Tax treatment of refund received on defective machine ?

Suppose a Company has Purchased A Machinery worth Rs 10 crore 3 years back.

It has been Depriciating the same regularly with same method.

Now After 3 years due to Complaints by various Purchasers, the selling Company is Giving a Refund of Rs 30 lakh on the same machine due to Certain Defects in the same.

 

What will be the Tax treatment of the Refund amount of Rs 30 lakh in the books of company which has received it ? Will it be treated as Capital Receipt or Revenue Receipt ? & relevant Judgements if any in respect of the same & also it will fall under which Section of IT act , 1961 ?

Replies (5)

its a capital receipt

It will be governed under which section of IT act , 1961 ?? & how muvh tax will be charged on the same ?

CAPITAL RECEIPTS IN THIS CASE ARE NOT CHARGEABLE TO TAX

hoever i have not much facts to support this ..let others give their views on this

 

Thank you for the Valuable Response ,but it would be useful if relevant section is known incase of scrutiny by AO.

 

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