V.P. ELHENCE, J.M.: ORDER assessee is aggrieved of order dt. 9th Jan., 1985 of ld. CIT(A), V, New Delhi. 2 . assessee, Indian Aluminium Cables Ltd., 18, Bara Khamba Road, New Delhi is limited company which is engaged in manufacture of conductors and cables. first ground relates to change of method of accounting, followed by assessee in regard to export incentive on deemed exports from mercantile to cash basis. facts in that regard are as follows : As per policy of Government, (Ministry of Finance, export incentives and duty draw back are allowed on various items exported outside India and payment for which is received in convertible foreign exchange (4.5 dollars or pounds sterling). rates of such incentives are fixed from time to time on basis of export-import policy announced by government for each year. Such rates are announced by Ministry of Finance. In case of supplies made in India against local tenders, successful Indian bidders are treated as exporters. Similarly supplies made by any Indian supplier to projects in India which are assisted by IDA/IBDRD loans are also treated as export and such suppliers are known as "deemed exports". Although, there is no physical export involved, government announces from time to time various incentives in relation to such "deemed exports". incentives available in respect of physical exports are not automatically applicable in case of deemed exports unless there is specific notification of Ministry of Commerce in that regard. During accounting period April, 1980 to March, 1981, export of conductors was banned excepting supplies against project contracts or supplies of these items manufactured out of imported material. Hitherto assessee had been showing export incentive receivable by it on mercantile basis. However, for assessment year in question, system of accounting in regard to export incentive on "deemed exports" was changed by assessee to "due and payable" basis. In this regard, case of assessee was that during assessment year in question, there had been some change in policy of government with regard to deemed exports in so far as export of conductors was banned except supplies against project contracts to various Electricity Boards under IDA/IBRD assistance project. According to assessee, there were under IDA/IBRD assistance project. According to assessee, there were changes in government policy with regard to export incentive and duty draw back. case of assessee before IAC was that export incentive was based on policy of government and that on account of frequent changes in such policy, it had become difficult to ascertain amount. Reference was also made to Ministry of Commerce letter dt. 4th Aug., 1980, by which Cables and Conductors Manufacturers Association had been informed that sub-serial 4603 of Draw Back Schedule had been withdrawn and as such AAC conductors would not be covered under sub- serial 4610 of Draw Back Schedule for purposed of supplementary cash assistance and each individual would have to forward draw back data for fixation of rates for supplementary cash assistance in lieu of duty draw back. Reference was also made to another letter dt. 6th Sept., 1980, wherein it was clarified that where item is otherwise banned for exports, no assistance would be available on supply thereof as "deemed exports". As per calculations submitted by assessee before IAC (Asstt.), on basis of supplies made by it, it should have received additional sum of Rs. 17,71,320 as follows, had system of accounting not been changed : Date Date Amount Amount Month of of claim claimed received payment June, 19- Rs. 17- Rs. 1980 2-1981 79,018 6-1981 79,019 July, 2- Rs. 24- Rs. 1980 12-1980 9,13,892 7-1981 9,13,892 Aug., 2- Rs. 28- Rs. 1980 12-1980 7,78,410 7-1981 7,78,440 Rs. . . . . 17,71,320 However, ld. IAC (Asstt.) took view that there was no significant change in export incentive receivable and actually received in past. He was also influenced by fact that more or less equal amount as export incentive was received by assessee subsequently, though subsequent payment was based on adhoc settlement and not on basis of calculations/claims made by assessee. IAC (Asstt.)., therefore, took view that change in accounting system had been made only with view to postpone payment of taxes or set off income of assessment year in question against expected losses of subsequent year. He, therefore, added amount of Rs. 17,71,320 as income of assessee. 