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TMI Blog1990 (12) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... f the cash assistance received during the year ending30-6-1980appear at pages 88 89 of the department's Paper Book and pages 24 25 of the assessee's Paper Book. The balance amount of Rs. 7,39,722 (Rs. 38,23,642 Rs. 30,83,920) was tendered by the assessee as its income. According to the assessee, the amount of Rs. 30,83,920 did not represent its income. The assessee had entered into an agreement with Iranian State Railways in the assessment year 1979-80 for the supply of rail track accessories. The parties above named were manufacturers who supplied these accessories to the assessee, who, in turn exported it to the Iranian State Railways. The cash assistance was received by the assessee from the Government of India in the Ministry of Commerce, from year to year, in terms of the scheme of cash assistance to exporters. Though the system of accounting followed by the assessee is mercantile, the cash assistance had been offered for taxation on cash (receipt) basis. In the original assessment the Income-tax Officer disallowed the amount of Rs. 30,83,922 vide assessment order dated 19-9-1984 after obtaining the directions dated 14-9-1984 of the Inspecting Assistant Commissioner under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - In respect of "third party" exports, i.e., where all or any of the export documents contain the names of two parties, the import replenishment licence as admissible under the import policy for Registered Exporters may be claimed by any of these two parties provided (i) the claimant is a Registered Exporter and is otherwise eligible under the policy, (ii) the claimant produces a certificate of "disclaimer" from the other party in his favour, and (iii) the party granting the disclaimer, is not itself debarred from receiving licences etc., under the Imports (Control) Order, 1955." 4. Thereafter the Income-tax Officer took up the matter with the Engineering Export Promotion Council and the Joint Chief Controller of Imports and Exports. The Joint Controller of Imports and Exports informed (vide letter dated8-11-1985copy at pages 9 10 of the Department's Paper Book" that information could not be furnished in the absence of file numbers. The Income-tax Officer observed that para 165 of the Import and Export Policy only related to Import Entitlement Licences and did not make any reference to cash assistance and other export incentives. He observed that the Engineering Export Promotio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refer to the relevant provisions in any one of those agreements, say that with M/s. Everest Steel Fabricators Ballabhgarh. Under clause 2, it was the obligation of the Manufacturer and Supplier to indemnify the assessee against all claims arising from the defects, delay or supply of goods. Further, clause 11 provided that all export entitlements which accrue or arise on account of the export of the goods (including cash assistance) shall accrue to the manufacturer supplier on the F.O.B. prices as given in Annexure I and the exporter (assessee) shall have to right, title and interest in the same whatsoever. Any replenishment licence or duty drawback was also to similarly accrue only to the manufacturer and shipper to the exclusion of the assessee. The assessee as the exporter was to issue a disclaimer for the same in favour of the Manufacturer and Shipper and to render all reasonable and lawful assistance as may be deemed necessary by the Manufacturer and Shipper to claim the export incentive or as may be prescribed under the rules. The assessee had written a letter dated 12-12-1984 to the Engineering Export Promotion Council to issue a certificate (with reference to Para 165 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 7, 8 and 11 of the department's paper book). The erstwhile Ministry of Foreign Trade had also informed all concerned, vide its letter dated18-8-1971, regarding the provisions for cash assistance (copy at pages 13-19 of the department's paper book). The assessee company had received cash assistance from the JCCI E itself as an exporter (except in respect of one sale dated 3-11-1978 vide invoice No. 1032) and therefore it was not necessary to procure any disclaimer from the Manufacturer/Supplier. The Invoice No. 1032 related to M/s. Steel Fast who remitted Rs. 1948/27 as cash assistance to the assessee after keeping the amounts of cash assistance attributable to it under its agreement (vide pages 26-27 of the assessee's Paper Book). The assessee company's case was never of third party exports. This was also clarified by it in its letter dated26-12-1985to the Income-tax Officer (copy at pages 86-87 of the department's paper book). In regard to the dutydraw back, the shipping bills carried the note that duty drawback may be passed on to the supplier. The drawback payment order also showed that it could be endorsed by the claimant in favour of any party. (Vide copies at pages 51, 55 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e's income. 8. In the cross objection filed by the assessee the point taken is that the learned CIT(Appeals) erred in law in not entertaining the legal ground that the cash assistance amount of Rs. 7,39,723 was not taxable in law. The learned CIT(Appeals) had held that, such a ground did not arise from his predecessor's order dated11-1-1985and was therefore not entertainable and that even on merits the amount in question was taxable as a trading receipt. 9. We have heard the learned representatives of both the sides on the cross objection. The assessee had itself tendered the amount in question as its income. Such an offer or admission has neither been explained to be the result of any inadvertence or mistake nor can such a plea be helpful now in view of the retrospective amendment of section 2(24)(vb) and section 28(iiib) with effect from 1-4-1967 by the Finance Act, 1990, as the amount is, treatable, as income/"profits and gains of business or profession". The cross objection was therefore, rightly and fairly conceded by the learned counsel for the assessee as devoid of any merit. It must therefore fail. 10. In the result, the appeal filed by the department as well as the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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