Commissioner Of Income-Tax, ... vs Vijay Fertilizers P. Ltd.
2000 Latest Caselaw 620 Del

ORDER

Arijit Pasayat C.J.

1. This appeal under Section 260A of the Income-tax Act, 1961 (for short the Act) is in respect of order dated 7th June, 1999 passed by the Incometax Appellate Tribunal, Delhi Bench-D (for short the Tribunal) in ITA No. 5264/Del./91 for the assessment year 1989-90.

2. Dispute relates to the question whether subsidies shown as receivable for the months of February and March, 1989 were correctly reflected. Assessing Officer during the course of assessment found that the assessee had shown subsidy receipts at Rs. 95,14,044/- which was inclusive of Rs. 8,34,765/-, receivable for the months of February and March, 1989. He noticed that subsequent to the closure of the accounting period ending on 31st March, 1989, on 5th April, 1989, assessee had submitted a supplementary bill for an amount of Rs. 3,43,765/- on account of subsidy for the month of February, 1989 and on 7th April, 1989 another bill for Rs. 4,11,705/- for the month of March, 1989. Assessing Officer concluded that there was an attempt to conceal the amount of subsidy receivable for the month of March to the extent of Rs. 4,11,075/-. It was also noticed by the Assessing Officer that the assessee had received a sum of Rs. 6,39,946/- as subsidy on account of revised rates in respect of assessment year in question and therefore an addition of Rs. 10,51,021/- was made to the total income of the assessee. Being aggrieved by the aforesaid order, assessee filed an appeal before the Commissioner of Income-tax (Appeal) (in short the CIT(A)) who reduced the addition in respect of Rs. 4,11,075/- to Rs. 2,93,651/- observing that subsidy for the months of February and March 1989 at the old rate (Rs. 788/- for MT) came to Rs. 11,28,416/- against which assessee had declared a subsidy of Rs. 8,34,768/- and the difference comes to Rs. 2,93,651/-only. Addition of Rs. 6,39,946/- was fully deleted by the CIT(A) by observing that the notification dated 28th March, 1989, revising the subsidy, came to the knowledge of the assessee only in the first week of April, 1989 and was received on 5th May, 1989. Before the Tribunal, Revenue contended that the relief granted to the assessee was uncalled for. Tribunal dismissed the same holding that no interference was called for.

3. It was observed that assessee was carrying on the business of manufacture of single super phosphate and received subsidy from the Government of India. Prices of fertilizers are fixed from time to time. In order to claim subsidy assessee raised bills on the basis of rates notified by the Fertilizer Industries Co-ordination Committee (in short FICC) and got the subsidy. Bills were raised usually in the first week of the next month on the basis of actual quantity produced and moved to the warehouses. FICC revises subsidy rates from time to time by issuing notifications. On the basis of such notifications indicating revised rates, subsidy is claimed at revised rates. As revision is effected from a particular date prior to the year of notification, subsidy received on the basis of revised rates is accounted for in the year of receipt and is assessed to tax.

4. In support of the appeal learned counsel for the Revenue submitted that the assessee knew of the revised rates and, therefore, immediately after the closure of the accounting period submitted revised bills. What it ought to have done is to give the actual figure as receivable and that having not been done, the Assessing Officer was justified in his conclusion about the concealment of income and under-statement of subsidy receivable.

5. We find that both the CIT(A) and the Tribunal noticed that the notification dated 28th March, 1989 was received by the assessee in the first week of April, 1989 and, therefore, arrears were subsequently received. Amounts received on the basis of revised rates have to be assessed only in the subsequent year i.e. 1990-91. In fact it is accepted by learned counsel for Revenue that such amounts were included in the income of the subsequent period and has been assessed also. It is to be noted that the assessee followed mercantile system of accounting during the relevant assessment year. There is no dispute that assessee indicated figures of subsidy receivable at the old rate. The notification dated 28th March, 1989, as observed by the CIT(A) and the Tribunal, came to the knowledge of the assessee in the first week of April, 1989 whereafter the revised claims were made. Since inception of business, assessee is following mercantile system of accounting. In the past also amounts received as arrears of subsidy at the revised rates were being included in the income of the year of receipt and assessments were completed accordingly.

6. That being the position, the CIT(A) and the Tribunal were justified in their conclusions about the non-sustainability of the addition made by the Assessing Officer. No question of law, much less a substantial question of law, is involved to warrant our interference.

7. The appeal stands dismissed accordingly.