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TMI Blog1962 (4) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... einafter referred to as the Act): "Whether the sum of ₹ 10,000 received by the assessee by the sale of permits granted by the Regional Transport Authority authorising the assessee to ply vehicles on certain routes was revenue income liable to tax under the Income-tax Act?" The assessee carries on the business of plying motor-buses, trucks and lorries and was assessed to tax for the assessment year 1950-51 in the status of an individual. In the accounts of the accounts for the relevant year there were credit entire of ₹ 10,000. The Income-tax Officer called upon the assessee to explain those entire. The assessee explained by saying that that amount represented the sale proceed of the sale of permits to third persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h and the substance of a transaction which matters and that in orders to determine the real nature or the essential quality of a transaction, the court has to scrutinise it with great care. The assessee has called the amount of ₹ 10,000 as sale consideration. Under the province of the Motor Vehicles Act, nobody can ply a stage carriage or a public carrier except under a permit granted under the provisions of the Motor Vehicles Act. In the present case, what actually happened was that the assessee, instead of plying the vehicles itself, transferred the permits with the permission of the authorities to third persons from whom it realised a sum of ₹ 10,000 as consideration. In order words, it sold the right of plying the vehicles g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icles. In that view of the matter, the payment of ₹ 10,000 cannot be treated to be one of an enduring nature. It appears to us that the substance of the transaction between the assessee and the so-called purchasers was that the assessee changed the mode of his business and of earning profits. Instead of plying his own vehicles on the routes specified in the permits, he allowed third parties to do so and received ₹ 10,000 in lieu thereof. That being so, this sum of ₹ 10,000 is not capital receipt but the profit or the income which the assessee made in connection with the business. Our attention is invited to Maheshwari Devi Jute Mills Ltd. v. Commissioner of Income-tax [1961] 43 I.T.R. 254. In that case the assessee company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tself unable to use the dyeing plant, allowed another to run it against a certain amount received as consideration. Mahajan J. held that amount was a revenue receipt liable to assessment of tax. In the case of Raghuvanshi Mills Ltd. v. Commissioner of Income-tax [1952] 22 I.T.R. 484; [1953] S.C.R. 177, it was observed by the Supreme Court that the income of the company would be considered from the particular facts in each case. Having considered the facts of this case, we have, for reason already mentioned above, come to the conclusion that the sum of ₹ 10,000 was in the nature of revenue receipt liable to assessment of tax. We, therefore, answer the question referred to us in the affirmative and against the assessee. The assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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