The Hon’ble J&K High Court deciding an appeal, observed that income tax cannot be levied on hypothetical income but only on real income. Resultantly it was held that no tax can be charged on an amount which is not actually earned and that the Ld. Tribunal was right, in deleting the addition of Rs. 3,29,76,575/-as hypothetical income which has not actually accrued, which was otherwise 64% of the excise duty recognized by the assessee in its books of accounts. On the second issue, the Court observed that excise duty does not fall in the definition of income as envisaged under Section 2(24)(xviii) of the Act and that the amount of Rs.1,85,49,324/-is not an income but a capital receipt not taxable under the provisions of the Act. (AY. 2016-17)