Section 28(iii)(b) — the law in short
What the courts have decided on section 28(iii)(b), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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CIT v Meghalaya Steels Ltd
Supreme CourtHelps taxpayer
My unit gets transport, power and interest subsidies from the State — does that money count as profit derived from the undertaking for section 80-IB or 80-IC?
Yes. The Supreme Court held on 9 March 2016 that subsidies reimbursing elements of the cost of manufacturing or selling the undertaking's products have a direct nexus with its profits and qualify for deduction under sections 80-IB and 80-IC. Profits and gains in those sections mean net profit, arrived at after deducting the costs of making and selling the goods; if the State refunds part of those costs, the resulting profit is derived from the business. That the immediate source of the money is the Government makes no difference. Liberty India, which concerned an export incentive available only after manufacture, was distinguished, and the contrary Himachal Pradesh view was held wrongly decided.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.