TMI Blog1985 (4) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... e Government for each year. Such rates are announced by the Ministry of Finance. In case of supplies made inIndiaagainst global tenders, successful Indian bidders are treated as exporters. Similarly, supplies made by any Indian supplier to the projects inIndiawhich are assisted by IDA/IBRD loans are also treated as export and such supplies are known as 'deemed exports'. Although, there is no physical export involved, the Government announces from time to time various incentives in relation to such 'deemed exports'. The incentives available in respect of physical exports are not automatically applicable in the case of deemed exports unless there is a specific notification of the Ministry of Commerce in that regard. During the accounting period April 1980 to March 1981, the export of conductors was banned excepting supplies against project contracts or supplies of these items manufactured out of imported material. Hitherto, the assessee had been showing export incentive receivable by it on mercantile basis. However, for the assessment year in question, the system of accounting in regard to the export incentive on 'deemed exports' was changed by the assessee to 'due and payable' basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with a view to postpone the payment of taxes or set off the income of the assessment year in question against the expected losses of the subsequent year. He, therefore, added the amount of Rs. 17,71,320 as the income of the assessee. 3. In appeal, firstly, the learned Commissioner (Appeals) held that the assessee was not right in saying that there was any uncertainty in the Government's policy. In this connection, he noticed that claims continued to be made even after the circular letter dated6-9-1980of the Government and the assessee continued to be paid. He found from a perusal of the data regarding the assessee's claims (given in para 5.2.1 of the impugned order) that in almost all cases, the amount paid had been the same as claimed. He found that in the settlement of the claims, there was only a little delay. Secondly, the learned Commissioner (Appeals) held that the payment of duty drawback was almost automatic and that whatever delay occurred was either because the assessee had chosen to delay the making of the claim or because of the usual delays due to the Government's procedures. He observed that there was almost no time lag between the sanction of the claim and the act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have considered the rival submissions as also the decisions referred to above. The main question which falls for our consideration is whether the change in the system of accounting hitherto followed by the assessee in regard to the export incentive on 'deemed exports' was bona fide. So far as the policy of the availability of export incentives on 'deemed exports' are concerned, it is seen that vide circular dated 4-7-1980, the Cable Conductors Mfrs. Association of India informed that duty drawback on AC/ACSR had been revised with effect from 1-6-1980 resulting in the total withdrawal of the drawback on AAC conductors while on ACSR conductors, the rate had been reduced as per public notice published in the Gazette of India on 19-5-1980. Thereafter, the Ministry of Commerce vide its letter dated 28-7-1980 informed the Cable Conductors Mfrs. Association of India that the AAC conductors could be classified under sub-serial 4610 for the purposes of grant of supplementary cash assistance in lieu of duty drawback (earlier the AAC conductors were classified under sub-serial 4603 for the purposes of grant of supplementary cash assistance in lieu of duty drawback). Thereafter on4-8-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter the decision on the revision/review petition that the assessee would know as to what extent the claim preferred by the assessee had been accepted. It is, therefore, clear that making of the claim did not mean automatic acceptance thereof. Therefore, no amount could be said to be legally due to the assessee until the claim was accepted. We have already referred to the change in the policies and procedures appearing upon the grant of cash assistance. On these facts, even if for the first time the assessee was to decide as to which system of accounting to follow in regard to the export incentives, it could not be said that the following of the system of accounting on the basis of receipt of the amount would not be proper. In fact, the system which was hitherto followed by the assessee, namely, the mercantile system was not the correct system. In fact, even the system adopted by the assessee for the assessment year in question could not be said to be a cash system in the sense that money was still not actually received by the assessee. The inference drawn by the learned Commissioner (Appeals) that by shifting the date of accrual the assessee-company had intended to reduce its losse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance on account of machinery added during the year was calculated at Rs. 3,37,144. The balance of Rs. 2,21,597 related to the existing machinery. The learned Commissioner (Appeals) was of the view that extra shift allowance had to be calculated on the basis of the number of days any particular plant and machinery had worked and not on the basis of the number of days the concern worked double or triple shift. Reliance was placed by him in this connection on the decision of the Calcutta High Court in the case of Anantpur Textiles Ltd. as also on the following decisions : CIT v. Dehri Rohtas Light Railway Co. Ltd. [1979] 116 ITR 847 (Cal.), Dhampur Sugar Mills Ltd. v. CIT [1980] 126 ITR 648 (All.) (FB) and South India Viscose Ltd. v. CIT [1982] 135 ITR 206 (Mad.). 6. In the appeal before us, reliance was placed on behalf of the assessee on the decision of the Tribunal in ITO v. Sri Varadaraja Textiles (P.) Ltd. [1984] 9 ITD 469 (Mad.), as also on the circular letter dated28-10-1970of the CBDT. On the other hand, the learned departmental representative relied upon the order of the learned Commissioner (Appeals). 7. We have considered the rival submissions as also the decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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