K.E. Kesavan and Sons vs Commissioner of Income Tax

K.S. Paripoornan, J.—At the instance of an assessee to income tax, the Income Tax Appellate Tribunal has referred the following question of law for the decision of this court:

"Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the sum of Rs. 1,12,237 representing the consideration received by the assessee for the transfer of the import licences granted to it has been rightly assessed as the income of the assessee ?"

The respondent is the Revenue. We are concerned with the assessment year 1976-77, the relevant accounting period ending on December 31, 1975. The assessee is a registered firm. The assessee is doing business in the export of frozen shrimps. It received a sum of Rs. 1,12, 237 during the relevant accounting period as consideration for the transfer of import licences granted to it on the basis of exports made by it. It was claimed that the amount was not taxable as income. This plea was raised for the first time before the Commissioner of Income Tax (Appeals). He declined to entertain the claim. The claim was again raised before the Income Tax Appellate Tribunal. It was contended that the amount received in the sum of Rs. 1,12,237 is a capital receipt. The Appellate Tribunal repelled the said contention. Reliance was placed upon the decision in Kesoram Industries and Cotton Mills Ltd. Vs. Commissioner of Income Tax, , Commissioner of Income Tax Vs. Swadeshi Cotton Mills Co. Ltd., and Commissioner of Income Tax, Tamil Nadu-V Vs. Universal Radiators P. Ltd., . It is thereafter at the instance of the assessee that the Income Tax Appellate Tribunal has referred the question formulated hereinabove for the decision of this court.

We heard counsel. In Kesaria Tea Co. Ltd. V. CIT [1989] 480 ITR 134, a Bench of this court held that the amount received by the assessee which carried on export business, by way of cash assistance given by the Government to carry on the business in a profitable manner, Is in the course of the conduct of the business. The amount so received by the assessee by way of additional payment for the goods exported is income liable to tax. A learned single judge of this court has also taken the same view in O.K. Industries and Others Vs. Commissioner of Income Tax and Another, . In the light of the above two Bench decisions of this court, the Income Tax Appellate Tribunal was justified in taking the view that the sum of Rs. 1,12,237 represents the consideration received by the assessee for the transfer of import licences granted to it and so rightly assessed as income of the assessee for the relevant assessment year. We answer the question referred to us in the affirmative, against the assessee and in favour of the Revenue.

A copy of this judgment under the seal of this court arid the signature of the Registrar shall be forwarded to the Income Tax Appellate Tribunal, Cochin Bench.