KM KNIT WEAR,TIRUPUR vs. ADIT,CPC, BANGALORE

This bunch of eight appeals filed by the Department as well as different assessees are directed against different orders passed by the ld. Commissioner of Income Tax (Appeals), Coimbatore-3, Coimbatore, for the assessment years 2017-18, 2018-19 and 2020-21.

Ground No. 1 consisting of sub-grounds (i) & (ii) raised by the Revenue and the same are reproduced hereunder: i) Whether on the facts and circumstances of the case and in law the ld. CIT(A) is justified in holding that incentive of ₹.27,28,00,467/- given by the Govt to the assessee for exploring new market is a capital receipt, whereas the object of the incentive was to enable the assessee to carry on the business more profitably and hence it is receive receipt? ii) Whether on the facts and circumstances of the case and in law, the ld. CIT(A) is justified in holding that the incentive given by the Govt to the assessee for exploring new market for exports is a capital receipt and hence cannot be treated as income u/s. 28 of the Act whereas sec. 28(iiib) states that “cash assistance (by whatever name called) received or receivable by any person against exports under any scheme under the Government of India shall be chargeable to income tax under the head ‘Profits and Gains of Business or Profession”?

The ld. CIT-DR, by referring to Focus Market Scheme, submits that it is an export promotion scheme of the Government, designed to encourage exports to selected markets given certain disadvantage while export to this market. The scheme compensates or offset higher freight cost and other disadvantage to selected international market with a view to enhance the country’s export competitiveness in these countries. He further submits that the said scheme was merged with MEIS as per 2015 Trade Policy. Further, he referred Focus Product Scheme [FPS] and submits that its main objective is to incentivize export of certain products, which have higher employment intensity and other advantages. He argued that as per FPS policy, exports of notified products to all countries shall be entitled for duty credit scrip equivalent to 2- 5% of the value of exports for each licensing year. The said policy also merged with MEIS as per Foreign Trade Policy 2015-20. He argued the incentives given in every year cannot be capitalized as the capital is to be treated the incentive before establishing the unit. He referred to Merchandise Exports from India Scheme [MEIS], which was introduced in the Foreign Trade 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 Policy [FTP] for the period 2015-20. The said MEIS, he submits, was launched as an incentive scheme for the export of goods and replaced various export incentive schemes, which gave different types of duty credit scrips including MLFPS. He vehemently argued MEIS intends to incentives exports of goods manufactured in India or produced in India and placed on record the details of MLFPS, submits the eligibility being exporters of selected products to select countries w.e.f. 01.05.2013 and drew our attention to various products of Market Linked Focus Product Scheme [MLFPS] for export made.

The ld. AR submits since in the absence of reward in section 2(24)(xviii) of the Act, the mischief under section is not attracted to the facts and circumstances of the case. The scope of said section cannot be enlarged to include the reward by interpreting the words subsidy, grant, cash incentive, duty drawback, waiver, concession and reimbursement and prayed to dismiss the ground No. 1(i) & (ii) of appeal raised by the Revenue.

In light of the above, in our view, the amendment to section 2(24) by the insertion of sub-cause (xviii) of the Finance Act, 2015, is a perfect example of a legislative endeavour to align the definition of "income" with the evolving economic landscapes and judicial precedent of it being an inclusive and elastic term. The submissions of petitioner though appear to be of fiscal concern were, in our view, more an argument of diminished profits and a narrow interpretation of income which the Apex Court has time and again expanded. The submissions of petitioner fall short of appreciating the overarching legislative intent to foster a comprehensive and equitable taxation regime. The amendment to Section 2(24) by insertion of the impugned sub-clause that includes various subsidies and concessions only indicates the well established jurisprudential path ensuring that the income tax laws remain attuned to the economic realities and continue to serve as a vital cog in the nation's fiscal machinery. As submitted by ASG, it is the duty of the legislature to ensure that taxation policy reflects a balance between incentivizing economic activity and ensuring the equitable distribution of fiscal resources. 44 In our view, there is no merit in the petition. Petition dismissed.

We find that the Coordinate Bench in the case of Hyundai Motor India Ltd. V. ACIT (supra) held the duty credit scrips received from Government of India under Focus Market Scheme [“FMS” in short hereafter] is revenue in nature. Further, we note that the Coordinate Bench held the facts in the case of Hyundai Motor India Ltd. (supra) and in the case of Nitin Spinners Ltd. (supra) are different. We find, on careful reading of para 8 of the judgement of Hon’ble High Court of Rajasthan in the case of Nitin Spinners Ltd. (supra) at pare 110 of the paper book, clearly shows the question before the Hon’ble High Court was with regard to the subsidy given by the Central Government under Focus Marketing Scheme (FMS) to enhance Indian export potential in the international 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 market. The Hon’ble High Court observed that the said subsidy was not granted to meet the cost of expenditure to meet the competition of the Indian textile market and was pleased to upheld the order of the ITAT in holding the said amount was not an incentive, but is capital receipt and therefore, not taxable by placing reliance in the case of Ponni Sugars & Chemicals Ltd. (supra).

On examination of the facts in the case of Hyundai Motors India Ltd. V. ACIT (supra), it is clear from para 34, the issue therein was with regard to “FMS” as it is mentioned in para 8 of the decision of the Hon’ble High Court of Rajasthan in the case of PCIT v. Nitin Spinners Ltd. (supra). Therefore, we find force in the arguments of the ld. AR that the facts in the case of Hyundai Motors India Ltd. V. ACIT (supra) and in the case of PCIT v. Nitin Spinners Ltd. (supra) are relating to “FMS” only. Further, we note that as aggrieved by the decision of the Hon’ble High Court of Rajasthan in the case of PCIT v. Nitin Spinners Ltd., the Revenue preferred SLP in Civil Diary No. S-179 of 2020 before the Hon’ble Supreme Court, which in turn dismissed the said SLP vide its order dated 31,.08.2021, thereby, it clearly manifest the subsidy granted by Government of India to enhance Indian export potential in the international market, is a capital receipt, not chargeable to tax.

