IMPORTANT POINT
Excise duty exemptions granted for industrial development are capital receipts, not subject to taxation under normal provisions or included in MAT calculations.

JUDGMENT :

N. Unni Krishnan Nair, J.

Heard Mr. Subhash Chandra Keyal, learned Senior Standing counsel, CBDT & Income Tax, NER, appearing on behalf of the appellants in these 2(two) income tax appeals. Also heard Dr. Ashok Saraf, learned senior counsel, assisted by Mr. B. Sarma, learned counsel, appearing on behalf of the sole respondent in both these income tax appeals.

2. The present income tax appeals being ITA No. 03/2023 and ITA No. 06/2023 have been preferred by the Revenue Department under Section 260A of the Income Tax Act, 1961 , challenging the order, dated 21.06.2022, passed by the Income Tax Appellate Tribunal, Guwahati Bench at Kolkata, in ITA No. GAU 232/GAU/2019 and ITA No. 359/GAU/2019.

3. As the above-noted income tax appeals involve identical factual and legal issues; hence, these appeals were heard together and are disposed of by this common judgment & order.

4. The brief facts requisite for adjudication of the issue arising in the present proceedings, is noticed as under:

4.1. In the above-noted income tax appeals; this Court had admitted the above-noted appeals, vide order, dated 09.06.2023, on the following substantial questions of law:

“ (1) Whether the Hon'ble ITAT was right in law in upholding the order of learned CIT (Appeals) in allowing excise duty exemption as capital receipt while the assessee has treated the same as revenue receipt in its book, return of income as well as during assessment.

(2) Whether the Hon'ble ITAT was right in law in allowing the excise duty exemption adjustment in computation of MAT under section 115-JB.”

4.2. The assessee, herein, in the above-noted income tax appeals viz. M/s. Greenply Industries Ltd., had filed its return of income tax electronically on 29.11.2015, for the assessment year 2014-2015, showing total income of Rs. 49,12,19,250/-. The case was selected for scrutiny through CASS under complete scrutiny category. The Assessing Officer, thereafter, passed an assessment order, under Section 143 (3) of the Income Tax Act, 1961 , on 29.12.2017, with an assessed income of Rs. 54,42,24,740/-.

4.3. Being aggrieved, the assessee had instituted an appeal before the Commissioner of Income Tax(Appeals), Dibrugarh. The said appeal was registered as CIT(A), Dibrugarh/10082/ 2017-18. During the pendency of the said appeal, the assessee had raised further additional grounds. The additional grounds so raised by the assessee also included the following ground:

“ 1. That on the facts and in the circumstances of the case, Excise Duty Exemption availed during the year under consideration be treated as capital receipt and hence be excluded in computing total income under the provisions of the Act.”

4.4. The said additional ground as raised by the assessee was considered by the Commissioner of Income Tax(Appeals), Dibrugarh, and the said ground was allowed. The additional ground so considered by the Commissioner of Income Tax (Appeals), Dibrugarh, pertains to the claim of the assessee for treating the excise duty exemption availed during the year under consideration, as a capital receipt and hence, to be excluded from computation of total income under the provisions of the Income Tax Act, 1961 . It is to be noted that the assessee in its income tax returns filed for the year, in question, had treated the said excise duty exemption as a revenue receipt. However, the Commissioner of Income Tax (Appeals), Dibrugarh, while holding the excise duty exemption claimed by the assessee in relation to its 2(two) units viz. Rudrapur Plywood Unit and Rudrapur MDF Unit, to be a capital receipt; vide order, dated 25.03.2019, did not proceed to hold that the said income would also not be considered as a book profit for com