1984 (2) TMI 57 - HC - Income Tax

Summary

Issues:
1. Interpretation of income accrued from the transfer of import license for taxation in different assessment years.
2. Determination of the assessment year for the profit earned on the transfer of import license.
3. Assessment of profit from the transfer of import license in the correct assessment year.

Analysis:
The case involved a petition under section 256(2) of the Income Tax Act, 1961, where the Commissioner of Income-tax sought a mandamus to refer questions of law arising from the decision of the Income-tax Appellate Tribunal. The questions revolved around the timing of profit accrual from the transfer of an import license. The assessee, a partnership firm, received an import license and transferred part of it to another firm, earning a premium. The Income Tax Officer (ITO) included this profit in the assessment for the year 1969-70, considering it a measure to stagger profits. However, the ITO later included the profit in the assessment for the year 1970-71, suspecting the transfer was not made in the relevant accounting period. The Tribunal found that the profit accrued in the assessment year 1969-70, as the transferee firm imported goods based on the license within that period.

The Tribunal's decision was based on factual findings, concluding that the profit of Rs. 1,18,560 was assessable in the assessment year 1969-70 and not in 1970-71. The Revenue's questions did not raise any legal issues regarding income accrual, as the import license was acted upon by the transferee firm within the relevant assessment year. The Tribunal's finding was upheld as a pure finding of fact and not an interpretation of legal principles. The Tribunal correctly determined that the income accrued in the assessment year 1969-70, making the question of law irrelevant. Therefore, the Revenue's petition was declined without costs.

In summary, the judgment clarified the timing of profit accrual from the transfer of an import license, emphasizing that the actual act of utilizing the license within the relevant assessment year was crucial in determining the tax liability. The Tribunal's factual findings supported the assessment of the profit in the correct assessment year, highlighting the importance of factual circumstances in tax assessments.