| Case ID |
0a834f2c-7e8a-4a96-a27b-1ce695105b96 |
| Body |
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| Case Number |
IT REFERENCE No. 250 OF 1978 |
| Decision Date |
Feb 18, 1986 |
| Hearing Date |
|
| Decision |
The Tribunal held that the income which arose to the assessee as a consequence of the devaluation of the rupee had arisen during the course of trade and constituted a trading profit. The excess amount received by the assessee as a result of devaluation was deemed to be a revenue receipt and taxable as such. The appeal by the assessee was rejected, affirming that the receipts were not of a casual and non-recurring nature, but rather directly associated with the trading activity of the firm. The decision concluded that the amount of Rs. 1,01,572 received by the assessee was taxable as revenue receipts and not exempt under section 10(3) of the Income-tax Act, 1961. |
| Summary |
In the case of Hindustan Trading Corporation v. Commissioner of Income Tax, the Gujarat High Court addressed the tax implications of income received by an exporter due to the devaluation of the Indian rupee against the U.S. dollar. The assessee, a firm engaged in exporting goods, received an excess amount of Rs. 1,01,572 as a result of currency devaluation. The court reaffirmed that such receipts, although resulting from external economic factors, were integral to the trading operations of the firm and thus constituted taxable trading profits. The court's ruling emphasized the importance of recognizing the nature of receipts in determining their taxability. This case highlights the complexities surrounding tax law application in cases involving currency fluctuations and trading activities, making it a significant reference for similar future cases. |
| Court |
Gujarat High Court
|
| Entities Involved |
Hindustan Trading Corporation
|
| Judges |
R.C. Mankad,
A.P. Ravani
|
| Lawyers |
K.C. Patel,
B.R. Shah
|
| Petitioners |
Not available
|
| Respondents |
Commissioner of Income Tax
|
| Citations |
1986 SLD 1725,
(1986) 160 ITR 15
|
| Other Citations |
M. Shamsuddin & Co. v. CIT [1973] 90 ITR 323 (Ker.),
CIT v. Mehboob Productions (P.) Ltd. [1969] 74 ITR 676 (Bom.)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
28(i),
10(3)
|