TMI Blog1993 (2) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... rred to us. While question No. 1 is common to all the assessment years 1957-58 to 1960-61, question No. 2 is only for the assessment year 1958-59 : "1. Whether an appeal to the Appellate Assistant Commissioner against the charge of penal interest was competent ? 2. Whether, on the facts and in the circumstances of the case, the sum of Rs. 1 lakh was rightly assessed as the income of the company ? " In respect of question No. 1, we need not set out the facts in any detail because it is an accepted position that in view of the decision of the Supreme Court in the case of Central Provinces Manganese Ore Co. Ltd. v. CIT [1986] 160 ITR 961, the question must be answered in the negative and in favour of the Revenue. The question is answered a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract is a sum of Rs. 1,00,000. The assessee-company claimed that the receipt of Rs. 1,00,000 was exempt from income-tax as it was a capital receipt and was of a casual and non-recurring nature. The income-tax authorities have, however, held that the sum of Rs. 1,00,000 received by assessee-company from the new company is taxable as a revenue receipt in the assessee-company's hands. Hence the above question has been referred to us at the instance of the assessee. Mr. Dwarkadas, learned counsel for the assessee, submits in this connection that the contract must be viewed as a capital of the company and the amount of Rs. 1,00,000 which is received for transfer of this contract should be treated as a capital receipt. He also submits th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o all the said circumstances, the court said that what was received by the assessee was a capital receipt and was not liable to tax. The above decisions, in our view, do not assist the assessee looking to the facts of this case. The assessee has, assigned this contract for Rs. 1,00,000 to the new company and has also transferred to the new company the payments received under that contract by the assessee-company till that date. Had the contract been completed by the assessee, any profit which the assessee might have earned would have been its business income. This amount of Rs. 1,00,000 received by the assessee is in lieu of this benefit which the assessee would have received under the contract. Hence, in our view, it partakes of the char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin the first category enumerated by the Supreme Court. The sum of Rs. 1,00,000 is paid to compensate the assessee for assignment or transfer of the contract. Such assignment does not affect in any manner the trading structure of the assessee's business nor does it deprive him of any source of income. The assignment appears to be in the normal course of business and has not impaired the assessee in any manner in carrying on its business. In these circumstances, the payment for assignment of the contract, in our view, clearly is in the nature of revenue receipt. In the case of CIT v. Gangadhar Baijnath [1972] 86 ITR 19, the Supreme Court applied the same tests cited above. In that case the assessee-firm and another firm combined to form a p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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