{"id":73944,"date":"1964-05-01T00:00:00","date_gmt":"1964-04-30T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964"},"modified":"2015-10-06T08:11:41","modified_gmt":"2015-10-06T02:41:41","slug":"kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964","title":{"rendered":"Kettlewell Bullen And Co vs Commissioner Of Income-Tax, … on 1 May, 1964"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Kettlewell Bullen And Co vs Commissioner Of Income-Tax, … on 1 May, 1964<\/div>\n
Equivalent citations: 1965 AIR 65, \t\t 1964 SCR (8)\t 97<\/div>\n
Author: S C.<\/div>\n
Bench: Shah, J.C.<\/div>\n
           PETITIONER:\nKETTLEWELL BULLEN AND CO.\n\n\tVs.\n\nRESPONDENT:\nCOMMISSIONER  OF INCOME-TAX, CALCUTTA\n\nDATE OF JUDGMENT:\n01\/05\/1964\n\nBENCH:\nSHAH, J.C.\nBENCH:\nSHAH, J.C.\nSUBBARAO, K.\nSIKRI, S.M.\n\nCITATION:\n 1965 AIR   65\t\t  1964 SCR  (8)\t 97\n CITATOR INFO :\n APL\t    1965 SC 452\t (11,15)\n R\t    1966 SC  54\t (11)\n R\t    1966 SC1325\t (4,5)\n R\t    1970 SC1811\t (6)\n F\t    1971 SC1590\t (9,10)\n R\t    1972 SC 386\t (18)\n RF\t    1973 SC1011\t (25)\n\n\nACT:\nIncome-tax-Compensation\t received for surrendering  managing\nagency-If capital or revenue-Test--Income-tax Act, 1922\t (11\nof 1922), ss. 2(6c), 10, 12.\n\n\n\nHEADNOTE:\nBy  an agreement with the Fort William Jute Company in\t1925\nthe appellant company became its Managing Agent.  The terms,\ninter  alia,  were  that the appellant\tor  its\t successors,\nunless\tthey chose to resign, were to continue\tas  Managing\nAgent  until  they  ceased to hold  certain  shares  in\t the\ncapital of the company and were on that account removed by a\nresolution  of\tthe company or their tenure  of\t office\t was\ndetermined by the winding up of the company.  On termination\nof the agency, the Managing Agent was to get such reasonable\ncompensation  as was agreed upon between the Managing  Agent\nand the company.  Besides this managing agency the appellant\nheld  five other managing agencies.  In 1952, the  appellant\nby in agreement with M\/s.  Mugneeram Bangur & Co., agreed to\nrelinquished  the managing agency of the Fort  William\tJute\nCo.,  Ltd.,  in\t their\tfavour\tin  consideration  of\tM\/s.\nMugneeram Bangur and Co. taking over the shares held by\t the\nappellant,  procuring  repayment of loans  advanced  by\t the\nappellant  to  the  Fort William Jute  Company\tand  further\nprocuring that the Fort William Jute Company. will pay\tcom-\npensation  to  the appellant.  The appellant  intimated\t the\nmembers\t of the latter company that it would be in the\tbest\ninterest  of the share-holders to terminate the\t appellant's\nagency\twhich  would otherwise continue till 1957  and\tthat\nM\/S.   Mugneeram  Bengur & Co. had agreed to  reimburse\t the\nFort  William Jute Co. Ltd. for payment of Rs.\t3,50,000  as\ncompensation  to the appellant.\t The arrangement  with\tM\/s.\nMugneeram Bangur & Co. was accepted by the Fort William Jute\nCo. and the appellant tendered resignation.  M\/s.  Mugneeram\nBangur and Co.\n94\nbecame\tthe Managing agent.  The appellant received the\t sum\nof     Rs. 3,50,000 and credited the sum  in  its profit and\nloss  account as having been received from the Fort  William\nJute Co. Ltd. on account of compensation for loss of  office\nand in calculating the net profit for the purpose of income-\ntax for the year 1953-54 did not include this amount in\t the\nreturn.\t  The Income-tax Officer in assessment included\t the\namount\tin  the appellant's taxable income.   The  Assistant\nAppellate  Commissioner\t on appeal modified  the  assessment\nholding\t  that\tthe  sum  received  by\tthe   appellant\t  as\ncompensation for surrendering the managing agency, which was\nto  enure for five years more and might have  continued\t for\nanother twenty years, was a capital receipt.  The  Appellate\nTribunal  confirmed  the order of  the\tAppellate  Assistant\nCommissioner.\tAt  the\t instance  of  the  Commissioner  of\nIncome-tax  the following question was referred to the\tHigh\nCourt:\nWhether\t on the facts and circumstances of the case the\t sum\nof  Rs. 3,50,000 received by the assessee to relinquish\t the\nmanaging  agency was a revenue receipt assessable under\t the\nIndian Income-tax Act?.\nThe High Court answered the question in the affirmative.\nHELD:\t  that\tthe answer should be in the  negative.\t The\ntransaction  in question was not a trading transaction,\t but\none  in which the assessee parted with an asset of  enduring\nvalue.\tThe compensation received was compensation for\tloss\nof  capital.  It was inconsequential whether  the  appellant\nconducted the remaining agencies after the determination  of\nthe one in question.\nWhere payment is made as compensation for cancellation of  a\ncontract which does not affect the trading structure of\t the\nbusiness,  nor causes 'deprivation of what in  substance  is\nsource of income, and is a normal incident of the  business,\nthe  compensation  is revenue.\tBut where  the\tcancellation\nimpairs\t the  trading structure or results in  loss  of\t the\nsource of income, the compensation paid for the cancellation\nof the agreement is normally capital receipt.\nCommissioner  of  Income-tax Nagpur v.\tRai  Bahadur  Jairam\nYalji,<\/a> 35 I.T.R. 148, referred to.\nCommissioner  of Income-tax v. Shaw Wallace and Co. L.R.  59\nI.A. 206, explained.\nRaja   Bahadur\tKamakshaya  Narain  Singh  of\tRamgarh\t  v.\nCommissioner  of Income-tax, Bihar and Orissa, L.R.<\/a> 70\tI.A.\n180,  Commissioner  of\tIncome-tax and\tExcess\tProfits\t Tax\nMadras v. South India Pictures,<\/a> 29 I.T.R. 910, Peirce Leslie\nand  Co.  Ltd.\tv. Commissioner of  Income-tax,\t Madras,  38\nI.T.R. 356, Commissioner of Income-tax, Hyderabad-Deccan  v.\nVazir  Sultan  and Sons.<\/a> 36 I.T.R. 175 and Godrej &  Co.  v.\nCommissioner  of  Income-tax, Bombay City,<\/a>  37\tI.T.R.\t381,\ndiscussed.\n\n\n\nJUDGMENT:\n<\/pre>\n
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 226 of 1963.\n<\/p>\n
95<\/span><\/p>\n
Appeal from the judgment and order dated August 1, 1961,  of
\nthe  Calcutta High Court in Income-tax Reference No.  75  of
\n1956.\n<\/p>\n
S.   Chaudhuri,\t D.  N. Mukherjee and D. N. Gupta,  for\t the
\nappellant.\n<\/p>\n
K.   N.\t Rajagopal Sastri and R. N. Sachthey, for  the\tres-
\npondent.\n<\/p>\n
May 1, 1964.  The Judgment of the Court was delivered by
\nSHAH  J.-The appellant is a public limited company. and\t has
\nits  registered office at Calcutta.  By an  agreement  dated
\nMay  1, 1925, the Fort William Jute Company  Ltd.  appointed
\nthe  appellant\tits managing agent upon\t certain  terms\t and
\nconditions  set\t out  therein.\t Under\tthe  agreement\t the
\nappellant  was to receive as managing agent remuneration  at
\nthe  rate of Rs. 3,000 per month, commission at the rate  of
\nten  per  cent\ton the profits\tof  the\t company’s  working,
\nadditional commission at three per cent on the cost price of
\nall new machinery and stores purchased by the managing agent
\noutside India on account of the company, and interest on all
\nadvances  made by the managing agent to the company  on\t the
\nsecurity   of  the  company’s  stocks,\traw  materials\t and
\nmanufactured  goods.   The appellant and its  successors  in
\nbusiness, whether under the same or any other style or firm,
\nunless they resigned their office were entitled to  continue
\nas  managing agent until they ceased to hold shares  in\t the
\ncapital of the company of the aggregate nominal value of Rs.