3. In appeal firstly ld. CIT(A) held that assessee was not right in saying that there was any uncertainty in government s policy. In this connection, he noticed that claims continued to be made even after circular letter dt. 6th Sept., 1980 of government and assessee continued to be paid. He found from perusal of data regarding assessee s claims (given in para 5.2.1. of impugned order) that in almost all cases, amount paid had been same as claimed. He found that in settlement of claims, there was only little delay. Secondly, ld. CIT(A) held that payment of duty draw back was almost automatic and that whatever delay occurred was either because assessee had chosen to delay making of claim or because of usual delays due to Government s procedures. He observed that there was almost no time leg between sanction of claim and actual payment. He also noticed that no sanction was actually issued by Customs authorities who were only issuing forwarding letter enclosing cheque for amount due. He held that payment of duty draw back accrued t least on date when claim was preferred by assessee-company. He, therefore, held that it could not be said that change in system of accounting was bona fide or that it had been made for overriding reasons. He held that by shifting date of approval, assessee-company had intended to reduce its losses in subsequent years which amounted to carry forward of losses. 4 . In appeal before us, Shri O.P. Vaish, ld. counsel for assessee reiterated submissions made on behalf of assessee before IT authorities on basis of its replies. In short, he highlighted points that government had withdrawn all export benefits to "deemed exports." Next he pointed out that even earlier system of accounting followed by assessee was not case of "legally due and payable though not received "or" accrued but not due". He pointed out that making of claim could not be taken as accrual of income as claim was subject to uncertainties. He pointed out that apart from uncertainty in accrual of such income, export incentive on deemed export could accrue only when incentive claims had been processed by concerned authorities after they were satisfied that required conditions had been met. He also pointed out with reference to printed balance sheet that there never were losses. He also pointed out that finding of CIT(A) in this regard was not correct and that payment of draw back was not automatic. Reliance was also placed by him on decision of Bombay High Court in : (i) CIT vs. Nadiad Electric Supply Co. Ltd. (1971) 80 ITR 650 (Bom), and Spl. Bench decision of Tribunal in ITO vs. Bajaj Auto Ltd. (1984) 40 CTR (Trib) 33 (Bom) (SB) : (1984) 8 ITD 296 (Bom)(SB). He therefore, argued that not only change in method of accounting was bona fide but that it was also correct method of accounting which should have been followed by assessee from very beginning having regard to nature of income and its accrual. On other hand, Shri K.K. Sharma, ld. Departmental Representative strongly supported orders of IT authorities. 5. We have considered rival submissions as also decisions referred to above. main question which falls for our consideration is whether change in system of accounting hitherto followed by assessee in regard to export incentive on "deemed exports" was bona fide. So far as policy of availability of export incentives on "deemed exports" are concerned, it is seen that vide circular dt. 4th July, 1980, Cable and Conductors Manufacturers Association of India (CACMAI for short) informed that duty draw back on AAC/ACSR had been revised w.e.f. 1st June, 1980 resulting in total withdrawal of draw back on AAC conductors while on ACSR conductors, rate had been reduced as per public notice published in Gazette of India on 19th May, 1980. Thereafter, Ministry of Commerce vide its letter dt. 28th July, 1980 informed CACMAI that AAC conductors could be classified under Item 4610 for purposes of grant of supplementary cash assistance in lieu of duty draw back (earlier AAC conductor were classified under Item No. 4603 for purposes of grant of supplementary cash assistance in lieu of duty draw back). Thereafter on 4th Aug., 1980. CACMAI was informed that draw back under sub-serial 4603 of Draw Back Schedule had been withdrawn and that as such AAC conductors would not be covered under sub-serial No. 4610 of Draw Back Schedule for purposes of supplementary cash assistance in lieu of duty draw back on supplies made under IDA/IBRB. It was also directed that for grant of supplementary cash assistance, each individual had to forward draw back data for fixation of rates of