Further, we may not accept the arguments of the ld. DR that the order of this Tribunal in the case of Hyundai Motor India Ltd. V. ACIT (supra) is binding on us to hold as a revenue receipt in view of the order of another Coordinate Bench in assessee’s own case for AY 2014-15 and 2015-16, which held as a capital receipt, which is admittedly latest to the order of the Hyundai Motor India Ltd. V. ACIT (supra). We find the order passed by Hyundai Motor India Ltd. V. ACIT (supra) was on 01.09.2021 and in assessee’s own case for AY 2014-15 and 2015-16 was on 10.02.2023, the Coordinate Bench followed the orders for AY 2011-12 & 2012-13, 2013-14 & 2016-17, held sale of scrips under MLFPS is capital receipt, not chargeable to tax.

Further, a contention was raised by the ld. AR that a reference to the applicability of sub-clause (xviii) to section 2(24) of the Act, wherein, he argued that there was no corresponding amendment to section 28 of the Act. We note that the Assessing Officer discussed the provision under section 28 of the Act in his order at page 3 of the assessment order and held sub-clause (iiia), (iiib), (iiic), (iiid) and (iiie) covers the income, nothing, but incentive to promote export trade – similar to the scheme of MLFPS. We note that under Chapter IV of the Income Tax Act “Computation of Income” is provided under main heads i.e., salary, 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 income from house property and profits and gains of profession. If we refer to sub-clause (iiia) of section 28 of the Act, which explains profits on sale of a license granted under the Import (Control) order, in our opinion, is not applicable in the facts and circumstances of the case. Further, sub- clause (iiib) of section 28 of the Act provides cash assistance (by whatever name called) received or receivable by any person against exports under any scheme of the Government of India. We find force in the argument of the ld. AR that there was no cash assistance granted to the assessee in the present case, thus, it is not applicable. Further, sub- clause (iiic), explains any duty of customs or excise re-paid or repayable as drawback to any person against exports under the Customs and Central Excise Duties Drawback Rules, is in our opinion, not applicable. Further, sub-clause (iiid) and (iiie) explains any profit on the transfer of the Duty Entitlement Pass Book scheme and any profit on the transfer of the Duty Free Replenishment Certificate respectively, admittedly, do not cover the facts and circumstances of the case, so, not applicable.

We note that the assessee contended before the Assessing Officer that there is no applicability of section 28 and 56 of the Act, but, however, the Assessing Officer held the case of the assessee falls under sub- clauses (iiia), (iiib), (iiic), (iiid) & (iiie) to section 28 of the Act r.w.s. 2(24)

The ld. AR argued that MEIS granted under Foreign Trade Policy is a reward as explained in the objective above to provide exporters a level playing field to offset infrastructural inefficiencies and associated costs involved therein. We find, admittedly, the assessee is an exporter falling 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 under 3.01 (i) Merchandise Exports from India Scheme (MEIS) concerning the reward as explained in Chapter 3 regarding objective of schemes provided to exporters.

Now, let us examine the Chapter 3 – with reference to 3.00 & 3.01(i) r.w. provisions under section 2(24)(xviii) of the Act. We already held that the objective of the scheme is to provide rewards to exporters falling under MEIS of Foreign Trade Policy – 2015 framed by the Government of India to exporters for level playing field. In view of the same, let us examine the arguments of the ld. DR as to whether the provisions under section 2(24)(xviii) of the Act are attracted to the facts of the present case or not, for better understanding, the provisions under section 2(24)(xviii) of the Act inserted by the Finance Act, 2015, w.e.f. 01.04.2016 is reproduced herein below for ready reference: (xviii) 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 [other than as substituted by the Finance Act, 2016, w.e.f. 01.04.2017 (a) the subsidy or 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; or (b) the subsidy or grant by the Central Government for the purpose of the corpus of a trust or institution established by 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 the Central Government or a State Government, as the case may be.] 28. On plain reading of the above provisions, we note that the definition of income is provided under many sub-clauses to sub-section (24) of section 2 of the act,. The definition of income under sub-clause (xviii) includes assistance in the form of “subsidy” or “grant” or “cash incentives” or “duty drawback” or “waiver” or “concession” or “reimbursement” (by whatever name called) from Central Government or state Government or any authority or body or agency in cash or kind. In the present case, we find no “subsidy” or “grant” or “cash incentives” or “duty drawback” or “waiver” or “concession” or “reimbursement”. The assessee got only reward for MEIS scheme under Foreign Trade Policy-2015 for a level playing field.

In this regard, the ld. AR placed on record meaning of terms in reference to section 2(24)(xviii) of the Act with examples. On perusal of the said meaning of terms, we note that the Government has launched the Fertilizer Subsidy Scheme, whereby, subsidy is paid on fertilizer sold for direct agriculture uses. The fertilizer subsidy division deals with payment of cost of imported urea of OMIFCO/canalizing agencies, recovery of pool issue price of urea from Handling Agencies, Ocean freight payments to vessel owners, subsidy disbursement in respect of 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 imported urea, indigenous & imported P & K fertilizers, SSP including freight subsidy, reimbursement of freight, insurance charges, custom duty, handing charges, etc. With regard to the term “grant” in reference to section 2(24)(xviii) of the Act means, it is a sum of money given to a business or individual by the Government to support them in implementing or establishing the ideas or projects that ultimately contribute to societal development. The grantee is expected to use the funds from the grant for the stated purposes. “Cash incentive” means any incentive received in cash and as its name indicates, a cash incentive has a clear monetary value being granted to motivate employees/company(s) to achieve the target/ company's overall revenue, etc. The term “reimbursement” means any expenditure which has been incurred by the assessee is being given back to the assessee. Since the expenditure would have been met in cash, the reimbursement of the same would also be in cash. As per Central Board of Indirect Taxes and Customs, “duty drawback” is a trusted and time-tested scheme administered by CBIC to promote exports. It rebates the incidence of Customs and Central Excise duties, chargeable on imported and excisable material respectively when used as inputs for goods to be exported. This WTO compliant scheme ensures that exports are zero-rated and do not carry the burden of the specific taxes. So duty drawback can either be in cash or in kind granted 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 by the Board. “Waiver” or “Concession” falls under the category of discount on any amounts payable or paid. Therefore, we find the word and expressions by way of subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement made in sub-clause (xviii) of section 2(24) of the Acyt does not attract the facts of the present case.