\n1,00,000  and  were  on that account removed  by  a  special
\nresolution of the company passed at an Extraordinary meeting
\nof  the\t company, or until the managing agent’s\t tenure\t was
\ndetermined  by the winding up of the company.  In the  event
\nof termination of agency in the contingencies specified, the
\nmanaging  agent was to receive such reasonable\tcompensation
\nfor deprivation of office, as may be agreed upon between the
\nmanaging  agent and the company and in case of\tdispute,  as
\nmay  be\t determined  by\t two arbitrators.   By\tcl.  8,\t the
\nmanaging agent was at liberty at any time to
\nresign\tthe  office  of managing agent\tby  leaving  at\t the
\nregistered office of the company previous notice in  writing
\nof  its\t intention in that behalf.  The\t agreement  did\t not
\nspecify\t any  period for which the managing  agency  was  to
\nenure.\t Since the successors of the appellant were also  to
\ncontinue   as  agents,\tunless\tthey  resigned\t or   became
\ndisqualified, the duration was in a sense unlimited.  But by
\nvirtue of s. 87-A(2) of the Indian Companies Act, 1913,\t the
\nappointment of the appellant as managing agent would  expire
\non January 14, 1957, i.e. on the expiry of twenty years from
\nthe  date  on which the Indian\tCompanies  (Amendment)\tAct,
\n1956, was brought into operation.  Section 87-A(2), however,
\ndid  not prevent the managing agent from being\tre-appointed
\nafter the expiry of that period.\n<\/p>\n
Beside the managing agency of the Fort William Jute Co. Ltd.
\nthe appellant held at all material time managing agencies of
\nfive  other  limited  companies,  viz.,\t Fort  Closter\tJute
\nManufacturing  Co.  Ltd., Bowreach Cotton  Mills  Co.  Ltd.,
\nDunbar\tMills Ltd., Mothola Co. Ltd and Joonktollee Tea\t Co.
\nLtd.   The appellant had advanced Rs. 12,50,000 to the\tFort
\nWilliam\t Jute  Co. Ltd. on the security of the\tstocks,\t raw
\nmaterials  and\tmanufactured  goods of\tthat  company.\t The
\nappellant held in 1952, 600 out of 14,000 ordinary shares of
\nthe  face  value of Rs. 100 each. and 6,920  out  of  10,000
\npreference  shares also of the face value of Rs.  100  each.
\nOn  May\t 21, 1952, the appellant entered into  an  agreement
\nwith M\/s Mugneeram Bangur & Co., the principal conditions of
\nwhich were:\n<\/p>\n
(i)  M\/s  Mugneeram  Bangur  & Co. to  purchase\t the  entire
\nholding of shares of the appellant in the Fort William\tJute
\nCo.  Ltd.-ordinary  shares at Rs. 400  each  and  preference\n<\/p>\n
-,hares at Rs. 185 each, and to make an offer to all holders
\nof the company’s shares-preference and ordinary-to  purchase
\ntheir holdings at the same rates;\n<\/p>\n
(ii) M\/s  Mugneeram Bangur & Co. to procure repayment on  or
\nbefore June 30, 1952 of all loans
\n97<\/span>
\nmade by the appellant to the principal company;\n<\/p>\n
(iii)\t  M\/s  Mugneeram  Bangur & Co. to procure  that\t the
\nprincipal company will compensate the
\nappellant  for\tloss of office in the sum of  Rs.  3,50,000,
\nsuch  sum being payable to the appellant after it  submitted
\nits resignation as managing agent; and\n<\/p>\n
(iv) M\/s Mugneeram Bangur & Co. to reimburse the company the
\namount payable to the appellant.\n<\/p>\n
The reasons for which the appellant agreed to relinquish the
\nmanaging agency were set out in a letter dated May 28, 1952,
\naddressed  by  the appellant to the members of\tthe  company
\nintimating  that M\/s Mugneeram Bangur & Co. were willing  to
\npurchase  the  shares at the same rates at  which  they\t had
\nagreed\tto purchase the share-holding of the appellant.\t  It
\nwas  recited in the letter that the installation  of  modern
\nmachinery  in the company’s factory entailed  heavy  capital
\nexpenditure and it was necessary to obtain a loan secured by
\ndebentures  charged  on the company’s property;\t that  large
\nsums   were  required  for  renewals  and  replacements\t  of
\nmachinery and it was not possible to obtain additional\tbank
\naccommodation;\tthat the appellant had maade large  advances
\nto the company exceeding Rs. 12,50,000 and, having regard to
\nits  other commitments, it was doubtful if it would be\table
\nto make available to the company addiional finance; that the
\narrangement  with M\/s Mugneeram Bangur & Co., by  acceptance
\nof  the\t terms offered by them, was  the  most\tsatisfactory
\nmethod of solving the company’s difficulties; that it was in
\nthe  best  interests of the shareholders  to  terminate\t the
\nappointment  of\t the appellant which in\t the  normal  course
\nwould not fall due for renewal until January 14, 1957;\tthat
\nM\/s  Mugneeram Bangur & Co. had agreed to procure  that\t the
\nFort  William  Jute Co. Ltd. will pay to the  appellant\t Rs.
\n3,50,000 and that M\/s Mugneeram Bangur & Co. will  reimburse
\nthe company for the payment, it being anticipated that\tthey
\nwill  in  Line course be appointed managing  agents  of\t the
\ncompany.\n<\/p>\n
98<\/span><\/p>\n
The arrangement with M\/s Mugneeram Bangur & Co. was  carried
\nout.   The  appellant tendered its resignation\twith  effect
\nfrom  July  1,\t1952,  in pursuance  of\t the  terms  of\t the
\nagreement and M\/s Mungneeram Bangur & Co. were appointed  as
\nmanaging  agent\t of the company.  The sum  of  Rs.  3,50,000
\nreceived  by  the  appellant from the company  which  it  is
\ncommon ground was provided by M\/s Mugneeram Bangur & Co.-was
\ncredited in the profit and loss account of the appellant  as
\nreceived  from the Fort William Jute Co. Ltd. on account  of
\ncompensation for loss of office.  But in arriving at the net
\nprofit\tin  the return for income-tax for the  year  1953-54
\nthis amount was deleted.  In the proceedings for  assessment
\nfor  the  year\t1953-54\t the  Incometax\t Officer,  Companies
\nDistrict   1V,\tCalcutta,  included  this  amount   in\t the
\nappellant’s   taxable  income.\t In  appeal  the   Appellate
\nAssistant Commissioner modified the assessment holding\tthat
\nthe  sum  of  Rs.  3,50,000 received  by  the  appellant  as
\ncompensation for surrendering the managing agency, which was
\nto  enure  for five years more, and which in  normal  course
\nmight have continued for another term of twenty years, was a
\ncapital receipt.  The Appellate Tribunal confirmed the order
\nof  the\t Appellate Assistant  Commissioner,  observing\tthat
\ncompensation  received tinder an agreement for “an  outright
\nsale  of  such an agency to a third party”,  not  being\t one
\nwhich a businessman enters in the normal course of business,
\nnor  being one which amounts to modification, alteration  or
\ndischarge  of normal incidents of such a business,  was\t not
\nassessable to income-tax as a revenue receipt.
\nAt  the\t instance  of the Commissioner\tof  Income-tax,\t the
\nTribunal  referred  under s. 66(1) of  the  Income-tax\tAct,
\n1922, the following question to the High Court of Judicature
\nat Calcutta:\n<\/p>\n
“Whether  on the facts and in the circumstances of the\tcase
\nthe  sum  of  Rs.  3,50,000  received  by  the\tassessee  to
\nrelinquish  the\t managing  agency  was\ta  revenue   receipt
\nassessable under the Indian Income-tax Act?”\n<\/p>\n
99<\/span><\/p>\n
The High Court, for reasons which we will presently set out,
\nanswered the question in the affirmative.  With\t certificate
\ngranted\t by the High Court, this appeal is preferred by\t the
\nappellant.\n<\/p>\n
This  case  raises  once again\tthe  question  whether\tcom-
\npensation  received by an agent for premature  determination
\nof the contract of agency is a capital or a revenue receipt.
\nThe  question is not capable of solution by the\t application
\nof  any single test: its solution must depend on  a  correct
\nappraisal  in  their true perspective of  all  the  relevant
\nfacts.\tAs observed in Commissioner of Income-tax Nagpur  v.
\nRai Bahadur Jairam Valji<\/a>(1) by Venkatarama Aiyar, J.,:
\n“The  question\twhether a receipt is capital or\t income\t has
\nfrequently  come  up for determination\tbefore\tthe  courts.
\nVarious\t rules have been enunciated as furnishing a  key  to
\nthe  solution of the question, but as often observed by\t the
\nhighest\t authorities,  it is not possible to  Jay  down\t any
\nsingle\ttest  as  infallible  or  any  single  criterion  as
\ndecisive  in the determination of the question,\t which\tmust
\nultimately  depend on the facts of the particular case,\t and
\nthe authorities bearing on the question are valuable only as
\nindicating the matters that have to be taken into account in
\nreaching  a  decision.\tVide, Van Den Berghs Ltd.  v.  Clark
\n[(1935) 3 I.T.R. (Engl.\t Cas.) 17].  That, however is not to
\nsay  that  the question is one of fact, for as\tobserved  in
\nDavies (H.  M. Inspector of Taxes) v. Shell Company of China
\nLtd.  (1952) 22 I.T.R. (Suppl.) 1) these  questions  between
\ncapital and income, trading profit or no trading profit, are
\nquestions  which, though they may depend no doubt to a\tvery
\ngreat  extent  on  the particular facts\t of  each  case,  do
\ninvolve a conclusion of law to be drawn from those facts’.”
