1998 (7) TMI 4

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....pt of Rs. 50,000 by the assessee-company for the use of the licence and trade mark "Miller" by the Indian company was a capital receipt, and, therefore, not taxable in the assessee's hands ? The assessee is a foreign company which entered into agreement with Tube Investments Ltd., and later with T. I. Miller Ltd., Madras. These agreements were entered into in the year 1961. Under the agreement between the assessee and Tube Investments Limited, it was provided that the assessee would receive a sum of Rs. 50,000 from the company to be incorporated in the form of equity shares of that company as consideration for allowing that company an exclusive licence to use the trade mark "Miller" over its products. The agreement also provided that the n....

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....t be identical with the character of that amount when received in the hands of the payee. Even assuming that the amount paid by T. I. Miller Limited, the newly established company, to the assessee was a payment of capital character so far as the payer was concerned, it could still be regarded as revenue receipt in the hands of the assessee. The Supreme Court in the case of Empire Jute Co. Ltd. v. CIT [1980] 124 ITR 1, held that it is not a universally true proposition that what may be a capital receipt in the hands of the payee must necessarily be capital expenditure in relation to the payer. While the payer in this case may have acquired an advantage of enduring benefit for the period covered by the agreement, so far as the assessee is co....