R.K.GULATI, J. - (1.) THIS is a cross reference under Section 66(1) of the Indian Income -tax Act, 1922. The dispute relates to the assessment year 1961 -62. During that year, the assessee, Swadeshi Cotton Mills Co. Ltd., carried on the business of manufacture and sale of yarn and cloth with its head office at Kanpur and branches at Pondicherry, Naini, etc. The Income -tax Appellate Tribunal, Allahabad Bench, Allahabad, has referred the following six questions for the opinion of this court: '(1) Whether, on the facts and circumstances of the case, the sum of Rs. 4,72,742 received by the assessee for surrender of import entitlements was rightly taxed as its income for the assessment year 1961 -62 ? (2) Whether the finding of the Appellate Tribunal of the addition of Rs. 43,000 to the book results of the Pondicherry Unit stands vitiated because it does not take into account some relevant material and takes into account some irrelevant material and considerations ? (3) Whether, on the facts and in the circumstances of the case, the loss of Rs. 4,498 suffered by the assessee on the sale of Government securities in its Naini Unit was rightly disallowed as a capital loss ? (4) Whether, on the facts and in the circumstances, the Tribunal erred in law in refusing to entertain the additional ground for the allowance of Rs. 45,930 on account of differential excise duty ? (5) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the levy of interest under Section 18A(6) could not be considered by it ? (6) Whether, on the facts and in the circumstances of the case, the claim of the assessee for deduction as a trade liability of Rs. 1,63,609 was rightly allowed by the Tribunal ?'
(2.) OUT of the above, the first five questions are at the instance of the assessee, whereas the last mentioned question is at the instance of the Commissioner of Income -tax, Kanpur. It was fairly conceded by learned counsel appearing for the assessee that because of one or other earlier decisions of this court, all the questions referred to us, except question No. 4, are to be answered against the assessee. In this view of the matter, we are absolved from setting out the material facts in detail in respect of questions Nos. 1, 2, 3, 5 and 6. We may, however, briefly notice the controversy in these questions and the decisions by which they are covered.
(3.) THE subject -matter of the first question is whether the sum of Rs. 4,72,742, which the assessee received during the previous year from the Government in exchange for surrender of import entitlements under a Cotton Textile Export Incentive Scheme was rightly taxed as business income of the assessee. The assessee's case was that the amount in question was a capital receipt in the nature of a windfall or casual income and thus, it was not liable to tax. This very question came up for consideration before this court in the assessee's own case in the decision in CIT v. Swadeshi Cotton Mills Co. Ltd. : [1980]121ITR747(All) . That case related to the assessment year 1963 -64 where, repelling a similar contention in respect of a similar receipt, it was held that the amount received for surrender of import entitlements by the assessee was a revenue receipt, which was received in the course of its business and it accrued as a direct result of the business carried on in the manufacture of cloth and yarn and export thereof. Further, the payment being directly proportionate to the quality of goods exported, it was an additional payment received for the goods sold by way of export. The amount received on account of surrender of import entitlements was not a receipt of casual nature but a revenue receipt liable to tax as business income of the assessee. In view of the above decision, question No. 1 is answered in the affirmative, in favour of the Revenue and against the assessee.;