\n(1)  [1959] SUPP. 1 S.C.R. 110, 113.\n<\/p>\n
100<\/span><\/p>\n
The interrelation of facts which have a bearing on the ques-
\ntion  propounded  must therefore first be  determined.\t The
\nmanaging agency was not, except in the circumstances set out
\nin  cl. 2 of the agreement, liable to be determined  at\t the
\ninstance of the company before January 14, 1957, unless\t the
\nappellant  by  giving  notice  of  three  weeks\t voluntarily
\nresigned the agency.  At the date of termination the  agency
\nhad  five more years to run, and the Campanies Act  did\t not
\nprohibit  renewal of the agency in favour of the  appellant,
\nafter the expiry of the initial period of twenty years.\t The
\nappellant company was formed for the object, amongst others,
\n(vide  cl.  3(2)  of the Memorandum of\tAssociation  of\t the
\nappellant) of carrying on the business of managing agencies.
\nThe appellant was entitled under the terms of the  agreement
\nto receive so long as the agency enured ‘Len per cent of the
\nprofits\t of  the company’s working, three per  cent  on\t all
\npurchases  of  stores and machinery abroad,  and  a  monthly
\nremuneration  of  Rs. 3,000.  The  appellant  submitted\t its
\nresignation in exercise of the power reserved under cl. 8 of
\nthe  managing agency agreement, but that resignation was  it
\nis common ground part of the arrangement with M\/s  Mugneeram
\nBangur\t&  Co. dated May 21, 1952.  Under the terms  of\t the
\nmanaging  agency  agreement, the principal company  was\t not
\nobliged\t to  pay  any  compensation  to\t the  appellant\t for
\nvoluntary resignation of the agency, but in consideration of
\nthe  appellant parting with its shareholding and  submitting
\nresignation  of the managing agency so as to facilitate\t the
\nappointment of M\/s Mugneeram Bangur & Co. as managing agent,
\nthe  latter  purchased the shareholding\t of  the  appellant,
\nundertook to make available Rs. 3,50,000 for payment to\t the
\nappellant  and to discharge the debt due by the\t company  to
\nthe  appellant.\t  Payment of Rs. 3,50,000 was  therefore  an
\nintegral part of an arrangement for transfer of the managing
\nagency.\t A managing agency of a company is in the nature  of
\na capital asset: that is not denied.  It is true that it  is
\nnot like an ordinary asset capable of being transferred from
\none  person to another.\t Theoretically the power to  appoint
\nor dismiss the managing agent may lie with the directors  of
\nthe company, but in practice the power lies with the  person
\nor per-\n<\/p>\n
101<\/span><\/p>\n
sons  having a controlling interest in the share-holding  of
\nthe company.  M\/s Mugneeram Bangur & Co. were anxious to  be
\nappointed managing agents of the principal company, and\t for
\nthe purpose the appellant had to be persuaded to agree to  a
\npremature termination of its agency.  This was secured for a
\ntriple\tconsideration; sale of shares held by the  appellant
\nat  an a-reed price, stipulation to discharge the  liability
\nof  the company to repay the loans due by the  company,\t and
\npayment\t of Rs. 3,50,000 as compensation for termination  of
\nthe appellant’s agency.\n<\/p>\n
The  High  Court  summarised the  effect  of  the  agreement
\nbetween\t the  appellant and M\/s Mugneeram Bangur  &  Co.  as
\nfollows:  The sum of Rs. 3,50,000 described as\tcompensation
\nfor  loss  of office of the managing agent was part  of\t the
\nwhole scheme incorporated in the agreement.  Each clause  of
\nthe  agreement was a consideration of the other clauses\t and
\npayment\t of compensation for the alleged loss of office\t did
\nnot,  being  part  of the total\t scheme,  stand\t by  itself.
\nDetermination  of the managing agency of the  appellant\t was
\nnot  compulsory\t cessation of business: it was\ta  voluntary
\nresignation  for  which\t under\tthe  agency  agreement\t the
\nappellant  was not entitled to any compensation, but by\t the
\ndevice\tof  procuring a purchaser the  appellant  was  doing
\n“business  of  selling\tthe managing agency  and  getting  a
\nprofit\tand value for it which it otherwise could  not\thave
\ngot”.\tThe  High Court stamped this  transaction  with\t the
\nnature\tand  character of a “trading or\t a  business  deal”,
\nbecause\t in their view the managing agency of  a  company-an
\ninstitution  peculiar to Indian\t business  conditions–which
\ncreates\t a  managing agent as an alter ego. of\tthe  managed
\ncompany with authority to utilise the existing structure  of
\nthe  company’s\tOrganisation  to  carry\t on  business,\tearn
\nprofits,  and in fact, virtually to trade in every  possible
\nsphere open to the company, may. be regarded as\t circulating
\ncapital, where several managing agencies are conducted by an
\nassessee.   Therefore  in  the view of the  High  Court\t the
\ncompensation  received\tfor  surrendering  the\tagency\t was
\nremuneration received on account of conducting the business,
\nand  was income.  The judgment of the High  Court  proceeded
\nsubstantially upon the following two grounds:\n<\/p>\n
102<\/span><\/p>\n
(1)  that on the facts of the case, the managing agency held
\nby  the\t appellant  of the Fort William Jute  Co.  Ltd.\t was
\nstock-in-trade; and
\n(2)  that  the\tappellant  was formed  with  the  object  of
\nacquiring  managing  agencies,\tand in\tfact  held  managing
\nagencies of as many as six com-\n<\/p>\n
panies.\t  Earning  profits by conducting the  management  of
\ncompanies, being the business of the appellant, compensation
\nreceived  as  consideration for\t surrendering  the  managing
\nagency was a revenue receipt.\n<\/p>\n
We are unable to agree with the High Court that the managing
\nagency of the Fort William Jute Co. Ltd. was an asset of the
\ncharacter  of stock-in-trade of the company.  The  appellant
\nwas  formed  with  the object, among  others,  of  acquiring
\nmanaging agencies of companies and to carry on the  business
\nand  to take part in the management, supervision or  control
\nof  the\t business  or  operations  of  any  other   company,
\nassociation,  firm or person and to make profit out  of\t it.
\nThat  only  authorised the appellant to acquire as  a  fixed
\nasset,\tif  a managing agency may be so\t described,  and  to
\nexploit\t it  for  the purpose of profit.  But  there  is  no
\nevidence  that\tthe company was formed for  the\t purpose  of
\nacquiring and selling managing agencies and making profit by
\nthose transactions of sale and purchase.  A managing  agency
\nis not an asset for which there is a market, for it  depends
\nupon  the  personal qualifications of  the  agent.   Counsel
\nappearing  on behalf of the Commissioner concedes  that\t the
\ncase that the managing agency was of the nature of stock-in-
\ntrade  was not set up before the Tribunal, and he  does\t not
\nrely  upon this part of the reasoning of the High  Court  in
\nsupport\t of the plea that the compensation received  by\t the
\nappellant  is  a  revenue  receipt.   He  relies  upon\t the
\nalternative ground, and contends that the managing agency of
\nthe Fort William Jute Co. Ltd. was part of the framework  of
\nthe business of earning profit by working as managing  agent
\nof   different\t companies,  and  in  the   normal   course,
\ntermination of employment by the principal companies of\t the
\nappellant as managing agent being a normal incident of\tsuch
\nbusiness, compensation received by the appellant is
\n\t\t\t    103<\/span>
\nnot  for loss of capital, but must be regarded as a  trading
\nreceipt\t especially when the termination of the agency\tdoes
\nnot impair the structure of the business of the appellant.
\nIn  the present case there is a special\t circumstance  which
\nmust first be noticed.\tIn truth the amount of Rs.  3,50,000
\nwas  received by the appellant from M\/s Mugneeram  Bangur  &
\nCo.  in consideration of the former agreeing to\t forego\t the
\nagency\twhich it held and which M\/s Mugneeram Bangur  &\t Co.
\nwere  anxious to obtain.  It was in a business sense a\tsale
\nof  such rights as the appellant possessed in the agency  to
\nM\/s Mugneeram Bangur & Co. This is supported by the recitals
\nmade  in cl. 2 of the agreement that if at any\ttime  within
\nsix months after the completion of such sale, M\/s  Mugneeram
\nBangur\t&  Co.\twere unable to exercise\t the  voting  rights
\nattached to the shares purchased by them the appellant\twill
\nappoint\t any person nominated by M\/s Mugneeram Bangur &\t Co.
