COMMISSIONER OF INCOME TAX Vs. MADHAVAN NAYAR

JUDGEMENT

(1.) AT the instance of the revenue, the Tribunal has referred two questions of law for the years 1967- 68 and 1969-70 and an additional question for the year 1969-70 in R.A. Nos. 57 and 58/C/1975-76 in ITA No. 483 & 549/C/72-73 in compliance with the directions of this Court. One of the common questions referred for the years 1967-68 and 1969-70 is as follows : "Whether on the facts and in the circumstances of the case, the Tribunal having adopted month-to- month basis for computation of profits, is right in law in not adopting the same basis for the computation of profits from the sale of import entitlements ?"

(2.) THE assessee, respondent in these two references, is an individual and a director in Cochin Company (P) Ltd. The business of the company is export of sea-foods. In respect of such export, the company was allowed under the export incentive scheme certain "import entitlements" It is said that these import entitlements were sold by the assessee at a profit. For the accounting year ending 31st Dec., 1966 the profit was Rs. 2,17,566 and for the year ended 31st Dec., 1965 the assessee company had a profit of Rs. 5,79,382 for the year ended 31st Dec., 1967, it amounted to Rs. 1,78,151. It is also said that the "import entitlements" were sold on certain definite dates. These are mentioned in paragraph 6 of the statements of the case of the Tribunal.

(3.) AS could be seen from the statement of the case, the Tribunal was of the view that the import entitlement can be dispensed (disposed of ) in three ways. The Tribunals has also stated that it is only in the third alternative of sale, the assessee would be entitled to profit and that profit accrued only on the date of sale.