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8.7 The Ld. AR submitted that nature of amendment to income definition u/s 2(24)(xviii) was not a substantive amendment and no corresponding amendment was made in the charging provisions u/s 28. It has been submitted that the provisions of Sec.2 of the Act define various terms and phrases used in the Act and it is merely a definition provision and does not deal with the charge of income tax. As per Section 14 of the Act, the charge of income tax and computation of total income is governed under the respective heads of income. Section 2(24) of the Act was amended vide Finance Act, 2015 w.e.f. 01.04.2016 (i.e., from AY 2016-17) to include 'subsidies' within the definition of income vide insertion of clause (xviii). However, amendment was not made in the charging section i.e., Section 28 of the Act to tax the same as 'profits and gains of business or profession'. Merely because the said clause has been included in the definition provision, it will not mean that it is automatically taxable in the absence of any change in the charging provisions of Section 28 of the Act. Therefore, this aforesaid amendment to Sec. 2(24) of the Act is not a substantive amendment since the definition is a mere explanation of a particular term or phrase used in the Act and not a charging section by itself. If the provisions of Sec.2 are considered to be charging provisions, then the provisions of section 28 of the Act dealing with the charging provisions for profits and gains from business would lose its relevance. The definition in section 2(24) has to be read along with the charging provisions u/s 28 of the Act to determine whether the incomes as per the definition section will be chargeable to tax as per the charging provisions. Wherever the legislature intended to tax any particular item of income or receipt, it has been very clearly included within the charging provisions of Sec.28 of the Act. The Ld. AR cited the example of taxation of non- compete fee received by an assessee which was brought to tax as per Clause (va) of Section 28 of the Act. Correspondingly, the said item was also included within the definition of income by way of insertion of Clause (xii) to section 2(24) of the Act. 8.8 The Ld. AR further submitted that merely because an amendment has been introduced in the definition Section without any corresponding amendment / change in the charging provisions, it will not mean that the amendment is a substantive amendment intended to bring a new income / receipt within the taxation net without there being any change in the charging provisions. For instance, "dividend" has been included within the definition of income as per section 2(24)(ii) of the Act. However, this would not automatically mean that all dividend incomes are chargeable to tax as certain categories of dividend income enjoyed an exemption. Therefore, chargeability or otherwise of an item of income/receipt is always governed under the respective charging provisions of the Act and not by the definition as per Section 2 of the Act. The Ld. AR further submitted that even prior to introduction of Clause (xviii) in section 2(24) of the Act, subsidies which were revenue in nature were being chargeable to tax. Therefore, it cannot be said that all subsidies are being covered within the tax net only post amendment. If this position is accepted, i.e., all subsidies are taxable only post amendment to section 2(24), then it would mean that even revenue subsidies prior to insertion of the term 'subsidies' in income definition will not be chargeable to tax. Since revenue subsidies even prior to the amendment were always chargeable to tax under section 28, the above interpretation that all subsidies are covered within the tax net post amendment is not consistent with the position of law. Since there is no change in the charging provisions under section 28 of the Act, the principles laid by the Apex Court and other High Courts would still hold the field in order to interpret whether a particular receipt is capital or revenue in nature even post amendment to section 2(24) of the Act. The Ld. AR thus submitted that the taxability of subsidies is dependent on whether it is revenue or capital in nature and the determination of this is based on the "Purpose test" as laid down by several judicial precedents including the Apex Court. Considering the purpose test, these receipts should be treated as capital receipt not chargeable to tax.

8.9 The Ld. AR submitted that the purpose and objective of amendment was only to align with Income Computation and Disclosure Standards (ICDS) provisions. The above amendment was introduced directly in the Finance Act 2015 w.e.f. AY 2016-17 (later amended to be effective from AY 2017-18). It was submitted that the ICDS was notified by the Government on 31.03.2015 u/s 145 of the Act and the same were made applicable from AY 2017-18. Accordingly, the legislature intended to do corresponding consequential / supplementary amendment to the definition section in the Act. Therefore, the intention behind amendment to section 2(24) of the Act was only to align with the then newly introduced provisions of ICDS notified under section 145 of the Act. The objective / intention of the legislature in relation to introduction of this clause could be understood from the Explanatory Notes issued vide Circular No.19/2015 [F.NO.142/14/2015-TPL] dated 27.11.2015 which read as "Alignment of provisions relating to taxation of Government Grants with the provisions of Income Computation and Disclosure Standards (ICDS)'. The above Explanatory Note explicitly states that the objective of insertion of clause (xviii) of section 2(24) of the Act was to align with ICDS. The Ld. AR submitted that the provisions of ICDSs were introduced only to aid in computation of income and for disclosure purposes and it is not a substantive law. ICDS by itself is not a taxing statute, i.e., it does not deal with the taxability or otherwise of income / expenditure under the Act. It merely lays down the principles for recognition / treatment of those items which have already been dealt with under the Act. The taxability or otherwise of income / expenditure is governed by the provisions of the Income Tax Act read with the law laid down by the Supreme Court as may be applicable. Thus, the amendment to section 2(24) by way of insertion of clause (xviii) was only to align with the provisions of ICDS as per the stated purpose. The intention was not to tax all kinds of subsidies so as to include the non-taxable capital subsidy. Further, the amendment does not state that it is made to nullify the interpretation of law as laid down by the Supreme Court in various decisions including Sahney Steel & Press Works Ltd. v. CIT [1997] 94 Taxman 368; CIT vs. Ponni Sugars and Chemicals Ltd. [2008] (174 Taxman 87) etc. as also by other High Courts and Tribunals. Therefore, it was to be held that the intention of the amendment was not to make a substantive amendment to bring a new item of income within the charging provisions of section 28 of the Act. The intention was only to align the definition of income under section 2(24)(xviii) of the Act with the provisions of ICDS.

