TMI Blog1957 (7) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... and Sons Ltd. I say was , because it is not clear whether after the termination of the chief agency the company which had this particular agency as its main, if not the only, business, has at all continued to exist. The present assessment of the assessee is an assessment in his capacity of a individual. It appears that D.M. Das Sons Ltd., held that chief agency of the Empire of India Life Assurance Co. Ltd., for Bengal, Bihar, Orissa and Assam. As such chief a gets the company procured considerable business for the principal company and built up for it a fine business reputation in the area covered by the chief agency. Nevertheless in 1948, the life assurance company decided to terminate the chief agency and take up the business directly into its own hands. Certain negotiations as regards the terms on which the agency was to be terminated followed and it appears that ultimately a set of proposals was made by the chief agents. Those proposals were accepted by the assurance company with certain modifications and the terms, as so modified are evidenced by a letter which the assurance company wrote to the chief agents on the 26th of June 1948. The seventh term as set out in that l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mar Sen, Mr. A.B. Gupta Mrs. Maya Bose and Mr. P.K. Das, who is the assessee before us, payments at certain rates per month to be made for a period of seven years, were provided for. A further provision was made for payment of ₹ 1,000 per month to one Mrs. A.C. Sen, who was the mother of Mr. Amiya Kumar Sen, to be made for the period of her life. Mrs. Maya Bose, it may be stated here was the mother of Mr. Dilip Bose who was himself a director but for whom no provision was made by the agreement. It appears and the Tribunal has so found that even the shareholders who were to get monthly payments under the terms of the agreement were to receive benefits which were not in proportion to their shareholders. A further convent provided that neither the company nor any of the recipients of the compensation would carry on life assurance business or work for any other life office during the period of the payment of the compensation, but, on the other hand, the company and its directors more particularly Mr. Amiya Kumar Sen, would extend their full co-operation to the assurance company. The question before us concerns the nature of the payment which one of the directors of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent made but they are some evidence as regards how the parties themselves regarded the payment and thus some evidence of their intention. So far as the description quoted by the Tribunal is concerned, we do not find any materials before us to show that the parties themselves had used it and, therefore, we shall leave it out of account. The decision of the Tribunal falls into two parts. They have held that the payments provided for in the agreement regarded as payments made to D.M. Das and Sons Ltd., could not possibly be anything but capital receipts. Proceeding a step further, they have held that it made no difference that the payments were made to the nominees of the chief agents, nor did it make any difference that the payments were made and taken in the form of monthly payment spread over a number of years. According to the Tribunal, the receipts by the nominees of the chief agents were equally capital receipts. As regards the first of their findings, I am prepared to accept the view taken by the Tribunal. The question whether a particular receipt is an income or a capital receipt is always a vexed question and no test of a hard and fast character can be laid down. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the agreement, one of them is that neither the company, nor the directors would carry on any life assurance business of work for any other life office during the period of the payment of the compensation, either directly or indirectly. That, it is clear, is a restrictive convent and it is equally well-settled that the price received for submitting to a restrictive e covenant in regard to one's business or profession is a capital receipt. Another term is that the company and its directors, more particularly one of them, would extend their full co-operation to the assurance company, but it has been found by the Tribunal on admission made before them that the co-operation contemplated was only co-operation in observing the terms of the agreement and not co-operation with the assurance company carrying on its assures business. That being so, this particular terms is of no consequence. Some difficulty, in my view, is created by a further terms which provides that on and from the date when the termination of the chief agency would take effect, the chief agents would not be entitled to nor be paid, any commission or renewal commission on business secured by them during the perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their hands. I, however, find myself unable to accede to the second proposition of the Tribunal. In my view, the fact that the payment with which we are here concerned is not a payment recieved by D.M. Das and Sons Ltd. as such, but a payment received by a nominee of the company although a director, does make a difference and a further difference is made by the form in which the payments were arranged to be paid and received. One of the tests applied in deciding whether a particular instalment payment is capital or income is, although it is not a decisive test, to see whether the instalment has any relation to any ascertained capital sum. If the payment is only an instalment of a capital sum it is obviously not an income receipt in the hands of the recipient, but an instalment of a debt and therefore, a capital receipt. In the present case the assessee, it might be useful to remind ourselves, is to D.M. Das and Sons Ltd. but Mr. P.K. Das. The payments in which he was to participate under the agreement were, it is true, payments agreed to by and between D.M. Das and Sons Ltd. and the assurance company, but those payments were to be made not to the company of the chief agents as s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees who are not receiving the same directly from the assurance company in exchange for some rights of their own, but receiving it from the chief agents in the form of an annuity provided by the chief agents for them. I cannot see that, on the facts of the case, the receipts by the several nominees can be said to bear any other character. This is not even a case when a person is receiving a capital sum in a form which makes it income in his hands, but it is a case where a person, receiving a capital sum, is using it to provide incomes for third parties, one of whom is the assessee before us. There is one obligation cast on the nominees which must, however, be referred to. As has been seen, they too are required to refrain from carrying on any life assurance business or working for any other life office directly or indirectly during the period of the payment of the compensation. It might be argued that, at least to a certain extent, they are getting the monthly payments as a price for their submission to this restrictive covenant and, therefore, at least a portion of the payments which may be found reasonably attributable to this restriction should be treated as a capital receipt. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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