Retrospective tax amendment brought import licence transfer receipts into business income, making the reference academic.

The Finance Act, 1990 retrospectively inserted clause (iiia) into section 28 and expanded section 2(24), bringing sale proceeds from import licences within chargeability as business income. As a result, the controversy over whether receipts from transfer of import entitlements were assessable as business income no longer survived for adjudication. The Delhi High Court therefore treated the referred question as academic and returned the reference unanswered.

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Issues: Whether the receipt arising from transfer of import entitlements was assessable as business income.

Analysis: The reference became academic because the Finance Act, 1990 retrospectively inserted clause (iiia) in section 28 of the Income-tax Act, 1961 and correspondingly enlarged the definition of income in section 2(24), bringing sale proceeds of import licences within chargeability under the head of profits and gains of business or profession. In view of the retrospective amendment, the controversy did not survive for adjudication on the referred question.

Outcome: The reference was returned unanswered as academic.

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