Export trade advance remained a liability and was not taxable income absent waiver, remission, or abandonment.

Outstanding export trade advances do not become taxable income unless the liability is extinguished by waiver, remission, or enforceable abandonment. The advance here remained an export-related liability, not a trading surplus written back by the assessee, and there was no remission by the foreign buyer. The assessee sought RBI clarification and later repaid the amount through banking channels, confirming that the balance had not ceased to be a liability during the relevant year. The factual position was unlike cases involving unclaimed balances transferred to profit and loss account, so the amount could not be assessed as income.

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Issues: Whether the outstanding export trade advance of the assessee had ceased to be a liability and, therefore, could be treated as income in the year under consideration.

Analysis: The outstanding amount represented advance received against exports and not a sum written back by the assessee as trading surplus. The liability had not been extinguished by any waiver, remission, or enforceable abandonment by the foreign buyer. The assessee had itself approached the Reserve Bank of India for clarification and later obtained permission to repay the amount, which was ultimately remitted through banking channels. The factual matrix was therefore materially different from cases involving unclaimed balances transferred to profit and loss account and did not attract the principle applied to trading receipts that become the assessee's own money by lapse of time.

Conclusion: The amount did not cease to be a liability during the relevant year and could not be assessed as income of the assessee.

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