ACIT-3(1)(1), MUMBAI, AAYKAR BHAWAN vs. SANGAM (INDIA) LIMITED, ANDHERI

PER OM PRAKASH KANT, AM

This appeal by the Revenue is directed against the order dated 03.04.2025 passed by the learned Addl. /Joint Commissioner of Income-tax (Appeals)-4, Bangalore (hereinafter shall be referred to as the ‘Ld. CIT(A)’) for the A.Y. 2020-21, raising following grounds:

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Income Tax Act, 1961, contrary to the binding precedent of the Hon'ble Supreme Income Tax Act, 1961, contrary to the binding precedent of the Hon'ble Supreme Income Tax Act, 1961, contrary to the binding precedent of the Hon'ble Supreme Court in Liberty India v. CIT (317 ITR 218)?" Court in Liberty India v. CIT (317 ITR 218)?" 2. During course of the hearing, the learned Departmental During course of the hearing, the learned Departmental During course of the hearing, the learned Departmental Representative (DR) also raised additional ground also raised additional grounds, which are reproduced as under: reproduced as under:

"1. Whether, on the facts and in the circumstances of the case and in law, the "1. Whether, on the facts and in the circumstances of the case and in law, the "1. Whether, on the facts and in the circumstances of the case and in law, the learned Commissioner of Income learned Commissioner of Income-tax (Appeals) erred in adjudicating the issue tax (Appeals) erred in adjudicating the issue relating to MEIS subsidy amounting to ₹5,95,46,449/-, which had been offered relating to MEIS subsidy amounting , which had been offered by the assessee to tax in its return of income filed on 13.02.2021 as export ssee to tax in its return of income filed on 13.02.2021 as export ssee to tax in its return of income filed on 13.02.2021 as export incentive? "2. Whether, on the facts and in the circumstances of the case and in law, the "2. Whether, on the facts and in the circumstances of the case and in law, the "2. Whether, on the facts and in the circumstances of the case and in law, the learned CIT( A) exceeded his jurisdiction in learned CIT( A) exceeded his jurisdiction in deciding that the MEIS subsidy is a deciding that the MEIS subsidy is a capital receipt or a revenue receipt, when this issue was not adjudicated in order capital receipt or a revenue receipt, when this issue was not adjudicated in order capital receipt or a revenue receipt, when this issue was not adjudicated in order under section 143(1) dated 31.03.2021 & order under section 154 of the Income under section 143(1) dated 31.03.2021 & order under section 154 of the Income under section 143(1) dated 31.03.2021 & order under section 154 of the Income Tax Act 1961 dated 24.01.2023. Tax Act 1961 dated 24.01.2023. "3. Whether, on the facts an "3. Whether, on the facts and in the circumstances of the case and in law, the d in the circumstances of the case and in law, the learned CIT(A) exceeded his jurisdiction in deciding that the MEIS subsidy is a learned CIT(A) exceeded his jurisdiction in deciding that the MEIS subsidy is a learned CIT(A) exceeded his jurisdiction in deciding that the MEIS subsidy is a capital receipt or a revenue receipt, when such an issue falls outside the scope capital receipt or a revenue receipt, when such an issue falls outside the scope capital receipt or a revenue receipt, when such an issue falls outside the scope and purview of section 154 of the Income and purview of section 154 of the Income-tax Act, 1961, being not a mistake Act, 1961, being not a mistake apparent from the record? apparent from the record? "4. Whether, on the facts and in the circumstances of the case and in law, the "4. Whether, on the facts and in the circumstances of the case and in law, the "4. Whether, on the facts and in the circumstances of the case and in law, the learned Commissioner of Income tax (Appeals) erred in admitting and relying learned Commissioner of Income tax (Appeals) erred in admitting and relying learned Commissioner of Income tax (Appeals) erred in admitting and relying upon additional evidence on the issue of ME upon additional evidence on the issue of MEIS/export incentive amounting to IS/export incentive amounting to 25,95,46,449/-and treating the same as a capital receipt, in contravention of Rule and treating the same as a capital receipt, in contravention of Rule and treating the same as a capital receipt, in contravention of Rule 46A of the Income-tax Rules, 1962, without affording the Assessing Officer an tax Rules, 1962, without affording the Assessing Officer an tax Rules, 1962, without affording the Assessing Officer an opportunity to examine or rebut such additional evidence as mandated under opportunity to examine or rebut such additional evidence as ma opportunity to examine or rebut such additional evidence as ma Rule 46A(3), thereby rendering the appellate order bad in law?" Rule 46A(3), thereby rendering the appellate order bad in law?" Rule 46A(3), thereby rendering the appellate order bad in law?" 3. The additional ground raised by the R dditional ground raised by the Revenue evenue being purely of legal in nature, and not requiring investigation of the fresh facts, legal in nature, and not requiring investigation of the fresh facts, legal in nature, and not requiring investigation of the fresh facts, therefore same are admitted for adjudication in e are admitted for adjudication in view of settled principle in the case of NTPC Ltd reported in 226 ITR 383(SC). principle in the case of NTPC Ltd reported in 226 ITR 383(SC). principle in the case of NTPC Ltd reported in 226 ITR 383(SC).