We have to see as to whether the words by “whatever name called” will attract the “assistance” or the words subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement with reference to definition given above. In this regard, Shri Banusekar, ld. AR filed written note on principle of ejusdem generis and explained that where general words follow specific words then such general words take the colour from the specific words that precede and drew our attention the decisions of the Hon’ble Supreme Court in the case of Lokmat Newspaper Pvt. Ltd. v. Shankar Prasad AIR 1999 SC 2423, Municipal Corporation of Greater Bombay v. Bharat Petroleum Corporation Ltd. [2002] 4 SCC 219 and Grasim Industries Ltd. v. Collector of Customs [2002] 4 SCC 297. The relevant part of 3 above said judgements are reproduced herein below: In Lokmat Newspaper Pvt. Ltd. v. Shankar Prasad AIR 1999 SC 2423 the Hon’ble Supreme Court has stated that the rule of ejusdem generis provides that “When particular words pertaining to a class, category or genus are 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 followed by general words, the general words are construed as limited to things of the same kind as those specified”. Further, the Hon’ble Supreme Court in the case of Municipal Corporation of Greater Bombay v. Bharat Petroleum Corporation Ltd. [2002] 4 SCC 219, has observed as under: “............ The principle underlying ejusdem generis is applied when the statutory provisions concerned contain an enumeration of specific words, the subject of enumeration thereby constituting a class or category but which class or category is not exhausted at the same time by the enumeration and the general term follows the enumeration with no specific indication of any different legislative intention. The Hon’ble Supreme Court in the case of Grasim Industries Ltd. v. Collector of Customs [2002] 4 SCC 297, has held as under: “In the background of what has been urged by the assessee it has to be further seen whether the principles of ejusdem generis have application. The rule is applicable when particular words pertaining to a class, category or genus are followed by general words. In such a case the general words are construed as limited to things of the same kind as those specified..........”

On careful reading of the above judgements along with written note of the ld. AR, we note that the meaning of an unclear or ambiguous word or phrase can be determined by the words surrounding it and the words surrounding the words “by whatever name called” are the words subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement. Therefore, in our opinion, that the words “by whatever name called” only qualifies the words “subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement” and not the word “assistance”. As canvassed by the ld. AR, we note that the principle of ejusdem generis focuses on interpreting a general term in a list based on specific accompanying terms, taking support from the decision of 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 Hon’ble Supreme Court in the case of Lokmat Newspaper Pvt. Ltd. v. Shankar Prasad (supra), Municipal Corporation of Greater Bombay v. Bharat Petroleum Corporation Ltd. (supra) and Grasim Industries Ltd. v. Collector of Customs (supra), in our opinion, the words “by whatever name called” do not expand the scope of the word “assistance”, but, only expands the scope of the words “subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement”. We thus, hold that the word “assistance” is independent of the words “by whatever name called” and words “by whatever name called” are not qualifying the word “assistance”. By applying the same finding, let us see the difference between the words “reward” and “assistance”. As per the note given by the ld. AR, the term “reward” is defined as a “thing given in recognition of service, efforts or achievement”, whereas, the term “assistance” is defined as the provision of money, resources or information to help someone, thus, we find a “reward” is granted in a recognition of services, an assistance is given to someone as a help, but not in recognition of a service rendered. Therefore, in our opinion, there is a clear difference between the words “reward” and “assistance”, thus, we hold the “reward” as in the Foreign Trade Policy – 2015 and the “assistance” as found in the provisions under section 2(24)(xviii) of the Act are different from each 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 other, the “reward” does not fall within the definition of sub-clause (xviii) of sub-section (24) of section 2 of the Act.

Further, we find benefit granted under the Foreign Trade Policy – 2015 by way of MEIS scrips do not fall within the meaning of any of the terms cited from Government website and, therefore, does not fall within the meaning of “subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement” as provided under section 2(24)(xviii) of the Act.

The ld. DR preferred Income Computation and Disclosure Standard [“ICDS” in short hereinafter] and submits that the CBDT notified ICDS -1 to ICDS-X vide notification No. SO-892(E) dated 31.03.2015 after wide public consultation. The ICDS-VII relating to Government grants provides that all Government grants except relating to depreciable asset shall be recognized as income in accordance with the provisions of the said ICDS. We note that in order to avoid future litigation and controversy that definition of income under section 2(24) has been amended so as to provide that income shall include 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. He argued that this ICDS is applicable for computation of income chargeable 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 under the head “Profits and gains of business or profession” or “income from other sources”. In case of any conflict between the provisions of the Income Tax Act and the ICDS, the provisions of the Act shall prevail to the extent. We find this ICDS deals with the treatment of Government grants. The Government grants are sometimes called by other names such as subsidies, cash incentives, duty drawbacks, waiver, concessions, reimbursements, etc. We find the treatment of Government grants at page 12 & 13 of the paper book, which is reproduced herein below for better understanding: Treatment of Government Grants 5. Where the Government grant relates to a depreciable fixed assets or assets of a person, the grant shall be deducted from the actual cost of the asset or assets concerned or from the written down value of block of assets to which concerned asset or assets belonged to.

On perusal of the above, we note that the ICDS-VII only refers to a Government grant as seen above. We find the duty credit scrips under MEIS not included within its ambit, therefore, since MEIS is a reward not governed by ICDS-VII. The point 9 above clearly states that the Government grant other than covered by paragraph 5, 6, 7 & 8 shall be recognized as income over the periods necessary to match them with related costs which they are intended to compensate. We find a grant is a sum of money given by the Government or to be paid for a particular purpose, since, we held that benefit by way of MEIS scrips is not an assistance by way of a grant, in our opinion, the MEIS does not fall under ICDS-VII, since MEIS is not a grant. In this regard in support of our view, 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 let us reproduce point No. 3.03 of Foreign Trade Policy – 2015 at page 3 of the paper book: 3.03 Objective Objective of Merchandise Exports from India Scheme (MEIS) is to offset infrastructural inefficiencies and associated costs involved in export of goods/products, which are produced/manufactured in India, especially those having high export intensity, employment potential and thereby enhancing India’s export competitiveness.

