The Tax Publishers2020 TaxPub(DT) 1831 (Chd-Trib)

INCOME TAX ACT, 1961

Section 5

Assessee was eligible for incentive on the basis of Industrial Policy, 2003 of Government of Punjab on account of expansion of existing unit and to be received by the assessee by way of adjustment in electricity bills of future consumption. However, assessee had not received any benefit by way of adjustment or reimbursement for the year under consideration, so it was a hypothetical income which could or could not materialize to its money value. Therefore, addition made by AO was not justified.

Income - Accrual - Electricity Duty Exemption entitlement - Assessee's eligibility was to be examined by a separate Empowered Committee constituted by State Government

Assessee-company received Rs. 225 Lacs on account of Electricity Duty Exemption entitlement. AO taxed the same as revenue receipt. Assessee's case was that said entitlement although accrued but had not been received during the year under consideration, as case of assessee was to be examined by a separate Empowered Committee constituted by State Government.Held: Assessee was eligible for incentive on the basis of Industrial Policy, 2003 of Government of Punjab on account of expansion of existing unit and to be received by the assessee by way of adjustment in electricity bills of future consumption. However, assessee had not received any benefit by way of adjustment or reimbursement for the year under consideration, so it was a hypothetical income which could or could not materialize to its money value. Therefore, addition made by AO was not justified.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

INCOME TAX ACT, 1961

Section 37(1)

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