COMMISSIONER OF INCOME TAX vs. WINDSOR FOODS LTD

ITR/85/1991HC GujaratGJHC24013319199116 October 2001Author: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE D.A.MEHTA3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court answered the reference in the negative, in favour of the revenue and against the assessee. The Court noted that while the Tribunal had previously held cash compensatory support as a capital receipt, relying on Gadore Tools (India) (P) Ltd. vs. IAC, the legislature had subsequently amended Sections 2(24) and 28(iiib) of the Income Tax Act. These amendments, effective from April 1, 1967, explicitly provided that cash assistance received against exports under any Government scheme is chargeable to income-tax under the head 'Profits and gains of business or profession' and is to be included in 'income'. Since the assessment year under consideration is 1983-84, the cash compensatory support received by the assessee was taxable as income and not exempt as a capital receipt due to the retrospective effect of the legislative amendment. The reference was disposed of accordingly.

What were the facts?

This is an Income Tax Reference filed by the revenue (Commissioner of Income Tax) against the assessee, Windsor Foods Ltd. The reference pertains to assessment year 1983-84. The core issue revolves around whether the amount received by the assessee as cash compensatory support is taxable or a capital receipt. The Tribunal had previously held it to be a capital receipt, relying on the decision in Gadore Tools (India) (P) Ltd. vs. IAC. However, the legislature subsequently amended Sections 2(24) and 28(iiib) of the Income Tax Act, with effect from April 1, 1967, to include cash assistance received against exports under any Government scheme as taxable income under the head 'Profits and gains of business or profession'. The present case falls under this amended provision.

What were the issues?

1. Whether, on facts and in the circumstances of the case and in law, the Tribunal is right in holding that the amount received as cash compensatory support is not taxable being a capital receipt? Assessee's Contention: The assessee contended that the cash compensatory support received was a capital receipt and therefore not taxable. The Tribunal had previously ruled in favour of the assessee on this point, relying on the decision in Gadore Tools (India) (P) Ltd. vs. IAC, 25 ITD 193. Revenue's Contention: The revenue argued that due to legislative amendments to Sections 2(24) and 28(iiib) of the Income Tax Act, with retrospective effect from April 1, 1967, cash assistance received against exports is now taxable as income from business or profession. The assessment year in question is 1983-84, which falls within the purview of these amendments.

Which sections of the Income-tax Act were involved?

Section 2(24),Section 28(iiib)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 85 of 1991

For Approval and Signature:

Hon'ble MR.JUSTICE M.S.SHAH and Hon'ble MR.JUSTICE D.A.MEHTA

============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

2.

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

4.

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the Civil Judge? : NO

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 2(24)

All 355 judgments and leading authorities on Section 2(24) →

Recent GST High Court judgments

Search GST case law →