The above point 3.03 clearly shows the objective of Merchandise Exports from India Scheme (MEIS) is to offset infrastructural inefficiencies and associated costs involved in export of goods/products, which are produced/manufactured in India, especially those having high export intensity, employment potential and thereby enhancing India’s export competitiveness.

In reply, the ld. CIT-DR Shri Palanikumar contended the benefit of MEIS under Foreign Trade Policy-2015 are received on a year to year basis, is a revenue receipt, but not a capital receipt. We note that merely because a receipt is received on a year to year basis, is a revenue receipt is not acceptable for the reason that this Tribunal for AYs 2011-12 to 2016-17 i.e., five assessment years held the receipt of sale of scrips under MLFPS based on Foreign Trade Policy-2015 is a capital receipt, we find no contrary view brought on record by the appellant-revenue, therefore, we find force in the arguments of the ld. AR that the reward 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 under the Foreign Trade Policy-2015 by way of MEIS scrips is given as a percentage of turnover cannot make the same as a revenue receipt, moreover, the manner of determining the benefit by itself cannot change the character of a capital receipt into a revenue receipt when the said benefit is not falling within the meaning under the provisions of section 2(24)(xviii) of the Act. In this regard, we refer to the decision of Hon’ble Supreme Court in the case of CIT v. Ponni Sugars & Chemicals Ltd. & ors. (supra), which held that the purpose test is determination of whether a benefit under a Government policy is income or otherwise, the relevant portion of which is reproduced herein below for better understanding: 5. That matter concerns the 1980 Scheme. The dispute pertains to Assessment Year 1986-87. In this matter both the above questions arises for determination. The incentives conferred under that Scheme were twofold. First, in the nature of a higher free sale sugar quota and second, in allowing the manufacturer to collect excise duty on the sale price of the free sale sugar in excess of the normal quota, but pay to the Government only the excise duty payable on the price of levy sugar. In that connection, we quote clause 7 of the Scheme, which reads as under: "The beneficiaries of the incentive scheme shall ensure that the surplus funds generated through sale of the incentive sugar are utilized for the repayment of term loans, if any, outstanding from the Central Financial institutions. The sugar factories should submit utilization certificates annually from Chartered/Cost Accountant, holding certificate of practice. Utilisation certificate in respect of each sugar season during the incentive period should be furnished on or before the 31st December of the succeeding year. Failure to submit utilization certificate within the stipulated time may result not only in the termination of release of incentive free sale quota, but also in the recovery of the incentive free sale releases already made, by resorting to adjustment from the free sale releases of future years."

We have examined in this case the 1980 and 1987 Schemes. Essentially all the four schemes are similar except in the matter of details. Four factors exist in the said Schemes, which are as follows: (i) Benefit of the incentive subsidy was available only to new units and to substantially expanded units, not to supplement the trade receipts. (ii) The minimum investment specified was Rs. 4 crores for new units and Rs. 2 crores for expansion units. (iii) Increase in the free sale sugar quota depended upon increase in the production capacity. In other words, the extent of the increase of free sale sugar quota depended upon the increase in the production capacity. (iv) The benefit of the scheme had to be utilized only for repayment of term loans.

One important aspect may also be noted that in the case of Salem Cooperative Sugar Mills Ltd. we are concerned with Notification dated 15.11.1980. It indicates the above factors of the Scheme. The important point to be noted is that Government of India, financial institutions as well as the sugar industries are parties to the scheme in the sense that but for the 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 scheme the financial institutions would not have given term loans to set up new units/expansion of the existing units.

The main controversy arises in these cases because of the reason that the incentives were given through the mechanism of price differential and the duty differential. According to the Department, price and costs are essential items that are basic to the profit making process and that any price related mechanism would normally be presumed to be revenue in nature. In other words, according to the Department, since incentives were given through price and duty differentials, the character of the impugned incentive in this case was revenue and not capital in nature. On the other hand, according to the assessee, what was relevant to decide the character of the incentive is the purpose test and not the mechanism of payment.

In our view, the controversy in hand can be resolved if we apply the test laid down in the judgment of this Court in the case of Sahney Steel and Press Works Ltd. (supra). In that case, on behalf of the assessee, it was contended that the subsidy given was up to 10% of the capital investment calculated on the basis of the quantum of investment in capital and, therefore, receipt of such subsidy was on capital account and not on revenue account. It was also urged in that case that subsidy granted on the basis of refund of sales tax on raw materials, machinery and finished goods were also of capital nature as the object of granting refund of sales tax was that the assessee could set up new business or expand his existing business. The contention of the assessee in that case was dismissed by the Tribunal and, therefore, the assessee had come to this Court by way of a special leave petition. It was held by this Court on the facts of that case and on the basis of the analyses of the Scheme therein that the subsidy given was on revenue account because it was given by way of assistance in carrying on of trade or business. On the facts of that case, it was held that the subsidy given was to meet recurring expenses. It was not for acquiring the capital asset. It was not to meet part of the cost. It was not granted for production of or bringing into existence any new asset. The subsidies in that case were granted year after year only after setting up of the new industry and only after commencement of production and, therefore, such a subsidy could only be treated as assistance given for the purpose of carrying on the business of the assessee. Consequently, the contentions raised on behalf of the assessee on the facts of that case stood rejected and it was held that the subsidy received by Sahney Steel could not be regarded as anything but a revenue receipt. Accordingly the matter was decided against the assessee. The importance of the judgment of this Court in Sahney Steel case lies in the fact that it has discussed and analysed the entire case law and it has laid down the basic test to be applied in judging the character of a subsidy. That test is that the character of the receipt in the hands of the assessee has to be determined with respect to the purpose for which the subsidy is given. In other words, in such cases, one has to apply the purpose test. The point of time at which the subsidy is paid is 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 not relevant. The source is immaterial. The form of subsidy is immaterial. The main eligibility condition in the scheme with which we are concerned in this case is that the incentive must be utilized for repayment of loans taken by the assessee to set up new units or for substantial expansion of existing units. On this aspect there is no dispute. If the object of the subsidy scheme was to enable the assessee to run the business more profitably then the receipt is on revenue account. On the other hand, if the object of the assistance under the subsidy scheme was to enable the assessee to set up a new unit or to expand the existing unit then the receipt of the subsidy was on capital account. Therefore, it is the object for which the subsidy/assistance is given which determines the nature of the incentive subsidy. The form of the mechanism through which the subsidy is given is irrelevant.”

