TMI Blog2017 (4) TMI 764X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Shri N.K.Pradhan, Accountant Member For The Assessee : Shri Neeraj Sheth For The Revenue : Shri Purushottam Kumar ORDER Per Joginder Singh (Judicial Member) Both these appeals are by the Revenue challenging the impugned orders dated 12/02/2015 and 11/02/2015 respectively. 2. During hearing the learned Counsel for the assessee Shri Neeraj Sheth contended that the tax effect in ITA No.4136/Mum/2015 (A.Y.2011-12) is less than the prescribed monetary limit. 3. The learned DR did not controvert this factual matrix / assertion of the learned Counsel for the assessee. 4. We have considered the rival submissions and perused the material available on record. The total addition made by the Assessing Officer in respect of unreconciled AIR / ITS data is ₹ 27,10,970/-, thus, the total tax effect comes to ₹ 9,00,516/- which is below prescribed monetary limit, therefore, CBDT instruction No.21 of 2015, dated 10/12/2015 (F No.279/Misc./142/ 2007-IT(PT) is applicable, wherein, the Department was advised/directed by the Board not to file appeal in the cases where the tax effect does not exceed the following monetary limit.:- Sl. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso the order of the Commissioner of Income Tax (Appeals) in its own case for the assessment years 1995-96 to 1997-98. 7. By his order dated 24th March 2004, the Assessing Officer did not accept the assessee s claim on the ground that the taxability of such benefits is covered by Section 28(iv) of the Income Tax Act, 1961 (for short the Act ) which provides that the value of any benefit or perquisite, whether convertible into money or not, arising from a business or a profession is income. According to the Assessing Officer, along with an obligation of export commitment, the assessee gets the benefit of importing raw material duty free. When exports are made, the obligation of the assessee is fulfilled and the right to receive the benefit becomes vested and absolute, at the end of the year. In the year under consideration, the export obligation had been made and the accounting entries were based on such fulfilment. The Assessing Officer distinguished Jamshri on the ground that it pertained to the assessment year 1985-86 when the export promotion scheme was totally different and the taxability of such a benefit was examined only with reference to Section 28(iv) of the Act but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case and in law ITAT is justified in law in holding by following its decision in the case of Jamshri Ranjitsinghji Spinning Weaving Mills Ltd. (41 ITD 142), that advance license benefit and DEPB benefits are taxable in the year in which these are actually utilized by the assessee and not in the year of receipts. 14. By the impugned order, the High Court declined to admit the appeal filed by the Revenue under Section 260-A of the Act. 15. It was submitted before us by learned counsel for the Revenue that in view of the provisions of Section 28(iv) of the Act, the value of the benefit obtained by the assessee is its income and is liable to tax under the head Profits and gains of business or profession . We are unable to accept the contention of learned counsel for the Revenue for several reasons. 16. Section 28 (iv) of the Act reads as follows:- Profits and gains of business or profession. 28. The following income shall be chargeable to income-tax under the head Profits and gains of business or profession - .. (iv) the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of duty free imports to the assessee until the goods are actually imported and made available for clearance. The benefits represent, at best, a hypothetical income which may or may not materialise and its money value is therefore not the income of the assessee. 22. In Godhra Electricity Co. Ltd. v. Commissioner of Income Tax, [1997] 225 ITR 746 (SC) this Court reiterated the view taken in Shoorji Vallabhdas and Morvi Industries. 23. Godhra Electricity is rather instructive. In that case, it was noted that the High Court held that the assessee would be obliged to pay tax when the profit became actually due and that income could not be said to have accrued when it is based on a mere claim not backed by any legal or contractual right to receive the amount at a subsequent date. The High Court however held on the facts of the case that the assessee had a legal right to recover the consumption charge in dispute at the enhanced rate from the consumers. 24. This Court did not accept the view taken by the High Court on facts. Reference was made in this context to Commissioner of Income Tax v. Birla Gwalior (P.) Ltd., [1973] 89 ITR 266 (SC) wherein it was held, aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of duty free import to the assessee even without any imports having been made; and the probability or improbability of realisation of the benefits by the assessee considered from a realistic and practical point of view (the assessee may not have made imports), it is quite clear that in fact no real income but only hypothetical income had accrued to the assessee and Section 28(iv) of the Act would be inapplicable to the facts and circumstances of the case. Essentially, the Assessing Officer is required to be pragmatic and not pedantic. 28. Secondly, as noted by the Tribunal, a consistent view has been taken in favour of the assessee on the questions raised, starting with the assessment year 1992-93, that the benefits under the advance licences or under the duty entitlement pass book do not represent the real income of the assessee. Consequently, there is no reason for us to take a different view unless there are very convincing reasons, none of which have been pointed out by the learned counsel for the Revenue. 29. In Radhasoami Satsang Saomi Bagh v. Commissioner of Income Tax, [1992] 193 ITR 321 (SC) this Court did not think it appropriate to allow the reconsideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n favour of the assessee and did not pursue the matter any further but in respect of some assessment years the matter was taken up in appeal before the Bombay High Court but without any success. That being so, the Revenue cannot be allowed to flip-flop on the issue and it ought let the matter rest rather than spend the tax payers money in pursuing litigation for the sake of it. 32. Thirdly, the real question concerning us is the year in which the assessee is required to pay tax. There is no dispute that in the subsequent accounting year, the assessee did make imports and did derive benefits under the advance licence and the duty entitlement pass book and paid tax thereon. Therefore, it is not as if the Revenue has been deprived of any tax. We are told that the rate of tax remained the same in the present assessment year as well as in the subsequent assessment year. Therefore, the dispute raised by the Revenue is entirely academic or at best may have a minor tax effect. There was, therefore, no need for the Revenue to continue with this litigation when it was quite clear that not only was it fruitless (on merits) but also that it may not have added anything much to the public ..... X X X X Extracts X X X X X X X X Extracts X X X X
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