TMI Blog1966 (10) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 4(3)(vii). Appeal dismissed - - - - - Dated:- 26-10-1966 - Judge(s) : V. RAMASWAMY., J. C. SHAH., V. BHARGAVA JUDGMENT The judgment of the court was delivered by SHAH J.-- Messrs. Ram Kumar Agarwalla and Brothers-hereinafter called " the assessees "--were carrying on business at Calcutta as " share brokers, share dealers and paper merchants ". Swadeshi Cotton Mills Ltd.--a public limited company--operates at Kanpur a large unit producing cotton textiles. It was originally managed by a firm of managing agents styled Messrs. Horseman Brothers. Some time early in 1946, Messrs. Horseman Brothers desired to dispose of their shareholding in the company, and to part with the managing agency. David Mitchell, a partner of Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid Rs. 25,000 out of their share to one Ratan Lal Goel for "services rendered in the deal", and credited the balance of Rs. 1,75,000, as "brokerage " in their profit and loss account, and submitted a return of income for the assessment year 1947-48 showing that receipt as income from "brokerage in the course of business." Later, the assessees submitted a revised return excluding the amount of Rs. 1,75,000. The Income-tax Officer rejected the claim of the assessees that the amount of Rs. 1,75,000 was a non-recurring casual receipt exempt from tax under section 4(3)(vii) of the Act or that it was a capital and not revenue receipt. The order was confirmed by the Appellate Assistant Commissioner. On the plea of the assessees that the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." The Tribunal submitted a statement of the case on the following two questions, on application by the assessees, under section 66(1) of the Income-tax Act : "(1) Whether there was any material on record before the President to give a finding to the effect that the contention of the assessee that it intended to buy the mills was without any basis whatsoever ? (2) Was the receipt in question a revenue receipt from a venture in the nature of trade and has it been rightly brought to tax?" The High Court of Calcutta held that there was ample material to support the finding of the Tribunal that the receipt in question was a revenue receipt from a venture in the nature of trade. With special leave, the assessees have appealed to this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that officer, as we have already observed, expressly recorded that the payment made to the assessees and their associates was for services rendered in acquiring the controlling interest for Messrs. Mangturam Jaipuria and not for dissuading them in competing for the purchase of the shares. The Tribunal accepted the report of the Appellate Assistant Commissioner, and observed that the assessees had no intention to buy the controlling interest in the company. The principal business of the assessees was in paper, and they were doing some business in shares and brokerage in shares. The evidence does not disclose how it was intended by the assessees to finance such a large transaction. The Tribunal was apparently of the view that a solicitor, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of the assessees. It is unnecessary to make a detailed reference to the decisions which were cited at the Bar, e.g., Higgs v. Olivier and Commissioner of Income-tax v. Mills Store Co. In Higgs's case a professional actor who had agreed to give his exclusive services to a film company in consideration of a fixed sum, and a proportion of the net profits from exploitation of a film, was, after the agreement was fulfilled, given a sum of pound 15,000 as consideration for an undertaking not to act, produce or direct any film for any person for a period of eighteen months. It was held that the amount paid was not for carrying on business but for refraining from carrying on the business and was not taxable. In the Mills Store Co.'s ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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