1992 (12) TMI 7

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....addition of Rs. 56,493 made by the Income-tax Officer in respect of interest." The brief facts of the case are that the Government of India has issued a Scheme which is known as "10 per cent. Central Outright Grantor Subsidy Scheme, 1971, for industrial units to be set up in selected backward districts/areas". This Scheme was published on August 26, 1971, in the Gazette of India and subsequent amendments were made on September 30, 1972, and June 19, 1973. According to the Scheme, if a new industrial unit is established or there is a substantial expansion of an existing industrial unit which is to be assisted by a financial institution, then the subsidy is payable to such industrial unit. Under the Scheme, the amount was to be disbursed t....

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....eimbursement from the Ministry of Industrial Development, Government of India. There was delay in the reimbursement of the subsidy by the Government of India to the assessee and accordingly in accordance with the above provision the assessee was entitled to interest on the amount of subsidy paid for which there was delay in reimbursement in respect of the period of delay. The assessee preferred the claim of interest with the Central Government for various previous years commencing from 1972-73. The assessee is following the mercantile system of accounting and the amount of the interest which has accrued has been shown as income of the assessee on accrual basis. No payment, however, was received by the assessee from the Central Government by....

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....l Development had been deleted in the manual as it was not a normally accepted practice. It was also stated that the revised instructions and procedures of the Scheme should be implemented with effect from January 1, 1977. The Income-tax Officer was not satisfied with the submissions made on behalf of the assessee and the amount of Rs. 2,24,428 and the amount of Rs. 1,32,065 were added in the taxable income of the assessee. The assessee challenged the order of the assessing authority before the Commissioner of Income-tax (Appeals) who deleted the addition on the ground that there was no prospect of the assessee receiving the interest from the Government of India. The action of the assessee in not charging further interest for the period ....