Retrospective taxability of export-linked cash compensatory support upheld under amended income tax provisions.

Retrospective insertion of clause (iiib) in section 28 and clause (vb) in section 2(24) of the Income-tax Act brought cash assistance received or receivable against exports under a Government scheme within taxable income. Because the Finance Act, 1990 gave the amendment retrospective effect from 1 April 1967, cash compensatory support received for the assessment years 1982-83 and 1983-84 was assessable as income. The Delhi High Court held that the Tribunal was wrong to exclude the receipt from tax and answered the question in favour of the Revenue.

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Issues: Whether cash compensatory support received under the Government scheme was taxable as income for the assessment years 1982-83 and 1983-84 in view of the retrospective insertion of clause (iiib) in section 28 and clause (vb) in section 2(24) of the Income-tax Act, 1961.

Analysis: The Finance Act, 1990 inserted clause (iiib) in section 28 and clause (vb) in section 2(24) of the Income-tax Act, 1961 to bring within taxable income cash assistance received or receivable against exports under any Government scheme. The amendment was given retrospective effect from 1 April 1967, so it governed the relevant assessment years. In light of the statutory amendment, the amount received as cash compensatory support could not be excluded from taxable income.

Conclusion: The Tribunal was not correct in holding that the cash compensatory support was not taxable; the question was answered in the negative and in favour of the Revenue.

Final Conclusion: Cash compensatory support received against exports was held to be taxable income for the relevant assessment years by reason of the retrospective amendment.

Ratio Decidendi: Where Parliament retrospectively inserts provisions specifically deeming export-related cash assistance to be taxable income, such receipt is assessable for earlier years covered by the retrospective operation of the amendment.

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