Deb, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, we are concerned with the following question of law : "Whether, on the facts and in the circumstances of the case, the sum of Rs. 5,045 received by the assessee for transfer of the 'import entitlements' was assessable to tax and, if so, as short-term capital gains ?"
(2.) The assessment year is 1964-65. The assessee carried on business in engineering goods. Under the export promotion scheme, he could get what are called "import entitlements" which would enable him to import raw materials to the extent of 75 per cent. of the f.o.b. value of the goods exported. Under this scheme, he could utilise the "import entitlements" for his own manufacture or could part with it to other manufacturers covered by the scheme. In the assessment year, the assessee received and transferred the "import entitlements" to two concerns for a total sum of Rs. 5,045. This amount was credited to the profit and loss account of the assessee and it was brought to tax by the Income-tax Officer.
(3.) It has been found by the Appellate Assistant Commissioner, on appeal, that the "import entitlements" were received by the assessee free of cost and as, in his opinion, the profits earned by the assessee on the sale of the "import entitlements" constituted a short-term capital gain, he directed the Income-tax Officer to make the assessment accordingly. The Tribunal, on second appeal, affirmed the said decision of the Appellate Assistant Commissioner.;