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& power-loom products, products, and power generation. For the year under consideration, the assessee file consideration, the assessee filed return of income on return of income on 13/02/2021 declaring total income of declaring total income of Rs. at Rs.16,73,69,620/ 16,73,69,620/- under the normal provisions of the normal provisions of the Income-tax Act, 1961, (in short ‘the Act’) (in short ‘the Act’) and book profit of Rs.20,30,46,844/ profit of Rs.20,30,46,844/- under section 115JB of the tion 115JB of the Act. The return, as filed, included The return, as filed, included the Merchandise Exports from Merchandise Exports from India Scheme (MEIS MEIS) incentive of Rs. 5,95,46,449/ incentive of Rs. 5,95,46,449/- within total income.

4.1 The return of income filed by the assessee was processed The return of income filed by the assessee was processed The return of income filed by the assessee was processed u/s 143(1) of the Act and thereafter nd thereafter further rectified vide order under further rectified vide order under section 154 dated 24th January 2023, determining total income at 4 dated 24th January 2023, determining total income at 4 dated 24th January 2023, determining total income at Rs.23,40,71,700/-.

4.2 In the aforesaid order under section 154, t resaid order under section 154, the he ld Assessing officer added to to total total income income deferred deferred tax tax amounting amounting to to Rs.4,30,00,000/-. He He also denied credit of the advance tax, also denied credit of the advance tax, tax deducted at source(TDS TDS), and tax collected at source( tax collected at source(TCS). Further, he also rejected the claim of the claim of assessee of excluding export incentives export incentives received in form of MEIS received in form of MEIS amounting to Rs.5,95,46,449 5,95,46,449/- under normal provisions as well as MAT provision provisions as well as MAT provisions, on the ground of on the ground of included inadvertently. included inadvertently.

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that as per the FIP policy (2015 that as per the FIP policy (2015-2020), objective of the MEIS was to 2020), objective of the MEIS was to promote the manufacture and export of notified goods/product. promote the manufacture and export of notified goods/product. promote the manufacture and export of notified goods/product. Hence, the incentive was granted to reward the eligible exporters Hence, the incentive was granted to reward the eligible exporters Hence, the incentive was granted to reward the eligible exporters under the Foreign Trade Policy 2015 Foreign Trade Policy 2015-20 policy, MEIS is a reward MEIS is a reward granted to the eligible exporter as recognition for increase in export. granted to the eligible exporter as recognition for increase in export. granted to the eligible exporter as recognition for increase in export. There is a marked difference between the term assistance and difference between the term assistance and reward. It was submitted that accordingly, it was a capital receipt It was submitted that accordingly, it was a capital receipt It was submitted that accordingly, it was a capital receipt outside the charge to tax, bot outside the charge to tax, both under normal provisions and under h under normal provisions and under Section 115JB, since a receipt outside the definition of "income" Section 115JB, since a receipt outside the definition of "income" Section 115JB, since a receipt outside the definition of "income" cannot enter the computation of book profit either. cannot enter the computation of book profit either.

