TMI Blog1965 (4) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... t was delivered by SHAH J.---The Maheshwari Devi Jute Mills Ltd. carries on the business of manufacturing jute goods and is a member of the Jute Mills Association. To protect the members against loss resulting from over-production, members of the association entered into an agreement dated January 9, 1932, called " the First Working Time Agreement " restricting hours of work. That agreement was to expire on December 11, 1944. With a view to continue the arrangement, a fresh agreement was executed on June 12, 1944. The preamble of the agreement was : " Whereas the signatories generally as a consequence of over-production having been put to considerable losses and in general interests of the members and their employees and of the associ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fected and registered with the association, the transferee was entitled, subject to certain conditions, to utilise "loom-hours" so transferred. The respondent was under the agreement allotted 220x72 hours per week. In the account year corresponding to the assessment year 1949-50, the preparatory section of the factory of the respondent was unable to work the looms for more than 48 hours a week, and with the sanction of the association the respondent sold 220 x 24 "loom-hours" to the Naskarpara Jute Mills and as consideration of the sale received Rs. 53,460. In the account year corresponding to the assessment year 1950-51 the respondent received from the Birla Jute Mills and Hanuman Jute Mills a total amount of Rs. 1,85,230 for sale of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a profession, vocation or occupation or by way of addition to the remuneration of an employee are exempt from tax, if they are of a casual and non-recurring nature. But a receipt in the ordinary course of the assessee's business, even though it is casual or non-recurring, is by the express words used by the legislature, taxable. It is not the case of the department that a business in "loom-hours" was carried on by the respondent. It is also common ground that for imposing restrictions upon the number of working hours, no compensation was paid to the members by the association or by any other body; if it were, such compensation being paid for agreeing to restraint on trade would be capital. To protect the interests of its members the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration of the transfer received in the two years in question substantial sums of money. The Solicitor-General submitted that where it is a part of the normal activity of the assessee's business to earn profit by making use of its asset by either employing it in its own manufacturing concern or by letting it out to others, consideration received for allowing the transferee to use that asset is income received from business and chargeable to income-tax. In support of his contention counsel relied upon the judgment of this court in Commissioner of Excess Profits Tax v. Shri Lakshmi Mills Ltd. In Shri Lakshmi Silk Mills Ltd. case the assessee-company was a manufacturing concern and had for the purpose of its business installed a plant f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee and user of the asset is given to another person. If in the present case, for the hours which the respondent was unable to use its looms, the respondent had permitted some other person to work the looms, profits received for permitting such user would be income. But the distinction between that case and the present case arises from the peculiar nature of the transaction in "loom-hours". "Loom-hours" cannot from their very nature be let out while retaining property in them, for there can be no grant of a temporary right to use "loom-hours". "Loom-hours" are the asset of the respondent, but temporary user of the "loom-hours" cannot be granted. The transaction in this case is of sale of "loom-hours". There is no doubt that when a bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hours" unutilisable was permanent. It was always open to the respondent to acquire the necessary yarn from outside and thereby utilise the remaining quota of "loom-hours" in manufacturing jute, and if the respondent preferred not to procure yarn and chose to sell the surplus "loom-hours" and thus ensure profit for itself without incurring any risk, the receipt by disposal of a commercial asset was profit of the business irrespective of the manner in which that asset was exploited by the owner of the business. In the view of the High Court the respondent was entitled to exploit the asset to its best advantage : it may do so either by utilising it personally or by letting it out to somebody else, and the sale of a part of its quota of "loom-h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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