Economic Explosives Ltd. v. Asstt. Commissioner of Income Tax

Parties Involved

Facts Summary

Economic Explosives Ltd. is a company engaged in the manufacture of Detonators/Filled shells, Aluminium & Copper Tubes, Fuse Head. The company set up its manufacturing unit in Nagpur, Maharashtra, under a government scheme for industrial development in backward areas. The company received a Sales Tax Subsidy of Rs.11,99,56,135 as part of this scheme. The assessee claimed this subsidy as a capital receipt and deducted it from the total income offered to tax. However, the Assessing Officer did not reduce this subsidy while computing the book profit under the Minimum Alternate Tax (MAT) provisions. The assessee filed appeals against this decision before the Income Tax Appellate Tribunal.…

Legal Issues

• 1. Whether the Sales Tax Subsidy should be reduced from the book profit under the MAT provisions?

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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