2016 (7) TMI 951

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....peals, we heard them together and disposing of the same by this common order. 2. Shri T. Banusekar, ld. Representative for the assessee submitted that the assessee received Market Linked Focus Product Scheme scrips on export of knitted garments. The Market Linked Focus Product Scheme was given @ 2% of the FOB value for export to potential new markets and not for all the markets. According to the ld. Representative, this is an incentive given for exploring new market on a long term perspective. The potential markets will be identified by the Government and the samples will be sent for exploring the markets. The assessee is engaged in the manufacturing of hosiery garments, therefore, exported hosiery garments to South American countries. M....

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....a or the local authority or Corporation, in the proposed Direct Tax Code, however, the Direct Tax Code could not see the light of the day so far. The Parliament did not amend the Income-tax Act, 1961 so far so as to include the transfer of right or benefit in sec. 28 of the Act. Therefore, the intention of the Parliament is not to tax the premium on transfer of Market Linked Focus Product Scheme scrips. 4. Placing reliance on the judgment of the Apex Court in Vodafone International Holdings B.V vs UOI & Anr [2012] 341 ITR 1, the ld. Representative for the assessee submitted that referring to the Direct Tax Code Bill, 2010, the Apex Court observed that there was a proposal to tax income from transfer of shares of a foreign company by a no....

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....ct Scheme scrips can be equated to TUF subsidy. Placing reliance on the decision of the Kolkata Bench of this Tribunal in DCIT vs Gloster Jute Mills Ltd, 33 ITR (Trib) 322 and DCIT vs Sutlej Textiles and Industries Ltd, 44 CCH 287, the ld. Representative submitted that subsidy received from Central Government on account of interest refund u/s TUF is capital in nature when the object of subsidy is to sustain competitiveness in the domestic as well as international market. 5. Placing reliance on the judgment of the Apex Court in CIT vs Ponni Sugars & Chemicals Ltd, 306 ITR 392, the ld. Representative submitted that character of a receipt in the hands of the assessee has to be determined with reference to the purpose for which the subsidy w....

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...., Market Linked Focus Product Scheme is nothing but a trade promoting scheme and receipts from sale of scrips has to be treated as revenue in nature. Therefore, the CIT(A) has rightly confirmed the addition made by the Assessing Officer. 8. Placing reliance on the clarification issued by the CBDT in Circular No.564 dated 5.7.1990, the ld. DR submitted that the export incentive needs to be included as income u/s 2(24) of the Act. The export incentives are revenue receipts, therefore, liable for taxation. The incentive now given to the assessee @ 2% of the FOB value is in the nature of export incentive, therefore, it will form part of the revenue receipt u/s 28 of the Act. Since the incentive was given based on the export made by the asses....