Focus Product Scheme export incentive treated as capital receipt where the scheme promoted market expansion.

Export incentive received under the Focus Product Scheme was treated as a capital receipt because it was directed towards market expansion rather than revenue operations. The claim, raised during assessment by letter, had to be examined on merits, and the issue was taken as covered by a coordinate bench ruling on identical facts in the immediately succeeding assessment year. On that basis, the incentive was held not to be assessable as income and the assessee's claim was accepted.

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Issues: Whether the export incentive received under the Focus Product Scheme was to be treated as a capital receipt and allowed as such in assessment.

Analysis: The assessee raised the claim during assessment proceedings by way of a letter and the appellate authority ought to have examined it on merits. The issue was found to be covered by the coordinate bench decision in the immediately succeeding assessment year on identical facts. Following that view, the incentive under the Focus Product Scheme was held to be an export incentive directed towards market expansion and therefore a capital receipt, not assessable as income.

Conclusion: The claim was accepted and the incentive under the Focus Product Scheme was held to be a capital receipt, in favour of the assessee.

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