TaxTMI 
TaxTMI 
2014 (4) TMI 243
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....he submissions of the learned representative and have perused the orders of the authorities below and also the earlier orders of the Tribunal dated June 12, 1997, and November 29, 1997. On a perusal of the earlier orders of the Tribunal, we observe that the Tribunal took into consideration the scheme regarding credit for excise and held that the right to receive the credit accrued only when there was a liability under the Excise Act and unless the liability under the Excise Act accrued on the production of specified goods, in which the inputs were used and other relevant conditions were fulfilled, the benefit by way of credit does not accrue to the assessee and, further, if there was and that too to the extent of the amount of liability and....
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....d senior advocate appearing for the assessee-respondent. The issue was discussed by the learned Tribunal in some detail. The reasoning advanced by the Tribunal as to why is the credit entry not taxable, inter alia, are as follows : "It appears to us that the right to receive the credit rebate accrued only when there is liability under the Excise Act. Unless the liability under the Excise Act accrues on the production of specified goods in which inputs are used and other relevant conditions are fulfilled by the assessee the benefit by way of credit does not accrue to the assessee. If there is liability it will get adjusted against the pro forma rebate to the extent of the lia....
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....ity is accrued. For the purpose of the Income-tax Act, a mere accounting entry cannot be income unless income has actually resulted. Income-tax is a tax on income and, therefore, a hypothetical income is not an income for the purpose of levy of tax. This was held by the Supreme Court in the case of CIT v. Shoorji Vallabhdas and Co. [1962] 46 ITR 144 (SC). Again, it was held by the Gujarat High Court in [1971] 81 ITR 712 (Guj) in the case of CIT v. Western India Engg. Co. that while, under the mercantile system of accounting the accrual of an amount to the assessee would justify a credit entry in the books the converse is not true and mere posting of an entry would not always be conclusive evidence on the question of accrual. It would be wor....
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....g paragraph from page 4 (page 260) : "In the instant case, the first proposition of Viscount Simon clearly applies. The amount paid to the assessee in the instant case is in the nature of subsidy from public funds. The funds were made available to the assessee to assist it in carrying on its trade or business. In our view, having regard to the scheme of the notification, there can be little doubt that the object of various assistance under the subsidy scheme was to enable the assessee to run the business more profitably." He also drew our attention to the following paragraph from page 7 of the report (page 267) :  ....