Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | Indian Income tax Act 1922 Capital receipt and revenue receipt Distinction |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Dismissed |
Headnote | Income-tax— Agreement by quota-holder to supply steel to manufacturer at a certain royalty per ton —Receipt of lump sum in lieu of royalty—Assessment on amount received—If according to law—Capital receipt and revenue receipt—Distinction— Indian Income-tax Act, 1922,(11 of 1922), S., 66A(2).The assessee company was receiving quota of coal and steel from the Government but had no factory. It entered into a partnership with a person who had a factory but no quota. The latter agreed to pay a royalty of Rs. 50 per ton of steel supplied to the firm under the quota. A few years later, that agreement was modified and the assessee agreed to receive a lump sum of Rs. 60,000 in consideration of waiving the roualtyIn assessing the income-tax on the assessee, the Income- tax Officer brought the amount of Rs. 60,000 to tax. When the matter went to the High Court, that court held that the amount was a revenue receipt, and hence liable to tax. On appeal to this Court, Held, that the amount of Rs. 60,000 represented capitalised profits of the assessee company on account of its transferring or selling the steel which the assessee company purchased under the authority given by the quota allowed to it. The assesse company purchased the goods in its own name and delivered them to the partnership. The sum of Rs. 60,000 represented the capitalised value of the profits the assessee company was to have on supplying all the steel it had under the quota at net price. No right to the quota itself was transferred, and hence it could not be said that the sum of Rs. 60,000 was paid in lieu of the transfer of the rights in the quota of steel. The description of the amount as goodwill in consideration of waiving royalty from partnership account did not convey the real nature of the amount. There was no question of goodwill in waiving a royalty. |
Judge | Hon'ble Mr. Justice Raghubar Dayal |
Neutral Citation | 1962 INSC 192 |
Petitioner | The National Steel Works Ltd. |
Respondent | Commissioner Of Income-tax, Bombay |
SCR | [1963] 2 S.C.R. 937 |
Judgement Date | 1962-05-03 |
Case Number | 544 |
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