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TMI Blog2015 (1) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... e has simply stated that the subsidy is received towards electronics and women workmen subsidy and it is a general subsidy - assessee himself states that it is not received in respect of any particular asset - subsidy received by the assessee cannot be treated as capital receipt – the order of the CIT(A) is upheld on the issue of bringing to tax the subsidy received by the assessee – Decided against assessee. Denial of deduction u/s 10A - Sale proceeds in foreign exchange not brought into India within six months from the end of the financial year – Held that:- Assessee received sale proceeds to the extent of ₹ 48.28 lakhs after a period of six months from the end of the financial year in which the exports took place - the competent authority is Reserve Bank of India - assessee has not produced any evidence to show that the competent authority has granted extension for receiving sale proceeds beyond six months from the end of the previous year - the claim of the assessee u/s 10A of the Act is rightly disallowed by the lower authorities - the order of the CIT(A) is upheld on the issue of bringing to tax the subsidy received by the assessee – Decided against assessee. Inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of Special Bench of this Tribunal in the case of CIT Vs. Sak Soft Ltd. [313 ITR 353(AT)] and the decision of Hon'ble Bombay High Court in the case of CIT Vs.Gem Plus Jewellery India Ltd. (330 ITR 175) held that freight charges should also be excluded from total turnover for computation of deduction under section 10A of the Act. Against the decision of the Commissioner of Income Tax (Appeals), the Revenue is in appeal before us. 3. Departmental Representative places reliance on the order of the Assessing Officer in excluding freight charges only from export turnover and not from total turnover. 4. Counsel for the assessee supports the order of the Commissioner of Income Tax (Appeals) and places reliance on the decision of the Special Bench of this Tribunal in the case of Sak Soft Ltd.(supra) and the decision of Hon'ble Bombay High Court in the case of CIT Vs. Gem Plus Jewellery India Ltd. (supra). 5. Heard both sides. Perused orders of lower authorities and the decisions relied on. The issue in all these Revenue appeals is squarely covered by the decision of Special Bench of this Tribunal in the case of Sak Soft Ltd. (supra), wherein the Tribunal held that fre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r authorities submits that general subsidy received by the assessee is not capital in nature. Since these subsidies are not received for any setting up of industry and therefore subsidy received by the assessee for electronics and workmen are in the nature of revenue. He further submits that in view of the decision of the Hon'ble Supreme Court in the case of Sahney Steel Press Works Ltd. (228 ITR 253), subsidy received by the assessee is not capital in nature, therefore the said subsidy was rightly brought to tax as revenue. 10. Heard both sides. Perused orders of lower authorities and the decisions relied on. The assessee in the course of assessment proceedings appears to have agreed for the addition in respect of subsidy received by it. However, in the course of appeal proceedings, assessee agitated that subsidy cannot be brought to tax. The assessee never denied that he has not agreed for the addition. Even on merits, the assessee could not establish as to why the subsidy received by it is to be treated as capital receipt and not exigible to tax. The assessee has simply stated that the subsidy is received towards electronics and women workmen subsidy and it is a general ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months from the end of the previous year. In such circumstances, the claim of the assessee under section 10A of the Act is rightly disallowed by the lower authorities. Therefore, we sustain the impugned order of the Commissioner of Income Tax (Appeals) and reject the grounds of appeal raised by the assessee on this issue. 15. The next issue in the appeal of the assessee is that Commissioner of Income Tax (Appeals) is not justified in sustaining the action of the Assessing Officer in not considering interest on debtors and creditors no longer payable written back as income from business allowable for deduction under section 10A of the Act. The Assessing Officer while completing the assessment and computing the deduction allowable under section 10A of the Act did not consider interest on debtors and creditors no longer payable written back amounting to ₹ 84.87 lakhs and ₹ 1,23,048/- respectively as income from business. On appeal, the Commissioner of Income Tax (Appeals) sustained the computation made by the Assessing Officer in excluding interest received on delayed payments from debtors and creditors no longer payable written back holding that these receipts are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng directly relatable only to the amounts receivable by the are during the course of its business on account of the sale of forgings this interest would have to be included as the profits and gains derived from the business of the assessee. We hold that this part of the interest would be entitled to be covered by section 80HH of the Act. 19. The decision relied on by the Commissioner of Income Tax (Appeals) in the case of India Comnet International Vs. ITO (supra) is on the issue of whether interest received by the assessee on Foreign Currency Deposit Account is income of the Industrial Undertaking or not. In the case on hand, the issue is whether the interest received on delayed payment of sale proceeds is income from business or not. Thus, the decision relied on by the Commissioner of Income Tax (Appeals) has no relevance to the issue. Therefore, respectfully following the decision in the case of Madras Motors Ltd. (supra) which is directly on the issue, we direct the Assessing Officer to consider interest on debtors as business income for the purpose of computing relief under section 10A of the Act. 20. Coming to the amount of creditors no longer payable written back, it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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