INCOME TAX OFFICER Vs. MAITRY EXPORTS

JUDGEMENT

(1.) This appeal under Sec. 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:-

(3.) The respondent assessee, an exporter of synthetics cloth, claimed deduction under section 80HHC of the Act at Rs.1,12,79,533.00 but restricted the same to income returned at Rs.80,75,780.00 Thus, the assessee disclosed income at 'nil' after claiming 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 Rs.1,10,56,774.00. The duty benefit had been worked out by the assessee on the basis of exports made by it. Considering the explanation of the assessee, the Assessing Officer was of the view that the duty benefit did not fall under clauses (iiia) (iiib) and (iiic) of section 28 of the Act and, accordingly, issued notice to the assessee. In response thereto, the assessee contended that the duty benefit had been worked out by it on the basis of advance licence available on export of goods which is in the nature of cash assistance (by whatever name called) received or receivable against the export under the scheme of the Government of India. It was contended that the duty benefit falls under section 28(iiia) of the Act.