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TMI Blog1972 (2) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... on erected by Caltex outside Delhi Gate. The dealership when secured was transferred to a private limited company named Delhi Gate. Services (P.) Ltd. and in consideration thereof the company allotted to the assessee 300 ordinary (non-transferable) shares as fully paid up valued at Rs. 30,000. The Income-tax Officer called upon the assessee to clarify the nature of this receipt. The assessee was asked to file the correspondence he had with Messrs. Caltex (India) Ltd. in this regard which was not produced on the ground that it was with some court. The Income-tax Officer treated the sum of Rs. 30,000 representing, the face value of the shares as remuneration for services rendered by the assessee in the matter of obtaining dealership for the limited company. Accordingly, this sum of Rs. 30,000 was treated as income in the hands of the assessee. The appeal of the assessee before the Appellate Assistant Commissioner as well as the Tribunal failed. The agreement between the assessee and the newly floated company is annexure " C " dated 26th June, 1963, which has been relied upon by the income-tax authorities as well as the Tribunal. The agreement recites that A. S. Bhargava has brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has relied upon a judgment of the High Court of Madras in Seshasayee Brothers Ltd. v. Commissioner of Income-tax to show that the sale of a licence from the Government of India for manufacture of Vanaspati product was not a trading receipt. We find great support in answering this reference from a recent authority of the Supreme Court in Commissioner of Income-tax v. Prabhu Dayal a (Civil Appeal No. 1693 of 1968 dated 6th October, 1971). The counsel for the revenue has not seriously challenged this legal position. He has, however, relied upon Commissioner of Income-tax v. Rai Bahadur lairam Valji, to show that there is a difference between a payment made as compensation for the termination of an agency contract and an amount paid as solatium for the cancellation of a contract entered into by a businessman in the ordinary course of business; in any agency contract, the actual business consists in the dealings between the principal and his customers, and the work of the agent is only to bring about that business while he himself does not do this business. In this authority, the Supreme Court observed that the agency may, therefore, be viewed as the apparatus which leads to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , howsoever flimsy it may be. Secondly, where the finding is recorded without any evidence, it would constitute an error of law and the finding would not be binding as has been held by the Supreme Court in Sree Meenakshi Mill's case and Indian Woollen Mills case and by this court in Said-ud-Din v. Mahabir Singh. We are, however, of the view that what has been relied upon by the counsel for the revenue, is not a finding of fact recorded by the Tribunal, but is a part of its conclusion in law. Paragraph 5 of the order of the Tribunal (annexure " D "), which deals with this point, is reproduced below : " As regards the sum of Rs. 30,000 brought to tax in his hands as his income, it is not necessary to elaborate our reasoning. The material facts have been brought out in the orders of the income-tax authorities. We have also before us the agreement of 26th June, 1953, between Anand Swarup on the one hand and the said limited concern on the other hand. That limited company's directors consisted of the assessee's father and his wife, Suraj Rani. It is clear from these facts that the assessee helped Caltex company to get certain good position near Delhi Gate to set up its petrol pump. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n his order (annexure " A ") after mentioning the facts of the case that he had asked the assessee to file the correspondence with the Caltex company so that he may correctly know the whole background of the deal stated that the same had not been filed and under the circumstances he had no alternative bat to hold the receipt of the shares as remuneration for the services rendered by the assessee in the matter of obtaining dealership for the newly floated company. Here again, there is neither any evidence to support the conclusion, nor is this a finding of fact, but it is only a legal conclusion drawn by the Income-tax Officer. The Tribunal in its order relied upon the agreement (annexure " C ") which has been extracted by us above. The Tribunal has not recorded a finding that it did not accept the agreement as correct or it desired to tear off its mask and had some reasons to determine some facts contrary to the tenor of the agreement. In view of the language of the agreement, it was incumbent on the Tribunal to give full legal effect to it and on its construction, it was not possible for the Tribunal to hold that it was not a case of transfer of his capital by the assessee to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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