TaxTMI 
TaxTMI 
1960 (3) TMI 50
X X X X Extracts X X X X
X X X X Extracts X X X X
....e as a proper deduction from the assessable profits under section 10(2)(xv) of the Indian Income-tax Act? "2. (a) Whether, on the facts and circumstances of the case, the sum of Rs. 41,000 received by the assessee company is exempt under section 4(3)(vii) of the Income-tax Act? (b) If the answer is in the negative, whether it is assessable under the head 'business' under section 10 or under the head 'capital gains' under section 12B of the Indian Income-tax Act?" With reference to the first question, the facts found were that Mr. Raman who was one of the directors of the assessee firm was deputed by the Mettur Chemical & Industrial Corporation Ltd. of which the assessee firm was the managing agent, to attend a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... not even furnish details of the places visited by Mr. Raman in the United Kingdom, Switzerland, Canada or the United States. Whether the trip was in part or in whole for pleasure, the Department was not in a position to gauge. In the absence of materials the Department and the Tribunal were certainly justified in coming to the conclusion, that the assessee had failed to establish the requirements of section 10(2)(XV) with reference to this item of expenditure of Rs. 14,625. We therefore, answer the question in the negative and against the assessee. With reference to the second question the relevant facts were as follows. The assessee company in association with Ravindra Mulraj and Dharmsey Mulraj Khatau constituted a firm under the name....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the Act. Both the assessee and the Department appealed against that finding of the Assistant Commissioner. The Tribunal held, agreeing with the Income-tax Officer, that it was a trading receipt in the hands of the assessee. That led to the formulation of the second question we have set out above. If only to eliminate it, we have to point out that it was not the case of the Department at any stage, that the acquisition of the licence by the firm of Ravindra Mulraj, Dharmsey Khatau and the assessee firm was an adventure in the nature of trade, and that the apparent formation of a company and the acquisition of licence were effected with the intent to sell the licence at a profit. It should also be noticed that the Department and the Tri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed its share of that receipt. It was a capital receipt in its hands, and in our opinion, the Assistant commissioner was right in the view he took, that being a capital receipt it fell within the scope of section 12B of the Act. It was not assessable to tax as a trading receipt. Before the Tribunal, an attempt was made by the assessee to establish that section 12B could not apply, because the profits had accrued prior to 1st April, 1946, after which date alone there was a statutory liability to pay the tax on capital gains. We have pointed out earlier that there was no evidence to show when precisely the licence was sold. Nor was there anything to show when the assessee's share of the profits accrued, independent of the actual receipt....