\nto attend and vote for them at any meeting of the company or
\nthe  holders of any class of shares to be held\twithin\tsuch
\nperiod\tin such manner as M\/s.\tMugneeram Bangur &  Co.\t may
\ndecide.\t  The object underlying the agreement was  therefore
\nto transfer he managing agency to M\/s Mugneeram Bangur & Co.
\nor at least to effectuate their appointment in place of\t the
\nappelant as managing agent of the Fort William Jute Co. Ltd.
\nAll  the  stipulations and the covenants of  the  agreement,
\nviewed\tin  the light of the surrounding  circumstances,  do
\nstamp  the transaction as one of surrender of the rights  of
\nthe  appellant in the managing agency so that  corresponding
\nrights\tmay arise in favour of M\/s.  Mugneeram Bangur &\t Co.
\nIt would be irrelevant in considering the true nature of  he
\ntransaction,   to  project  the\t somewhat  legalistic\tcon-
\nsideration  that a managing agency is not transferable.\t  It
\nis  because  it\t is  not  directly  transferable,  that\t the
\narrangement incorporated in the agreement was effected.\t  It
\nwould be difficult to regard such a transaction relating  to
\na managing agency as a trading transaction.
\nCounsel for the assessee contended that even assuming at the
\nform of the transaction under which for loss of the managing
\nagency\t the  appellant\t received  compensation\t  from\t the
\nprincipal company is decisive, or has even a dominant
\n104<\/span>
\nimpact, and the ultimate source from which the\tcompensation
\nwas provided is to be ignored, the compensation received for
\nloss  of agency by the agent must always be  regarded  under
\nthe Indian Income-tax Act as capital receipt.  In support of
\nthat  contention  counsel placed strong\t reliance  upon\t the
\njudgment  of  the  Judicial  Committee\tin  Commissioner  of
\nIncome-tax  v. Shaw Wallace and Co.(‘). In the\talternative,
\ncounsel pleaded that even if the extreme proposition was not
\nfound acceptable, the right of the assessee in the  managing
\nagency\tof  the principal company was to enure\tfor  another
\nfive  years  and  which\t in the\t normal\t course\t would\thave
\ncontinued for another twenty years was an enduring asset and
\nconsideration  received by the appellant for  extinction  of
\nthat asset was a capital receipt.\n<\/p>\n
On behalf of the Income-tax Department it was contended that
\nShaw   Wallace\t&  Co’s\t case(‘)  does\tnot  lay  down\t any
\nproposition of general application to compensation paid\t for
\ndetermination  of  all\tagency contracts.   It\twas  further
\nsubmitted that, having regard to the nature of the agreement
\nand  the voluntary resignation submitted by the assessee  no
\nenduring asset remained vested in the assessee, and none was
\nattempted to be transferred: the compensation directly\tpaid
\nby  the principal company (which compensation was under\t the
\nterms  of the contract not payable) was only a\t“measure  of
\nprofit” which the appellant would, but for the\tresignation,
\nhave earned, and was therefore in the nature of revenue.  It
\nwas  also  urged that compensation was not payaable  to\t the
\nassessee  when\tresignation  of\t the  mainaging\t agency\t was
\ntendered  under\t cl. 8 of the agreement, and  therefore\t the
\namount sought to be brought to tax was received by the
\n     assesseein the course of a normal trading transaction
\nofthe
\n     assessee.Finally,\tit  was urged that  in\tany  event,
\nbythe
\n     loss ofthe\t agency\t the framework\tof  the\t business
\nofthe
\nassessee  was  not at all impaired, and therefore  also\t the
\ncompsensation  received must be regarded as revenue  and  no
\ncapital.\n<\/p>\n
Whether\t a  particular\treceipt is capital  or\tincome\tfrom
\nbusiness, has frequently engaged the attention of the  court
\nIt  may be broadly stated that what is received for loss  of
\ncap-\n<\/p>\n
(1)  L. R. 59 I. A. 206
\n105<\/span>
\ntal  is\t a capital receipt: what is received  as  profit  in
\ntrading\t transaction is taxable income.\t But the  difficulty
\narises\tin ascertaining whether what is received in a  given
\ncase  is  compensation for loss of a source  of\t income,  or
\nprofit\tin a trading transaction.  Cases on  the  borderline
\ngive  rise  to vexing problems.\t The Act  contains  no\treal
\ndefinition  of income; indeed it is a term not capable of  a
\ndefinition  in\tterms of a general formula.   Section  2(6C)
\ncatalogues broadly certain categories of receipts which\t are
\nincluded in income.  It need hardly be said that the form in
\nwhich the transaction which gives rise, to income is clothed
\nand  the  name\twhich  is given\t to  it\t are  irrelevant  in
\nassessing   the\t exigibility  of  receipt  arising  from   a
\ntransaction  to\t tax.  It is again not predicated  that\t the
\nincome\tmust necessarily have a recurrent quality.   We\t are
\nnot  called upon to enter upon an extensive area of  enquiry
\nas to what receipts may be regarded as income generally, but
\nmerely\t to  consider  in  this\t case  whether\treceipt\t  of
\ncompensation  for  surrendering the managing agency  may  be
\nregarded  as  capital or as revenue.  In the  absence  of  a
\nstatutory rule, payment made by an employer in consideration
\nof  the employee releasing him from his obligations under  a
\nservice or agency agreement or a payment made voluntarily as
\ncompensation for determination of right to office arises not
\nout of employment, but from cessation of employment and\t may
\nnot generally constitute income chargeable under ss. 10\t and\n<\/p>\n
12.  It may be mentioned that this rule has been altered  by
\nthe  legislature  by  the  enactment of\t s.  10(5A)  by\t the
\nFinnance  Act of 1955, which provides that  compensation  or
\nother  payment due to or received by a managing agent of  an
\nIndian\tcompany at or in connection with the termination  or
\nmodification  of  his  managing agency\tagreement  with\t the
\ncompany,  or  by  a manager of an Indian company  at  or  in
\nconnection   with   the\t termination  of   his\t office\t  or
\nmodification  of the terms and conditions relating  thereto,
\nor  by\tany person managing the whole or  substantially\t the
\nwhole\taffairs\t of  any  other\t company  in   the   taxable
\nterritories at or in connection with the termination of\t his
\noffice\tor  the\t modification of the  terms  and  conditions
\nrelating thereto, or by any person holding an agency in\t the
\ntaxable territories for any part of the
\n106<\/span>
\nactivities relating to the business of any other person,  at
\nor  in connection with the termination of his agency or\t the
\nmodification  of the terms and conditions relating  thereto,
\nshall  be  deemed  to be profits and  gains  of\t a  business
\ncarried\t on by the managing agent, manager or other  person,
\nas the case may be, and shall be liable to tax\taccordingly.
\nBut  this amendment was made under the Finance\tAct,,  1955,
\nwith effect from April 1, 1955, and has no application to
\nthe  present case.\n<\/p>\n
The Indian Income-tax Act is not in pari materia with
\nthe  English Income-tax Statutes.  But the authorities under
\nthe  English Law which deal not with the interpretation of
\nany  specific provision, but on the concept of\tincome,\t may
\nnot  be regarded as proceeding upon any\t special  principles
\npeculiar  to the English Acts so as to render them  inappli-
\ncable  in  considering\tproblems arising  under\t the  Indian
\nIncome-tax  Act.  It is well-settled in England\t that  money
\npaid to compensate for loss caused to an assessee’s trade is
\nnor  income.   In Short Bros.  Ltd. v. The  Commissioner  of
\nInland\tRevenue(l) a sum received as compensation  for\tloss
\nresulting  from\t cancellation of a contract was held  to  be
\nrevenue in the ordinary course of the assessee’s trade,\t and
\nliable\t to   excess  profits  duty.\tSimilarly   in\t The
\nCommissioners of Inland Revenue v. The North fleet Coal\t and
\nBallast\t Co. Ltd.(‘), compensation paid by a person who\t had
\nagreed\tto purchase a certain quantity of chalk\t yearly\t for
\nten  years, from a company which was the owner of a  quarry,
\nin  consideration of being relieved of his  liability  under
\nthe  contract was held chargeable to excess profits duty  as
\ntrading profit in the hands of the company.
