TMI Blog1978 (2) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee in the course of its business as a textile manufacturer and is being accounted for by the company as a receipt year after year. The company is aware of and is regularly in expectation of this receipt on account of exports of its products and is accounting for it on the basis of exports made. The company is entitled to receive this sum as a matter of law and this receipt has occurred in the course of the assessee's trade and its capacity as a trader." The Income-tax Officer, therefore, held that there was no basis for the contention that the amount was received in a casual nature and noticing that such a plea in respect of such a receipt had been rejected in the earlier years, included the amount in the computation of the total income. It may at this stage be relevant to refer to some of the provisions of the scheme under which the amount in question was received. There was a public notice which dealt with import of raw cotton against exports of cotton cloth and/or yarn. The said notice, inter alia, contained the basis upon which the mills whose cotton cloth or yarn were exported should be granted import licences for the import of cotton. It is not necessary to set out the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les per installed looms. (b) The term ' non-traditional markets ' shall mean those markets in the continent of America and in Europe other than U.K., to which the mills had sold and exported cloth and/or yarn. The term ' traditional markets ' shall mean all other markets including U. K., but excluding Nepal, to which the mills had sold and exported cloth and/or yarn." The assessee preferred an appeal from the order of the Income-tax Officer mentioned before. The Appellate Assistant Commissioner confirmed the order of the Income-tax Officer holding, inter alia, as follows : " 4. For the assessee, the submission before us in this appeal was that it was a capital receipt. The exemption is no longer rested as a casual receipt as it recurs year after year. The fact that it was granted under a scheme formulated by the Government for bringing in foreign exchange was relied upon as showing that the assessee got it outside his trade. Mr. Balai Pal, learned counsel for the department, submitted that the assessee earned the amount in the course of its business and as a result of the sale of its manufactured goods, and that the receipt was nothing but business profit. 5. We find that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion, in any way militate against the said amount being considered to be a revenue receipt. This is not in the nature of a subsidy or a grant from the Government. But the position in respect of grant or subsidy from the Government has been explained by the House of Lords in the case of Ostime (H. M. Inspector of Taxes) v. Pontypridd and Rhondda Joint Water Board [1946] 28 TC 261, 278; [1946] 14 ITR (Supp) 45, 47, where Viscount Simon observed as follows : " The first proposition is that, subject to the exception hereafter mentioned, payments in the nature of a subsidy from public funds made to an undertaker to assist in carrying on the undertaker's trade or business are trading receipts, that is, are to be brought into account in arriving at the balance of profits or gains.... The second proposition constitutes an exception. If the undertaker is a rating authority and the subsidy is the proceeds of rates imposed by it or comes from a fund belonging to the authority, the identity of the source with the recipient prevents any question of profits arising ;..." But we are not concerned here with the question of subsidy or grant. The amount in question, as is apparent from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the sum of Rs. 5,85,701 received by the assessee under the export incentive scheme as a receipt in the course of carrying on of the business and as such taxable income? ", must be answered in the affirmative and in favour of the revenue. The second question was as follows : " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in rejecting the claim of Rs. 9,600 paid as salary to Smt. Makhani Debi Bagrodia as being not an admissible expenditure ? " It appears that Smt. Makhani Debi had been paid a salary of Rs. 9,600 during the year in question. She was the wife of Shri M. L. Bagrodia, who was in the employment of the company holding a top position. Her appointment was from the 1st June, 1962. On being asked by the Income-tax Officer as to what services were rendered by her and the basis for the salary paid, it was explained by a letter dated the 30th December, 1964, that she and two other ladies, whose remuneration was also being questioned by the Income-tax Officer, were supervising the canteens, hospitals and other staff and workers' welfare activities of the different units of the assessee-company. The Income-tax Officer, however, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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