TMI Blog1964 (12) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... The question apparently seems to be very simple and short, but after hearing the arguments, it does not appear to be quite so simple to answer. To understand the substance of the question, the facts may in a nutshell be stated. The assessee-company's main business is exploiting the Siraj forests in the State of Jammu and Kashmir and the company has taken a lease for the purpose of exploiting the forests. In this venture, it had entered into a partnership with Messrs. R.B. Jodhamal Company Ltd. The forests were to be exploited by a firm consisting of Messrs. R.B. Jodhamal Company and the assessee. Clause 10 of the partnership agreement is in the following terms: That in lieu of making the partnership privy to the second party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficult mountainous terrains. The equipments installed in the forests were specially designed and got fabricated by the company and the company imported a special type of portable saw-mill equipment from abroad which is not normally used in this country so far. The Hindustan Forests Co. specially designed and fabricated waterturbines to run on water power for direct couplings with the saw-mill equipment. Such water-turbines equipment is not used anywhere in this country so far. The Income-tax Officer considered the whole of this amount as revenue receipt. The learned Appellate Assistant Commissioner has expressed its conclusion on this point thus. From clause 10 of the partnership deed, it is quite apparent that in respect of goodwi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee, according to the Tribunal, was given not only one-third share of profits but something more because the assessee was rather more efficient and a well-known technician. The technical knowledge possessed by the assessee and the name which he had acquired was a source from which the income flowed with regular certainty. This yield was in character a revenue receipt and, therefore, taxable. The Tribunal for its view relied on Rani Amrit Kunwar v. Commissioner of Income-tax [1946] 14 I.T.R. 561. Before us, the learned counsel for the assessee has canvassed support for the view taken by the Appellate Assistant Commissioner; in other words, he wants us to hold that only ₹ 370 should be considered to be revenue receipt and the bala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the nature of a question of fact than of law. It is unnecessary, in my opinion, to deal with the cited cases in detail because they all deal with their own peculiar facts. In Handley Page's case [1935] 19 Tax Cas. 328, Lord Hanworth M.R. observed as follows: What is this sum--a large sum, a considerable sum? What is it paid for? There was here a dissipation of the knowledge and experience of the applicant. It was placed at the disposal of all and sundry who were engaged in making these aeroplanes and supplying them to the Government. They were required to place their experience, their knowledge and such inventive faculties as they employed in their business, at the benefit of the other contractors. It seems to me that that wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Rolls-Royce Ltd. [1965] 56 I.T.R. 580, 586; [1962] All E.R. 801 (H.L.), also contains little which can be taken to lend support to the assessee's contention. The engineering KNOW-HOW sold in this case was regarded as a regular product of the trade and treated as more transient and less permanent than the KNOW-HOW related to medical supplies in the Evans Medical Supplies case [1957] 31 I.T.R. 466 (Ch.D.); [1958] 33 I.T.R. 700 (C.A.); [1959] 35 I.T.R. 707 (H.L.); 37 Tax Cas. 540. The sales in the latter case were apparently a part of deliberate policy. The ratio of this case--if anything--may well be held to some extent to go against the assessee. Lord Radcliffe has, in his lucid judgment observed: ...that, although ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mong others, a commission on future sales and such commission might well be considered to be taxable. Finally, the sale itself may be a trading operation. When tangible assets or rights equivalent thereto are sold, the position may not present much difficulty but in the case of intangible assets or secret process, the problem may not be an easy one. It is not difficult to conceive of cases of joint receipts in exploitation as a commercial venture. Looking at the facts which are binding on us in the instant case and on a consideration of all the circumstances, it appears to me to be a case of joint commercial exploitation by the partners and the payment to the assessee is for successive user even of the KNOW-HOW . The sum in question is, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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