1. The assessee in this application under section 256(2) of the Income-tax Act, 1961, seeks a direction from this court to the Tribunal to refer the following three questions for the opinion of this court :
'1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the premium received on the sale of import entitlements is taxable under section 28(iv) of the Income-tax Act
2. Whether the Tribunal was right in distinguishing the decision of the Supreme Court in : 73ITR652(SC) (CIT v. Madan Gopal Radhey Lal) ?'
3. Whether the Tribunal was right in holding that the premium received on the sale of import entitlements cannot be considered as a capital gain and consequently not liable to tax in view of the decision of the Madras High Court in : 115ITR243(Mad) (Addl. CIT v. Sheik Mohideen)
2. The assessee is an exporter of fish and fish products. Based on the quantum of its exports, the assessee was given an import entitlement. However, after the receipt of import entitlement, the assessee without actually importing the goods covered by the import entitlement, sold the import licences and the sale proceeds came to Rs. 5,80,436.89. The Income-tax Officer included the said amount as part of the assessee's income treating it as a revenue or business receipt. This was challenged by the assessee before the Commissioner of Income-tax (Appeals) contending that the sale proceeds of the import entitlement should be taken to be a capital receipt and not as a revenue receipt. This contention was rejected by the Commissioner of Income-tax (Appeals) on the ground that the assessee got the import entitlement because of its exports which is its regular business and in view of the close nexus between the exports and the import entitlement, the assessee should be taken to have derived the said sum of Rs. 5,80,436.89 from out of its business. The matter was further taken to the Tribunal and the Tribunal, following the decision of the Bombay High Court in Metal Rolling Works Pvt. Ltd. v. CIT : 142ITR170(Bom) , held that the sale proceeds of the import entitlement should be taken to be a revenue receipt and not as a capital receipt.
3. The contention put forward by the learned counsel for the assessee before us is that there is no decision of this court on the point in question and, therefore, the question may be referred for having an authoritative ruling of this court. However, in view of the decision of the Bombay High Court with which we respectfully agree, we are not in a position to say that the question sought to be referred is a referable one in the circumstances of this case. It is not in dispute that the assessee in view of its export performance has got import entitlement. If the assessee had exploited the import entitlement by actually importing the goods referred to in the import licences and sold the same, the sale proceeds cannot, in any sense, be said to be a capital receipt. The fact that the assessee has chosen to exploit the import entitlement in a different manner other than actual import will not make any change in the character of the receipt. The sale of import entitlement is one of the modes of exploiting the import entitlement and, therefore, the exploitation of the import entitlement by sale of the import licence will, in our view, clearly be a revenue receipt and it cannot be said to be a capital receipt as contended by the learned counsel for the assessee. This view of ours is quite in accord with the view taken by the Bombay High Court in Metal Rolling Works Pvt. Ltd. v. CIT : 142ITR170(Bom) . It is unnecessary to refer to the said decision in detail and it is sufficient to refer to the following observations in that case which contains the reason for holding that the sale of import entitlement must be regarded as the profits of the assessee in its business :
'Now, in the present case, the facts found by the Tribunal clearly show and this is not disputed by either side that the import entitlements were obtained by the assessee in the course of its business, so that the value of the same constituted profits and gains of the business of the assessee within the meaning of the said term in clause (iv) of section 28 of the said Act. In these circumstances, it is impossible to regard these import entitlements as capital asset of the assessee. It is equally clear that, in these circumstances, the amount realised by the assessee on the sale of these import entitlements must also be regarded as profits of the assessee in its business.'
4. In this view of the matter, we do not think we will be justified in directing a reference in this case. This petition is, therefore, rejected.