COMMISSIONER OF INCOME TAX Vs. HIMALAYA CUTLERY WORKS

JUDGEMENT

(1.) The Income Tax Appellate Tribunal, Allahabad has referred the following question of law under Section 256(1) of the Income Tax Act, 1961, hereinafter referred to as "the Act" for opinion to this Court.

(2.) Briefly stated the facts giving (sic) to the present Reference are as follows:The present Reference relates to the Assessment Years 1988-89 the previous years relevant to the assessment year in question is the calendar year. The I.T.O. in the course of the assessment proceedings rejected the claim for deduction made by the assessee Under Section 80 HHC primarily on the ground that the same had been claimed on the amounts received as duty draw back, cash incentive and transfer of import licence there being no export during the year under consideration and there being complete absence of any foreign exchange earning. The I.T.O. also noted the absence of separate set of accounts book pertaining to such receipts and the other business income of the assessee.

(3.) Being aggrieved with the rejection of the claim, the assessee came up in appeal before the CIT (A) and raised the following arguments which find place in para 3.1 of the Appellate order as under:" In appeal before me, the learned Counsel stated that the appellant is engaged in the business of export of goods. In the year under appeal it is stated that no goods were exported but on the export of the preceding year the appellant received an incentive of Rs. 1,09,388/- by way of duty draw back, cash assistance and entitlements. It is pointed out that the provisions of Section 28 (iiia), (iiib) and (iiic) of Section, stood amended by Finance Act, 1990 wherein income by way of import entitlements, cash assistance and duty draw back were a part of the export income and accordingly 50% of the incentive scheme was fully liable to be allowed to the appellant. It is also brought to my notice that the abovementioned incentives were received by the appellant in the past also and the same have been consistently assessed to tax in respect of the exports of earlier years the incentive amounts were received in the year under appeal and, therefore, the same were entitled to deduction under section 80 HHC. Regarding the maintenance of accounts it is argued that there was no need to maintain two sets of account and it was sufficient if the appellant opened a separate account in the books of account maintained by it relating to the income under reference. It is also stated that all the other conditions laid down under Section 80 HHC are fully satisfied in this case and the appellant has also filed a certificate of the chartered Accountant as required by Section 80 HHC. It is urged that the deduction should be allowed to the appellant."