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2016 (9) TMI 109 - GUJARAT HIGH COURT

2016 (9) TMI 109 - GUJARAT HIGH COURT - TMI - Taxability of privilege in the form of advanced licence allotted to the assessee - Held that:- The Tribunal, after discussing the contentions advanced on behalf of the respective parties was of the view that income is to be taxed in accordance with the statutory provisions and not on the basis of the impression or the views which the assessee is supposed to have taken in the matter. On facts the Tribunal found that the assessee had advanced such a pl .....

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on of the question as to whether benefit or privilege in the form of advance licence allotted to the assessee is taxable or not is a practical approach having regard to the facts and circumstances of the case. In these circumstances, it is not possible to state that the impugned order passed by the Tribunal suffers from any legal infirmity so as to warrant interference. - The Appellate Tribunal has not erred in remanding the matter to the Assessing Officer for determination of the question a .....

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Devani ) 1. This appeal under section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act ) at the instance of the revenue is directed against the order dated 24.7.2000 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench B , (hereinafter referred to as the Tribunal ) in ITA No.1227/Ahd/1999. 2. While admitting the appeal, this court by an order dated 5.3.2001 had formulated the following substantial question of law :- Whether on the facts and in the circumstances of the .....

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ing deduction under section 80HHC of the Act. During the course of assessment proceedings, the assessee was asked to submit the working of export incentive credited to the profit and loss account. The assessee submitted the working of duty benefit, excise duty refund and duty drawback. The assessee explained that the duty benefit was receivable by it to the extent of ₹ 1,10,56,774/. The duty benefit had been worked out by the assessee on the basis of exports made by it. Considering the exp .....

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overnment of India. It was contended that the duty benefit falls under section 28(iiia) of the Act. 4. Before the Tribunal, the learned counsel for the assessee admitted that the plea raised by the assessee before the Assessing Officer that ₹ 1,10,56,774/- was cash incentive was factually incorrect and that even if it is held that the assessee received licence under the export scheme, the licence was a capital receipt and could be taxed only under section 28(iiia) of the Act when the licen .....

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It was the case of the revenue that the income of ₹ 1,10,56,774/- was computed by the assessee on accrual basis under the mercantile system of accounting followed by it and was credited to the profit and loss account. This was taken as cost and was carried to the closing stock and adjusted against the sale proceeds of goods and licences sold in the next year. According to the revenue, the licence given in the year under consideration was a valuable asset and its value was fixed by the ass .....

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e learned counsel for the respective parties, held thus: 6.2 It is thus clear that provision relating to credit of ₹ 1,10,56,774/- as duty benefit was duly put before the AO although at some other place the assessee had wrongly claimed that duty benefit was cash compensatory allowance. This stand was modified and AO was fully aware of the nature of entries made by the assessee in its books of accounts. All the facts relating to the export made by the assessee and the scheme under which the .....

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enue receipt at all. On account of above circumstances. The assessee cannot be debarred from raising the claim. There is no estoppel against the statute and income is to be taxed as per statutory provisions and not on the basis of impression or views which the assessee is supposed to have taken of the matter. It is further settled law that entries made by the assessee in the books of accounts are not conclusive on the question of taxability at a receipt. The question has to be determined in acco .....

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d order, thought it appropriate to ask the Assessing Officer to re-examine the claim of the assessee under section 80HHC of the Act in case there is a positive total income and allow relief in accordance with law. 7. Mr. Sudhir Mehta, learned senior standing counsel for the appellant assailed the impugned order by submitting that the Assessing Officer was wholly justified in holding that the duty benefit derived by the assessee on the duty free import falls within the ambit of section 28(iiib) o .....

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e head cash assistance as business receipts and hence, the Tribunal was not justified in not deciding the matter on merits and remitting the matter to the Assessing Officer. 8. On the other hand, Mr. B.S. Soparkar, learned advocate for the respondent assessee submitted that in the present case what the assessee had done was to take up the value of export duty which it was likely to save on export of yarn and dyes and had accordingly, credited such amount in the profit and loss account. Reliance .....

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al, having regard to the facts of the case, has merely sent back the matter to the Assessing Officer to decide whether the benefit of privilege in the form of advance licence allotted to the assessee is taxable or not. Therefore, the impugned order of the Tribunal does not give rise to any question of law so as to warrant interference. Reliance was placed upon the decision of 345 ITR 135 and 351 ITR 454 (Karn). 9. As can be seen from the impugned order, the Tribunal after recording that the plea .....

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o be taxed as per the statutory provisions and not on the basis of impression or views which the assessee is supposed to have taken in the matter. The Tribunal observed that it is settled law that entries made by the assessee in the books of account are not conclusive on the question of taxability of a receipt and that such question has to be determined in accordance with law. Therefore, the mere fact that the assessee showed the amount of ₹ 1,10,56,774/- as taxable receipt is not material .....

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e amount was also shown as income and this had been the stand of the assessee throughout. The Tribunal noted that it was true that the assessee did show ₹ 1,10,56,774/- as its income but having regard to its working which the Assessing Officer examined in detail, the credited amount cannot be treated as the assessee s income. The Tribunal noted that the Assessing Officer did not record a finding that on export the assessee was given licences which had commercial value of ₹ 1,10,56,77 .....

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t. The Tribunal, therefore, did not think it fit to accept the submission made on behalf of the revenue that ₹ 1,10,56,774/- should be assessed as taxable receipt representing the value of licence allotted to the assessee on export. According to the Tribunal, the question raised was required to be examined from all angles. 10. On behalf of the assessee, it was contended that the licence allotted to the assessee as per settled law is a capital asset and not a taxable receipt and, therefore, .....

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mmissioner (Appeals) and, therefore, no finding was recorded on the issue. In the above background, the Tribunal was of the view that the assessee was responsible for preventing the revenue authorities from examining in detail the question of taxability of the amount. The Tribunal observed that it had held that the working of export incentive as given by the assessee and examined by the Assessing Officer is not taxable, but hastened to add that it was not its finding that no benefit or privilege .....

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accrued to the assessee or not in accordance with law. 11. Thus, the assessee had initially not raised any contention to the effect that the amount of ₹ 1,10,56,774/- was not taxable. However, before the Tribunal a plea was raised in that regard. The Tribunal noted that such plea was also raised before the Assessing Officer but had not been examined and for the reasons referred to hereinabove, the Tribunal remitted the matter to the Assessing Officer to examine the issue in accordance with .....

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Act, subsequently, before the Tribunal the assessee stated that the plea that the sum of ₹ 1,10,56,774/- was cash incentive was factually incorrect. It was, however, claimed that even if it is held that the assessee received the licence under the export scheme, the said licence was a capital receipt and could be taxed only under section 28(iiia) of the Act when the licence is sold. That no licence was sold in the year under consideration and profit from licence was duly shown in the next .....

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