\nIn   The  Commissioners\t of  Inland  Revenue  v.   Newcastle
\nBreweries  Ltd.(3) compensation received under an  order  of
\nthe  War Compensation Court, under the Indemnity Act,  1920,
\nin addition to what was paid by the Admiralty for rum  taken
\nover in exercise of the power under the Defence of the Realm
\nRegulations was held to be revenue.\n<\/p>\n
(1)  12 T. C. 955
\n(3)  12 T. C. 927
\n(2) 12 T. C. 1102
\n107<\/span>
\nIn  Ensign Shipping Co. Ltd. v. The Commissioner  of  Inland
\nRevenue(‘) an amount paid by the Government to a  ship-owner
\nto  compensate him for loss resulting from detention of\t his
\nships  during  a coal-strike, and for wages  etc.  was\theld
\nliable to excess profits duty.\tAgain as held in Burma Steam
\nShip  Co. Ltd. v. Commissioners of Inland  Revenue(‘)  money
\nreceived  by  a ship-owner from a firm of  ship-builders  to
\ncompensate for loss resulting from the failure by the latter
\nto  complete repairs to a ship within the stipulated  period
\nwas regarded as revenue.\n<\/p>\n
These  cases illustrate the principle that compensation\t for
\ninjury\tto  trading  operations,  arising  from\t breach\t  of
\ncontract or in consequence of exercise of sovereign  rights,
\nis  revenue.   These cases must, however,  be  distinguished
\nfrom another class of cases where compensation is paid as  a
\nsolatium  for  loss  of office.\t Such  compensation  may  be
\nregarded  as  capital or revenue: it would  be\tregarded  as
\ncapital, if it is for loss of an asset of enduring value  to
\nthe   assessee,\t but  not  where  payment  is  received\t  in
\nsettlement of loss in a trading transaction.
\nIn  Chibbet v. Joseph Robinson & Sons 3) the  assessees\t who
\nwere  ship-managers employed by a steamship company under  a
\ncontract   which  provided  that  they\tshould\tbe  paid   a
\npercentage  of ,he company’s income, were paid\tcompensation
\nfor  loss  of office in anticipation of liquidation  of\t the
\nsteamship company.  It was held that payment to make up\t for
\nloss resulting from cessation of profits from employment was
\nnot  itself an annual profit, but was payment in respect  of
\ntermination of employment and was not assessable to tax.
\nIn Du Cros v. Ryall (4) the assessee settled a claim made by
\nhis  employee  for damages for wrongful dismissal  and\tpaid
\n57,250\tas compensation for wrongful dimissal.\tIt was\theld
\nthat no. part could be apportioned to salary and  commission
\nand the whole escaped assessment.\n<\/p>\n
In Duff v. Barlow(‘) the managing director of the  appellant
\ncompany who was employed for a period of ten
\n(1)  i2 T. C. 1169.\n<\/p>\n
(3)  9 T. C. 48.\n<\/p>\n
(2)  16 T. C. 67.\n<\/p>\n
(5) 23 T. C. 631.  (4) 19 T. C- 444.\n<\/p>\n
108<\/span><\/p>\n
years  was asked by it to manage the business of one of\t its
\nsubsidiaries, and to receive a percentage of profits made by
\nthe  subsidiary.   The employment was terminated  by  mutual
\nagreement  two years after its commencement and\t 4,000\twere
\npaid  as compensation to the managing director for  loss  of
\nhis  rights  of\t future remuneration.\tThis  was  held\t not
\ntaxable. because it was a sum paid as compensation for\tloss
\nof a source of income and hence a capital asset.  This\tcase
\nwas  followed  in Henley v. Murray(‘)  where  the  appellant
\nemployed as a managing director of a property company  under
\na  service agreement which was not determinable\t till  March
\n31,  1944,  was also appointed a director  of  a  subsidiary
\ncompany.   At the request of the Board of directors  of\t the
\nproperty  company the appellant resigned his office  in\t the
\nproperty company as well as its subsidiary and received from
\nthe  property  company an amount equal to  the\tremuneration
\nwhich he would, under the agreement, have been entitled\t to,
\nif his appointment had not been determined.  It was held  by
\nthe  Court  of\tAppeal\tthat  the  use\tof  the\t  expression
\n“compensation  for loss of office”‘ was not the\t determining
\nfactor when the bargain itself stood cancelled, and the\t sum
\npaid  was  in  consideration of\t total\tabandonment  of\t all
\ncontractual rights which the other party
\nhad. The receipt was in the circumstances not taxable.
\nThe  payment was not voluntarily made; the bargain was
\nthat the  appellant  should  resign  and  in   consideration
\nthereof,
\nIn  Barr,  Grombie and Co. Ltd. v. Commissioners  of  Inland
\nRevenue(‘)  the\t appellant  company  managed  the  ships  of
\nanother\t company under an agreement for a period of  fifteen
\nyears.\tThe shipping company went into liquidation and a sum
\nexceeding pound 16,000 was paid to the appellant company for
\nthe  eight  years  which were still to run to  the  date  of
\nexpiry\tof the agreement.  Over a period upwards of  sixteen
\nyears  only two per cent of the appellant  company’s  income
\nwas  derived from other managements, and on the\t liquidation
\nof  the\t shipping  company the appellant  company  lost\t its
\nentire\tbusiness  except  for some  abnormal  and  temporary
\nbusiness.  It was held by the Court of Ses-\n<\/p>\n
(1) 31 T. C. 351\t\t      (2) 26 T. C. 406
\n109<\/span>
\nsion in Scotland that the sum in question was not a  trading
\nreceipt\t of the appellant company.  Lord  President  Normand
\nobserved:\n<\/p>\n
“In  the  present  case virtually the whole  assets  of\t the
\nAppellant  Company  consisted in this agreement.   When\t the
\nagreement  was surrendered or abandoned practically  nothing
\nremained of the Company’s business.  It was forced to reduce
\nits staff and to transfer into other premises, and it really
\nstarted\t a  new\t trading life.\t Its  trading  existence  as
\npractised up to that time had ceased with the liquidation of
\nthe shipping Company.”\n<\/p>\n
These  cases establish the distinction between\tcompensation
\nfor loss of a trading contract and solatium for loss of\t the
\nsource of income of the assessee.\n<\/p>\n
But payment Of compensation for loss of office is not always
\nregarded as capital receipt.  Where compensation is  payable
\nunder  the  terms  of the  contract,  which  is\t determined,
\npayment\t is in the nature of revenue and therefore  taxable.
\nFor  instance  in Henry v. Foster(‘) it was held  that\twhen
\ncompensation stipulated under a contract is paid for loss of
\noffice, it is taxable under Sch.  ‘E’, and it was also\theld
\nin  Dale v. De Soissons(2) that compensation paid  under  an
\nagreement  to  an  Assistant of the  managing  director\t for
\npremature  termination of employment was held to be  income.
\nThe  principle\ton  which these\t cases\tproceeded  was\talso
\napplied\t by  the  Court of Session  in\tScotland  in  Kessal
\nParsons\t and Co. v. Commissioners of Inland Revenue(3) to  a
\ncase  in  which\t there was no express term  for\t payment  of
\ncompensation  on termination of employment.  The  appellants
\nin  that case carried on business as agents on a  commission
\nbasis  for  sale  in Scotland of  the  products\t of  various
\nmanufacturers,\tand entered into agency agreements for\tthat
\npurpose.  At the instance of the manufacturer concerned, one
\nof the agreements which was for a period of three years\t was
\nterminated at the end of the
\n(1)  (1931) 145 L. T. R. 225
\n(3)  21 T. C. 608, 520
\n(2) [1950] 2 All E. R 460
\n110<\/span>
\nsecond\tyear in consideration of a payment of pouns_  1,500.
\nIt was held by the Court of Session that no capital asset of
\nthe assessee was depreciated in value, or became of less use
\nfor  the purpose of the assessee’s business.  The  sum\tpaid
\nwas  accordingly included in the calculation of the  taxable
\nprofits\t for  the  year\t in which  it  was  received.\tLord
\nPresident Normand Observed.\n<\/p>\n
“We  are  not embarrassed here by the kind  of\tdifficulties
\nwhich  arise when, by agreement, a benefit extending over  a
\ntract  of future years is renounced for a payment made\tonce
\nand  for  all.\t The sum paid in this  case  is\t really\t and
\nsubstantially a surrogatum for one year’s profits.”
\nThe  foundation of the distinction made in  Kelsall  Parsons
\nand  Co.’s  case(‘):  Henry v. Foster(‘):  and\tDale  v.  De
\nSoissons(3) is to be found in the observations made by\tLord
\nMacmillan in Van Den Berchs Ltd. v. Clark(‘).  In that\tcase
\ntwo  companies\twhich were manufacturers  of  ,margarine  an
\nmargarine  and\tsimilar products entered into  an  agreement
\nwith  a view to end competition between them and to work  in
\nfriendly  alliance  and to share the profits and  losses  in
\naccordance  with an elaborate scheme.  This arrangement\t was
\nterminated  by\tmutual\tagreement in  consideration  of\t the
\npayment by the Dutch company pound 450,000 to the  appellant
\ncompany as damages.  It was held by the House of Lords\tthat
\nthe  amount  was received by the appellant  as\tpayment\t for
\ncancellation of the appellant company’s future rights  under
\nthe  agreements,  which constituted a capital asset  of\t the
\ncompany,  and that it was a capital receipt. lord  Macmillan
\nobserved.\n<\/p>\n
“Now what were the Appellants giving up?  They gave up their
\nwhole rights under the agreements for thirteen years  ahead.
