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2014 (6) TMI 531 - AT - Income TaxAccrual of incentives - Addition u/s 28(iii)(c) of the Act Hypothetical income of the incentive on Advance License Held that:- Assessee contended that as per the accounting system followed by it, it had accounted for the incentive income of advance license on hand for unused license or licenses not received but for which application to the appropriate authorities were made - assessee had discontinued its manufacturing operations after 31.03.1995 and due to discontinuing to its operation had surrendered the licenses and no benefit has been derived out of sale of advance license or by importing materials Relying upon CIT vs. Excel Industries [2013 (10) TMI 324 - SUPREME COURT] - even if it was assumed that the assessee was entitled to the benefits under the advance licences as well as under the duty entitlement pass book, there was no corresponding liability on the customs authorities to pass on the benefit of duty free imports to the assessee until the goods were actually imported and made available for clearance - the benefits represent a hypothetical income which may or may not materialize and its money value is therefore not the income of the assessee - in fact no real income but only hypothetical income had accrued to the assessee and Section 28(iv) would be inapplicable. The Assessee has discontinued its manufacturing operations after 31.03.1995, surrendered the licenses to the appropriate authorities and has not obtained subsequently any benefit out of the advance licenses - no income arose to the Assessee and therefore no addition can be made on account of income on advance license thus, the deletion made on account of income on advance licenses is directed Decided in favour of Assessee.
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