5.1 In support of the capital In support of the capital-receipt characterisation, the assessee receipt characterisation, the assessee in the case of Bharat relied (i) decision of Delhi Bench of Tribunal Delhi Bench of Tribunal in the case of Rasayan Ltd. v. ACIT Rasayan Ltd. v. ACIT in ITA No. 1231/Del/2019 in ITA No. 1231/Del/2019, holding assistance under MLFPS to be a capital receipt; (ii) Shree Cement assistance under MLFPS to be a capital receipt; (ii) assistance under MLFPS to be a capital receipt; (ii) Ltd., ITA No. 614/JP/2010 (Jaipur Trib., 09.09.2011) ITA No. 614/JP/2010 (Jaipur Trib., 09.09.2011), affirmed ITA No. 614/JP/2010 (Jaipur Trib., 09.09.2011) by the Hon’ble Rajasthan by the Hon’ble Rajasthan High Court, Appeal Nos. 85/2014 and High Court, Appeal Nos. 85/2014 and 204/2010 (22.08.2017), for the exclusion of capital subsidy from 204/2010 (22.08.2017), for the exclusion of capital subsidy from 204/2010 (22.08.2017), for the exclusion of capital subsidy from book profit under Section 115JB; (iii) CIT v. Harinagar Sugar Mills CIT v. Harinagar Sugar Mills book profit under Section 115JB; (iii) Ltd., ITA No. 1132 of 2014 (Bom., 04.01.2017); ITA No. 1132 of 2014 (Bom., 04.01.2017); ITA No. 1132 of 2014 (Bom., 04.01.2017); (iv) Alok Industries Ltd. v. DCIT Industries Ltd. v. DCIT, ITA No. 1017/Mum/2017 (21.05.2018), o. 1017/Mum/2017 (21.05.2018), holding that a subsidy which is not chargeable under Section 4 holding that a subsidy which is not chargeable under Section 4 holding that a subsidy which is not chargeable under Section 4 cannot become chargeable under Section 115JB, "an alternate cannot become chargeable under Section 115JB, "an alternate cannot become chargeable under Section 115JB, "an alternate mechanism for computation of income"; (v) mechanism for computation of income"; (v) Shivalik Venture Pvt. Shivalik Venture Pvt. Ltd. v. DCIT, ITA No. 2008/Mum/2012 (1 , ITA No. 2008/Mum/2012 (19.08.2015), holding that a 9.08.2015), holding that a

