MISHRA J.

Of the two questions under reference for the opinion of the court, the question whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the gross value of the assets should alone be taken as capital for the purpose of grant of relief under section 80J of the Income-tax Act, 1961, by ignoring the provisions of rule 19A(3) of the Income-tax Rules, 1962, need not be answered in any detail as the law in this behalf has been settled by the pronouncement in the case of Lohia Machines Ltd. v. Union of India and the same has to be applied strictly by all concerned The question, however, whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the profit on sale of import licences of Rs. 5, 70, 704 was derived from the assessee's manufacturing activity for the purpose of deduction of relief under section 80J of the Income-tax Act, 1961

"28. Profits and gains of business or profession.-- The following income shall be chargeable to income-tax under the head 'Profits and gains of business or profession', --

(i) the profits and gains of any business or profession which was carried on by the assessee at any time during the previous year ;

(ii) any compensation or other payment due to or received by, --

(a) any person, by whatever name called, managing the whole or substantially the whole of the affairs of an Indian company, at or in connection with the termination of his management or the modification of the terms and conditions relating thereto ;

(b) any person, by whatever name called, managing the whole or substantially the whole of the affairs in India of any other company, at or in connection with the termination of his office or the modification of the terms and conditions relating thereto ;

(c) any person, by whatever name called, holding an agency in India for any part of the activities relating to the business of any other person, at or in connection with the termination of the agency or the modification of the terms and conditions relating thereto ;

(d) any person, for or in connection with the vesting in the Government, or in any corporation owned or controlled by the Government, under any law for the time being in force, of the management of any property or business ;

(iii) income derived by a trade, professional or similar association from specific services performed for its members ;

(iv) the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession

Explanation 1.-- The profits and gains of a business shall include the profits and gains of managing agencyExplanation 2.-- Where speculative transactions carried on by an assessee are of such a nature as to constitute a business, the business (hereinafter referred to as 'speculation business') shall be deemed to be distinct and separate from any other business."

Section 29 of the Act states

" The income referred to in section 28 shall be computed in accordance with the provisions contained in sections 30 to 43A."*

Chapter VI-A of the Act which deals with deductions contains in sec tion 80J, how, from profits and gains derived from an industrial undertaking or a ship or the business of a hotel, deductions can be allowed and says where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking or a ship or a business of a hotel, there shall, in accordance with and subject to the provisions of the section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of so much of the amount thereof as does not exceed the amount calculated at the rate of six per cent. per annum on the capital employed in the industrial undertaking or ship or business of the hotel, as the case may be, computed in the prescribed manner in respect of the previous year relevant to the assessment year

The petitioner herein claimed deduction