On careful reading of the above, we note that the Hon’ble Supreme Court by referring to facts of the Sahney Steels & Press Works (supra) observed if the object of the subsidy scheme was to enable the assessee to run the business more profitably then the receipt is on revenue account and the basic test to be applied in judging the character of a subsidy, that test is that the character of the receipt in the hands of the assessee has to be determined with respect to the purpose for which the subsidy is given. In other words, in such cases, one has to apply the purpose test. The point of time at which the subsidy is paid is not relevant. The source is immaterial. The form of subsidy is immaterial. Taking into account the same, held if the object of the assistance under the subsidy scheme was to enable the assessee to set up new unit or to expand the existing unit, then the receipt of the subsidy was on capital account.

By applying the same ratio as held by the Hon’ble Supreme Court in the case of CIT v. Ponni Sugars & Chemicals Ltd. & ors. (supra) to the 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 facts of the present case, we note that the reward by way of MEIS scrips is given to offset infrastructure inefficiencies, but, not for the purpose of running the business more profitably. It is noted further that though the said amounts are brought into profit and loss account claimed as exempt in the return of income, we find the said treatment in the books of accounts by itself cannot be determinative of taxability, we, therefore, hold that the same treatment of amounts received by way of sale of MEIS scrips as credited to the profit and loss account cannot alter the receipt, in our opinion, does not fall in the definition of income even after insertion of sub-clause (xviii) to section 2(24) of the Act. Thus, it is a capital receipt, not chargeable to tax. Therefore, the contention of the ld. DR relying upon the decision in the case of Sahney Steels & Works Ltd (supr) is not acceptable.

In the case of ACIT v. Gravita Metal Inc in for AY 2016-17 dated 15.06.2023, the Amritsar Bench of ITAT held as under: 16. The Ld. AR argued that 'exemption' and 'subsidy' are two separate and independent words and which are not defined. He contended that therefore, the general meaning of these words are required to be considered, as per Black's Law Dictionary (Sixth Edition) wherein these two words are defined as under:- 'Exemption: Freedom from a general duty or service; immunity from a general burden, tax, or charge. Immunity from service of process or from certain legal obligations, as jury duty, military service, or the payment of taxes.' 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 'Subsidy: A grant of money made by government in aid of the promoters of any enterprise, work, or improvement in which the government desires to participate, or which is considered a proper subject for government aid, because such purpose is likely to be of benefit to the public' 17. From the above definitions, it is apparently clear that word exemption is used in the conditions when assessee is given freedom from following any rules or regulations whereas subsidy is something which is given to the assessee to meet the cost of its project. In the present case, assessee is exempted from making payment of excise duty to the extent of 36% of the total excise duty collected. It is not subsidy given to meet cost of project. In our view, the exemption from excise duty do not fall in the definition of income as envisaged u/s 2(24)(xviii) of the Act. Meaning thereby, the amount of Rs.1,85,49,324/- is not an income but a capital receipt not taxable under the provisions of the Act.

The Hon'ble Supreme Court in "Commissioner of Custom Vs. Dilip Kumar & Co.", (Supra) by considering the decision of judgment of State of West Bengal Vs. Kesoram Industries Ltd. 10 SCC 201 decided by the bench of 5 judges, has laid down the principles applicable for interpretation of taxing statute that in interpreting a taxing statute, equitable considerations are entirely out of place. A taxing statute cannot be interpreted on any presumption or assumption. A taxing statute has to be interpreted in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any deficiency; that before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section; and that If the words are ambiguous and open to two interpretations, the benefit of interpretation is given to the subject and there is nothing unjust in a taxpayer escaping if the letter of the law fails to catch him on account of the legislature's failure to express itself clearly'. This principal of law is quoted referred by Hon'ble Supreme Court in case of "Checkmate Services Pvt. Ltd. Vs. CIT", (2022) 448 ITR 518 vide Para 50 of its judgement.

Respectfully, applying the above settled principal of law, to the interpretation of the Notification No.56/2002 dtd. 14.11.2002 as amended by Notification No.19/2008 dt. 27.03.2008, the assessee is granted exemption from payment of excise duty to the balance part of 36% of total excise duty collected. Since, the word 'exemption' in not included in the of ambit the Section 2(24)(xviii) of the Act, though it specifically includes the words subsidy, grant, cash incentive, duty drawback, waiver, concession & reimbursement. and hence, in the absence of inclusion of word 'exemption' under the said clause, we are of the considered view that the scope of this section cannot be enlarged to include exemption by interpreting that it is subsidy. Accordingly, the addition of Rs.1,85,49,324/-, confirmed by Ld. 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 CIT(A) is held to be unjustified and bad in law. As such, the part addition confirmed by Ld. CIT(A) is directed to be deleted. Thus, the ground of the assessee is allowed.

On perusal of the above, we note that the Amritsar Bench of ITAT, by taking into account definition as per Black’s Law Dictionary, held the words “exemption” and “subsidy” are two separate independent words in. Further, it held the word “exemption” from excise duty do not fall in the definition of income as envisaged under section 2(24)(xviii) of the Act, thereby, held a sum claimed as exempt is not an income, but a capital receipt not taxable under the provisions of the Act. In order to come to such conclusion, the Amritsar Bench of ITAT placed reliance in the case of Commissioner of Customs v. Dilip Kumar & Co. AIR [2018] Supreme Court 3606, which laid down principle applicable for interpretation of taxing statute, that in interpreting taxing statute equitable consideration are entirely out of place, a taxing statute cannot be interpreted on any presumption or assumption. A taxing statute has to be interpreted what is clearly expressed, it cannot employ anything which is not expressed, it cannot import provision to statute so as to supply any deficiency, that before taxing any person, it must be shown that he falls within the ambit of section 2(24)(xviii) of the Act and in the absence of inclusion of words under the said clause, the scope of section cannot be enlarged to include exemption by interpreting with its subsidy. We find the facts of the present 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 case are identical to the facts before ITAT Amritsar Benches. In the present case, the word “reward” is absent in the provisions of section 2(24)(xviii) of the Act, in the absence of said word in section 2(24)(xviii) of the Act, the scope of the section cannot be enlarged to include “reward”.

