TMI Blog1972 (7) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... , by the Appellate Tribunal, Cochin Bench? "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is correct in law in holding that the amount of Rs. 2,54.862,19 represents income derived by the assessee in the course of trade ?" The facts are as follows : The assessee, a firm of four partners, owns cashew factories and exports cashew kernels to foreign countries, mostly to U.S.A. The assessee also has forward transactions of sale with some of the foreign buyers. The invoice price of the exports is fixed between the parties in terms of dollars. For the forward contracts of sale also, the price is stipulated in terms of dollars. At the time of payment the assessee receives the rupee equivalent of the price in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision by this court. In our opinion, the assessee's contention cannot be accepted. The income which arose as a consequence of the devaluation has arisen during the course of the trade and is a trading profit inasmuch as the amount represents part of the sale proceeds. It may be that the increase in the sale price was occasioned by the devaluation which has nothing to do with the trade. But, the result of the devaluation was that the assessee became entitled to receive a larger price in terms of rupees for his goods and that is directly in the course of the trade and constitutes a trading profit. A similar question arose before the Mysore High Court in Hindustan Aircraft Ltd. v. Commissioner of Income-tax. In that case the assessee, a priv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Co. Ltd. must be held to have impliedly overruled the decision of the Mysore High Court referred to earlier. In the Supreme Court case the question arose this way. The assessee-company carrying on the business in the manufacture of locomotives had to make purchases of plant and machinery from U.S.A. For this purpose the assessee remitted to its agents in U.S.A. large amount with the sanction of the exchange control authorities. Some amounts due to them from other business transactions in America were also diverted and formed part of the remittance for the purchase of the plants and machineries. The pound sterling and with it the Indian rupee were devalued in September, 1949, and the assessee found it very expensive to buy the American g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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