TMI Blog1959 (3) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... o special leave are directed against the order of the Income-tax Appellate Tribunal by which five appeals before it, two in regard to income-tax assessment for 1947-48 and 1948-49 and the other three against business profits tax assessment for the three chargeable accounting periods covered by the same accounting periods, were disposed of. By the Income-tax Officer and by the Appellate Assistant Commissioner the matter was decided in the income-tax assessment appeal relating to the year of assessment 1947-48. The question in all these appeals is common and it relates to depreciation under section 10(2)(vi) of the Income-tax Act (hereinafter termed the Act). The appellant before us is the Jogta Coal Co. and the respondent, the Commissioner of Income-tax, West Bengal. The appellant company was incorporated on September 14, 1945. The facts leading up to these appeals are that two brothers E. C. Agabeg and A. A. Agabeg were lessees of a coal mine situate in village Jogta in the Jharia coal field area which belonged to the Raja of Jharia. The two brothers installed on the land leased to them plant and machinery and erected buildings and inclines and started working the coal mine. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation under section 10(2)(vi) of the Indian Income-tax Act. The Income-tax Officer held that the appellant paid the whole of the price as recited in the deed of sale, that is, Rs. 23,00,000 but he was of the opinion that the allocation of this sum on the different assets as mentioned in the sale deed was not correct and that a portion of the consideration was for the purchase of the goodwill. In his order he said : "The colliery was well established and had its own clientage which the assessee company secures without much effort. For such reasons it is only essential that some part of consideration may be apportioned under the head goodwill" ; And he estimated the value of the goodwill at Rs. 7,50,000 and the rest he valued as follows : Land including shafts and inclines which are estimated at Rs. 80,000 ... Rs. 10,00,000 Buildings ... 2,00,000 Plant and machinery ... 3,50,000 ----------------------- 15,50,000 ----------------------- The appellant went in appeal to the Appellate Assistant Commissioner who also accepted the estimate made by the Income-tax Officer and dismissed the appeal. The matter was taken to the Appellate Tribunal and in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same is made clear, that is, Rs. 13 lakhs were deemed to be paid in respect of underground and surface rights and other appurtenances and the assignment of the balance of the uncompleted orders and contracts and Rs. 10 lakhs were deemed to be the value of machinery etc. There is no mention of the sale of goodwill in the sale deed itself. Goodwill has been described as : "The benefit arising from connection and reputation which includes the probability of the old customers going to the new firm which has acquired the business ; but this last phrase is not of itself adequate. That which the purchaser of a goodwill actually acquires, as between himself and his vendor, is the right to carry on the same business under the old name with such addition or qualification, if any, as may be necessary for the protection of the vendor from liability or exposure to litigation under the doctrine of 'holding out' and to represent himself to former customers as the successor to that business." There is no doubt that there is no specific mention of the sale of goodwill in the sale deed but counsel for the respondent submitted that in the resolution for liquidation which was passed by Agabeg Br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original cost of such property to such person (i.e., assessee) and therefore the cost to be considered for the purpose of calculating the depreciation allowance is the original cost of the purchaser who is being assessed and not the written down value to his predecessor. We do not think that there is any doubt on the wording of the section or on the interpretation that has been put upon those words that the cost to be calculated for the purpose of depreciation allowance is the cost to the assessee and not to the person who makes the sale but still the question remains whether the Appellate Tribunal has the jurisdiction to hold that what the appellant has actually paid as the price of a particular asset is not its real price and the price paid includes the price of some other asset which must have been purchased. Counsel for the appellant referred to Craddock v. Zevo Finance Co. Ltd. where it was held that in determining the profits made by the company the correct figure of costs of investments made by the company is not the market value of the goods but the actual price paid by the company. This matter was taken to the House of Lords by the Revenue but the appeal was dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