This Tribunal, in assessee’s own case for AY 2011-12 & 2012-13 as per page 112-119 of the paper book, discussed the said issue in detail and the relevant part at para 9 is reproduced herein below for ready reference: "9. We have considered the rival submissions on either side and also perused the relevant material available on record. The Market Linked Product Scheme is a scheme promoted by the Director General of Foreign Trade wherein incentive @ 2% on the FOB value of the total export was allowed. As per the Scheme, the incentive was given to export products in a specified market. The export of products which are covered under FPS list would be given incentive of 2% on FOB value of the export. In other words, it is an incentive given by the Government for exploring the new markets across the globe. The question arises for consideration is when the assessee was given incentive for exploring the new markets across the globe, whether such incentive would be a capital receipt or revenue receipt? The Apex Court in the case of Ponni Sugars & Chemicals Ltd. (supra) had an occasion to examine an Identical situation and observed that if the object of the subsidy was to enable the assessee to carry on the business more profitably, then the receipt is on the revenue account. On the other hand, if the object of assistance was to enable the assessee to set up a new unit or expand the existing unit, then the receipt is on the capital account. In the case before us, the Government of India provided the incentive for exploring the new markets across the globe. Exploring a new market for a specified area would naturally expand the market area of the assessee. The incentive given to the assessee is not for running the business profitably but for expanding the market area. Therefore, this Tribunal is of the considered opinion that the incentive given by the Government to the assessee for exploring the new market is a capital receipt, hence it _ cannot be treated as income either under Section 2(24) or 28 of the Act. In view of the above, we are unable to uphold the order of the lower authority. Accordingly, the orders of the lower 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 authorities are set aside and the addition made by the Assessing Officer is deleted."

On perusal of the above, we note that the question arose for consideration is when the assessee was given incentive for exploring the new markets across the globe, whether such incentive be a capital receipt or revenue receipt. The Tribunal, considering decision of Hon’ble Supreme Court in the case of Ponni Sugars & Chemicals Ltd.(supra) held the incentive given by the Government of India for exploring new market across the globe, is not for running the business but for the expanding the market area, is a capital receipt and cannot be treated as income either under section 2(24) or 28 of the Act. As discussed above, the same finding has been followed by this Tribunal in assessee’s own case for AY 2014-15 & 15-16, thereby, we summarise our finding in answering the grounds of appeal with reference to the arguments of the ld. DR and ld. AR, that we hold that the decision of Hon’ble High Court of Bombay in the case of Serum Institute of India (P.) Ltd. v. Union of India (supra) is not applicable to the facts on hand as Hon’ble High Court was pleased to decide the question the constitutional validity of insertion of sub-clause (xviii) to sub-section (24) of section 2 of the Act only, but not its applicability.

We find that the assessee has taken land on lease and constructed building therein on such leasehold land and incurred expenditure of ₹.36,79,372/-. The assessee claimed the said incurrence of expenditure as revenue expenditure in the computation of income as there was no ownership to the assessee on such leasehold land. The Assessing Officer disallowed the said expenditure by invoking Explanation 1 to section 32 of the Act by holding it is a capital expenditure by allowing depreciation. The ld. CIT(A), by following the orders of this Tribunal in assessee’s own case, held the same as revenue expenditure and allowed the claim of the assessee. The latest consolidated order of this Tribunal in assessee’s own case for AY 2014-15 & 2015-16 are at page 131 of the paper book.

The ld. DR did not agree with the finding of the Tribunal in assessee’s own case for the said assessment year and challenged vehemently the order of the ld. CIT(A) following the same. He placed 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 reliance on the decision of the Hon’ble High Court of Madras in the case of CIT v. K.V. Nellaiappan [2022] 135 taxmann.com 223 (Madras).

The ld. AR relied on the decision of the Hon’ble High Court of Madras in the case of TVS Lean Logistics Ltd. 293 ITR 432 (Mad). We note that the distinction between both the decisions of the Hon’ble High Court of Madras are that in the case of CIT v. K.V. Nellaiappan (supra), the assessee therein taken a building on lease, but, not the land and in the case of CIT v. TVS Lean Logistics Ltd. (supra), the assessee therein taken land on lease and constructed building thereon. The Hon’ble High Court of Madras, in the case of CIT v. Nellaiappan (supra), held that the said expenditure as capital expenditure as the assessee has taken the building on lease and in the case of CIT v. TVS Lean Logistics Ltd. (supra), the Hon’ble High Court of Madras was pleased to hold the said expenditure as revenue expenditure as the assessee constructed its building on leasehold land. Similar issue came up for adjudication before this Tribunal for AY 2014-15 and 2015-16, wherein, by following the order of the Coordinate Bench for the AY 2016-17, the Tribunal held the same as revenue expenditure. The relevant part at page 143 to 145 is reproduced for better understanding: Our findings and Adjudication 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 15. At the outset, we find that this issue has been decided by Tribunal in for AY 2016-17 as under: - 5. We have considered the rival submissions on either side and perused the relevant material available on record. In the earlier round of litigation, this Tribunal in I.T.A. No.291/Mds/2017, examined this issue and remitted back the matter to the file of the Assessing Officer with a direction to re-examine the matter in the light of the judgment of Apex Court in Madras Auto Service (P.) Ltd. (supra) and the judgment of Madras High Court in TVS Lean Logistics Ltd. (supra). Now, the Assessing Officer has made a distinction between the cases before the Apex Court and Madras High Court on the one hand and the case of the assessee on the other hand. This distinction made by the Assessing Officer, according to the Ld. representative, is not correct. We have gone through the orders of the Assessing Officer and both the cases before the Apex Court and the High Court. In the case of the assessee before the High Court and Apex Court, the vacant property was taken on lease and the cost of construction was claimed by incurring heavy expenditure. In both the cases, the assessee was paying a nominal rate of rent when compared to the market rate of lease. We may say that the rent paid by the assessee may pertain to the land since the superstructure belongs to the assessee. After expiry of lease, the assessee has to demolish or may leave the construction as such and vacate the premises. In both the cases, the assessee has to lose the investment made for construction. Therefore, as rightly submitted by the Ld. representative for the assessee, the distinction made by the Assessing Officer between the case of the assessee and the cases before the Apex Court and the Madras High Court is not correct. This Tribunal is of the considered opinion that the facts of the case are identical to that of the Madras High Court and Apex Court.

