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A.M. Moosa Bharat Sea Foods vs Income-Tax Officer. on 8 August, 1985 cites

Commissioner Of Income Tax, Bihar And ... vs Raja Bahadur Kamakshya Narain Singh. on 2 September, 1946

"The argument advanced on behalf of the assessee is that since the assessee had become eligible for the import entitlements only on account of its having exported goods out of India, the income derived by conversation of the import entitlements into money by a process of sale should be regarded as profits or gains derived from the said activity of the export of goods. We are unable to accept this contention. Profit and gain can be said to have been derived from an activity carried on by a person only if the said activity is the immediate and effective source of the said profit or gain. There must be a direct nexus between the activity and the earning of the profit and gain. The income, profit or gain cannot be said to have been derived from an activity merely by reason of the fact that the said activity may have helped to earn the said income or profit in an indirect or remote manner -CIT v. Raja Bahadur Kamakhaya Narayan Singh [1948] 16 ITR 325 (PC) and Mrs. Bacha F. Guzdar v. CIT [1955] 27 ITR 1(SC). When this principle is applied to the facts of the present case it becomes clear that the profits earned by the assessee by the sale of the import entitlements cannot be regarded as profits or gains derived from the export of goods out of India. We find that a similar question had arisen before this Court in ITR No. 99 of 1971 and by judgment dated 29th May, 1973, which is not so far reported, a Division Bench of this Court held that the profits realised by the assessee in that case by the sale of the import licences obtained by it on the strength of import entitlements could not be said to be profits derived by the assessee from export of goods out of India. We are in respectful agreement with the said view. It then follows that the Tribunal was right an assessees claim for rebate under section 2(5) (a) (i) of the Finance Act, 1966. ..." (p. 830) It has been held therein that the income, profit or gain cannot be said to have been derived from an activity merely by reason of fact that the said activity may have helped to earn the said income or profit in an indirect or remote manner. The profits realised by the sale of the import licences obtained by it on the strength of import entitlements could not be said to be profits derived from the export of goods out of India.
Patna High Court Cites 2 - Cited by 126 - Full Document

Bacha F. Guzdar vs Commissioner Of Income-Tax, Bombay on 28 October, 1954

"The argument advanced on behalf of the assessee is that since the assessee had become eligible for the import entitlements only on account of its having exported goods out of India, the income derived by conversation of the import entitlements into money by a process of sale should be regarded as profits or gains derived from the said activity of the export of goods. We are unable to accept this contention. Profit and gain can be said to have been derived from an activity carried on by a person only if the said activity is the immediate and effective source of the said profit or gain. There must be a direct nexus between the activity and the earning of the profit and gain. The income, profit or gain cannot be said to have been derived from an activity merely by reason of the fact that the said activity may have helped to earn the said income or profit in an indirect or remote manner -CIT v. Raja Bahadur Kamakhaya Narayan Singh [1948] 16 ITR 325 (PC) and Mrs. Bacha F. Guzdar v. CIT [1955] 27 ITR 1(SC). When this principle is applied to the facts of the present case it becomes clear that the profits earned by the assessee by the sale of the import entitlements cannot be regarded as profits or gains derived from the export of goods out of India. We find that a similar question had arisen before this Court in ITR No. 99 of 1971 and by judgment dated 29th May, 1973, which is not so far reported, a Division Bench of this Court held that the profits realised by the assessee in that case by the sale of the import licences obtained by it on the strength of import entitlements could not be said to be profits derived by the assessee from export of goods out of India. We are in respectful agreement with the said view. It then follows that the Tribunal was right an assessees claim for rebate under section 2(5) (a) (i) of the Finance Act, 1966. ..." (p. 830) It has been held therein that the income, profit or gain cannot be said to have been derived from an activity merely by reason of fact that the said activity may have helped to earn the said income or profit in an indirect or remote manner. The profits realised by the sale of the import licences obtained by it on the strength of import entitlements could not be said to be profits derived from the export of goods out of India.
Supreme Court of India Cites 12 - Cited by 349 - M C Mahajan - Full Document

Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. vs Commissioner Of Income-Tax on 31 January, 1983

13. But so far as the drawbacks to which reference is made by the Commissioner are concerned, the full facts are not available. It is not known whether it is in respect of the excise duty on the packing materials collected from the manufacturer and whether the customs department has given refund as customs duty with reference to the excise duty collected on the packing materials. No doubt, the decision of the Madhya Pradesh High Court in Gwalior Rayon Silk Mfg. (Wvg.), Co. Ltd.s case (supra) is in favour of the assessee so far as the drawbacks are concerned. But in the assessees case the facts have to be enquired. Hence, to that extent we direct the ITO to make afresh in accordance with law. To that extent the order of the Commissioner is modified and in other respects we uphold his order.
Madhya Pradesh High Court Cites 11 - Cited by 91 - Full Document

Sterling Foods vs Commissioner Of Income-Tax, Karnataka on 1 June, 1984

10. Sterling Foods v. CIT [1984] 150 ITR 292 (Kar.) is a case directly on the point dealing with section 80HH. In that case, the assessee-firm was engaged in the processing and export of prawns and other sea foods. The assessee also earned import entitlements. The assessee sold such import entitlements and earned some profits. The total income of the assessee included the sale proceeds of such import entitlements. The ITO allowed relief under section 80HH in respect of the entire receipts inclusive of the sale proceeds of the entitlements. The Commissioner invoked the provisions of section 263 and set aside the assessment and directed the ITO to redo the same after excluding the sale proceeds of import entitlements. The Tribunal upheld the order of the Commissioner. On reference, the Karnataka High Court observed as under :
Karnataka High Court Cites 15 - Cited by 106 - Full Document
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