2015 (4) TMI 515 - HC - Income Tax

Taxability of Transport subsidy - method of accounting - accrual of income - ITAT has fallen in error in holding that the transport subsidy amounting to 16, 11, 477/- which was never received by the assessee and for which merely a claim was lodged with the Jammu 16, 11, 480/- on account of the fact that the assessee had not filed any documentary evidence supporting its claim for the concerned assessment year and had adopted the mercantile system of accounting. It had credited subsidy receivable on 21.3.2002 and therefore it was considered to be received on the said date. Accordingly the appeal of the revenue was allowed. Thus it would be apparent that the assessee apart from adopting mercantile system of accounting had chosen to take benefit of Section 80-IB of the Act and sought exemption. It had never taken the plea before the authorities below which is now sought to be raised that it was only liable to be assessed to the tune of 5, 17, 123/- which was actually received in the year concerned. As noticed neither was the certificate filed from the concerned General Manager District Industries Centre when the return was filed on 31.3.2002. The certificate was only obtained for the subsequent period and therefore it was never only the case of the assessee from day one that it could take benefit of Clause 6 (vii) of the Scheme which has been reproduced above on the ground that actual freight paid would be the income. Once that was not the specific case before the assessing authority and neither the same material had been placed before the Tribunal we are of the view that the substantial question of law which is now sought to be raised on the strength of aforesaid clause of the Scheme is not permissible. - Appeal dismissed.

Summary

Issues:
Interpretation of transport subsidy as income under the Income Tax Act, 1961 for assessment year 2002-03.

Analysis:
The appellant contested the treatment of a transport subsidy as income by the Income Tax Appellate Tribunal, arguing that the subsidy amount was never received and should not be taxed as income. The appellant relied on the Transport Subsidy Scheme of 1971, stating that only a portion of the subsidy was received, and the balance should not be added to the income. Reference was made to a Supreme Court judgment emphasizing that income must be both accrued and received to be taxable. The appellant's position was that the Tribunal erred in upholding the assessment order.

The revenue countered by stating that the appellant had previously sought benefits under Section 80-IB of the Act, indicating that the subsidy was treated as income during assessment. The assessing officer deemed the subsidy as income incidental to the industrial undertaking and ineligible for deduction under Section 80-IB. The revenue argued that the appellant's claim of not receiving the subsidy was inconsistent with past filings and assessments.

The Court noted discrepancies in the appellant's filings and the absence of a certificate supporting the claim of non-receipt of subsidy for the relevant year. The Commissioner of Income Tax partially allowed the appeal, recognizing the non-receipt of a portion of the subsidy. However, the Tribunal dismissed the appellant's appeal based on precedents where subsidies were considered taxable income. The Tribunal found that the appellant had not provided sufficient evidence to support the claim of non-receipt.

Ultimately, the Court held that the appellant's argument of non-receipt of subsidy was not raised consistently throughout the proceedings, and no substantial question of law arose from the case. The Court emphasized the importance of presenting relevant documents and consistent arguments before the authorities and the Tribunal. As the appellant's stance evolved during the process, the Court dismissed the appeal, concluding that the appellant's case did not warrant relief under the law.