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in the ease of Gillanders Arbuthnot and Co.L-td Vs.
Commissioner of Income --'E'ax, Calcutta
233 held: k
"That if the profit stI'11ctu:t:fe'«c_«f
assessee is not affected
such a transfer Woijldnot'-jxivo1ve'v:'e{fl1oss 'pf
enduring trading " the
assesses of a to
devote its energes £; a..*;ce1Iafion to
carry 013751136 The income
and would
e1:=¢a;¢;::;¢"s ' ' 4 - V
The tesi.s_ %t£> 'A'ado'pted are enumerated by their
"--'th_e__'.vsaid judment, examining as to
Viwhethers compensation paid by the Principal
n' ffofveanoellation of the agency may be regarded
as " receipt or revenue receipt. The Hozfble
V' '5_"' AAeSii;:§reme Court held as follows:
"Examining the circumstances of the present
case in the light of that principle, we agree
with the High Court thai that was received
by the appellant was income and not
W
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2
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19
Applying these principles in the instant
officer has come to the conclusion tI}at”‘-110 loss has
occurred to the assessee on” ieeceurlt of er 7
enduring asset and as such that ‘hI’ei1§htV’te.L
tax under Revenue ‘and V. face
recorded by him tiie Hon’b1e
Supreme find that both
appellate a:’u£iff;oi:itie:s’ upsetting this
finding Hence, we hold the
relevance was placed
by the does not come to rescue of
assesses Rs.20 lakhs as Capital receipt.
_ .:.:1:X:}other judgement relied upon by
ieamed Sr.Counsel is (1931) 140 rm 207
V] s Ssxasxvathi Publicities wherein the assessee
agreed to refrain from carrying on business with
_ _§~IiI1dustan Lever to contend same is applicable to facts
of the ease. The said judgement though refers to
f :3 if
20
restrictive covenant their lordships have also to
the various judgement of Supreme Court by
us Supra) and came to the conclusion.
termination of agency resulting i7n.t’}:n_i*3»iIiess lees Ea ‘
capital receipt. However,.on___ exaitfihriationeefgtcts cf the” L.
present case by applying _enLefgciated by their Lordships of we have held that salecf in loss to assessee._ar}:(l field revenue receipt. Thusfé isunot applicable to the facts of V' AV W
Vt ‘V 15. ‘l’he _etl’1erv:.}udge1:<1ents relied upon by the
. 'let i'~:t_f.'C,ou'i1eei SI'i.Sa1'angan are:
{1983) 140 rm 159
x t err v/s Late G.D.Naidu — (1937) 165 HR 63
mad.)
(iii) Oberei Hotels Pvt Ltd V/3 err (1999) 236 ITR
903(s<;:)
5
21
(iv) CIT V/s Sarej Kumar Poddar (2005)’~
573(Cal)
(V) err V/s A.S.Wardekar…(20(§6) 2′;’3’3′
(C81)
(vi) err V/s Shyaxti-$i1ndaf”C1fi2g1§rie;’:..{2t’}{)3) 305%
ITR 181 (MP) é
(vii) Romtasvé” (2003) 306 ITR
24Q;{®efl:i)
(viii) (2008) 214 CTR
__ — ‘
In all the restrrictive covenant
Vizfi, “Iaon~coix1petitioi1 clause in the Ageement has been
‘V their lordships with reference to the facts
._df..t}1e’se”_*ease’s’.and have come to conclusion that it does
“(a) loss of an enduring asset or (13) loss of
“i11c;pn§e to the assesses and accordingly held it would be
receipt and not exigible to tax. Per Contra in the
‘V V’ “instant case we have held that in the instant case it has
not resulted in the loss of enduring asset nor it has
5′ “‘”‘
5?”
22
resulted in ioss of income of the assessee but.-on the
other hand, turnover of the assessec
Hence, we have no option but to hoicf
authorities would not be of aeeisteneeV the 7
assessee in the present case.
16. Yet another Jiiiigfifiieilt iirelieciwsviupon by
assessee to repel revenue with
regard to appiicatic-fie” i Act is CIT Vs.
Narezidra CTR 3.90 (BOM). The
revenaiei’ ‘that by bringing in an
amendxeent =te is¢e :’}~!’3i(2) of the Act was in order to
V. _ theV”‘exieting practice and Legal position by
_:va:.i1’egis*yf.iation and not to take converse View that
legiefition was not applicable for earlier assessment
yearS.,:__i’i~It is seen from the judgement that it has been
therein that in the facts and circumstances of the
K _ ease therein it haci been held, it was a capital receipt
and receipt of the same during the year in question and
E4″
5
23
it was held that Section 55(2) of the Act
applicable. It would not bej’oi:t” of :’ lfolf {is to »
mention here that unless
the Statute retrospectively,’
unless it is held itis legisléttion. We do s
not Wish to embark the this issue,
since we Lthge ‘faets Veanri circumstances of
this by the assessee as
revenue_ xeee-rgf.. ‘e§iig_fii_’b.le_’ to tax.
_ 1’7 ‘vies? of the above discussion we hold that
v _ fii€’AppeBate ‘ties were in error in holding that
20,00,000/- received by the assesses as
fee should be treated as capital receipt
and 1191 as revenue receipt.
18. For the reasons above said, we allow this
V’ Vlappeal and answer the question of law formulated
24
herein above in favour of the revenue and ag9iP.sjtV.@hé*;:_VA’
38868866.
S131)/* V