1982 (2) TMI 104

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.... the agency. It is prayed that the order of the AAC be set aside and that of the ITO be restored. 2. The assessee is a registered firm, which came into existence by a deed dated 19-12-1974. The relevant accounting period ended on 31-3-1975. This is the first year of the business of the assessee, and the business consisted of distributorship of Burshane gas for which there was an agreement dated 23-12-1974, between the assessee and Burmah Shell Oil Storage & Distributing Co. of India Ltd. There was an agreement between the assessee and Cambatta Industries. Cambatta Industries had their business at the shop of one Mr. Hodiwala which was on leave and licence basis and that the assessee had to make its own arrangement for a show room and godow....

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.... As already stated, the assessee-firm made the payment of Rs. 1 lakh to Cambatta Industries. On going through the letter and the agreement, which were produced by the assessee at the time of the assessment proceedings, the ITO was of the view that the business had only shifted hands, and that there was nothing technical about the business of the assessee. In para 5 of this assessment order, the ITO has stated that he did not believe that Rs. 60,000 were paid by the assessee to Cambatta Industries by way of technical fees, but it must be for some other consideration. In other words, the ITO felt that what was apparent was not real. He observed that a substantial payment of Rs. 60,000 which has been claimed in the guise of technical fees obvi....

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....for the premises of Cambatta Industries or may be for the goodwill of Cambatta Industries. Therefore, considering the totality of the circumstances, the AAC held in favour of the assessee, against which the present appeal has been filed by the department. 4. The learned departmental representative argued on the lines of the reasoning given by the ITO and stated that there is no technical assistance given by Cambatta Industries and that the expenditure was for acquiring a capital asset and, therefore, it was not of a revenue nature. Reliance was placed on CIT v. Durga Prasad More [1971] 82 ITR 540 (SC), wherein it is laid down that document can be gone into to find out the real intention of the parties. It was stated that the ITO was right ....

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....asis, and that the ITO was not sure as to how to disallow the amount of Rs. 60,000. 6. I have heard the rival contentions and gone through the orders of the authorities below, and the compilation filed before me. At the very outset it must be made clear that the business had not changed hands at all, because the letter from Cambatta Industries dated 4-12-1974 clearly shows that it was not for relinquishing the business of Cambatta Industries, but they were advising the assessee-firm to directly negotiate for the agency with Burmah Shell Oil Storage & Distributing Co. of India Ltd., provided a total consideration of Rs. 1 lakh was paid to Cambatta Industries. In the said letter, the terms and conditions of payment have also been made. It is....