TMI Blog1997 (9) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... e form of higher free sale quota and excise duty rebate. The assessee quantified this incentive and credited to capital reserve account and claimed that this amount being capital receipt in the hands of the assessee was not liable to tax. The AO held that this particular subsidy was in the nature of revenue receipt and relied on this behalf on the decision of Supreme Court in the case of V.S.S.V. Meenakshi Achi Anr. vs. CIT (1966) 60 ITR 253 (SC) and some other High Court judgments. During the course of hearing before the learned CIT(A) the assessee submitted that these arguments of the AO are covered by the judgment of Tribunal "A-Bench", Calcutta in the case of Balarampur Chini Mills Ltd. vs. ITO in ITA Nos. 2032 and 2033 (Cal) of 1988. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incentive did not represent capital receipt in the hands of the assessee have to be rejected. The learned counsel pointed out that in both these cases, the Tribunal have considered at length the scheme framed by the Government of India on the recommendation of Sampat Committee and the facts of the case of the assessee are pari materia with those cases. 4. Regarding the argument of the learned CIT(A) pertaining to the provisions of s. 28(iv) of the Act, the learned counsel of the assessee pointed out that these provisions have been considered in scholarly treatise of Sampat Iyengar's "Law of Income-tax" 9th Edn., p. 482. The learned author referred to the judgment in the case of Lachit Film vs. CIT (1992) 195 ITR 402 (Gau) and held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ni Mills Ltd. and Babhnan Sugar Mills Ltd., held that the incentive as received by the assessee in the present appeal, constitutes capital receipt in the hands of the assessee and is, therefore, not chargeable to income-tax. The learned CIT(A) has in the impugned order relied upon the provisions of s. 28(iv) of the Act. We are unable to accept the broad proposition canvassed by the learned CIT(A) that the capital receipts arising to an assessee during the course of business would nonetheless be liable to tax under the provisions of s. 28(iv) of the Act. Various authorities cited by the learned counsel of the assessee clearly refute this line of argument. 7. Learned Departmental Representative has relied upon the decisions in (1966) 60 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance. This aspect has been discussed in the impugned order by the learned CIT(A) in para 9. The facts briefly are that the assessee claimed deduction of investment allowance pertaining to the asst. yrs. 1989-90 and 1990-91 on the ground that investment allowance reserve was created by the assessee during the previous year under assessment. The AO rejected the claim of the assessee relying on the judgment of Hon'ble Supreme Court in the case of Subhalaxmi Mills Ltd. vs. CIT (1989) 77 CTR (SC) 31 : (1989) 177 ITR 193 (SC) and held that it was obligatory on the assessee to create the reserve in the years of installation of plant or machinery or in the immediately succeeding year when the plant and machinery was first put to use even if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO has allowed the assessee deduction of this amount on account of addition made by him to the value of closing stock in the asst. yr. 1990-91. Since on appeal the learned CIT(A) for the asst. yr. 1990-91 had decided the matter in favour of the assessee, the adjustment made by the AO during this year to the extent of Rs. 93,26,845 was required to be withdrawn. 12. During the course of hearing before us, the learned counsel of the assessee argued that in the asst. yr. 1990-91 the learned CIT(A) had only directed the AO to decide the closing stock valuation on the basis of the directions for the asst. yr. 1989-90. The learned counsel of the assessee also argued that the directions in the impugned order have been given by the learned CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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