TMI Blog1983 (3) TMI 305X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of the case, the Income-tax Appellate Tribunal having adopted month-to-month basis for computation of profits, is right in law in not adopting the same basis for the computation of profits from the sale of import entitlements? 2. The assessee-respondent in these two references is an individual and a director in Cochin Company (P.) Ltd. The business of the company is export of sea-foods. In respect of such export, the company was allowed under the export incentive scheme certain 'import entitlements'. It is said that these import entitlements were sold by the assessee at a profit. For the accounting year ending 31-12-1965, the assessee-company had a profit of ₹ 5,79,382 ; for the year ended 31-12-1966, the profit w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed in para II of their order that it is true that an exporter has an entitlement to import certain specified goods and it is relatable to the export sale figures. But that by itself does not produce income. An import entitlement can be dispensed in three ways. First, the assessee might himself import goods in which case there is no profit. The import entitlement allows him to import goods which are otherwise not allowed to be imported by the Import and Export (Control) Act. Let us suppose he imports an item which is his raw material or stock-in-trade. He would debit the purchases to the extent of cost and if the goods are not used or sold, would show it in the closing stock. This can be at cost. However, it is quite likely that the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rol and in particular clauses 105 and 106 thereof and urged that the assessee 'nominated' the persons to whom the import entitlements were passed on and the consideration received, therefor are the sale proceeds of the same. This aspect highlighted at the time of arguments (sic) before this Court has not been specifically adverted to or dealt with by the Tribunal either in its appellate order or in the statement of the case. It is not clear as to what the Tribunal meant when it said in para II of the statement of the case. 'It is only on the third alternative of sale he would be entitled to profit. That profit accrued only on the date of sale'. The Tribunal, therefore, upheld the AAC's method of calculation with the ride ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons contained in the decision of the Supreme Court in Sutlej Cotton Mills Ltd. v. CIT [1979] 116 ITR 1. In the said case, the assessee had earned ₹ 36 lakhs and ₹ 18 lakhs in terms of Indian rupees in the assessment year 1954-55 and retained them in West Pakistan in Pakistan currency and when they were subsequently remitted to India, the assessee received only ₹ 25 lakhs and ₹ 12 lakhs and thus suffered a loss of ₹ 11 lakhs and ₹ 5 lakhs in the process of conversion on account of alteration in the rate of exchange. Eventually, when the matter reached the Supreme Court the question was whether the loss was a capital loss or a revenue loss. For determining that question a finding as to whether the sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r case, since both parties pleaded before the Supreme Court that their attention was not drawn to this aspect of the matter when the case was heard before the lower authorities and the Tribunal, the matter was remitted back to the Tribunal to take additional evidence or to direct the ITO to take additional evidence and to make a report to it. On the facts of this case, we are satisfied that it will be sufficient, in the circumstances, to adopt the ordinary course formulated by the Supreme Court in the said decision and call for a supplementary statement of the case from the Tribunal giving its finding regarding, how, in what manner and when the import entitlements were disposed of by the assessee, with details thereof. 6. The Tribunal wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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