8.10 The Ld. AR cited instance of insertion of Explanation-10 to section 43(1) of the Act vide Finance Bill 1998. The Explanation-10 to section 43(1) of the Act states that where a portion of the cost of an asset acquired by an assessee has been met directly or indirectly by the Central Government or State Government or any authority established under any Law or by any other person, in the form of subsidy or grant or reimbursement, then in a case where the subsidy is directly relatable to the asset, such subsidy shall not be included in the actual cost of the asset. Since this is a substantive amendment, this has been introduced in the Finance Bill 1998 itself and not directly in the Finance Act 1998. Wherever a new substantive amendment was made, it was undertaken through a Finance Bill along with a Memorandum i.e., when any substantive amendment is introduced, the intention is clearly set out in the Memorandum to the respective Finance Bill mentioning that the amendment is proposed in view of judgments of various Courts, since the Finance Bill and the Memorandum are tabled in the Parliament for discussions. The Ld. AR also drew analogy from various other amendments made in the Finance Act, 2015 which are not substantive in nature. It was the plea of Ld. AR that only non-substantive amendments are made via the Finance Act directly since it does not require any deliberations/discussions in the Houses of Parliament. In the above background, Ld. AR submitted that IPS granted to the assessee do not fall within the provisions of ICDS VII since the same deal with treatment of different kinds of Government grants and IPS so received by the assessee would not fall within the categories as mentioned therein. The Ld. AR pleaded that ICDS VII deals only with revenue subsidies i.e., government grants in the nature of revenue receipts and capital subsidies which are granted for meeting the cost of assets. The provisions of ICDS VII would not cover non-taxable capital subsidies. The impugned incentive was not given to offset the cost of any particular asset and is merely issued with an objective of accelerating the industrial development. Though, for the purpose of determining the amount of subsidy to be given, cost of eligible investment was taken as the basis, the IPS was not specifically intended to subsidize the cost of the assets. Therefore, since the amendment to section 2(24) was made only to align with the provisions of ICDS, it is clear that said amendment shall not include non-taxable capital subsidies. Nevertheless, the preamble of ICDS VII provides that the provisions of the Act shall prevail in case of any conflict between ICDS and the provisions of the Act. The same would reaffirm the position that the amendment to section 2(24) of the Act was made only to align with ICDS, which by itself is not a substantive law, and it cannot be interpreted to mean that all forms of subsidies are henceforth taxable post the amendment.

12. Proceeding further, we find that the provisions of Sec.5 provide the scope of total income. It provides that subject to the provisions of this Act, total income of a person who is resident would include all income from whatever sources derived which is received or deemed to be received in India or income which accrue or arise or deemed to accrue or arise in India. The heads of income has been carved out in Section 14 of the Act. The provisions of Sec.14 provide for heads of income under which such income would be assessable. These provisions provide that save as otherwise provided by this Act, all income shall, for the purposes of charge of income-tax and computation of total income, be classified in five distinct heads of income i.e., Salaries, Income from House Property, Profits and Gains of business or profession, capital gains or income from other sources. In other words, once an item has been found to be covered within the meaning of 'income', the same shall have necessarily to be classified in distinct heads of income and computations of tax would be made accordingly. Since the definition of income is an inclusive one, it is not necessary as well as not practical that each item of income is sclearly and distinctly spelt out in charging provisions of distinct heads of income. We also find that the provisions of Sec.28 specify the income which shall be chargeable to Income Tax under the heads 'Profits and Gains of business or Profession'. The sub-clause (i) provides that profits and gains of business or profession which was being carried on by the assessee at any time during the previous year shall be chargeable to tax under the head 'Profits and Gains of Business or Profession'. From the scheme of the Act, it could be seen that the definition of income as provided in Sec. 2(24)(xviii) is of widest amplitude and it is an inclusive definition and not an exhaustive definition. The scope of total income includes all types of income that is received or that accrues or arises to the assessee. The income has to be divided into five distinct heads one of which is 'Profits and Gains of Business or Profession'. In our considered opinion, when the definition of income is not exhaustive one, it is not necessary that to tax the income, corresponding amendment should have been made in Sec.28 of the Act. The argument that the amendment is not a substantive amendment is not correct and we do not concur with this argument.