Law:

Section:

Section 28(i) of the Income-tax Act, 1961 - Business income - Chargeable as -Assessee-firm, following mercantile system of accounting, was engaged in export of certain items to foreign countries - Sale price of exported items was fixed in U.S. dollars - In relevant previous year rupee was devalued against dollar as a result of which, on conversion of export price from dollars into rupees, assessee received certain amount in excess of original rupee equivalent of export price - Said excess receipt pertained partly to sales made during year under consideration and partly to unrealised sale price of goods exported in preceding year - Whether aforesaid additional amount received by assessee was trading receipt and, thus, taxable as business income in year under consideration - Held, yes Facts The assessee-firm was engaged in the business of export of certain items to foreign countries and was maintaining its accounts on mercantile system. The export price was originally fixed in dollars and then converted into rupees at the prevailing exchange rate. In the relevant assessment year, namely 1967-68, the assessee received an additional amount of Rs. 1,01,572 in excess of sales made by it as a result of devaluation of the rupee against the dollar. Out of the said total excess receipt, a sum of Rs. 71,199 related to the year in question and a sum of Rs. 41,586 related to the preceding year. The assessee claimed the aforesaid receipt to be casual and non-incurring and, hence, exempt under section 10(3). The ITO observed that what the assessee had received was only the sale price of the goods sold and that as a result of devaluation of the Indian rupee, it had received a larger amount in terms of Indian rupees and, therefore, these receipts arose from the business and, thus, were not exempt from payment of tax. On appeal, it was contended by the assessee before the Tribunal that at least the receipts relating to the preceding year, i.e., & sum of Rs. 41,586, should be treated as capital in nature, as these were an accretion to the debt due to the assessee carried over from the earlier year. The Tribunal, however, held that each of the receipts received from the…

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