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receipt falling outside the definition of "income" cannot be included receipt falling outside the definition of "income" cannot be included receipt falling outside the definition of "income" cannot be included in book profit; (vi) in book profit; (vi) Malana Power Co. Ltd. v. JCIT Malana Power Co. Ltd. v. JCIT, ITA No. 2281/Del/2013 (27.04.2018); and (vii) 2281/Del/2013 (27.04.2018); and (vii) PCIT v. Ankit Metal and PCIT v. Ankit Metal and Power Ltd. [2019] 416 ITR 591 (Cal.). [2019] 416 ITR 591 (Cal.). The assessee also placed The assessee also placed reliance on a battery of coordinate decisions to similar effect Binani reliance on a battery of coordinate decisions to similar effect reliance on a battery of coordinate decisions to similar effect Industries Ltd. (ITA No. 144/Kol/2013); L.H. Sugar Factory Ltd. (ITA Industries Ltd. (ITA No. 144/Kol/2013); L.H. Sugar Factory Ltd. (ITA Industries Ltd. (ITA No. 144/Kol/2013); L.H. Sugar Factory Ltd. (ITA No. No. No. 417/LKW/2013); 417/LKW/2013); 417/LKW/2013); Nilgiri Nilgiri Nilgiri Tea Tea Tea Estate Estate Estate Ltd. Ltd. Ltd. (ITA (ITA (ITA No.377/Coch/2010); Harrisons Malayalam Ltd No.377/Coch/2010); Harrisons Malayalam Ltd. 32 SOT 497 (Coch); . 32 SOT 497 (Coch); Genus Electrotech Limited (ITA No. 2840/Ahd/12); KrishiRasayan Genus Electrotech Limited (ITA No. 2840/Ahd/12); KrishiRasayan Genus Electrotech Limited (ITA No. 2840/Ahd/12); KrishiRasayan Exports (ITA No. 883/Kol/14); Mcnally Bharat (ITA No. 532/Kol/12); Exports (ITA No. 883/Kol/14); Mcnally Bharat (ITA No. 532/Kol/12); Exports (ITA No. 883/Kol/14); Mcnally Bharat (ITA No. 532/Kol/12); Sicpa India (ITA No. 933/Kol/12) Sicpa India (ITA No. 933/Kol/12) and, significantly, on the decision and, significantly, on the decision of this Tribunal in the assessee's own case for AY 2015-16, where, of this Tribunal in the assessee's own case for AY 2015 of this Tribunal in the assessee's own case for AY 2015 following Suraj Jewellery (India) Ltd. Suraj Jewellery (India) Ltd. [2008] 21 SOT 79 (Mum.), [2008] 21 SOT 79 (Mum.), Shivalik Venture [2015] 60 taxmann.com 314 (Mum.), [2015] 60 taxmann.com 314 (Mum.), [2015] 60 taxmann.com 314 (Mum.), DCIT v. Degree Orchards Pvt. Ltd. Degree Orchards Pvt. Ltd. (08.08.2018), and ITO v. Frigsales (India) ITO v. Frigsales (India) Ltd. [2005] 4 SOT 376, the Tribunal directed the AO to verify and [2005] 4 SOT 376, the Tribunal directed the AO to verify and [2005] 4 SOT 376, the Tribunal directed the AO to verify and allow the assessee's claim, both under normal provisions and under allow the assessee's claim, both under normal provisions and under allow the assessee's claim, both under normal provisions and under Section 115JB.

5.2 The learned CIT(A) allowed the assessee's claim regarding The learned CIT(A) allowed the assessee's claim regarding The learned CIT(A) allowed the assessee's claim regarding double addition of deferred tax in the book addition of deferred tax in the book-profit computation and profit computation and the non-grant of credit for advance tax, TDS, and TCS, subject to grant of credit for advance tax, TDS, and TCS, subject to grant of credit for advance tax, TDS, and TCS, subject to verification, and allowed the claim that the MEIS incentive of Rs. verification, and allowed the claim that the MEIS incentive of Rs. verification, and allowed the claim that the MEIS incentive of Rs. 5,95,46,449/- be excluded from total income, as well as from bo be excluded from total income, as well as from bo be excluded from total income, as well as from book

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profit under Section 115JB, as a capital receipt, subject to profit under Section 115JB, as a capital receipt, subject to profit under Section 115JB, as a capital receipt, subject to consequential verification of interest and MAT credit. consequential verification of interest and MAT credit. consequential verification of interest and MAT credit.

7.1 The ld. Counsel Counsel relied on the order of ld. CIT(A). relied on the order of ld. CIT(A).

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inefficiencies and enhancing export competitiveness, the same inefficiencies and enhancing export competitiveness, the same inefficiencies and enhancing export competitiveness, the same computation as a percentage of FOB export value, and the same computation as a percentage of FOB export value, and the same computation as a percentage of FOB export value, and the same absence absence of of any any capital capital-investment investment threshold threshold or or utilisation utilisation obligation. The issue i obligation. The issue is accordingly identical on merits to that s accordingly identical on merits to that decided by the Special Bench. decided by the Special Bench.

