1990 (11) TMI 65 - HC - Income Tax

Summary

Issues involved:
The judgment addresses the issue of whether the receipt from the sale of import entitlements should be included in the income of the assessee for computing relief under section 80HH of the Income-tax Act, 1961.

Details of the judgment:
In the assessment year 1979-80, the assessee received a sum from the sale of import licences and export commission. The Income-tax Officer initially rejected the claim for relief under section 80HH as the profit from the industrial undertaking resulted in a negative figure. The Commissioner of Income-tax (Appeals) also held that the receipts from the sale of import licences were revenue receipts and not eligible for relief under section 80HH. The Tribunal upheld this decision based on its earlier order. However, a previous ruling by the High Court on identical facts stated that the income from the sale of import entitlements should be included in the total income of the assessee under section 5 of the Act, and that the source of such income was the government scheme, not the industrial undertaking of the assessee.

The High Court noted that amendments to section 28 of the Income-tax Act had been made, which now included profits on the sale of import licences and cash assistance against exports as chargeable income. Therefore, the income from the sale of import licences became eligible for benefits under section 80HH due to the legislative changes. Despite arguments to follow previous rulings, the court emphasized the need to consider the law as it stood at the relevant time, which made the income from the sale of import licences assessable as business income.

The court referred to a Supreme Court judgment emphasizing that when the law is amended with retrospective effect, the courts must apply the amended law to the dispute at hand. It was held that the High Court's duty was to answer the reference in accordance with the amended law. The court rejected the contention that it was only exercising an advisory jurisdiction and concluded that the income from the sale of import licences was indeed eligible for relief under section 80HH based on the legislative changes and the law as it stood at the relevant time.

Therefore, the court rejected the Revenue's contentions and answered the question in the negative and in favor of the assessee, allowing the relief under section 80HH for the income from the sale of import licences and incentives for export.

Order:
The court ruled in favor of the assessee, allowing the relief under section 80HH for the income from the sale of import licences and incentives for export.