TMI Blog1991 (11) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to as "CCS"). The present writ petition pertains to the assessment year 1987-88. The petitioner had filed a return declaring 'Nil' income and it claimed that the "CCS" was not taxable. The Deputy Commissioner of Income-tax, however, on October 13, 1989, held that this receipt was taxable and assessed the petitioner on a net income of Rs. 1,53,33,927. Further appeal to the Commissioner of Income-tax (Appeals) was also unsuccessful and the same was dismissed on March 16, 1990. On May 23, 1990, the Assessing Officer demanded tax and interest from the petitioner. The total amount demanded was Rs. 43,53,369, inclusive of interest, It seems that the petitioner had filed an appeal to the Income-tax Appellate Tribunal but, vide order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame time, there were at least two High Courts which came to the conclusion that the amount so received was taxable, the cases being that of Jeewan Lai (1929) Ltd. v. CIT [1983] 142 ITR 448 (Cal) and Kesaria Tea Co. Ltd. v. CIT [1989] 180 ITR 134 (Ker). We are informed that, pursuant to the Full Bench decision of the Income-tax Tribunal, reference application has been filed by the Department whose contention all along has been that the CCS which is received is a revenue income taxable under section 28 even prior to its amendment by the Finance Act. 1990. In the Memorandum Explaining the Provisions in the Finance Bin of 1990, with reference to the insertion of the clause in section 2(24) and section 28, it was indicated that the amendment w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit on sale of import entitlement licences from lst April, 1962, cash assistance from 1st April, 1967, and drawback of duty from lst April, 1972, and will, accordingly, apply in relation to the assessment years 1962-63, 1967-68 and 1972- 73 and subsequent years respectively." It is contended by learned counsel for the petitioner that the said amendments are liable to be struck down for two reasons. Firstly, it is submitted that the said amendments are outside the purview of entry 82 of List I of the Seventh Schedule to the Constitution. The submission of learned counsel is that the CCS is a subsidy which is received and it is not income and, therefore, it could not be regarded as an income within the meaning of that expression in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... struing entry 82 of last I, the court referred to its earlier decision in the case of Navinchandra Mafatlal v. CIT [1954] 26 ITR 758 (SC), and approved the approach of Das J., who had observed that the word 'income' used in the said entry must be given its ordinary, natural and grammatical meaning and that was, income is a thing that comes in. In Mafatlal's case [1954] 26 ITR 758 (SC), capital gain was regarded as having been validly subjected to tax in entry 82. In Navnit Lal's case [1965] 56 ITR 198 (SC), applying the same ratio, the Supreme Court upheld the validity of section 2(6A)(e) of the Indian Income-tax Act, 1922, which, inter alia, provided that a loan taken by a shareholder of a private limited company would be deemed to be a di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceased to be used for scientific research. The Bombay High Court concluded that the retrospective enactment had the effect of levying tax for the first time and the said amendment was not clarificatory in nature. Without going into the correctness of the said decision, the inescapable conclusion in the present case, however, is that the amendment which has been made is clarificatory in nature. This is evident from the Memorandum Explaining the Provisions in the Finance Bill, 1990, the relevant portion of which has been extracted hereinabove. The heading of this paragraph itself states that these are provisions clarifying the taxability of certain export incentives. Furthermore, there was clearly a difference of judicial opinion with regard ..... X X X X Extracts X X X X X X X X Extracts X X X X
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