8.1 The Special Bench, noted the scheme as under The Special Bench, noted the scheme as under The Special Bench, noted the scheme as under MEIS is a part of the Foreign Trade Policy, 2015 of the Foreign Trade Policy, 2015-20 notified under the Foreign 20 notified under the Foreign Trade (Development and Regulation) Act, 1992. The FTP-2015-20 Trade (Development and Regulation) Act, 1992. The FTP Trade (Development and Regulation) Act, 1992. The FTP was launched on April 1, 2015 introducing a slew of measures by was launched on April 1, 2015 introducing a slew of measures by was launched on April 1, 2015 introducing a slew of measures by providing a framework for increasing exports of goods and services, providing a framework for increasing exports of goods and services, providing a framework for increasing exports of goods and services, generation of employment and increasing value addition, in keeping generation of employment and increasing value addition, in keeping generation of employment and increasing value addition, in keeping with the "Make in India" vision of the government. with the "Make in India" vision of the government. MEIS envisages providing "reward" to exporters of notified goods to notified markets providing "reward" to exporters of notified goods to notified markets providing "reward" to exporters of notified goods to notified markets in the form of "duty credit scrips" for offsetting infrastructural in the form of "duty credit scrips" for offsetting infrastructural in the form of "duty credit scrips" for offsetting infrastructural inefficiencies inefficiencies inefficiencies and and and associated associated associated costs, costs, costs, involved involved involved in in in export export export of of of goods/products which produced/manufactured in goods/products which produced/manufactured in India, especially India, especially those having high export intensity, employment potential and those having high export intensity, employment potential and those having high export intensity, employment potential and thereby enhancing the country's export competitiveness. The duty thereby enhancing the country's export competitiveness. The duty thereby enhancing the country's export competitiveness. The duty credit scrips and the goods imported/domestically procured against credit scrips and the goods imported/domestically procured against credit scrips and the goods imported/domestically procured against them shall be freely transferable. The duty them shall be freely transferable. The duty credit scrips can also be credit scrips can also be utilised for a wide range of duty/taxes/fee payments. It is further utilised for a wide range of duty/taxes/fee payments. utilised for a wide range of duty/taxes/fee payments. noted that all the erstwhile schemes, viz. Focus Product Scheme ll the erstwhile schemes, viz. Focus Product Scheme ll the erstwhile schemes, viz. Focus Product Scheme (FPS), Focus Market Scheme (FMS), Vishesh Krishi Gramin Udyog (FPS), Focus Market Scheme (FMS), Vishesh Krishi Gramin Udyog (FPS), Focus Market Scheme (FMS), Vishesh Krishi Gramin Udyog Yojana (VKGUY), Market Linked Focus Yojana (VKGUY), Market Linked Focus Product Scheme (MLFPS), Product Scheme (MLFPS),

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Agri Infrastructure Incentive Scheme, and Incremental Export Agri Infrastructure Incentive Scheme, and Incremental Export Agri Infrastructure Incentive Scheme, and Incremental Export Incentive Scheme (offering separate duty credit scrips with varying Incentive Scheme (offering separate duty credit scrips with varying Incentive Scheme (offering separate duty credit scrips with varying conditions) have been merged into a single scheme, i.e. MEIS with conditions) have been merged into a single scheme, i.e. MEIS with conditions) have been merged into a single scheme, i.e. MEIS with no conditions attached thereto (for g no conditions attached thereto (for getting the assistance) except etting the assistance) except realization of export proceeds/foreign exchange. realization of export proceeds/foreign exchange.

