Chargeability of Income

Excise Duty Refund Whether Income Under Section 2(24)(xviii)--Recent Decision of Jammu and Kashmir High Court

CA. Nisha Bhandari

Recently the Jammu & Kashmir High Court has rendered its decision in the case of Pr. CIT v. Gravita Metal Inc. 2024 TaxPub(DT) 5772 (J&K-HC), holding that excise duty refund is not an income as envisaged under section 2(24)(xviii) and hence capital receipt not chargeable to tax. The learned author analyses this decision alongwith related statutory and judicial background.

1. Nature of subsidy receipt

Section 2(24)(xvii) as inserted by the Finance Act, 2015 w.e.f. assessment year 2016-17 provides that any assistance in the form of a subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement (by whatever name called) by the Central Government or a State Government or any authority or body or agency in cash or kind to the assessee will be treated as income. However,

(i) any subsidy, grant or reimbursement which is taken into account for determination of the actual cost of the asset in accordance with the provisions of Explanation 10 to clause (1) of section 43 will not be so treated as income.

(ii) The subsidy or grant received by the Government for the purpose of the corpus of a trust or institution established by the Government, shall also be not considered as income.