INCOME TAX ACT, 1961

Section 260A

- - -

Assessee had not declared cash compensatory assistance and duty drawback on the ground that same was liable to tax on receipt basis. AO rejected the same and included in total income on accrual basis and completed assessment. Tribunal permitted deduction on accrual basis holding that amount would be receivable only when assessee gets such a right to receive the income. Revenue challenged this by way of appeal before High Court. Held: Assessee would get a right to receive the amount only when it is sanctioned to assessee by custom authorities and not when assessee makes a claim of same. Since, amount of cash compensatory assistance and duty drawback during the relevant year was not sanctioned to assessee therefore, income had not accrued to assessee. Thus, in fact, Tribunal had allowed deduction on accrual basis only. Therefore, question of law was answered against the revenue and in favour of assessee.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 1995-96

INCOME TAX ACT, 1961

Section 260A

SUBSCRIBE FOR FULL CONTENT