1999 PLP 3851 (PTD)

The Finance Act, 1990, has introduced clause (iiia) in section 28 the Income Tax Act, 1961, according to which proceeds of sale of licence, ranted under the Imports (Control) Order, 1955, made under the Import, and Exports (Control) Act, 1947, is income chargeable under the he d "Profits and gains of business or profession". An amendment has also been effected in the definition of income in clause (24) of section 2 by the insertion of sub-clause (va) whereby any sum chargeable under clause (iiia) of section 28 is included in the definition of "income". These amendment though inserted by the Finance Act of 1990, have been given retrospective effect from April 1, 1962. The assessment year 1974-75 is covered by the amendment. Therefore, premium earned by the assessee on the transfer of import entitlements is income liable to tax under the head "Profits and gain of business or profession". Nemo for the Assessee. , R. D. Jolly, Ms. Prem Lata Barisal, Sanjeev Khanna and \j ay .11, for the Commissioner.. R. C. .LAHOTI, J.--This is a reference under section 256(1) of the Income Tax Act, 1961, arising out of the assessment year 1974-75 and ml(! at the instance of the assessee seeking the opinion of the High Court on t!-, following question of law "Whether on the facts and in the circumstances of the case, the premium of Rs.4,75,322 earned on transfer of import entitlement is income liable to tax?" The plea raised on behalf of the assessee was that the transfer o; import entitlements amounted to a transfer of source- of income and therefore, should not be treated as revenue receipt. This plea did not find favour with the Tribunal and the premium earned by the assessee has been held liable to tax. However, as pointed out by learned senior standing counsel for the Department, this reference has been rendered academic merely in vices of the change, in law made effective retrospectively. The Finance Act, 1990, has introduced clause (iiia) in section 28 of the Income Tax Act; 1961, according to which proceeds of sale of licence granted under the imports (Control Order, 1955, made under the Imports and Exports (Control) Act, 1947, is income chargeable under the head "Profits and gains of business or profession". An amendment has also been effected in the definition of income in clause (24) of section 2 of the interpretation clause of the Act whereby any sum chargeable under clause (iiia) of section 28 is included in the definition of "income". These amendments, though inserted by the Finance Act of 1990, have been given a retrospective effect from April 1, 1962. The assessment year 1974-75 is clearly covered by the amendment. Thus whatever might have been the controversy earlier, the same does not survive for decision in view of the amendments referred to hereinabove, according to which the premium earned by the assessee is liable to be taxed as "income" under the head "Profits and gains of business or profession". For the foregoing reasons, the reference is held to have rendered academic merely and hence is returned unanswered. M.B.A./4213/,FC Order accordingly