THE COMMISSIONER OF INCOME TAX vs. M/S PUNJAB BONE MILLS

ITR-99-1984 (O 101 IN TH THE COMMI

M/S PUNJAB

CORAM: H

H Present: M

SANJEEV P

ISSIONER OF INCOME TAX Vs.

B BONE MILLS **** HON’BLE MR. JUSTICE SAN HON’BLE MR. JUSTICE SAN **** Mr. Ranvijay Singh, Sr. Standing for the petitioner/Revenue. None for the respondent. **** RAKASH SHARMA, J.(Oral) d that notices on the responden pears for the respondent. a reference filed by the Commi Income Tax Appellate Tribun g to question No.1 alone. d counsel for the Revenue has i Court in Commissioner of Inco ed in [1998] 96 Taxman 555 al question was referred vide re essment year 1978-79. AB AND HARYANA AT RH ITR-99-1984 (O&M) Date of Decision: 23.10.2024 . . . . Petitioner . . . . Respondent NJEEV PRAKASH SHARMA NJAY VASHISTH g Counsel ) nt had been served, however, no issioner of Income Tax, referred nal (ITAT), before this Court invited attention to the decision ome-tax vs. Punjab Bone Mills, (Punjab & Haryana) wherein eference No.37/1984 relating to

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ITR-99-1984 (O 4. The qu referred o in a A 5. The Co under: h a fo g a a r T in c h e th in i c o o a o O&M) Page 2 of 8 uestion No.2 in the said referenc d herein which is as under: “ 1. Whether on the facts a of the case, the ITAT is right in la ncentive accrues to the assessee application for claim is mad Authority?”

ourt after examining the law relat “26. It would appear from hand before us that the right to accrued to the assessee on filing forward by Shri Gupta that the da give rise to a right in favour of appear to be appropriate because a claim ascertaining his right. Unle right to receive the income can b Though cash incentive was connect n the nature of a trading receipt cannot be said to accrue or arise u his claim. Cash assistance was g encourage exports. The making o herefore, an important event so ncome was concerned. The date of tself give rise to an income unle claim to receive the income from th of the receipt of cash incentive wo once it is found that the assesse accounts on the mercantile system of income would either depend on t ce is the same as question No.1 and in the circumstances aw in holding that cash on the date when the de to the Competent ting to accrual of income held as the facts of the case at receive cash incentive the claim. The plea put ate of the export would f the assessee, does not the assessee did not lay ess the claim is filed, no be said to have arisen. ted with exports and was or a revenue receipt, it unless the exporter made given to an exporter to of the application was, far as the accrual of f the export would not by ess the assessee laid a he Government. The date uld also be not relevant ee was maintaining his . Therefore, the accrual the date of the making of

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ITR-99-1984 (O th th T a h 6. It is fu challen Commi [2001] dated 1 th 7 q p m n W c 7. Thus, i which i decided will ha provide O&M) Page 3 of 8 he export or on the date of the m he assessee claiming cash incentiv The date of export would not cre assessee made a claim therefor. If his claim, there was no accrual in h

urther asserted that the said de nged before the Supreme Cour issioner of Income-tax vs. Pu 119 Taxman 781 (SC), wherein 9.07.2001 passed the following “1. No interference with the he High Court - CIT v. Punjab Bon 795 (Punj. & Har) is called for. Ha question, considering how that qu properly answered. As to the secon material in regard to the cash inc not appear to have been placed Without that material, it is not pos contention of the revenue is correct 2. The civil appeals are dism

it is apparent that the second is identical to the question No.1 d one way or the other by the Su ave to look into the other aspect ed for the various years to reach making of application by ve from the Government. eate a right unless the the assessee did not file his favour.” ecision of the High Court was rt by the Department titled as unjab Bone Mills, reported in n the Apex Court vide its order order: e judgment and order of ne Mills [1998] 232 ITR Having regard to the first uestion is worded, it is nd question, the relevant centive for exports does d before the Tribunal. ssible to decide that the t. missed with cost.” question in the said reference, in the present case, has not been upreme Court, and we therefore ts relating to the cash incentive to an independent conclusion.

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ITR-99-1984 (O 8. We fin respond 27.04.1 th is A in m d o a fo th m c (A I c sy c in th a d u to p a a O&M) Page 4 of 8 nd that the ITAT while decid dent for the assessment year 1984 found as under: “4. The second question of he accrual of cash incentive. The ssue in the para marked 'B' of According to him, the assessee had ncentive on receipt basis even th mercantile system of accounts and disclosed an amount of Rs. 240,083 of the assessment year 1978-79. Af authorities, he held that as the a following the mercantile system of he cash incentive an addition of R made to the income returned by the challenged the decision of the (Appeals), who has dealt with it in p It was contended by the assessee be changed the system of accountin system to cash, system but the disp cash, system but the dispute was a ncentive received could be said to he accounting period ended on 31 assessment year 1978-79. Howev dealt with the issue in the particula upheld the action of the ITO. The a o the Tribunal and the Tribunal ha paras 5, 6 & 6. 1 of its order, which

