This document provides a detailed analysis of the Income Tax Appellate Tribunal’s final decision on the case between Aamor Inox Ltd, Delhi and DCIT, Circle-1(1), Delhi, concerning the assessment year 2018-19. The case number is ITA 2618/DEL/2022, presided over by Accountant Member Shri M. Balaganesh and Judicial Member Shri Anubhav Sharma.
The appeal filed by the assessee, Aamor Inox Ltd, was directed against the order dated 14.10.2022 passed by the National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2018-19. The primary issue in this case was the treatment of MEIS (Merchandise Exports from India Scheme) scrips received by the assessee as capital receipts, not chargeable to tax.
During the hearing on 02.08.2023, the assessee was represented by Mr. Suresh K. Gupta, CA, while the Revenue was represented by Mr. Amit Katoch, Sr. DR. The Tribunal proceeded to adjudicate the appeal based on the materials on record and submissions made by both parties.
The primary grounds of appeal raised by the assessee were:
“1. The Ld. CIT(A) has grossly erred on facts and in law in not considering the claim of the appellant in the processing intimation passed u/s 143(1) of the IT Act, 1961 that income of Rs.2,15,96,571 from the scrips granted under MEIS of the Foreign Trade Policy 2015-20 be treated as capital receipts not chargeable to tax and therefore the same should not form part of the taxable income notwithstanding the fact that the same has been offered for tax in the return of income.
2. That Ld. CIT(A) has erred on facts and in law in not considering the claim of the appellant processing initiation u/s 143(1) of the IT Act, 1961 that the income of Rs.2,15,96,571 from scrips granted under MEIS of the Foreign Trade Policy 2015-20 being capital receipts should not form part of the book profit computed u/s 115JB of the IT Act, 1961 notwithstanding the fact the same form part of the book profit as per the return of income.”
The assessee, Aamor Inox Ltd., is engaged in the business of manufacturing steel. For the assessment year 2018-19, the assessee filed its return of income on 26.10.2018, declaring a loss of Rs. 1,81,92,071 under normal provisions and book profit of Rs. 1,42,31,007 under section 115JB of the Income Tax Act, 1961. A revised return was filed on 23.03.2019, maintaining the same figures, and the return was processed by CPC Bangalore.
During the year under consideration, the assessee received MEIS scrips amounting to Rs. 2,15,96,571, which were offered to tax as revenue receipts. The assessee later appealed to the CIT(A) to withdraw this offer, claiming that the scrips should be treated as capital receipts and not taxable.
The assessee argued that the MEIS scrips received were capital receipts intended to incentivize exporters and thus should not be taxable. The incentives were provided to offset domestic inefficiencies and to promote exports, thus increasing the inflow of foreign exchange into India. The assessee cited several documents and case laws to support their claim that the MEIS scrips should be considered capital receipts.
The Tribunal noted that the assessee consistently received such awards and accounted for the profit or loss from the transfer of these awards/licences as part of export benefits. The CIT(A) dismissed the appeal on the grounds that once an amount is offered in the return of income, it cannot be reduced in appellate proceedings.
The Tribunal, however, disagreed with the CIT(A) and observed that there is no estoppel against the statute, and the assessee can always plead that a particular receipt has been erroneously offered to tax. The Tribunal found that the CIT(A) did not provide a factual finding on the detailed concerns raised by the assessee.
The Tribunal restored the appeal to the file of the CIT(A) for a denovo adjudication in accordance with the law. The CIT(A) is directed to verify the computational aspects as per the revised computation furnished by the assessee.
Order pronounced in the open court on 29th August, 2023.
(ANUBHAV SHARMA)
JUDICIAL MEMBER
(M. BALAGANESH)
ACCOUNTANT MEMBER
This case highlights the importance of properly classifying income receipts and the taxpayer’s right to appeal against erroneous classification in their returns. The Tribunal’s decision ensures that the substantive merits of the case are addressed, promoting fair and just tax administration.
Final Tribunal Order for Aamor Inox Ltd, Delhi vs DCIT, Circle-1(1), Delhi, Assessment Year 2018-19
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