8.2 The Special Bench after examining the objective, structure, The Special Bench after examining the objective, structure, The Special Bench after examining the objective, structure, and eligibility conditions of the MEIS scheme under Chapter III of and eligibility conditions of the MEIS scheme under Chapter III of and eligibility conditions of the MEIS scheme under Chapter III of the Foreign Trade Policy 2015 the Foreign Trade Policy 2015-20, applied the "purpose test" laid 20, applied the "purpose test" laid down by the Hon'ble Supreme Court in down by the Hon'ble Supreme Court in Sahney Steel & Press Works Sahney Steel & Press Works Ltd. v. CIT, 228 ITR 253 (SC) , 228 ITR 253 (SC) and CIT v. Ponni Sugars & Chemicals CIT v. Ponni Sugars & Chemicals Ltd. [2008] 306 ITR 392 (SC) . [2008] 306 ITR 392 (SC), under which a subsidy or incentive is , under which a subsidy or incentive is a revenue receipt where its object is to enable the assessee to run a revenue receipt where its object is to enable the assessee to run a revenue receipt where its object is to enable the assessee to run its business more profitably, and a capital receipt only where its its business more profitably, and a capital receipt o its business more profitably, and a capital receipt o object is to enable the setting up or expansion of a unit, coupled object is to enable the setting up or expansion of a unit, coupled object is to enable the setting up or expansion of a unit, coupled with an obligation to apply the receipt to that capital purpose. with an obligation to apply the receipt to that capital purpose. with an obligation to apply the receipt to that capital purpose. Comparing the MEIS scheme against the four factors identified by Comparing the MEIS scheme against the four factors identified by Comparing the MEIS scheme against the four factors identified by the Supreme Court in the Supreme Court in Ponni Sugars (supra) as indicative of capital indicative of capital character, confinement to new or substantially expanded units, a character, confinement to new or substantially expanded units, a character, confinement to new or substantially expanded units, a minimum investment threshold, quantum linked to increase in minimum investment threshold, quantum linked to increase in minimum investment threshold, quantum linked to increase in production capacity, and mandatory utilisation for loan repayment , production capacity, and mandatory utilisation for loan repayment , production capacity, and mandatory utilisation for loan repayment , the Special Bench found none present in M the Special Bench found none present in MEIS. The Special Bench EIS. The Special Bench observed that the scheme is open to all qualifying exporters, observed that the scheme is open to all qualifying exporters, observed that the scheme is open to all qualifying exporters, including merchant exporters; carries no investment threshold; including merchant exporters; carries no investment threshold; including merchant exporters; carries no investment threshold; computes the reward as a percentage of FOB export value, not computes the reward as a percentage of FOB export value, not computes the reward as a percentage of FOB export value, not

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production capacity; and imposes no obligation production capacity; and imposes no obligation as to utilisation, the as to utilisation, the duty credit scrips being freely transferable and usable for any duty credit scrips being freely transferable and usable for any duty credit scrips being freely transferable and usable for any purpose, including payment of duties and taxes. On this basis, the purpose, including payment of duties and taxes. On this basis, the purpose, including payment of duties and taxes. On this basis, the Special Bench held that MEIS rewards, aimed at offsetting Special Bench held that MEIS rewards, aimed at offsetting Special Bench held that MEIS rewards, aimed at offsetting infrastructural inefficiencies and improving infrastructural inefficiencies and improving export competitiveness export competitiveness on a recurring, shipment on a recurring, shipment-by-shipment basis, align with the revenue shipment basis, align with the revenue side of the Ponni Sugars Ponni Sugars (supra) test.

8.3 The Special Bench further held that MEIS rewards fall within .3 The Special Bench further held that MEIS rewards fall within .3 The Special Bench further held that MEIS rewards fall within the inclusive definition of "income" under Section 2(24)(xviii) of the the inclusive definition of "income" under Section 2(24)(xvii the inclusive definition of "income" under Section 2(24)(xvii Act (inserted with effect from 01.04.2016), which brings to tax Act (inserted with effect from 01.04.2016), which brings to tax Act (inserted with effect from 01.04.2016), which brings to tax "assistance in the form of a subsidy or grant or cash incentive or "assistance in the form of a subsidy or grant or cash incentive or "assistance in the form of a subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement (by duty drawback or waiver or concession or reimbursement (by duty drawback or waiver or concession or reimbursement (by whatever name called)," subject only to the two exclusions in sub- whatever name called)," subject only to the two exclusio whatever name called)," subject only to the two exclusio clauses (a) and (b), neither of which applies to MEIS. Rejecting the clauses (a) and (b), neither of which applies to MEIS. Rejecting the clauses (a) and (b), neither of which applies to MEIS. Rejecting the argument that the principle of argument that the principle of ejusdem generis confines the phrase confines the phrase "by whatever name called" to the seven enumerated categories and "by whatever name called" to the seven enumerated categories and "by whatever name called" to the seven enumerated categories and excludes a "reward," the Special Bench held, excludes a "reward," the Special Bench held, applying applying D.N. Singh v. CIT [2023] 454 ITR 595 (SC), that the residuary phrase was [2023] 454 ITR 595 (SC), that the residuary phrase was [2023] 454 ITR 595 (SC), that the residuary phrase was deliberately used to keep the definition wide and elastic, and that a deliberately used to keep the definition wide and elastic, and that a deliberately used to keep the definition wide and elastic, and that a MEIS "reward" in any event falls within the description of "grant" or MEIS "reward" in any event falls within the description of "grant" or MEIS "reward" in any event falls within the description of "grant" or "cash incentive," both enumerated categories. "cash incentive," both enumerated categories.

