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Judgment
N. K. Agrawal, J.:
The following questions of law have been referred by the Income Tax Appellate Tribunal, Chandigarh Bench (The Tribunal), to this Court for opinion in respect asst. yrs. 1975-76, 1976-77, 1977-78 and 1978-79 :
"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in having disallowed the claim of the assessee for deductions of Rs. 2,38,482, Rs. 1,19,199, Rs. 1,83,489 and Rs. 2,89,625 u/s 35B(1)(b)(viii) of the Income Tax Act. 1961, for the asst. yrs. 1975-76, 1976-77, 1977-78 and 1978-79, respectively, on expenditure incurred by it on ocean freight and insurance in connection with the supply of goods outside India in which the assessee dealt against contracts.
Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in having held that the amounts of Rs. 7,59.030, Rs. 9,51,225, Rs. 9,44,188 and Rs. 3,99,398 for the asst. yrs. 1975-76, 1976-77, 1977-78 and 197879, respectively, on account of sale of import entitlements represented receipts liable to Income Tax and not capital receipts."
The following question of law has been referred by the Tribunal to this Court for opinion in respect of assessment year 1980-81 :
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in having held that the amount of Rs. 12,87,173 on account of sale of import entitlements represented receipts liable to Income Tax and not capital receipt. "
The question relating to deduction u/s 35B of the Income Tax Act, 1961 (for short, the Act) is in respect of the expenditure incurred by the assessee on ocean freight and insurance. The assessee claimed deduction under sub-cl. (viii) of cl.
(b) of s. 35B(1) of the Act.
Sub-cl. (iii) of the cl. (b) of s. 35B(1) specifically creates a bar against deduction of any expenditure incurred by an assessee on the carriage of goods to their destination outside India or on the insurance of such goods while in transit. Since there is a specific bar in the said sub-clause, the expenditure incurred on ocean freight and insurance is held to be not eligible for deduction u/s 35B(1) of the Act. The question is, therefore, answered in the affirmative, i.e., in favour of the Revenue and against the assessee.
The questions relating to the amount received by the assessee on sale of import entitlements are also answered in the affirmative, i.e., in favour of the Revenue and against the assessee, in view of s. 2(24)(va) and s. 28(iiia) of the Act as inserted by the Finance Act, 1990, with effect from 1st April, 1962. By retrospective amendment, such income has been made exigible to tax.