आयकर अपील(cid:547)य अ(cid:876)धकरण,‘ए’ Ûयायपीठ, चÛे नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI (cid:302)ी जॉज (cid:91) जॉज (cid:91) के, उपाÚय¢ एवं (cid:302)ी जगद(cid:547)श, लेखा सदèय के सम¢

BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.: 1426/CHNY/2025 िनधा(cid:6981)रण वष(cid:6981)/Assessment Year: 2016-17 The Deputy Commissioner of M/s. Loocust Incorp, Income Tax, Vs. 28A, MGR Nagar, Tiruppur Circle, 14^th Street, PN Road, Tiruppur. Tiruppur – 641 602.

PAN: AABFL 6721C (अपीलाथ(cid:7278)/Appellant) ((cid:7079)(cid:7004)यथ(cid:7278)/Respondent)

अपीलाथ(cid:7278) क(cid:7409) ओर से/Appellant by : Ms. Mythili, JCIT (cid:7079)(cid:7004)यथ(cid:7278) क(cid:7409) ओर से/Respondent by : Shri T. Banusekar, Advocate सुनवाई क(cid:7409) तारीख/Date of Hearing : 26.11.2025 घोषणा क(cid:7409) तारीख/Date of Pronouncement : 26.11.2025 आदेश/ O R D E R PER GEORGE GEORGE K, VICE PRESIDENT:

This appeal filed by the Revenue is directed against the order of the Commissioner of Income Tax (Appeal), National Faceless Appeal Centre (NFAC), Delhi dated 18.03.2025, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2016-17.

2. The solitary issue that is raised is whether the First Appellate Authority (FAA) is justified in deleting the addition made by the AO amounting to Rs.3,66,94,795/- on account of sale of Market Linked Focus Product Scheme [MLFPS].

3. Brief facts of the case are as follows: The assessee is a firm engaged in the business of manufacturing and export of hosiery garments. For the assessment year 2016-17, the return of income was filed declaring total income of Rs.5,89,89,110/-. The assessment was selected for scrutiny by issuance of notice u/s.143(2) of the Act on 18.09.2017. The assessment was completed u/s.143(3) of the Act vide order dated 27.12.2018 by making an addition of Rs.3,66,94,795/- on account of sale of MLFPS license. The assessee had claimed the said receipt as capital receipt not liable to tax, whereas the AO treating the same as a revenue receipt and brought the same to tax.

4. Aggrieved by the order of the AO, the assessee filed appeal before the FAA. The FAA by following the order of the Chennai Bench of the Tribunal in the case of ACIT vs. Eastman Exports Global Clothing (P.) Ltd., in ITA No.3326/Chny/2019 (order dated 20.09.2024) decided the issue on merits in favour of the assessee. The relevant finding of the FAA reads as follows:-

“After going thru AO's order and appellant's submission I am of the considered opinion that income from the sale of Merchandise Exports from India Scheme (MEIS) scrips is a non-taxable capital receipt and not revenue receipt. MEIS scrips were rewards granted under the Foreign Trade Policy (FTP) 2015-20 to help exporters offset infrastructural inefficiencies and expand markets and not to generate immediate profits. I rely upon decision of jurisdictional ITAT in the case of I.T.A. Nos.3326/Chny/2019 & 326/Chny/2024 ACIT Vs Eastman exports AY 17- 18/18-19 order date 20/9/2024 wherein at para 17 onwards Hon'ble tribunal has taken above view with above mentioned logic and following Hon'ble Supreme Court decision in the case CIT v. Ponni Sugars &

Chemicals Limited [2008] 306 ITR 392.”

5. Aggrieved by the order of the FAA, the Revenue has filed the present appeal before the Tribunal. The Ld.DR relied on the grounds.

6. The Ld.AR on the other hand submitted that the issue in question is squarely covered in favour of the assessee by the order of the Chennai Bench of the Tribunal in the case of Eastman Exports Global Clothing (P.) Ltd., (supra). It was submitted that the said order of the Chennai Bench was followed by the order of Delhi Bench of the Tribunal in the case of Dhanuka Laboratories Ltd., vs. ACIT in ITA No.826/Del/2023 (order dated 05.03.2025).

7. We have heard rival submissions and perused the material on record. The Revenue has raised solitary issue on merits namel