TMI Blog1962 (2) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the Appellate Tribunal was right in failing to consider the alternative claim for allowance of the loss under section 12 of the Act arising on the identical facts? The assessee is a public limited company and the accounting year is the year ending the 31st March, 1954, relevant for the assessment year 1954-55. It had for its object in the memorandum, manufacturing and selling of paper. According to the memorandum it had also as one of its objects, carrying on any other industry, trade or business whether manufacturing, commercial or otherwise and as general merchants, contractors, agents, guarantors, etc. In 1951 the Bharatiya Vidya Bhavan of Bombay intended to bring out books of popular editions on topics of Indian culture. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25 books in the English series on their own cost on the basis of the profits being handed over to them and they bearing the loss, if any. The scheme further stated that friends of the Bhavan were requested to undertake the Bhavan's cost of one or more books at ₹ 3,500 for a book in English and ₹ 2,500 for a book in Indian language so that the burden of initial outlay might be distributed. Correspondence started early in the year 1951 between Sri K.M. Munshi and Sri B.M. Birla. The first letter written by Sri Birla to Sri Munshi dated January 30, 1951, stated that the Hindusthan Cellulose and Paper Mills Ltd. would be publishers of the series of 25 English books to be selected by the Bhavan and the net profits of the seri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ills Ltd. stated that the total financial investment in the publication of each of the 25 volumes would in no circumstances exceed ₹ 3,500 and that in the event of loss the mill would not be liable for any loss beyond the invested amount of ₹ 3,500. Condition No. 7 related to an advance of ₹ 1,000 to be made by the mill in respect of each volume and the mill wrote that they would be glad to pay an advance as and when the work for a volume was undertaken in hand. On July 3, 1951, Sm. Lilavati Munshi, vice-president of the Bharatia Vidya Bhavan, wrote to the mill referring to conditions Nos. 2 and 4 in the letter dated May 24, 1951, that the Bhavan agreed that the total financial invest ment in the publication of each of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertaken in hand. Before the revenue authorities it was contended that it was a venture between the Bharatiya Vidya Bhavan on the one hand and the assessee on the other. That contention was rejected inasmuch as there was no agree ment for sharing of profits or losses. Counsel on behalf of the Commissioner contended that the scheme of Bharatiya Vidya Bhavan read along with the entire correspondence would furnish the key to the entire transaction. If profit making was the sole motive it might mean trade. The question here is whether there was the sole intention of making profit or whether there was any question of making profits at all in the background. It is apparent in the context of the scheme and the correspondence that in the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it was not an arbitrary or capricious order but contended that it was not a judicious order. His contention was that the Tribunal should have allowed the assessee to raise the contention under section 12. Counsel for the assessee relied on the decisions in Raghuvanshi Mills Ltd. v. Commissioner of Income-tax [1952] 22 ITR 484 ; [1953] SCR 177, Commissioner of Income-tax v. Breach Candy Swimming Bath Trust [1955] 27 ITR 279 and Gangadas Sarda v. Commissioner of Income-tax [1956] 29 ITR 799 , in support of his contention that additional grounds could be urged before the Tribunal. Counsel for the Commissioner, in my view, rightly contended that allowing a plea under section 12 of the Act would be on the basis that it is a revenue receip ..... X X X X Extracts X X X X X X X X Extracts X X X X
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