supplementary cash assistance in lieu of duty draw back. assessee was given similar advice by Joint Chief Controller of Imports and Exports (JCCI & E), in persuance to its letters. Indian Electrical Manufacturers Association (IEMA) also informed assessee vide its letter dt. 19/20th Sept., 1980 that no draw back duty was payable on supplies of AAC conductors by covering them under draw back rights which had to be determined on weighted average duties paid on aluminium received by allottee prior to despatch of AAC conductors and that it would be long drawn process. There can be no doubt that this imparted element of unascertainability so far as payment of draw back was concerned. Ministry of Commerce vide its letter dt. 6th Sept., 1980 had informed that where item was otherwise banned for exports, no assistance would be available on supply of that item as "deemed export". Therefore, assessee was right in contending that government had withdrawn export benefits to "deemed exports" and, procedure and system of allowance of export incentive against "deemed exports" had also been changed. Cash assistance was thus matter of bounty and assessee could not claim it as of right. After claim is filed by assessee, Joint Chief Controller of Imports and Exports forwards its application for cash assistance to bank endorsing copy to assessee giving reasons for reduction of claim. assessee, if not satisfied with reducing of claim could follow appeal procedure as per hand book of Rules and Procedure. appeal is then adjudicated upon by Joint Chief Controller of Imports and Exports and if that appeal also fails, assessee can file revision before Chief Controller of Imports and Exports in terms of paras 381 to 397 of Hand Book of Imports and Exports Procedure. It is only after decision on revision/review petition that assessee would know that to what extent claim preferred by assessee had been accepted. It is, therefore, clear that making of claim did not mean automatic acceptance thereof. Therefore, no amount could be said to be legally due to assessee until claim was accepted. We have already referred to change in policies and procedures appearing upon grant of cash assistance. On these facts, even if for first time, assessee was to decide as to which system of accounting to follow in regard to export incentives, it could not be said that following of system of accounting on basis of receipt of amount would not be proper. In fact system which was hitherto followed by assessee namely mercantile system was not correct system. In fact even system adopted by assessee for assessment year in question could not be said to be cash system in sense that money was still not actually received by assessee. inference drawn by ld. CIT(A) that by shifting date of accrual assessee-company had intended to reduce its losses in subsequent years which amounted to carry backward losses also does not appear to be correct on facts. balance sheets filed by assessee clearly show that it was not incurring any losses but was deriving profits. In fact perusal of details of amount of Rs. 17,71,320 shows that even though claims were made for assessment year in question, date of payments of claims all fell in subsequent year. In reply to query from Bench, ld. counsel for assessee stated that changed system of accounting w s being regularly followed by assessee for assessment years subsequent to assessment year in question. We are, therefore, of view that since on date of making of claim, amount was neither due nor payable to assessee, change of system of accounting made by assessee could not be said to be other than bona fide. In fact we find that on basis of similar pattern of facts, Spl. Bench of Tribunal, in case of ITO vs. Bajaj Auto Ltd. (1984) 40 CTR (Trib) 33 (Bom)(SB) : (1984) 8 ITD 296 (Bom)(SB), held that assessee could change method of accounting in respect of duty draw back and cash assistance from government on export performance, from mercantile to cash basis. Tribunal noticed that scheme of cash assistance as not statutory but concession and that amount could not be known before hand certainly as it depended on facts such as government policy and rates which were frequently changed. It also noticed that amounts involved were received regularly and very late from government. ratio of aforesaid decision could also be taken advantage of by assessee. We, therefore, decide this ground of appeal in favour of assessee. 