\nThese  agreements  are called in the  States  Case  “pooling
\nagreements”,  but that is a very inadequate  description  of
\nthem, for they did much more than
\n(1)  21 T.C. 608,620\t\t     (2) [1931]\t 145  L.T.R.\n<\/p>\n
225<\/span><\/p>\n
(3) [I950] 2 All E.R. 460\t     (4) 19 T. C. 390, 431
\n111<\/span>
\nmerely\tembody a system of pooling and sharing profits.\t  If
\nthe  Appellants were merely. receiving in one sum  down\t the
\naggregate of profits which they would otherwise have receiv-
\ned over a series of years, the lump sum might be regarded as
\nof  the\t same  nature as the ingredients  of  which  it\t was
\ncomposed.   But\t even  if a payment is\tmeasured  by  annual
\nreceipt, it is not necessarily in itself an item of income.”
\nCases  which  have lately arisen before the  Courts  in\t the
\nUnited\t Kingdom  have\telaborated  this  distinction.\t  In
\nCommissioner  of  Inland Revenue v. Fleming and\t Co.(‘)\t the
\nCourt,\tof  Session held following Kelsall  Parsons  &\tCos’
\ncase(‘), that compensation paid to the assessee who  carried
\non  business as manufacturers’ agent and  general  merchants
\nand  had  acted as the sole agents since  1903\tfor  certain
\nproducts of the manufacturers for termination in 1948 of the
\nagency at the instance of the manufacturers was regarded  as
\nrevenue.   In  the view of Lord President Cooper  the  cases
\nrelating  to  determination of agencies,  broadly  speaking,
\nfell  on  two sides of the line drawn in the  light  of\t the
\nvarying circumstances:\n<\/p>\n
(a)  “the  cancellation\t of  a contract\t which\taffects\t the
\nprofit-making sructure of the recipient of compensation\t and
\ninvolves the loss of an enduring trading asset”; and\n<\/p>\n
(b)  “the  cancellation of a contract which does not  affect
\nthe  recipient’s  trading structure nor deprive him  of\t any
\nenduring  trading asset, but leaves him free to\t devote\t his
\nenergies  and Organisation released by the  cancellation  of
\nthe  contract to replacing the contract which has been\tlost
\nby other like contracts”,
\nand held that the case fell within the second class, and not
\nthe first.\n<\/p>\n
In  Wiseburgh v. Domville(3) the appellant had entered\tinto
\nan agreement in 1942 under which he acted
\n(1)  33 T. C. 57
\n(3)  36 T. C. .527
\n(2) 21 T.C. 608, (20
\n112<\/span>
\nas  sole  agent\t for the manufacturer.\tIn  1948  when\tthis
\nagreement  could have been determined by notice expiring  in
\nOctober 1949, the manufacturer dismissed him.  The appellant
\nreceived  pound\t 4,000 as damages for breach  of  agreement.
\nThe  appellant\thad several agencies from time\tto  time  as
\nagents\tand it was one of the incidents of  agency  business
\nthat one agency may be stopped
\nand another may come and  it being a normal incident of\t the
\nkind  of  business  that the appellant was  doing,  that  an
\nagency should come to an end, compensation paid was regarded
\nas income on the principle laid down in Kelsall Parsons\t and
\nCo.’s case(‘).\n<\/p>\n
In another case which soon followed-Anglo French Exploration
\nCo.  Ltd.  v. Clayson(2)-the appellant\tcompany\t carried  on
\nbusiness, among others, is secretary and agent for a  number
\nof  other companies.  A South African Company appointed\t the
\nappellant   company  as\t its  secretary\t and  agent   at   a
\nremuneration  of  pound 1,500 per annum\t tinder\t a  contract
\nterminable at six months’ notice.  Under an arrangement with
\nthe   purchaser\t  of  the  controlling\t interest   of\t the
\nshareholders under which the appellant company was to resign
\nits  office  as\t secretary and agent of\t the  South  African
\nCompany, an amount of pound 20,000 received by the appellant
\ncompany\t was held by the Court of Appeal in the nature of  a
\ntrading receipt.\n<\/p>\n
In Blackburn v. Close Bros.  Ltd.(‘) the respondent  company
\ncarried on business of merchant bankers and of a finance and
\nissuing\t house and derived income in the form of  allowances
\nfor   performing   managerial  and   secretarial   services.
\nFollowing  a dispute with one ‘S’ for which  the  respondent
\ncompany had agreed to provide secretarial services for three
\nyears  at  a  remuneration of pound  8,000  per\t annum,\t the
\nagreement was terminated within about 2-1\/2 months from\t the
\ndate  of  its  commencement. pound 15,000  received  by\t the
\nrespondent  company as compensation for termination  of\t the
\nagreement was held to be a trading receipt.  Pennycuick\t J.,
\nheld  that  the\t contract was one of a\tnumber\tof  ordinary
\ncommercial contracts for rendering
\n(2)  36 T. C. 545
\n(1) 21 T.C. 608, 620
\n39 T.C. 164
\n 113<\/span>
\nservices  by the assessee in the course of carrying  on\t its
\ntrade, and therefore the sum received on the cancellation of
\nthe agreement was a receipt of a revenue nature.
\nIt  is\tmanifest that the principle broadly  stated  in\t the
\nearlier\t cases,\t that compensation for loss  of\t office,  or
\nagency, must be regarded as a capital receipt, has not\tbeen
\napproved  in later cases.  An exception has  been  engrafted
\nupon that principle that where payment even if received\t for
\ntermination  of\t an agency agreement, the agency is  one  of
\nmany  which the assessee holds, and the termination  of\t the
\nagency\tdoes not impair the pofit making structure,  but  is
\nwithin the framework of the assessee’s business, it being  a
\nnecessary  incident of the business that  existing  agencies
\nmay  be\t terminated  and fresh agencies may  be\t taken,\t the
\nreceipt is revenue and not capital.\n<\/p>\n
A case on the other side of the line may be noticed:  Sabine
\nv. Lookers Ltd.(‘). Under agreements, annually renewed\twith
\nthe manufacturers, the respondent company had acted for many
\nyears  as their main distributors in the Manchester area  of
\nthe  manufacturers’  products, which it bought\tfor  resale.
\nThe  respondent had sunk considerable sums in  fixtures\t and
\nequipment  specially  designed for the\ttrade  of  wholesale
\ndealers and carried a large stock of spare parts mainly\t for
\nwholesale  sale.  The whole of the trade of  the  respondent
\nwas geared to the display, sale, service and repairs of\t the
\nmanufacturers’\t products.    Upto  1952   inclusive,,\t the
\nmanufacturers\thad   included\tin   its   agreements\twith
\ndistributors  a\t standard  “continuity\tclause,\t giving\t the
\ndistributors,  on certain conditions, the option of  renewal
\nfor a further year.  But in 1953, the manufacturers  adopted
\na new standard agreement, containing a new continuity clause
\nwhich  the  respondent company regarded as  giving  it\tless
\nsecurity  than before.\tAs compensation for  loss  resulting
\nfrom   the  alterations,  the  manufacturers  paid  to\t the
\nrespondent  company, a sum calculated on sales to the  trade
\nduring\tthe  contract period.  It was held that this  was  a
\ncapital receipt, because, by the, modification the framework
\nof the respondent’s business was impaired.
\n(1)  38 T. C. 120
\n114<\/span>
\nElaborate arguments were presented before us on the decision
\nof  the Judicial Committee in Shaw Wallace & Co.’s  Case(‘).
\nThe  appellant contended that Shaw, Wallace’s  Case(‘)\tlaid
\ndown  a principle of general application applicable  to\t all
\ncases  of  compensation\t received  from\t the  principal\t  as
\nsolatium  for  determination  of  the  contract\t of  agency.