We have carefully gone through the judgment of Apex Court in the case of Madras Auto Service (P) Ltd. (supra). The Apex Court at para 6 of its judgment observed as follows:- “6. The test for distinguishing between capital expenditure and revenue expenditure in our country was laid down by this court in Assam Bengal Cement Co. Ltd. v. CIT [1955] 27 ITR 34. In that case, the appellant-company had acquired from the Government of Assam lease of certain limestone quarries for a period of 20 years for the purpose of manufacture of cement. The lessee had, inter alia, agreed to pay an annual sum during the whole period of the lease as a protection fee and in consideration of that payment, the 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 lessor undertook not to grant to any person any lease, permit or prospecting licence for limestone. This court examined tests laid down in various cases for distinguishing between capital expenditure and revenue expenditure. One of the standard tests now in use was laid down in the case of Atherton v. British Insulated and Helsby Cables Ltd. [1925] 10 TC 155. It said (page 40 of 27 ITR) : “When an expenditure is made, not only once and for all but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade, I think that there is very good reason (in the absence of special circumstances leading to an opposite conclusion) for treating such an expenditure as properly attributable not to revenue but to capital.” Whether by spending the money any advantage of an enduring nature has been obtained or not will depend upon the facts of each case. Moreover, as the above passage itself provides, this test would not apply if there are special circumstances pointing to the contrary. This court in the above case summarised the tests as follows (page 44) : “1. Outlay is deemed to be capital when it is made for the initiation of a business, for extension of a business, or for a substantial replacement of equipment.

Expenditure may be treated as properly attributable to capital when it is made not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade. . . If what is got rid of by a lump sum payment is an annual business expense chargeable against revenue, the lump sum payment should equally be regarded as a business expense, but if the lump sum payment brings in a capital asset, then that puts the business on another footing altogether.

Whether for the purpose of the expenditure, any capital was withdrawn, or, in other words, whether the object of incurring the expenditure was to employ what was taken in as capital of the business. Again, it is to be seen whether the expenditure incurred was part of the fixed capital of the business or part of its circulating capital.” (underlining ours) Relying upon the second test enumerated above, learned counsel for the appellant had submitted that the assessee got enduring benefit of a capital nature by spending the amount because the assessee obtained a new building for a period of 39 years. The difficulty, however, in the present case, arises from the fact that this building was never to belong to the assessee. Right from inception, the building was of the 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 ownership of the lessor. Therefore, by spending this money, the assessee did not acquire any capital asset. The only advantage which the assessee derived by spending the money was that it got the lease of a new building at a low rent. From the business point of view, therefore, the assessee got the benefit of reduced rent. The High Court has, therefore, rightly considered this as obtaining a business advantage. The expenditure is, therefore, to be treated as revenue expenditure.”

We have gone through the judgment of Madras High Court in TVS Lean Logistics Ltd. (supra). The Madras High Court after considering Explanation 1 to Section 32(1) of the Act and the judgments of Apex Court in Nasiruddin v. Sita Ram Agarwal (2003) 2 SCC 577 and Raghunath Rai Bareja v. Punjab National Bank (2007) 2 SCC 230, found that similar expenditure is revenue in nature. In fact, the Madras High Court has observed as follows:- “7. Similarly, there should be a literal rule of interpretation of a statute, which is the first and foremost principle of interpretation and where the words of a statute are absolutely clear and unambiguous, recourse cannot be had to the principles of interpretation other than the literal rule and even if the literal interpretation results in hardship or inconvenience, it has to be followed. The language employed in a statute is the determinative factor of the legislative event and even assuming there is a defect or any omission in the words used in the legislation, the court cannot correct or make up the deficiency, especially when a literal reading thereof produces an intelligible result and any departure from the literal rule would really be amending the law in the garb of interpretation, which is not permissible and which would be destructive of judicial discipline, vide Raghunath Rai Bareja v. Punjab National Bank [2007] 135 Comp Cas 163 (SC) ; [2007] 2 SCC 230.

What constitutes a capital expenditure and what does not, to attract Explanation 1 to section 32(1) of the Act depends upon the construction of any structure or doing any work or in relation to and by way of renovation, extension or improvement to the building which is put up in a building taken on lease by him for carrying on his business and profession of the assessee, but not in a case of construction of any structure or doing any work or relation to where such building is put up/constructed for the purpose of business or the profession of the assessee in a land taken on lease by the 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 assessee. Because the assessee did not acquire a capital asset, viz., the land in the instant case, but has put up a construction of the building only for the business advantage, with the result the entire construction cost is admissible as the revenue expenditure.

The apex court in L. H. Sugar Factory and Oil Mills P. Ltd. v. CIT [1980] 125 ITR 293 held that the construction of roads in the case of sugar mill is revenue expenditure. Similarly, contribution to the State Housing Board for construction of tenements for the workers was also held to be revenue expenditure by the apex court in the case of CIT v. Bombay Dyeing and Manufacturing Co. Ltd. [1996] 219 ITR 521.”

The case law of Hon’ble Apex Court in Mother Hospital Pvt. Ltd. vs. CIT [2017] 392 ITR 628 (SC) (as referred to by Ld. CIT-DR) is a case wherein a firm as owner of the land constructed hospital building. The firm leased the land to a tenant who reimbursed the cost of construction of building and claimed depreciation thereon. In this context, Hon’ble Apex Court held that the tenant would not be eligible for depreciation as per Explanation 1 to section 32(1) on the expenditure incurred towards construction of building since only when the assessee holds a lease right or other right of occupancy and any capital expenditure is incurred by the assessee on the construction of any structure or doing of any work in or in relation to and by way of renovation or extension of or improvement to the building and the expenditure on construction is incurred by the assessee, the assessee would be eligible to claim depreciation. The Hon'ble Supreme Court has denied the claim of depreciation for the reason that where construction was not carried out by assessee himself, said explanation to section 32 would not come to the aid of assessee for claiming depreciation. However, in the present case, the assessee has already been found eligible to claim depreciation @10% by invoking Explanation-1 to Section 32(1). Therefore, the aforesaid decision of Hon'ble Supreme Court which held that the expenditure so incurred is not in the capital field, would mean that the 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 expenditure is in the revenue field and therefore, the same, in fact, would support the case of the assessee.

