TMI Blog1995 (2) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... ss-objection No. 56/Mds/1991 was, however, heard along with the assessee's appeal bearing ITA No. 493/Mds/ 1992 (assessment year 1989-90). 2. The facts of the case are that the assessee, a firm of two partners, is engaged in the business of exporting garments. The issues arising for consideration in the case before us is better understood against the backdrop of a brief history of the assessee's assessment to income-tax and particularly in relation to (a) cash compensatory support, and (b) duty drawback received by the assessee. It is not disputed that up to and including the assessment for the assessment year 1986-87, the assessee was accounting for cash compensatory support and duty drawback on receipt basis. This was accepted by the department. For the assessment year 1987-88 the assessee initially filed a return of income in which cash compensatory support and duty drawback received by the assessee were disclosed on receipt basis. Subsequently, however, relying on the ITAT, Delhi Bench-A (Special Bench) order dated 25-3-1988 in the case of Gedore Tools (India) (P.) Ltd. v. IAC [1988] 25 ITD 193, the assessee filed a revised return claiming that tax was not exigible on the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mean and include the benefits accruing to the exporter in relation to the goods belonging to third parties which had been exported by exporter. This argument too was rejected by the Assessing Officer. 5. It was also the assessee's case that if both the incentives received and the incentives receivable are brought to tax together, the scheme of the Act would be vitiated. This argument was also rejected by the Assessing Officer, because, according to him, the problem would not have arisen had the assessee been accounting for the incentives in question on receivable basis right from the beginning. In other words, according to the Assessing Officer, if the assessee had followed the correct method of accounting, this situation would not have arisen. And by the same token "double taxation is not existing". 6. In view of the foregoing, therefore, the Assessing Officer added an aggregate sum of Rs. 36,37,948 (Rs. 20,84,969 + Rs. 15,52,979). 7. Predictably, the said addition was one of the subject-matters of the appeal by the assessee before the CIT(A) who declined to interfere in the following words : "In the report under section 44AB, it was stated that the appellant followed, 'Ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p George finally contended that if the Tribunal were to uphold the decision of the lower authorities on this issue, then in the assessment for the assessment year 1989-90 the incentives actually received during the relevant previous year and attributable to the aggregate addition of Rs. 36,37,948 made on 'receivable' basis in the assessment for the assessment year 1988-89 must be deleted. He, however, made it clear that his main contention was that the sums in question could have been brought to tax only on receipt basis, because that was the method of accounting regularly followed by the assessee. 14. The learned departmental representative on his part strongly supported the impugned orders of the lower authorities on this common issue. 15. In the course of the hearing, certain queries from the Bench elicited the following data : (a) The amounts claimed by the assessee in relation to cash compensatory support and duty drawback were treated by the Assessing Officer as amounts "receivable" by the assessee. (b) The amounts claimed by the assessee were exhibited against item No. 9(a) of the "Statement of particulars in the case of a person carrying on business" in Form 3CD fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In response, Shri M. Narayanan, the learned departmental representative, fairly drew our attention to the fact that item 9(a) of Form 3CD in terms talks of particulars, inter alia, of duty drawback where such drawbacks "are admitted as due by the concerned authorities, but are not credited to profit and loss account". As we see it, the underlined portion brings into bold relief to the fact that when sections 28(iiib) and 28(iiic) talk respectively of cash assistance receivable and any duty repayable as drawback, they obviously refer to cases where the person concerned had acquired a legal right to receive the cash assistance or, as the may be, duty drawback on account of the admission by the concerned authorities that the person was entitled to cash assistance or duty drawback in sums determined by the concerned authorities. Thus, as we see it, the true legislative intent behind the said sections conforms to the well-settled principles of law relating to accrual of rights, and does not seek to make any departure therefrom. 18. At this stage, we may mention that the learned counsel for the assessee stated that the amount actually claimed by the assessee inadvertently came to be ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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