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TMI Blog1984 (4) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... s. On the basis of the foreign exchange earned through export, the petitioner was granted by the Government the right to import a certain quantity of goods. This right is called the import entitlement. Instead of importing goods under the import entitlement, the petitioner sold the entitlement for the above mentioned sum. The contention of the petitioner is that this sum, representing the sale proceeds of the import entitlement, which is in the nature of a right conferred by the Government under the relevant scheme, constituted a capital asset within the meaning of section 2(14) and is, therefore, not a trade or income receipt which can be brought to tax under the head "Profits and gains of business or profession", as is sought to be done b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause (iv) of section 28 ; ....." Section 28 reads: "28. Profits and gains of business or profession. -The following income shall be chargeable to income,-tax under head `Profits and gains of business or profession', (i) the profits and gains of any business or profession which was carried on by the assessee at any time during the previous year ; ....... (iv) the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession." If the amount in question was received by the assessee either as profits and gains of business or as the value of any benefit arising from business, such amount is liable to be assessed as "profits and gains of business". The question, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Ker). The court in that case rejected the claim of the assessee that the sale proceeds of the import entitlement were profits and gains derived from the export of goods so as to entitle it to the benefits of rebate of tax under section 2(5) (a) (i) of the Finance Act, 1966, which provided (p. 830) : "(i) where his total income includes any profits and gains derived from the export of any goods or merchandise out of India, he shall be entitled to deduction ...........". (Emphasis supplied). See also Hindustan Lewer Ltd. v. CIT [1980] 121 ITR 951 (Bom) and Ahmedabad Mfg. Calico Printing Co. Ltd. v. CIT [1982] 137 ITR 616 (Guj). The petitioner's counsel seeks to gain support from these decisions. The Revenue, however, has no case that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t which gives rise to import. Viewed in this light, export and import together constitute the business of the assessee. The petitioner's counsel does not dispute that, if goods had in fact been imported under the entitlement and had been sold by the assessee, the proceeds of the sale would have constituted income chargeable to tax under section 28. But he says that the proceeds of sale of the right which is the import entitlement cannot be characterised as money realised by the sale of goods. The entitlement is a right to import goods. It has a value convertible into money because it is that right which allows the assessee to import goods with all the consequential benefits derived from that right. The amount realised by the sale of tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns received in the ordinary way. Section 4 is so widely worded that everything which is received by a man and goes to swell the credit side of his total account is either an income or a profit or a gain." Income, profits and gains may be realised in the form of monies worth as well as money. It may be in kind or in cash. It may constitute the stock-in-trade or the circulating, capital in the form of merchandise or goods kept for sale as distinguished from fixed capital which done is capital asset [See Vol. 84 Corpus Juris Secundum pp. 282, 654 ; ibid. Vol. 83, pp. 97, 98; and ibid. Vol. 47, p. 291. See also Richardson, In re 50 LJ. Ch. 468; and Karanpura Development Co. v. CIT [1962] 44 ITR 362 (SC)]. Whether a certain sum represents ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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