\nCounsel for the Revenue contended that the principle  should
\nbe  restricted to its special facts, and cannot be  extended
\nin view of the later decisions.\t It is necessary to  closely
\nexamine\t the  facts  which gave rise  to  that\tcase.\tShaw
\nWallace\t &  Company  carried on business  as  merchants\t and
\nagents\tof  various  companies and  had\t branch\t offices  in
\ndifferent paris of India.  For a number of years they  acted
\nas  distributing agents in India for the Burma\tOil  Company
\nand  the  Anglo-Persian Oil Company, but  without  a  formal
\nagreement with either company.\tThe two Oil Companies having
\ncombined decided to make other arrangements for distributing
\ntheir  products.  Each Company terminated its contract\twith
\nShaw  Wallace & Company and paid compensation to  it,  which
\naggregated  to\tRs.  15,25,000.\t  This\tamount,\t subject  to
\ncertain allowances, was sought to he assessed to  income-tax
\nunder  ss. 10 and 12.  The High Court of Calcutta held\tthat
\nthe  compensation  received by the assessee  was  a  capital
\nreceipt.   In appeal to His Majesty in Council the  decision
\nof the High Court was affirmed.\n<\/p>\n
The Judicial Committee declined to seek inspiration from the
\nEnglish decisions cited at the Bar.  The Board observed that
\nthe  expression\t “income” which is not defined\tin  the\t Act
\nconnotes  a periodical monetary return coming in  with\tsome
\nsort  of regularity, or expected regularity,  from  definite
\nsources: the source is not necessarily one which is expected
\nto  be\tcontinuously productive, but it must  be  one  whose
\nobject\tis  the production of a definite  return,  excluding
\nanything  in  the nature of a mere windfall.   They  further
\nobserved that the income chargeable under head (iv) of s.  6
\nbusiness” read with s. 10 is to be in respect of the profits
\nand  gains of any business carried on by the  assessee,\t and
\ntherefore the sums which the Income-tax Department sought to
\ncharge could only be taxable if they were the pro-
\n(1)  L.R. 59 I.A. 2o6.\n<\/p>\n
115<\/span><\/p>\n
duce  or the result of-carrying on the agencies of  the\t Oil
\nCompanies  in  the year in which they were received  by\t the
\nassessee.  But when once it was admitted that they were sums
\nreceived,  not\tfor carrying on this business, but  as\tsome
\nsort  of solatium for its compulsory cessation,\t the  answer
\nseemed\tfairly\tplain.\tThe Board observed that\t if  compen-
\nsation received for sale of the business or its goodwill was
\ncapital,  the  same reasoning ought to apply  when  the\t sum
\nreceived was in the nature of a solatium for cessation of  a
\npart of the business, and it was a matter of no\t consequence
\nthat the assessee continued to pursue its other\t independent
\ncommercial  interests, and profits from which were taxed  in
\nthe ordinary course, for the sums sought to be taxed had  no
\nconnection  with  the continuance of  the  assessee’s  other
\nbusiness: the profits earned by the assessee, it was observ-
\ned,  were  “the\t fruit of a different tree, the\t crop  of  a
\ndifferent  field”, and if under s. 10 the  compensation\t was
\nnot taxable, it was not taxable under s. 12 under the head ”
\nother sources” as well.\n<\/p>\n
The  judgment  of the Board proceeds upon  the\tground\tthat
\ncompensation received not for carrying on the business,\t but
\nas solatium for its compulsory cessation, would be  regarded
\nas  capital  receipt,  and  for\t the  application  of\tthis
\nprinciple,  existence  of other independent  commercial\t in-
\nterests out of which profits were earned by the assessee was
\nirrelevant.   Two  comments may be made at this\t stage.\t  It
\ncannot be said as a general rule, that what is determinative
\nof  the\t nature of the receipt is extinction  or  compulsory
\ncessation  of an agency or office.  Nor can it be said\tthat
\ncompensation received for extinction of an agency may always
\nbe  equated  with price received on sale of  goodwill  of  a
\nbusiness.  The test, applicable to contracts for termination
\nof agencies is: what has the assessee parted with in lieu of
\nmoney or money’s worth received by him which is sought to be
\ntaxed?\t If  compensation  is paid  for\t cancellation  of  a
\ncontract  of  agency,  which does  not\taffect\tthe  trading
\nstructure of the business of the recipient, or involve\tloss
\nof an enduring asset, leaving the tax-payer free to carry on
\nhis trade released from the contract which is cancelled, the
\nreceipt will be a trading receipt: where the cancellation
\n116<\/span>
\nof  a contract of agency impairs the trading  structure,  or
\ninvolves  loss\tof an enduring asset, the  amount  paid\t for
\ncompensating the loss is capital.\n<\/p>\n
The  view  expressed by the Judicial Committee has  not\t met
\nwith  unqualified  approval in later cases, Lord  Wright  in
\nRaja   Bahadur\t Kamakshya  Narain  Singh  of\tRamgarh\t  v.
\nCommissioner  of Income-tax.  Bihar and\t Orissa<\/a>(‘)  observed
\nthat it is incorrect to limit the true character of  income,
\nby  such  picturesque similies like “fruit  of\ta  different
\ntree,  or  crop of a different field”.\tAgain it  cannot  be
\nsaid  generally\t that  compensation for\t every\ttransfer  or
\ndetermination  of a contract of agency is  capital  receipt:
\nKelsall Parsons & Co. v. Commissioner of Inland\t Revenue(‘):
\nCommissioners of Inland Revenue v. Fleming & Co. (3):  Wise-
\nburgh  v.  Domville(4) and Commisiosner\t of  Income-tax\t and
\nExcess Profits Tax, Madras v. South India Pictures  Ltd.<\/a>(‘).
\nNor  is it true to say that where an assessee holds  several
\nagency\tcontracts, each agency contract cannot without\tmore
\nbe  regarded  as  independent of the  other  contracts,\t and
\nincome received from each contract cannot always be regarded
\nas  unrelated to the rest of the business continued  by\t the
\nassessee.  The decision in Shaw Wallace Co.’s case(‘) cannot
\ntherefore  be read to yield the principle that\tcompensation
\nfor  loss  of  an agency may in all  cases  be\tregarded  as
\ncapital\t receipt.   Nor\t does it lay  down  that  where\t the
\nassessee  has  several lines of business each line  must  in
\nascertaining  the  character of compensation for loss  of  a
\nline of business be deemed an independent source.  This view
\nis  exemplied by decisions of this Court and a\tdecision  of
\nthe  Madras High Court.\t In the South India Pictures  Ltd.’s
\ncase(5)\t compensation  received\t for  determination  of\t the
\ndistribution  rights of films was held taxable.\t  After\t the
\nassessee  had exploited partially its right of\tdistribution
\nof cinematographic films to which it was entitled under\t the
\nterms of agreement under which he had advanced money to\t the
\nproducers,  the agreements were cancelled and the  producers
\npaid an aggregate sum of Rs. 26,000 to the assessee  towards
\ncommission.  It was held by Das C. J.,
\n     (1) L. R, 70 1. A. 180   (2) 21 T.C. 608, 620
\n     (3) 33 T.C. 57 (4) 36 T.C. 527
\n     (5) 29 1. T. R. 910 (6) L.R. 59 I.A. 2o6
\n117<\/span>
\nand  Venkaterama Aiyar, J., (Bhagwati J.,  dissenting)\tthat
\nthe  sum paid to the assessee was not compensation  for\t not
\ncarrying on its business, but was a sum paid in the ordinary
\ncourse\tof  business  to adjust the  relations\tbetween\t the
\nassessee  and the producers, and was taxable.  Similarly  in
\nRai Bahadur Jairam Valji’s cave(‘) a contract for the supply
\nof limestone and dolomite was terminated when the  purchaser
\nthe  Bengal Iron Company Ltd. found the rates  uneconomical.
\nA  suit\t was  then  filed by  the  respondent  for  specific
\nperformance   of   the\tcontract  and  for   an\t  injunction
\nrestraining  the  company  from\t purchasing  limestone\t and
\ndolomite  from\tany other person.  A  fresh  agreement\tmade
\nbetween the respondent and the company fell through  because
\nof circumstances over which the parties to the agreement had
\nno control.  The company then agreed to pay Rs. 2,50,000  to
\nthe respondent as solatium, besides the monthly\t instalments
\nof  Rs. 4,000 remaining unpaid under the contract  of  1940.
\nThe Income-tax Department sought to bring to tax the  amount
\nof  Rs.\t 2,50,000 and the balance due  towards\tthe  monthly
\ninstalments  of Rs. 4,000.  It was held by this\t Court\tthat
\nthe  sum of Rs. 2,50,000 was not paid to the  respondent  as
\ncompensation  for expenses laid out for works at the  quarry
\nof  a capital nature and could not be held to be  a  capital
\nreceipt\t  on  that  account,  the  agreements  were   merely
\nadjustments made in the ordinary course of business.   There
\nwas in the view of the Court no profit-making apparatus\t set
\nup  by the agreement of 1941, apart from the business  which
\nwas  to be carried on under it and there was at no time\t any
\nagreement  which  operated as a bar to the carrying  of\t the
\nbusiness of the respondent and therefore the receipt of\t Rs.
\n2,50,000  was  chargeable to tax.   Venkatarama\t Aiyar,\t J.,
\nobserved, in at,agency contract the actual business consists
\nof dealings between the principal and his customers, and the
\nwork of the agent is only to bring about the business:\twhat
\nhe  does is not the business itself, but something which  is
\nintimately and directly linked up with it.  The agency\tmay,
\ntherefore,  be\tviewed as the apparatus which leads  to\t the
\nbusiness  rather  than the business itself.   Considered  in
\nthis light the
\n(1)  [1959] Supp. 1 S.C.R. 110
\n118<\/span>
\nagency\tright can be held to be of the nature of  a  capital
\nasset  invested in business.  But this cannot be said  of  a
\ncontract  entered into in the ordinary course  of  business.
