COMMISSIONER OF INCOME TAX Vs. ASHOKA LUNGI CO

JUDGEMENT

(1.) IN this reference under Section 256(1) of the I.T. Act, 1961, the following question has been referred I

(2.) THE assessee is a firm carrying on business of sale and export of lunghis. It exported handloom fabrics during the quarters ending March 31, 1965, December 31, 1965, March 31, 1966, and June 30, 1966. Under a scheme formulated by the Government of India for the development of such exports, the exporters of handloom fabrics were given licences to import cotton of the value of 40% of the f.o.b. value of the exported fabrics. THE scheme stipulated that such exporters should surrender the licences to import cotton to the Textile Commissioner in lieu of cash incentives. THE cash incentives were originally at the rate of 21% of the value of the cotton that could be imported, but later on it was reduced to 6%.

(3.) THE assessee appealed to the Tribunal, and the Tribunal pointed out that a person exporting handloom fabrics had to make the necessary application to the concerned authority for the issue of import entitlements in the prescribed form and accompanied by the necessary documents and that if such an application was made, such exporter would be entitled to import licences and that in view of the above the right to receive the import entitlements arose when a proper application was made therefor. THE result was that only Rs. 18,340 was found to be assessable in this year and the balance in the earlier year. THE assessment was modified accordingly. This order of the Tribunal has given rise to the reference of the question set out above.