The nature of a receipt, whether it is taxable or not, depends on its true character and legal principle, and not merely on the conduct of the party.

AJIT K. SENGUPTA, J.

( 1 ) AS many as eight questions of law--four at the instance of the assessee and four at the instance of the Revenue--for the assessment year 1972-73 have been referred to this court. Counsel for the parties are agreed that all the questions but two are covered either by the decisions of this court or of the Supreme Court. We do not, therefore, propose to set out the facts in respect of such questions. We, however, propose to answer the questions which are admittedly covered by the decisions of this court or of the Supreme Court, as the case may be. Be it mentioned that we have rearranged the questions for convenience :"whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the cash subsidy on controlled cloth of Rs. 52,87,267 was liable to tax under the Income-tax Act, 1961?"

( 2 ) WHETHER, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the benefit of Rs. 14,48,604 received by the assessee-company under the Export Incentive Scheme is taxable under the Income-tax Act, 1961 ?"in view of the decisions of this court in Kesoram Industries and Cotton Mills Ltd. v. CIT [1978] 115 ITR 143 ; Jeewanlal (1929) Ltd. v. CIT [1983] 142 ITR 448 and Bharat General and Textile Industries Ltd. v. CIT [1985] 153 ITR 747, the aforesaid two questions (which are questions Nos. (ii) and (iii), respectively, in the statement of case referred at the instance of the assessee) are answered in the affirmative and in favour of the Revenue and against the assessee. ". Whether, on the facts and in the circumstances of the case and on a proper interpretation of the provisions of Sections 80a (2), 80b (5), 80k and 80h of the Income-tax Act, 1961, the Tribunal was justified in holding that the relief allowable under Sections 80k and 80m was not allowable on gross dividend but could be allowed only after setting off the carried forward unabsorbed depreciation ?"

( 3 ) IN view of the decisions of this court in CIT v. Bengal Assam Steamship Co. Ltd. [1985] 155 ITR 26 and in CIT v. North Koshalpur Colliery Co. P. Ltd. [1986] 161 ITR 756, the aforesaid question (question No. (iv) at the instance of the assessee) is answered in the affirmative and in favour of the Revenue and against the assessee. ". Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in treating the sum of Rs. 2,07,548 received on transfer of import entitlements as capital gains and in directing the Income-tax Officer to determine the capital gains earned by the assessee on transfer of import entitlements in accordance with law after ascertaining necessary information from the assessee ?"

( 4 ) IN view of the decision of this court in the case of Jeewanlal (1929) Ltd. v. CIT [1983] 139 ITR 865, the aforesaid question (being the first question at the instance of the Revenue) is answered in the negative and in favour of the Revenue and against the assessee. In other words, the sum received on transfer of import entitlements has to be assessed as revenue profits. " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the income-tax authorities should have taken into account the value of the fixed assets acquired during the accounting period relevant to the assessment year 1972-73 as well as borrowed capital for the purpose of computing capital employed in new units as contemplated under Section 80j of the Income-tax Act, 1961, and in directing the Income-tax Officer to compute capital employed afresh accordingly ?"

( 5 ) IN view of the decision of the Supreme Court in the case of Lohia Machines Ltd. v. Union of India [1985] 152 ITR 308, the aforesaid question (being the second question at the instance of the Revenue) is answered in the negative and in favour of the Revenue and against the assessee. " Whether, on the facts and in the circumstances of the case, the Tribunal w

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