Commissioner Of Income-Tax, ... vs M/S. Banaras House Limited
2000 Latest Caselaw 865 Del

ORDER

Arijit Pasayat, CJ.

1. In this appeal under Section 260A of the Income-tax Act, 1961 (in short 'the Act') the only question raised by the Revenue is whether the Income-tax Appellate Tribunal Delhi Bench A (in short 'the Tribunal) was justified in holding that the amount received by assessee on account of forfeiture of advance guarantee commission is business income and not income from other sources, in terms of Section 28(iiia) of the Act.

2. Background facts, which are almost undisputed, are essentially as follows:

For the assessment year 1989-90 the assessee, a limited company, filed its return, inter alia claiming that the sum of Rs. 3,05,165/- received as advance guarantee commission from M/s. Jain Sudh Vanaspati Limited by written agreement dated 30th March, 1982 was income from business. Assess- ing Officer, while computing the total income, reduced the aforesaid amount from the net profits as disclosed in the profit and loss account, without disclosing any reason but under the broad heading "income under the head "other incomes" for separate consideration". The amount of Rs.3,05,165/- was a part of a sum of Rs.7, 69,18,390/- which was deducted under the aforesaid head and it was added as income from other sources. At the cost of repetition we may indicate that the reason for coming to the conclusion that the income was not from business but was from other sources was not indicated in the order of assessment. The matter was carried in appeal before the Commissioner of Income-tax (Appeals) (in short `CIT(A)) who upheld the actions of the Assessing Officer holding that on consideration of the nature of the receipt the same does not relate to business activity of the assessee and has been correctly treated as income from other sources. The matter was carried in further appeal before the Tribunal. With reference to Section 28(iiia) which was made operative with effect from 1st April, 1962 retrospectively by the Finance Act, 1990, it was held that amount in question constituted income from business and not from other sources. Accordingly, assessee's contention was accepted and Assessing Officer was directed to treat the same as income from business of the assessee.

3. In support of the appeal learned counsel for the revenue placed strong reliance on decision of the Apex Court in CIT Vs. Sterling Foods (1999) 237 ITR 579. Learned counsel for the assessee on the other hand submitted that the provision itself is very clear to the effect that profits on sales of a licence granted under the Import (Control) Order 1955 made under the Im ports and Exports (Control) Act, 1947 is a part of the business income.

4. It would be appropriate to quote Section 28(iiia). Said provision reads as follows:

   "S. 28. Profits and gains of business or profession:- The follow-   ing income shall be chargeable to income-tax under the head    "profits and gains of business or profession. 
 

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   (iiia) Profits on sale of a licence granted under the Imports    (Control) Order, 1955, made under the Imports and Exports (Con-   trol) Act, 1947 (18 of 1947)".   
 

5.  It is to be noted that along with Section 28(iiia), Section 2(24)(va) was introduced with effect from 1.4.1962. Said provision reads as follows:     

   "Section 2. Definition: In this Act, unless the context otherwise    requires:- 
 

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   (24) "income" includes
 

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   (va) any sum chargeable to income-tax under Clause (iiia) of    Section 28". 
 

6. On a bare reading of the Sterling case (supra) it is clear that the same was rendered in a contextually different background. There the scope of Section 80HHC vis-a-vis profits and sales of licence was in considera- tion. We find that Section 28(iiia), having retrospective effect from 1st April, 1962 as quoted above, makes the position clear that the profits on sales of a licence granted under the Import (Control) Order, 1955 made under the Imports and Exports (Control) Act, 1947 are chargeable to income tax under the head "profits and gains of business". Undisputedly sale of the licence, which was subject-matter of consideration, was under the Imports and Export Control Act, 1947 and was a licence issued under the Import Control Order, 1955. In view of the said position we are of the view that Tribunal was justified in its conclusion. That being the position we do not entertain this appeal.

7. Dismissed.