8.4 The Special Bench considered and distinguished the decisions l Bench considered and distinguished the decisions l Bench considered and distinguished the decisions relied upon by assessees favouring capital treatment and noted that relied upon by assessees favouring capital treatment relied upon by assessees favouring capital treatment several arose prior to the introduction of Section 2(24)(xviii), or several arose prior to the introduction of Section 2(24)(xviii), or several arose prior to the introduction of Section 2(24)(xviii), or

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under schemes tied to industrial development of a particular region, under schemes tied to industrial development of a particular region, under schemes tied to industrial development of a particular region, or turned on their own peculiar facts, and expressly approved the or turned on their own peculiar facts, and expressly approved the or turned on their own peculiar facts, and expressly approved the contrary view taken in contrary view taken in Hyundai Motor India Ltd. v. ACIT IT(TP d. v. ACIT IT(TP)A No.39/Chny/2021 dated 22nd December, 2021 and DCIT v. Eris Life No.39/Chny/2021 dated 22 DCIT v. Eris Life Sciences Ltd. ITA No.847 . ITA No.847-850/AHD/2025 dated 09.12.2025 850/AHD/2025 dated 09.12.2025, holding that the phrase "by whatever name called" captures the legislative that the phrase "by whatever name called" captures the legislative that the phrase "by whatever name called" captures the legislative intent to bring within the tax net all forms of governmental intent to bring within the tax net all forms of governmental intent to bring within the tax net all forms of governmental assistance, the label "reward" notwithstanding. assistance, the label "reward" notwithstanding.

8.5 The Special Bench accordingly held that MEIS rewards are .5 The Special Bench accordingly held that MEIS rewards are .5 The Special Bench accordingly held that MEIS rewards are revenue receipts, chargeable to tax both under the normal chargeable to tax both under the normal chargeable to tax both under the normal provisions of the Act and under Section 115JB, on both the purpose provisions of the Act and under Section 115JB, on both the purpose provisions of the Act and under Section 115JB, on both the purpose test and the statutory language of Section 2(24)(xviii). test and the statutory language of Section 2(24)(xviii). test and the statutory language of Section 2(24)(xviii).

8.6 Respectfully following the ratio of the Special Bench in Respectfully following the ratio of the Special Bench in Respectfully following the ratio of the Special Bench in Aarti (supra), we hold that the MEIS incentive of Rs. , we hold that the MEIS incentive of Rs. Drugs Ltd. v. ACIT (supr 5,95,46,449/- is a revenue receipt, chargeable to tax both under is a revenue receipt, chargeable to tax both under is a revenue receipt, chargeable to tax both under the normal provisions of the Act and under Section 115JB. The the normal provisions of the Act and under Section 115JB. The the normal provisions of the Act and under Section 115JB. The finding of the learned CIT(A) to the contrary is set aside, and the finding of the learned CIT(A) to the contrary is set aside, and the finding of the learned CIT(A) to the contrary is set aside, and the original ground of the Revenue's appeal is allowed. the Revenue's appeal is allowed.

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violation of Rule 46A. These grounds are left open, to be decided at violation of Rule 46A. These grounds are left open, to be decided at violation of Rule 46A. These grounds are left open, to be decided at an appropriate stage, if and when necessary. an appropriate stage, if and when necessary.

Order pronounced in the open Court on ounced in the open Court on 24/ /09/2026. Sd/- Sd/- (SIDDHARTHA NAUTIYAL SIDDHARTHA NAUTIYAL) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 24/09/2026 /2026 K.Kr. p.s. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai