STERLING FOODS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this income-tax reference case, the following question is referred to us for our answer :

(2.) IN the assessment year 1979-80, Messrs. Sterling Foods, Mangalore, received a sum of Rs. 3,09,800 by way of sale of import licences and export commission. IN the return filed, they claimed relief in respect of that receipt under section 80HH in respect of sale of import licences. The INcome-tax Officer held that since the profit derived from the industrial undertaking results in a negative figure, no deduction under section 80HH was admissible. Therefore, he rejected the claim of the assessee. On appeal, the Commissioner of INcome-tax (Appeals) held that the receipts on sale of import licences were revenue receipts and as such there was no question of relief under section 80HH on such receipts. To come to that conclusion, he followed the order of the Tribunal in the earlier year in the case of the assessee itself. On appeal filed against the order of the Commissioner, the Tribunal, following its earlier order dated January 7, 1981, in I.T.A. Nos. 190 and 191/Bang of 1979, upheld the order of the Commissioner and dismissed the appeal. Therefore, it referred the question extracted above for answer by this court.

(3.) SECTION 28 provides for what income shall be chargeable to income-tax under the head "Profits and gains of business or profession". Therefore, by the amendment effected to section 28, what was held by this court not to be an income arising out of profits and gains of business or profession, by operation of law, has become such income. Therefore, once it becomes income, automatically, the benefits conferred by section 80HH will be attracted to the case of the assessee.