Wings Wear Pvt. Ltd. vs Commissioner Of Income-Tax
1998 Latest Caselaw 702 Del

JUDGMENT

R.C. Lahoti, J.

1. By this reference under Section 256 of the Income-tax Act, 1961, made at the instance of the assessee, the Tribunal has sought for opinion of the High Court on the following two questions of law referable to the assessment year 1980-81 :

"1. Whether, on the-facts and in the circumstances of the case, the amount of Rs. 1,31,910 representing sale value of nominations obtained against import entitlements is assessable as income from business ?

2. Whether, on the facts and in the circumstances of the case, Rs. 3,49,846 representing transportation charges of goods incurred within India up to the port would rank for the deduction under Section 35B of the Income-tax Act ?"

2. So far as question No. 1 is concerned, the Finance Act, 1990, has inserted clause (iiia) in Section 28 and clause (va) in Section 2(24) of the Act, the effect whereof is that profits on sale of import entitlements agreement under the Imports (Control) Order, 1955, has been included in the definition of income liable to be charged to Income-tax under the head "Profits and gains of business or profession". This amendment has been given retrospective effect from April 1, 1962, and, therefore, would apply to the assessment year 1980-81. The question is, therefore, answered in the affirmative, i.e., in favour of the Revenue and against the assessee.

3. So far as question No. 2 is concerned, the question itself suggests that the expenditure was incurred within the country and on the movement of the goods within the country. Such an expenditure is not entitled to weighted deduction under Section 35B of the Income-tax Act, as it stood at the relevant time, (see CIT v. Hero Cycles Pvt. Ltd. [1997] 228 ITR 463 (SC) and CIT v. Step well Industries Ltd, [1997] 228 ITR 171 (SC)). The question is answered in the negative, that is, in favour of the Revenue and against the assessee.

4. The reference stands answered accordingly.