R.J. Wood and Co. (P.) Ltd. vs Commissioner of Income Tax

R.C. Lahoti, J.—This is a reference u/s 256(1) of the income tax Act, 1961 arising out of the assessment year 1981-82 and made at the instance of the assessee seeking opinion of the High Court on the following questions of law : Whether, the Tribunal was right in holding that the receipt of Rs. 1,59,958 received on transfer of import entitlements constituted a revenue 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 the learned senior standing counsel for the department, this reference has been 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, 1990, have been given retrospective effect from 1-4-1962. The assessment year 1974-75 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.