TMI Blog1989 (4) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Allahabad High Court is directed against a judgment of the High Court answering the following questions in favour of the Revenue and against the assessee in an income-tax reference : "(1) Whether, on the facts and in the circumstances of the case, and on a correct interpretation of the lease deed dated August 22, 1960, the Tribunal was right in holding that the profits of the glass factory during the relevant accounting year accrued to the assessee-company ? (2) If the answer to question No. 1 is in the affirmative, whether the Tribunal was right in holding that the entire profits and not one-half of the profits of the glass factory during the relevant accounting year accrued to the assessee-company ?" The assessee, Messrs. Vib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars. The State Government also stipulated that if and when the profits of the business exceeded a prescribed limit, half share of those profits would go to the State Government. The assessee agreed to this arrangement and executed a document dated August 22, 1960, incorporating the requisite conditions. For the relevant accounting period, the glass factory business disclosed a profit of Rs. 92,960 while the assessee suffered a loss of Rs. 3,47,656 according to its separate profit and loss account. During assessment proceedings for the assessment year 1962-63, it was contended by the assessee before the Income-tax Officer that the profit of Rs. 92,960 earned by the glass factory business was not assessable in the hands of the assessee but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. Although the deed is described as lease deed and it provides that the glass factory is demised to the State Government, in substance, possession of the glass factory was transferred to the State Government only for the purpose of enabling it to manage and run the business. The High Court has given good reasons for reaching that conclusion. Clause (c) of paragraph 7 of the deed provides "that if, upon the expiration or sooner determination of this demise, it is found that the working of the factory has shown profits after meeting the entire liabilities of the company, the, balance profits, after accounting for all charges and expenses incurred by the State Government, shall be divided between the company and the Government in equal prop ..... X X X X Extracts X X X X X X X X Extracts X X X X
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