Proceeding further, upon perusal of Clause-11 of lease deed dated 02.05.2010, it could be seen that the assessee-lessee, upon termination of the lease, was to deliver the possession of the demised land to the lessor with or without removing the super structure, electrical and other installation thereon as may be mutually agreed upon by both the parties. The expenses in respect of the same would be borne by the lessee. Thus, the assessee has taken only the land on lease and upon termination of the lease period, the assessee was required to return the land with or without removing the super structure built by the assessee. Therefore, the lessor does not own the building and the assessee cannot own the same as capital asset since the land does not belong to the assessee and at the time of termination of lease agreement, the assessee has to either handover the building along with the land or remove the superstructure and handover the land to the lessor. Therefore, the said expenditure would be allowable as revenue expenditure in the hands of the assessee. For the aforesaid reasons, we confirm the impugned order, on this issue. The corresponding grounds raised

In the result, the appeal of the Revenue is dismissed.

We find ground No. 1 is general in nature and requires no adjudication.

We find ground Nos. 2 to 10 are similar to the ground Nos. 2 to 10 raised by the Revenue in for AY 2017-18, wherein, we have taken a view in confirming the order of the ld. CIT(A) in allowing the claim of the assessee as revenue expenditure and the same view is equally applicable to the year under consideration. Thus, the ground Nos. 2 to 10 raised by the Revenue are dismissed.

We find ground Nos. 11 to 15 are similar to the ground Nos. 1(i) & (ii) raised by the Revenue on same identical facts in for AY 2017-18, wherein, we have taken a view in confirming the order of the ld. CIT(A) and dismissed the grounds raised by the Revenue and the same view taken by us is equally applicable to the year under consideration. Thus, the ground Nos. 11 to 15 raised by the Revenue are dismissed.

In the result, the appeal of the Revenue is dismissed.

We find ground Nos. 3 & 4 raised by the assessee are similar to ground Nos. 1(i) & (ii) as raised by the Revenue on same identical facts in for AY 2017-18, wherein, we have taken a view in confirming the order of the ld. CIT(A) and dismissed the grounds raised by the Revenue and the same view taken by us is equally applicable to the present case on hand. Thus, the ground Nos. 3 to 4 raised by the assessee are allowed.

In the result, the appeal of the assessee is allowed in the case of ACIT v. M/s. KM Knit Wears for AY 2017-18 [Revenue’s appeal] 58. This appeal of the Revenue was filed with a delay of 206 days. Upon hearing both the parties, and on perusal of the affidavit, we find the reasons stated therein are bonafide, which really prevented the Appellant- Revenue in filing the appeal in time. Thus, the delay of 206 days is condoned.

Ground No. 1 is general in nature and requires no adjudication.

We find ground Nos. 2 & 3 are similar to ground Nos. 1(i) & (ii) raised by the Revenue in for AY 2017-18, wherein, on similar issue on same identical facts and circumstances, we have taken a view in confirming the order of the ld. CIT(A) and dismissed the grounds raised by the Revenue and the same view taken by us is equally applicable in the present case. Thus, the ground Nos. 2 to 3 are dismissed.

In the result, the appeal of the Revenue is dismissed.

Ground No. 2 not pressed and accordingly, the same is dismissed.

Ground No. 3 raised by the assessee in challenging the action of the ld. CIT(A) in rejecting the ground raised by the assessee with regard to exclusion of sale proceeds of MEIS licences. We find that the ld. CIT(A), by observing that the assessee, during the course of assessment proceedings, did not make any claim towards exclusion of proceeds from sale of MEIS licences from the ambit of total income which would fall

Before us, the ld. AR submits that the Hon’ble Supreme Court held in the case of Goetze (India) Ltd. (2006) 284 ITR 323 (SC), that the appellate authority has power to direct the Assessing Officer to consider even if any claim was not made in the original return of income. The ld. DR did not dispute the same. Thus, taking support from the decision of the Hon’ble Supreme Court in the case of Goetze (India) Ltd. (supra), we deem it proper to remit the matter back to the file of the Assessing Officer with a direction to verify the above claim and allow the same in terms of our decision hereinabove to ground Nos. 1(i) & (ii) raised by the Revenue in for AY 2017-18. Thus, ground No. 3 raised by the assessee is allowed for statistical purposes.

In the result, the appeal of the assessee is partly allowed for statistical purposes. in the case of San Tex Inc v. ACIT for AY 2017- 18 [assessee’s appeal] 67. Ground Nos. 1 & 2 are general in nature and requires no adjudication.

In the result, the appeal of the assessee is allowed. in the case of Geena Garments v. ACIT for AY 2017-18 [assessee’s appeal] 70. Ground Nos. 1 & 2 are general in nature and requires no adjudication.

We find ground Nos. 3 to 6 raised by the assessee are similar to ground Nos. 1(i) & (ii) as raised by the Revenue in for AY 2017-18, wherein, on similar issue on same identical facts and circumstances, we have taken a view in confirming the order of the ld. CIT(A) and dismissed the grounds raised by the Revenue and the same view taken by us is equally applicable to the present case 326 & 1014/Chny/24, 706, 768,358/Chny/22 & 94 & 1348Chny/23 on hand. Thus, we set aside the order of the ld. CIT(A) on this issue and the ground Nos. 3 to 6 raised by the assessee are allowed.

In the result, the appeal of the assessee is allowed. in the case of Gates Wear v. DCIT for AY 2020-21[assessee’s appeal]

Ground Nos. 1 & 2 are general in nature and requires no adjudication.

We find ground Nos. 3 & 4 raised by the assessee are similar to ground Nos. 1(i) & (ii) as raised by the Revenue in for AY 2017-18, wherein, on similar issue on same identical facts and circumstances, we have taken a view in confirming the order of the ld. CIT(A) and dismissed the grounds raised by the Revenue and the same view taken by us is equally applicable to the present case on hand. Thus, we set aside the order of the ld. CIT(A) on this issue and the ground Nos. 3 & 4 raised by the assessee are allowed.