Retrospective tax treatment of import licence premiums rendered the reference academic after the Income-tax Act amendment.

The retrospective insertion of section 28(iiia) and the corresponding expansion of section 2(24) brought sale proceeds of import licences within taxable business income, so the earlier dispute over whether premium on transfer of import entitlements was taxable no longer survived for the assessment year in question. In view of those amendments, the reference under section 256(1) became academic and was returned unanswered.

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Issues: Whether the premium earned on transfer of import entitlements was income liable to tax, and whether the reference survived in view of the retrospective amendment to the Income-tax Act, 1961.

Analysis: The question referred under section 256(1) arose from an assessment year governed by the retrospective insertion of clause (iiia) in section 28 by the Finance Act, 1990. The amendment brought proceeds of sale of licence granted under the Imports (Control) Order, 1955 within the head "Profits and gains of business or profession", and the consequential amendment to section 2(24) expanded the definition of income to include sums chargeable under section 28(iiia). As the assessment year in question was covered by these retrospective changes, the earlier controversy no longer survived for adjudication.

Outcome: The reference was held to have become academic and was returned unanswered.

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