COMMISSIONER OF INCOME TAX vs EMERY STONES MANUFACTURING CO.

B.R. Arora, J.

The Tribunal, Jaipur Bench, Jaipur, at the instance of the revenue, has referred the following question of law, u/s 256(1) of the Income Tax Act, for the opinion of this court :

"Whether, on the facts and in the circumstances of the case the Tribunal was legally justified in allowing assessee''s claim that cash compensatory support for export is a capital receipt not liable to tax under the provisions of the Income Tax Act, 1961?"

The material facts, on the basis of which question is to be decided are similar to the facts in D.B. IT Ref. No. 7 of 1990, Commissioner of Income Tax Vs. Saboo Emery Stones, and the above-quoted question is identical with the question which was for decision in D.B. IT Ref. No. 7 of 1990. For the same reasons given in CIT v. Saboo Emery Stones''s case (supra), this question is decided in favour of the revenue and against the assessee and it is held that the cash compensatory support (by whatever name it may be called) is liable to tax under the provisions of the Income Tax Act.

Consequently, the reference is answered in favour of the revenue and against the assessee, and it is held that the cash compensatory support (by whatever name it may be called) in liable to tax under the provisions of the Income Tax Act, 1961.