आयकर अपील(cid:9)य अ(cid:10)धकरण, ‘ए’ (cid:14)यायपीठ, चे(cid:14)नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI (cid:21)ी मनु कुमार (cid:10)गtiर, (cid:14)या(cid:26)यक सद(cid:29)य एव ं (cid:21)ी एस. आर. रघुनाथा, लेखा सद(cid:29)य के सम#

BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.:434/Chny/2025 (cid:26)नधा$रण वष $ / Assessment Year: 2012-13 M/s. Hyundai Motor India Ltd., The Principal Commissioner of Plot No.H-1, Sipcot Industrial Park, vs. Income Tax-4, Irungattukottai, Sriperumbudur Taluk, Chennai.

Kancheepuram District – 602 117.

[PAN:AAACH-2364-M]

(अपीलाथ&/Appellant) (’(यथ&/Respondent)

अपीलाथ& क) ओर से/Appellant by : Shri. Sriram Seshadri, C.A.

’(यथ& क) ओर से/Respondent by : Ms. E. Pavuna Sundari, C.I.T.

सुनवाई क) तार(cid:9)ख/Date of Hearing : 06.01.2026 घोषणा क) तार(cid:9)ख/Date of Pronouncement : 11.02.2026 आदेश /O R D E R PER S. R. RAGHUNATHA, AM:

This appeal is filed by the assessee against the order dated 09.12.2024 passed by the learned Principal Commissioner of Income Tax–1, Chennai (“Ld. PCIT”) under section 263 of the Income-tax Act, 1961 (“the Act”), whereby the order passed by the Assessing Officer (AO) u/s.143(3) read with section 254 of the Act dated 20.02.2024 was held to be erroneous and prejudicial to the interests of the Revenue.

2. The brief facts emanating from the records are that the assessee, Hyundai Motor India Limited (“HMIL”), is a wholly owned subsidiary of Hyundai Motor Company, South Korea, engaged in manufacture and export of passenger vehicles. For AY 2012-13, the assessment was completed u/s. 143(3) of the Act. During the course of assessment proceedings, the assessee raised an additional claim that the Investment Promotion Subsidy (“IPS”) received in the form of refund of output VAT amounting to Rs.33 crores was a capital receipt not chargeable to tax. The Ld. AO rejected the claim treating the same as revenue receipt.

3. On appeal, this Tribunal, vide order dated 23.03.2023 in IT(TP)A No. 51/CHNY/2021, held that the IPS was granted for setting up/expansion of manufacturing facilities and was capital in nature. However, the matter was restored to the file of the AO for:

• examination of the complete scheme and details of investment for quantification of subsidy; and • verification of applicability of Explanation 10 to section 43(1) of the Act, with a categorical direction to ascertain whether the subsidy was intended to offset the cost of acquisition of assets or merely to accelerate industrial development.

4. Pursuant to the above directions, the AO conducted remand proceedings, called for detailed information, examined the scheme documents, investment details certified by the statutory auditor, and submissions of the assessee. Thereafter, the AO passed an order dated 20.02.2024 under section 143(3) r.w.s 254 of the Act, accepting the assessee’s claim that IPS amounting to Rs.33 crores was a capital receipt not chargeable to tax and that Explanation

10 to section 43(1) of the Act was not applicable.

5. Subsequently, the Ld. PCIT initiated proceedings u/s.263 of the Act, alleging that the AO failed to properly examine the applicability of Explanation 10 to section 43(1) of the Act and that the subsidy was intended to offset the cost of assets. By the impugned order dated 09.12.2024, the Ld. PCIT set aside the order giving effect and directed the AO to apportion the subsidy among various blocks of assets and reduce the same from WDV for recomputation of depreciation.

6. Aggrieved, the assessee is in appeal before us.

7. Before us, the ld.AR assailing the action of the ld.PCIT, submitted that the order passed by the AO u/s.143(3) r.w.s.254 was in accordance with law and there is no reason to interfere by the ld.PCIT. Further, the ld.AR stated that during the course of remand proceedings, the AO sought for relevant materials and the assessee made detailed submissions vide letter dated 01.01.2024 along with details of investments as ce