Whether the interest subsidy and excise refund would be treated as capital receipt or revenue receipt for the 115JB

Last updated: 18 January 2023
Quick Summary
This judgement clarifies whether interest subsidies and excise refunds should be treated as capital or revenue receipts when calculating book profit under Section 115JB of the Income Tax Act. The High Court ruled in favour of the assessee, determining that such subsidies, provided for industrial development and employment generation, are capital in nature. Consequently, they cannot be included in the computation of book profit under Section 115JB.

Court :
Kolkata High Court

Brief :
Since interest subsidies and power subsidies are provided by the government to the entities establishing units in specified areas are of Capital nature. The subsidies are given to develop the specified areas and generate employment. Since these subsidies are of capital nature and hence cannot be included to compute Book Profit under provisions of Section 115JB of the Income tax Act, 1961.

Citation :
ITA/18/2021-IA No.GA/2/2018 (Old No.GA/515/2018)

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