TMI Blog1971 (1) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... he court was delivered by HEGDE J.-- This is an assessee's appeal by certificate. The concerned assessment year is 1952-53, and the relevant accounting year is the year ended on 31st March, 1952. From the statement of the case submitted by the Income-tax Appellate Tribunal, " A " Bench, Calcutta, to the High Court of Calcutta under section 66(2) of the Indian Income-tax Act, 1922 (in short " the Act "), the following facts are available. The assessee is a private limited company (which will hereinafter be referred to as " the company "). It was functioning as the managing agents of 27 companies including M/s. Greaves Cotton Co. Ltd. M/s. Greaves Cotton Co. Ltd. was incorporated as a private company in about 1922, and its managin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akhs to the company as compensation. That resolution was communicated to the company on April 3, 1951, and the latter accepted it on April 10, 1951. In the assessment for the assessment year 1952-53, the Income-tax Officer included a sum of Rs. 18 lakhs in the total income of the company. He took the view that the payment of Rs. 18 lakhs by the managed-company was an advance remuneration and not a compensation on account of loss of employment. On appeal by the company, the Appellate Assistant Commissioner differed from the view taken by the Income-tax Officer and held that the amount in question represented compensation received by the company for the termination of its managing agency. The Income-tax Officer took the matter in appeal to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question as framed does not pose any challenge to the facts found by the Tribunal. It was open to the Commissioner to challenge the facts found by the Tribunal, if the findings in question were not supported by any evidence or if in reaching those findings the Tribunal committed any error of law. But the Commissioner did not challenge those findings on any of those grounds. The question as framed proceeds on the basis that the fact found by the Commissioner but he challenges the decision reached by the Tribunal on the basis of those findings. In other words, the question framed should be read as to whether, on the facts and in the circumstances of the case, as found by the Tribunal, the sum of Rs. 18,00,000 paid to the company was a revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal as revenue receipt. As held by this court in Commissioner of Income-tax v. Chari and Chart Ltd., that ordinarily compensation for loss of office or agency is regarded as a capital receipt, but this rule is subject to an exception that payment received even for termination of an agency agreement would be revenue and not capital in the case where the agency was one of many which the assessee held and its termination did not impair the profit-making structure of the assessee, but was within the framework of the business, it being a necessary incident of the business that existing agencies may be terminated and fresh agencies may be taken. But it is for the income-tax department to clearly establish that the case fell within the exceptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al receipt or a revenue receipt is undoubtedly a difficult question to be answered. The difficulty is inherent in the problem itself. Decisions on this question are numerous. But none of them have laid down a precise principle of universal application, but various workable rules have been evolved for guidance. One of us, speaking for the court in Kettlewell Bullen Co.'s case, has laid down the following guidelines for finding out the true nature of such a receipt. The relevant observations read thus : " Where, on a consideration of the circumstances, payment is made to compensate a person for cancellation of a contract which does not affect the trading structure of his business, nor deprive him of what in substance is his source of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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