"5. The last contention of t addition of Rs 2,4,000/- on account asstt. year 1978-79. The CIT (Appe ding the case of the assessee- 1978-79, vide its order dated f the Revenue relates to ITO has dealt with the f his assessment order. d accounted for the cash hough it was following d by so doing had short- 3/- as part of its income After referring to certain assessee itself had been accounting in respect of Rs. 240,080/- was being e assessee.. The assessee ITO before the CIT paras 4 to 6 of his order. efore him that it had not ng from the mercantile pute was to which of the as to which of the cash o accrue or arise within 1.3.1978 relebant to the ver, the CIT (Appeals) ar fashion and ultimately assessee came in appeal as dealt with the issue in h are quoted below: the assesse is about the t of cash incentive in the eals) has dealt with this

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ITR-99-1984 (O p s r P q e 3 3 3 3 o u p N c H ju a a A th d V M R b s n th O&M) Page 5 of 8 point in para 4 to 6 of his orde statement giving particulars about reproduce the information given bel Period/ quarter ending Date application 30.6.77 12th July, 1977 30.9.77 20th Oct, 1977 31.12.77 18th Jan, 1978 31.3.78 1st April 1978 Total

The dispute is about adding of Rs. 135,779/-and Rs. 104,304/- under appeal. 6. We have heared the perused the order of the C.I.T. Narayanan submitted that his ar correctly appreciated by the CIT (A He explained that the assessee w udged under the mercantile system amounts of cash incentive in disp assessee's income in the asse Acvording to him, the cash incentiv he date when the claim was san decisions of Madras High Court, n Vs Ashoka Lungi Co.-12 OITR 413 Motor Credit Co. P.Ltd.-127 ITR Revenue, it was submitted that cash by the Government of India accord scheme announced before hand an no sooner the assessee affected the he procedure for claiming that er. The assessee filed a t cash incentive and we low: of Amount received Date of receipt of amount 7 108379/- 10.1.1978 7 50680/- 21.3.78 8 135779/ 19.4.78 104304/ 30.9 78 399142/-

of the last two amounts in the assessment year rival submissions and (Appeals). Shri A nant rguments had not been Appeals) to some extent. wanted the claim to be m but according to it the ute had not accrued as essment year 1978-79 ve amount will accrue on nctioned. He cited two amely, CITI Tamil Nadu and CIT Tamil Nadu Vs 572. On behalf of the h incentive was allowed ding to a duly formulated nd, therefore, it accrued e necessary exports and cash incentive merely

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ITR-99-1984 (O r c in M a th a a a o a f w r c c th to A a a in R th th u a a C C O&M) Page 6 of 8 related to the quantification of a cited by the ITO in the assessment n support of this submission. It wa Madras decision in 127 ITR 572 w and that decision would not apply he assessee. 6.1 We have considered the assessee on our inquiry informed available the cash incentive sch assessee but Shri Anant Narayanan of the chart, the particulars of above, that a claim for cash incen filled at the end of the each quarte will be admissible only when th required application each quarte circumstance and the Madras Hig case of Ashoka Lungi Co. 120 I. T. R he right to cash incentive of each q o the assessee at the time when t After the application what follow assessee's claim and the quantif admissible. Applying this principle ncentive for the quarter ended on Rs. 1,04,304/- cannot be said to ac he assessment year 1978-79 a herefore, not been rightly inclu under mercantile system. Conseque addition made by the ITO by the a and partly accept the assessee's con

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ITR-99-1984 (O n 9. It appe the Su aforesa 10. Be that on fact incentiv decidin assessm th a in n a fo w p th d th g tr 11. Thus, i officer O&M) Page 7 of 8 6. The statement of the cas notices to the parties.”

ars that the said aspects were n upreme Court, and therefore th aid observations. t as it may, with regard to assess ts, the Tribunal made following ves and it had remanded the ng it afresh on the basis appr ment year 1978-79. “5. The second objection o he relief of Rs. 2,40,083/- given account of cash incentive. The ass n its appeal urging that point regar not been properly appreciated attention was invited to the fact th for the preceeding assessment year with it in paras 5,6, and 6.1 of its o proper to set aside the finding of t his issue and restore it to the f deciding it afresh on the basis appr he asseesment year 1978-79. Th ground of appeal raised by the asse 6. In the result, the appeal reated to be allowed for satistical p

it is apparent that while on facts to examine as to what are the c se is finalised after due not brought to the knowledge of he Apex Court has made the sment year 1979-80, we find that g observations relating to cash matter to the IAC (Asstt.) for roved by the Tribunal for the of the Revenue is about by the CIT (A) in the sessee has also objected rding cash incentive had by the CIT (A). Our hat this very issue arose r and the Tribuanl dealt order. We will consider it the lower authorities on file of IAC (Asstt.) for roved by the Tribunal for his will dispose of the essee also. of the revenue may be purposes only.” s, it would be for the concerned cash incentives allowed in each

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ITR-99-1984 (O quarter the sam respond date of recogni incentiv 12. The re respond 13. ITR sta 14. All pen

October 23, 20 Mohit goyal 1. Whethe 2. Whethe O&M) Page 8 of 8 , but so far as the question is c me view as already taken by this dent bearing No. ITR-37-1987 (s f submission of claim that the acc ized and not from the date of ve. eference is accordingly answer dent and against the Revenue. ands disposed of as above. nding applications also stand dis

(SANJ 024 r speaking/reasoned?

Y r reportable?

Y concerned, we confirm and take s Court in the earlier case of the supra), and hold that it is on the crual of cash incentive would be f submission or receipt of cash red in favour of the assessee- sposed of accordingly. JEEV PRAKASH SHARMA) JUDGE

(SANJAY VASHISTH) JUDGE Yes/No Yes/No

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