1962 (5) TMI 2

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.... Association of India and as such was receiving a quota of coal and steel from the Government of India. After the partition, its registered office was shifted to Bombay. It had no factory there for carrying on the business of rolling mill. Though possibly not entitled to receive the quota of coal and steel, it however continued its membership of the Steel Rolling Mills Association of India and continued to receive the quota of coal and steel. In order to utilise the coal and steel so received, it entered into a partnership with one K. R. Irani, who had put up a factory in Bombay called the New Era Iron & Steel Works, but had no quota of steel and coal. The agreement of partnership entered into between Irani and the assessee on September 29,....

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....the assessee and Irani entered into an agreement whereby the terms of the agreement of September 29, 1948, were modified. The amendments to clause 12 are important and they are quoted below : " IT IS HEREBY AGREED THAT in clause 12 of the Partnership Agreement dated September 29, 1948, the Royalty which is fixed at Rs. 50 per ton shall be reduced in the manner following from 1st October, 1953. (a) Royalty of Rs. 25 per ton shall be charged from October 1, 1953, on all rollable materials received up to June 30, 1954, except semis and perfect billets on which Royalty will be charged at Rs. 10 per ton on all the said materials received up to June 30, 1954. (b) That cess charges payable to Steel Re-Rolling Mills Association of India, Calc....

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....High Court. The contention of the appellant is that the sum of Rs. 60,000 was paid by Irani to the assessee company in view of the partnership getting the rights under the quota which the assessee company possessed and that therefore the sum represented a capital receipt and not a revenue receipt. We do not agree. It is clear from the facts stated in the statement of the case that this amount represents capitalised profits of the assessee company on account of its transferring or selling the steel which the assessee company purchased under the authority given by the quota allowed to it. It is the assessee company which purchases the goods in its own name and delivers them to the partnership at cost price. Under the original agreement of....