9911796707
TMI Blog2014 (4) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... ve and have perused the orders of the authorities below and also the earlier orders of the Tribunal dated June 12, 1997, and November 29, 1997. On a perusal of the earlier orders of the Tribunal, we observe that the Tribunal took into consideration the scheme regarding credit for excise and held that the right to receive the credit accrued only when there was a liability under the Excise Act and unless the liability under the Excise Act accrued on the production of specified goods, in which the inputs were used and other relevant conditions were fulfilled, the benefit by way of credit does not accrue to the assessee and, further, if there was and that too to the extent of the amount of liability and the balance amount of the accumulated cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent. The issue was discussed by the learned Tribunal in some detail. The reasoning advanced by the Tribunal as to why is the credit entry not taxable, inter alia, are as follows : "It appears to us that the right to receive the credit rebate accrued only when there is liability under the Excise Act. Unless the liability under the Excise Act accrues on the production of specified goods in which inputs are used and other relevant conditions are fulfilled by the assessee the benefit by way of credit does not accrue to the assessee. If there is liability it will get adjusted against the pro forma rebate to the extent of the liability. Thus, the right to realise the rebate is dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, a mere accounting entry cannot be income unless income has actually resulted. Income-tax is a tax on income and, therefore, a hypothetical income is not an income for the purpose of levy of tax. This was held by the Supreme Court in the case of CIT v. Shoorji Vallabhdas and Co. [1962] 46 ITR 144 (SC). Again, it was held by the Gujarat High Court in [1971] 81 ITR 712 (Guj) in the case of CIT v. Western India Engg. Co. that while, under the mercantile system of accounting the accrual of an amount to the assessee would justify a credit entry in the books the converse is not true and mere posting of an entry would not always be conclusive evidence on the question of accrual. It would be worthwhile to see what the Supreme Court in [1961] 41 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; "In the instant case, the first proposition of Viscount Simon clearly applies. The amount paid to the assessee in the instant case is in the nature of subsidy from public funds. The funds were made available to the assessee to assist it in carrying on its trade or business. In our view, having regard to the scheme of the notification, there can be little doubt that the object of various assistance under the subsidy scheme was to enable the assessee to run the business more profitably." He also drew our attention to the following paragraph from page 7 of the report (page 267) : "The Madhya Pradesh High Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipt cannot be treated otherwise than in the nature of a revenue receipt. There can be no quarrel with the submission. If the assessee had in fact received the money, it would have been a receipt in the nature of revenue but the fact is that the assessee did not receive any money. That is the finding of the learned Tribunal. The receipt shown in the profit and loss account is an illusory receipt. The assessee had communicated its reasons as to why it resorted to make to such an illusory entry which include that the company had sustained losses and in order to impress the bankers and to please the shareholders the aforesaid entry was passed into the profit and loss account. The learned Tribunal on facts was satisfied with the explanation. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
