Export-linked transfer of import licences treated as business income, not capital receipt, under Kerala HC reasoning.

Amounts received by an exporter for transfer of import licences issued in connection with export business were treated as business income, not as a capital receipt. The Kerala HC noted that the receipt arose from the assessee's export activity and represented consideration linked to the business of exporting goods. Applying its earlier rulings on cash assistance and other export-linked receipts, the Court held that such amounts form part of taxable business income. The amount was therefore correctly assessed as income of the assessee.

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Issues: Whether the amount received by the assessee for transfer of import licences granted on the basis of exports constituted taxable income or a capital receipt.

Analysis: The receipt arose from the assessee's export business and represented consideration for the transfer of import licences granted in relation to that business. The Court applied its earlier decisions holding that amounts received by an exporter by way of cash assistance or additional payment connected with exported goods form part of business income and are liable to tax.

Conclusion: The amount was rightly assessed as income of the assessee and not as a capital receipt.

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