GUPTA GARMENTS Vs. ASSISTANT COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) ITA No. 493/Mad/1992 is the assessees appeal against the order dt. 18th Dec., 1991 of the CIT(A)-VI, Madras, relating to the asst. yr. 1989-90. Cross-objection No. 56/Mad/1991 filed by the assessee is related to the Departmental appeal bearing ITA No. 1655/Mad/1991 (asst. yr. 1988-89). The cross-objection in question, however, raises no issue which is common to the issue raised in the said Departmental appeal. On the contrary, the issues raised in the said cross-objection are common with the issues raised in the assessees appeal relating to the asst. yr. 1989-90.

(2.) The facts of the case are that the assessee, a firm of two partners, is engaged the business of exporting garments. The issues arising for consideration in the case before us is better understood against the backdrop of a brief history of the assessees assessment to income-tax and particularly in relation to (a) cash compensatory support, and (b) duty drawback received by the assessee. It is not disputed that upto and including the assessment for the asst. yr. 1986-87, the assessee was accounting for cash compensatory support and duty drawback on receipt basis. This was accepted by the Department.

(3.) For the purposes of the assessment for the asst. yr. 1988-89, the assessee had, as before, accounted for cash compensatory support and duty drawback on receipt basis. The Assessing Officer found that in the statutory audit report (Form No. 3CD) sums of Rs. 20,84,969 and Rs. 15,52,979 had been shown as the amounts receivable respectively on account of cash compensatory support and duty drawback. According to him, the said sums should be brought to tax on "receivable basis". In this regard he was impelled by the consideration that Ss. 28(iii)(b) and 28(iii)(c) interested by the Finance Act, 1990 with retrospective effect talked respectively of "cash assistance (by whatever name called) received or receivable" and "any duties of customs or excise repaid or repayable drawback".