Duty drawback accrual as business income where exports and drawback claim stand in the assessee's own name.

Duty drawback received on exports made in the assessee's own name is treated as export incentive and, under section 28(iiia), section 28(iiib) and section 28(iiic) of the Income-tax Act, is chargeable as business income. Where the exports, invoices and drawback claim stand in the assessee's name, the amount accrues to the assessee in the first instance. Later transfer of the proceeds to a sister concern does not negate accrual or alter taxability in the assessee's hands, so the receipt remains assessable as business income.

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Issues: Whether duty drawback received on exports made in the assessee's name constituted income accruing to the assessee and assessable as business income, notwithstanding that the amount was passed on to its sister concern.

Analysis: Duty drawback is an export incentive available to the exporter under the Customs and Central Excise Duty Drawback Rules, 1971, and, by virtue of section 28(iiia), section 28(iiib) and section 28(iiic) of the Income-tax Act, 1961, such export incentives are chargeable as business income. The exports, invoices and drawback claim were made in the assessee's own name, so the receipt accrued to it in the first instance. Subsequent passing on of the amount to another concern did not prevent accrual of income in the assessee's hands or alter its taxability.

Conclusion: Duty drawback accrued as income to the assessee and was rightly assessable as business income; the addition was sustained.

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