TaxTMI 
TaxTMI 
2025 (3) TMI 2208
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....1961 ["the Act"] for Assessment-Year ["AY"] 2018-19, the assessee has filed this appeal. 2. The background facts leading to present appeal are such that the assessee-company filed return of AY 2018-19 declaring a total income of Rs. 7,20,89,230/-. The case was selected for scrutiny assessment and the AO passed order u/s 143(3) after making two additions, namely (i) addition of Rs. 18,32,561/- on account of income from duty drawback, and (ii) disallowance of Rs. 25,40,234/- on account of personal expenses. Aggrieved, the assessee carried matter in first-appeal whereupon the CIT(A) upheld the addition of Rs. 18,32,561/- but deleted the disallowance of Rs. 25,40,234/- and this way partly allowed assessee's first appeal. Still aggrieved, the....
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....f the Act governs the taxability of duty drawback receipts. He submitted that Para 4 of ICDS-VII prescribes thus: "4(1) Government grants should not be recognised until there is reasonable assurance that the person shall comply with the conditions attached to them, and the grants shall be received. 4(2) Recognition of Government grant shall not be postponed beyond the date of actual receipt." 8. Ld. AR then referred a publication titled "Technical Guide on Income Computation and Disclosure Standards" issued by "The Institute of Chartered Accountants of India" wherein following guidance has been provided with regard to above Para 4 of ICDS-VII: "5.11 Para 4 of the ICDS has two limbs. The two limbs collectively p....
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....e' has in law the prima facie meaning of reasonable with regard those circumstances of which the actor, called on to act reasonably, knows or ought to know." 5.13 The phrase 'reasonable assurance' has also not been defined by the ICDS. It connotes something which has a sufficient degree of certainty. Often, one cannot obtain absolute assurance because of the following limitations: (a) Grant conditions which are contingent upon the performance of outsiders or third parties; (b) Change in Government policies; (c) Delay in communicating the precise quantum of grant; 5.14 Accordingly, absolute assurance in complying with conditions and receipt of grant may not be attainable. The ICDS does....
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.... 22.06.2017 15.10.2019 2 1971745 03.01.2018 3,29,980 Kenya 06.12.2018 22.06.2017 15.10.2019 3 8199446 24.08.2017 1,40,698 Kenya 06.12.2018 28.11.2016 01.08.2017 4 8277419 28.08.2017 1,49,519 Tanzania 06.12.2018 26.09.2017 5 3200990 28.08.2017 44,185 Bangladesh 10.04.2018 20.04.2018 Total 18,32,561 11. Ld. AR thereafter made a detailed submission for all line items of duty drawback receipts as mentioned at S.No. 1 to 5 in above Table. Replying to same, Ld. DR for revenue also made his submissions. We present below the entire discussion alongwith our adjudicati....
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....within the period of 6 months after date of export as stipulated under Foreign Exchange Management Act, 1999 ("FEMA) but still the 'reasonable assurance' is very technical and it was difficult for anyone to account for duty drawback in the previous year 2017-18 relevant to AY 2018-19. This argument raised by Ld. AR is for the sake of argument only and we are not convinced. We have made this clear to Ld. AR during hearing itself. Accordingly, the pleading made by Ld. AR is rejected and it is held that the AO has rightly taxed the duty drawback of Rs. 44,185/- in AY 2018-19. However, since the assessee has already offered and department has taxed this very receipt in AY 2019-20, the assessee cannot be made to suffer double taxation. Therefore....
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....ify the procedure for the recovery or adjustment of the amount of such drawback. Per contra, Ld. DR for revenue resisted the argument of Ld. AR on the footing that the assessee received 25% advance in current year and therefore it cannot be said that there was no 'reasonable assurance'. After a careful consideration, we find considerable merit in the submission of Ld. AR. We find that the assessee received only part advance from buyer and the substantial portion was not received within 6 months as prescribed in FEMA. The assessee was ultimately able to realise much later on 15.10.2019. These facts are sufficient enough to show that there was no 'reasonable assurance' that the assessee shall comply with the condition of realization of export....