Law:

Section:

Section 28(iiib) read with section 28(iiic), of the Income-tax Act, 1961 - Business income - Cash assistance - Assessment year 1983-84 - Whether, by virtue of clauses (iiib) and (iiic) inserted in section 28 by Finance Act, 1990 with effect from 1-4-1967 and 1-4-1972, cash incentive, duty drawback and premium entitlement received by assesses would form part of income from business or profession and, accordingly, would be subjected to tax-Held, yes Section 80HHC of the Income-tax Act, 1961 - Deductions - Exporters - Assessment year 1983-84 - Whether amount of cash incentive, duty drawback and premium entitlement paid by Government to an assessee under export promotion policy of Government of India will not form part of export turnover and deduction under section 80HHC is not available on such portion of income - Held, yes FACTS The assessee, a private limited company, was engaged in the business of export of carpets. In the course of the assessment proceedings, it claimed that the cash incentive and duty drawback and premium entitlement, which it had received under the 'export promotion policy' of the Government of India were not a revenue receipt and, therefore, not taxable as income at its hand. The ITO held otherwise which order was upheld till the stage of the Tribunal. The Tribunal also held that the cash incentive, duty drawback and premium entitlement was liable to be included in the 'export turnover' of the assessee so as to entitle it to claim due deduction under section 80HHC. On reference : HELD By the Finance Act, 1990 clauses (iiib ) and (iiic) are inserted in section 28 with effect from 1-4-1967, and 1-4-1972, which provided that cash assistance (by whatever name called) and duty drawback received or receivable by any person against exports under any scheme of the Government of India, shall be chargeable to income-tax under the head 'profits and gains' of business or profession. In view of the retrospective amendment the cash incentive, duty drawback and premium entitlement received by the assessee had, rightly been held to form part of the income from business or profession and, accordingly, subjected to tax. So far as the question as to whether…

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