BARCLEYS INTERNATIONAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS appeal has been preferred by the assessee under Section 260A of the Income Tax Act, 1961 (in short, "the Act") against the order dated 15.9.2006 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar in ITA No.511(ASR)/1996 for the assessment year 1992-93. Vide order dated July 14, 2008, the appeal was admitted to consider the following substantial question of law:-

(2.) BRIEFLY , the facts as narrated in the appeal may be noticed. The assessee firm is engaged in the business of manufacturing and export of hand tools. It is following mercantile system of accounting. During the assessment year 1992-93, the appellant filed its income tax return declaring an Income of Rs. 24,29,694.00 which concluded cash incentive amounting to Rs. 2,11,205.00 and IPRS amounting to Rs. 19,98,599.00. During the assessment proceedings, it was submitted before the Assessing officer that in the past there had been a dispute as to whether receipt of cash incentive and IPRS etc. was a revenue receipt or a capital receipt. Therefore, in order to put an end to this controversy, an amendment in law vide Finance Act, 1990 was made wherein sub section (iiib) was retrospectively inserted in section 28 of the Act w.e.f 1.4.1967 according to which cash assistance received or receivable was to be treated as income chargeable to tax w.e.f 1.4.1967. Thus, it was submitted that in the light of the aforesaid retrospective amendment in law, export incentive was to be treated as part of the trading account for the year to which it related i.e. assessment years 1988-89 and 1989-90. The assessee also submitted before the Assessing Officer that deduction under Section 80HHC of the Act was to be allowed out of the profits derived from the export of such goods. The Assessing Officer declined to exclude the aforesaid amounts while framing the assessment. The Assessing officer further disallowed an amount of Rs 40,500.00 being the interest on an amount of Rs.6 lacs that had been given as an advance by the assessee firm to one M/s Chopra Property dealer, New Delhi for the purchase of a plot at New Delhi. Aggrieved by the assessment order, the assessee filed an appeal before the CIT(A). The CIT(A) excluded the export incentives received by the assessee firm in the financial year relevant to the assessment year 1992-93 from the scope of total income for the said year with a direction that the said amounts were to be assessed in the hands of the assessee firm in the assessment years 1988-89 and 1989-90 i.e. the period in which the said Export incentives had become receivable. The CIT(A) further deleted the disallowance of Rs. 40,500.00 made by the Assessing officer. Aggrieved by the order, the department filed an appeal before the Tribunal. It was held that though the said export incentives had become receivable in the assessment years 1988-89 and 1989-90, but the same were liable to be included in the total income of the assessee firm for the assessment year 1992-93 and allowed the appeal. Hence this appeal by the assessee.

(3.) LEARNED counsel for the revenue supported the order passed by the Tribunal.