1998 (1) TMI 59 - HC - Income Tax

Cash incentives taxable as revenue receipts under Finance Act, 1990 amendments

The High Court of Delhi held that the cash incentive received by the assessee was taxable as a revenue receipt following retrospective statutory ... Classification of receipts as capital or revenue - cash assistance received under export promotion schemes treated as income chargeable to tax - retrospective operation of fiscal amendmentsClassification of receipts as capital or revenue - cash assistance received under export promotion schemes treated as income chargeable to tax - retrospective operation of fiscal amendments - Whether the cash incentive received by the assessee in assessment year 1982-83 is taxable as a revenue receipt. - HELD THAT: - The Tribunal had permitted the assessee to raise a legal plea that the receipt was capital in nature and, relying on its earlier decision, held the cash incentive to be capital and not taxable. Subsequent statutory changes effected by the Finance Act, 1990, however, inserted a provision treating cash assistance received (by whatever name called) against exports under any Government of India scheme as income chargeable to income-tax, and amended the definition of income to include sums chargeable under that provision. Those amendments were given retrospective effect from 1 April 1967 and therefore apply to assessment year 1982-83. In view of the retrospective legislative declaration that such cash assistance is income, the Court answered the reference against the assessee and in favour of the Revenue.The Tribunal's conclusion that the incentive was not taxable is displaced by the retrospective statutory amendment; the cash incentive for 1982-83 is to be treated as income chargeable to tax.Final Conclusion: Reference answered in the negative: the cash incentive received in assessment year 1982-83 is taxable as income in view of the retrospective amendment introduced by the Finance Act, 1990. The High Court of Delhi ruled that the cash incentive received by the assessee was taxable as a revenue receipt due to retrospective statutory amendments introduced by the Finance Act, 1990. The Tribunal's decision in favor of the assessee was overturned.