- (1.) The first ground of appeal is general and no specific submission made in respect thereof during the hearing given by us.
(2.) The second ground of appeal is directed against the assessment of a sum of Rs. 6,72,820 as representing revenue income. The facts of the case in this respect are discussed at length in para 6 of the impugned order of the learned CIT(A). In brief, as a result of scheme framed by the Govt. of India on recommendation of an Export Committee headed by S.V. Sampat, the assesseecompany received incentive in the form of higher free sale quota and excise duty rebate. The assessee quantified this incentive and credited to capital reserve account and claimed that this amount being capital receipt in the hands of the assessee was not liable to tax. The AO held that this particular subsidy was in the nature of revenue receipt and relied on this behalf on the decision of Supreme Court in the case of V.S.S.V Meenakshi Achi Anr. vs . CIT, 1966 60 ITR 253 and some other High Court judgments. During the course of hearing before the learned CIT(A) the assessee submitted that these arguments of the AO are covered by the judgment of Tribunal "A-Bench", Calcutta in the case of Balarampur Chini Mills Ltd. vs . ITO in ITA Nos. 2032 and 2033 (Cal) of 1988. The Tribunal in that case after traversing various Court pronouncements came to the conclusion that the incentive received by the assessee was in the nature of capital receipt and, accordingly, the same could not be assessed as business income. The learned CIT(A), however, held that in the case of Balarampur Chini Mills Ltd. (supra), it was never argued that the case of the assessee fell under s. 28(iv) of the Act, which makes such income taxable. Decidedly the assessee had received a benefit arising from the business by way of free sale of entitlement of sugar at a certain percentage of recovery. In case any term loans were due to certain financial institutions, the assessee had to utilise the surplus fund generated on sale of incentive sugar, for payment of such outstanding loans. The learned CIT(A) opined that remission of liability was also a benefit which arose to the assessee from business. As the provisions of s. 28(iv) had not been argued before the Tribunal in the case of Balarampur Chini Mills Ltd. (supra), the learned CIT(A) held that there was no need to interfere in respect of assessment of this amount as business income by the AO.
(3.) During the course of hearing before us, the learned counsel for the assessee pointed out that the decision of Tribunal in the case of Balarampur Chini Mills Ltd. (supra) was reiterated by the Tribunal "E-Bench", Calcutta in the case of Babhnan Sugar Mills Ltd. order, dt. 5th Nov., 1996, in ITA No. 711 (Cal) of 1996. Thus, the finding of the AO that the incentive did not represent capital receipt in the hands of the assessee have to be rejected. The learned counsel pointed out that in both these cases, the Tribunal have considered at length the scheme framed by the Government of India on the recommendation of Sampat Committee and the facts of the case of the assessee are pari materia with those cases.;