6. next ground relates to claim for extra shift allowance to tune of Rs. 5,58,740. assessee had claimed Rs. 15,50,400 as against which IAC (Asstt.) allowed only Rs. 10,84,942. He held that some of items of plant and machinery were purchased and installed in February and March, 1981. He was of view that extra shift allowance could not be allowed for whole year as machinery had not worked for minimum of 240 days. Reliance was placed by him on decision of Hon ble Calcutta High Court in Anandpur Textiles Ltd .vs. CIT (1979) 116 ITR 861 (Cal). On basis of computation relied upon by assessee, extra shift allowance on account of machinery added during year was calculated at Rs. 3,37,144. balance of Rs. 2,21,597 related to existing machinery. ld. CIT(A) was of view that extra shift allowance had to be calculated on basis of number of days any particular plant and machinery had worked and not on basis of number of days concern worked double or triple shift. Reliance was placed by him in this connection on decision of Calcutta High Court in case of Anandpur Textiles Ltd. (supra) as also on following decisions : (i) CIT vs. Dehri Rohitas Light Railway Co. Ltd. (1979) 116 ITR 847 (Cal), and Dhanpur Sugar Mills Ltd. vs. CIT (1980) 126 ITR 648 (All)(FB) and (3) South India Viscose Ltd. vs. CIT (1982) 29 CTR (Mad) 356 : (1982) 135 ITR 206 (Mad). 7. In appeal before us, reliance was placed on behalf of assessee on decision of Tribunal in ITO vs. Sri Varadaraja Textiles (P) Ltd. (1984) 9 ITD 469 (Mad), as also on circular dt. 28th Oct., 1970, of CBDT. On other hand, ld. Departmental Representative relied upon order of ld. CIT(A). 8. We have considered rival submissions as also decisions referred to above. In circular of Board, it is clearly mentioned that where concern has worked double shift or triple shift, extra shift allowance would be allowed in respect of entire plant and machinery used by concern without making any attempt to determine number of days for which each machinery actually worked double or triple shift during relevant previous year. This being circular beneficial to assessee and it is not having been shown that this circular was not applicable for assessment year in question, we are of view that claim made by assessee was justified and that it should have been accepted. similar view was taken by Tribunal, in following decisions, copies of which have been filed by assessee in its paper book : (i) Order dt. 29th Sept., 1977 of Delhi Bench `C in M/s Hindusthan Cococu Wire Ltd. vs. ITO (ITA No. 5295/Del/75-76). (ii) Order dt. 4th Sept., 1984 of Delhi Bench `B of Tribunal in ITO vs. M/s Hindustan Cococu Wire Ltd. (ITA No. 2169/Del/1983). We hold accordingly. 9. next ground relating to grant of relief of Rs. 2,21,597 having not been pressed before us at time of hearing of appeal no longer survives for our consideration. 10. next ground relates to disallowance of Rs. 2,000 representing expenses of survey of land. assessee had paid this amount against bill dt. 3rd March, 1981 to M/s Jain Engineers Enterprises for survey of its land and for taking spot levels at 10 mtrs. intervals both ways and additional levels on existing roads, nallas, inverted levels, sewage drains, etc., and preparing drawing plan on tracing paper. This amount had been paid in connection with processing of loan application given to M/s Haryana State Industrial Development Corporation. After hearing ld. Representatives of both sides, we are of view that this amount should have been allowed as business expenditure. This ground through raised in appeal, had not been dealt with by ld. CIT(A) in his original order. Therefore, application was made by assessee under s. 154. In order dt. 18th Jan., 1985, passed by ld. CIT(A) under s. 154, he did not accept this claim. As already stated above, claim was clearly allowable, we hold accordingly. 11. next ground relating to levy of interest under s. 215 also does not survive for our consideration as in order dt. 18th Jan., 1985 passed by ld. CIT(A) under s. 154, IAC (Asstt.) was directed to recompute interest under s. 215 on basis of Appellate order. This is consequential ground. We hold accordingly. 12. only other ground relating to non-allowance of credit of Rs. 207 being tax deducted at source also no longer survives as it is covered by order dt. 18th Jan., 1985 of ld. CIT(A) under s. 154 wherein he has directed IAC (Assessment) to look into same and to allow such benefit of IDS as may be admissible. 13. In result, appeal filed by assessee is partly allowed. *** INDIAN ALUMINIUM CABLES LTD. v. INSPECTING ASSISTANT COMMISSIONER