CASHMERE WOOLLEN AND SILK MILLS VS COMMISSIONER OF INCOME-TAX
2001 P T D 293
[238 I T R 1026]
[Delhi High Court (India)]
Before R. C. Lahoti and Dalveer Bhandari, JJ
CASHMERE WOOLLEN AND SILK MILLS
versus
COMMISSIONER OF INCOME‑TAX
Income‑tax Reference No.349 of 1985, decided on 09/01/1998.
Income‑tax‑‑‑
‑‑‑‑Income‑‑‑Business income‑‑‑Law applicable‑‑‑Effect of introduction of cl.(iiia) in S.28 and amendment of cl.(24) of S.2 with retrospective effect from 1‑4‑1962 by Finance Act, 1990‑‑‑Premium earned on sale of import entitlements in assessment year 1982‑83‑‑‑Assessable to tax‑‑‑Indian Income Tax Act, 1961, Ss.2 & 28.
The Finance Act, 1990, has introduced clause (iiia) in section 28 of the Income Tax Act, 1961, according to which proceeds of sale of licence granted under the Imports (Control) Order, 1955, made under the Imports and Exports (Control) Act, 1947 is income chargeable under the head "profits and gains of business or profession". An amendment has also been effected in the definition of income in clause (24) of section 2 of the interpretation clause of the Act whereby any sum chargeable under clause (iiia) of section 28 is included in the definition of "income". These amendments, though inserted by the Finance Act, 1990, have been given a retrospective effect from April 1, 1962.
Therefore, in view of the amendments the amount earned in the assessment year 1982‑83 on account of import entitlements was assessable.
Nemo for the Assessee.
R. D. Jolly, Ms. Premlata Bansal, Sanjeev Khanna aid Ajay jha for the Commissioner.
JUDGMENT
R.C. LAHOTI, J.‑‑‑'This is a reference under section 256(1) of the Income Tax Act, 1961, made at the instance of the assessee arising out of the assessment year 1982‑83 seeking opinion of the High Court on the following question of law:
"Whether, on the facts and circumstances of the case, the Tribunal was legally justified in holding that the amount of Rs.2,72,036 on account of import entitlements received by the assessee was assessable to Income‑tax as business income?"
The plea raised on behalf of the assessee was that the transfer of import entitlements amounted to transfer of source of income and, therefore, should not be treated as revenue receipt. This plea did not find favour with the Tribunal and the premium earned by the assessee has been held liable to tax.
However, as pointed out by learned senior standing counsel for the Department, this reference has teen rendered academic merely in view of the change in law made effective retrospectively. The Finance Act, 1990, has introduced clause (iiia) in section 28 of the Act according to which proceeds of sale of licence granted under the Imports (Control) Order, 1955, made under the Imports and Exports (Control) Act, 1947, is income chargeable under the head "Profits and gains of business or profession". An amendment has also been effected in the definition of income in clause (24) of section 2 of the interpretation clause of the Act whereby any sum chargeable under clause (iiia) Of section 28 is included in the definition of "income". These amendments, though inserted by the Finance Act of 1990, have been given a retrospective effect from April 1, 1962. The assessment year 1974‑75 (sic) is, clearly covered by the amendment. Thus, whatever might have been the controversy earlier; the same does not survive for decision in view of the amendments referred to hereinabove, according to which the premium earned by the assessee is liable to be taxed as "income" under the head "Profits and gains of business or profession".
For the foregoing reasons, the reference is held to have been rendered academic merely. and hence is returned unanswered.
M.B.A./186/FC ?????????
Order accordingly