\nSuch  a\t contract is part of the business itself,  not\tsome
\nthing  outside\tit,  and any receipt on account\t of  such  a
\ncontract   can\t only  be  a   trading\t receipt.    Because
\ncompensation paid on the cancellation of a trading  contract
\ndiffers in character from compensation paid for cancellation
\nof an agency contract, it should not be understood that\t the
\nlatter is always, and as a matter of law, to be held to be a
\ncapital\t  receipt.   An\t “agency  contract  which  has\t the
\ncharacter of a capital asset in the hands of one person\t may
\nassume the character of a trading receipt asset in the hands
\nof another, as for example, when the agent is found to\tmake
\na  trade  of  acquiring agencies  and  dealing\twith  them.”
\nTherefore,  when the question arises whether the payment  of
\ncompensation for termination of an agency is a capital or  a
\nrevenue\t receipt, it must be considered whether\t the  agency
\nwas  in\t the nature of a capital asset in the hands  of\t the
\nagent,\tor whether it was only part of\this  stock-in-trade.
\nThe  learned  Judge  also observed  that  payments  made  in
\nsettlement  of rights under a trading contract\tare  trading
\nreceipts  and are assessable to revenue, but where a  trader
\nis prevented from doing so by external authority in exercise
\nof  a paramount power and is awarded compensation  therefor,
\nwhether\t the  receipt  is a capital  receipt  or  a  revenue
\nreceipt\t will  depend upon whether it  is  compensation\t for
\ninjury inflicted on a capital asset or on stock-in-trade.
\nIn Pairce Leslie and Co. Ltd. v. Commissioner of Income-tax,
\nMadras(‘) the assessee company took up managing agencies  of
\nseveral\t plantation companies.\tThe managing  agencies\twere
\nliable\tto  termination, but the assessee  was\tentitled  to
\ncompensation  by  the terms of the agreement.\tThe  Talliar
\nEstates\t Ltd.  was  one\t of the\t companies  managed  by\t the
\nassessee.  The agreement was a composite agreement about the
\nmanaging  agency rights and certain other rights.  When\t the
\nTalliar\t Estates  Ltd. went into  liquidation  the  assessee
\nreceived  Rs.  60,000  by way of compensation  for  loss  of
\noffice and the question arose
\n(1)  38 I. T. R. 356
\n119<\/span>
\nwhether that amount was income in the hands of the assessee.
\nThe  Madras High Court held that the loss of one of  several
\nmanaging agencies had little effect on the structure of\t the
\nassessee’s  business  even in tea or on its  profit  earning
\napparatus  as a whole and the termination of  the  agreement
\nwith  the  Talhar Estates could well be said  to  have\tbeen
\nbrought\t about\tin the ordinary course of  business  of\t the
\nassessee  and  therefore the amount received was  a  trading
\nreceipt.\n<\/p>\n
In the South India Picture Ltd.’s case(): Rai Bahadur Jairam
\nValji’s\t case(‘) and Peirce Leslia Company’s case(‘) it\t was
\nheld that the receipt of compensation for loss of agency was
\nin  the\t nature\t of revenue.  In the  South  India  Pictures
\nLtd.’s case(‘) the amount received was not compensation\t for
\nnot  carrying  on its business, but was a sum  paid  in\t the
\nordinary course of business to adjust the relations  between
\nthe  assessee  and  the producers; the\ttermination  of\t the
\nagreements  did not radically or at all affect or alter\t the
\nstructure  of  the  assessee’s\tbusiness,  and\tthe   amount
\nreceived  by  the  assessee was\t only  so  received  towards
\ncommission  i.e. as compensation for the loss of  commission
\nwhich  it  would have earned, had the  agreements  not\tbeen
\nterminated.   Therefore, the amount was not received by\t the
\nassessee  as  the  price  of  any  capital  assets  sold  or
\nsurrendered or destroyed, but the amount was simply received
\nby  the\t assessee in the course of  its\t going\tdistributing
\nagency business and therefore it was an income receipt.\t  In
\nthat  case the majority of the Court held on three  distinct
\ngrounds,  viz., (i) that the assessee did not part with\t any
\ncapital\t asset;\t (ii) that the amount was  received  in\t the
\ncourse\tof  the\t distributing  agency  business\t which\t was
\ncontinued, and (iii) that the termination of the  agreements
\ndid not radically or at all affect or alter the structure of
\nthe assessee’s business, that the sum received was  revenue.
\nRai  Bahadur Jairam Valji’s case(‘) was one of\tcompensation
\nreceived  for termination of a trading contract.  In  Peirce
\nLeslie\tand  Company’s\tcase(‘)\t there\twas  termination  of
\noffice, but it was held to be brought about in the  ordinary
\ncourse of the trading operations of the assessee.\n<\/p>\n
(i)  29 I.T.R. 910  (2) [1959] Supp.  I S.C.R. iio   (3-  38
\nI.T.R. 356
\n120<\/span>
\nOn  the other side of the line are cases of Commissioner  of
\nIncome-tax, Hyderabad-Deccan v. Vazir Sultan and Sons<\/a>(‘) and
\nGodrej\tand  Co. v. Commissioner of Incometax,\tBombay\tCity<\/a>
\n(2).  In Vazir Sultan and Son’s case(‘) the majority of\t the
\nCourt  held that compensation paid for restricting the\tarea
\nin which a previous agency agreement operated was a  capital
\nreceipt, not assessable to incometax.  It was held that\t the
\nagency\tagreements were not entered into by the assessee  in
\nthe  carrying on of their business, but formed\tthe  capital
\nasset of the assessee’s business which was exploited ‘by the
\nassessee  by entering into contracts with various  customers
\nand dealers in the respective territories; it formed part of
\nthe  fixed capital of the assesssee’s business and  was\t not
\ncirculating  capital or stockin-trade of their business\t and
\ntherefore  payment made by the company for determination  of
\nthe contract or cancellation of the agreement was a  capital
\nreceipt in the hands of the assessee.\n<\/p>\n
In Godrej and Co.’s case(‘) the managing agency agreement in
\nfavour\tof  the\t assessee of a\tlimited\t company  which\t was
\noriginally for a period of thirty years and under which\t the
\nassessee  was entitled to a commission at certain rates\t was
\nmodified and remuneration payable to the managing agents was
\nreduced.   As compensation for agreeing to  this  reduction,
\nthe  assessee received Rs. 7,50,000 which was sought  to  be
\ntaxed  as income in the hands of the assessee.\t This  Court
\nheld, having regard to all the attending circumstances, that
\nthe  amount was paid not to make up the\t difference  between
\nthe higher remuneration and the reduced remuneration, but in
\ntruth  as  compensation for releasing the company  from\t the
\nonerous\t terms\tas  to\tremuneration  as  it  was  in  terms
\nexpressed  to be; so far as the assessee firm was  concerned
\nit  was\t received as compensation for the  deterioration  or
\ninjury\tto the managing agency, by reason of the release  of
\nits  rights  to get higher remuneration\t and,  therefore,  a
\ncapital receipts.\n<\/p>\n
On an analysis of these cases which fall on two sides of the
\ndividing line, a satisfactory measure of consistency
\n(1) 36 1. T. R. 175
\n\t\t     (3) 36 I.T.R. 175
\n(2) 37 r.T.R. 381
\n121<\/span>
\nin principle is disclosed.  Where on a consideration of\t the\n<\/p>\n
-circumstances,\t payment is made to compensate a person\t for
\ncancellation of a contract which does not affect the trading
\nstructure  of  his  business, nor deprive  him\tof  what  in
\nsubstance  is  his  source of  income,\ttermination  of\t the
\n,contract being a normal incident of the business, and\tsuch
\ncancellation  leaves him free to carry on his  trade  (freed
\nfrom  the contract terminated the receipt is revenue:  Where
\nby  the cancellation of an agency the trading  structure  of
\nthe  assessee is impaired, or such cancellation\t results  in
\nloss  ,of  what\t may  be  regarded  as\tthe  source  of\t the
\nassessee’s  income,  the  payment  made\t to  compensate\t for
\ncancellation  of the agency agreement is normally a  capital
\nreceipt.\n<\/p>\n
In  the present case, on a review of all the  circumstances,
\nwe  have  no doubt that what the assessee was  paid  was  to
\ncompensate  him\t for loss of a capital\tasset.\t It  matters
\nlittle\t whether  the  assessee\t did  continue\t after\t the
\ndetermination  of its agency with the Fort William Jute\t Co.
\nLtd to conduct the remaining agencies.\tThe transaction\t was
\nnot  in the nature of a trading transaction, but was one  in
\nwhich  the  assessee  parted with an asset  of\tan  enduring
\nvalue.\t We  are, therefore, unable to agree with  the\tHigh
\nCourt  that the amount received by the appellant was in\t the
\nnature of a revenue receipt.\n<\/p>\n
We  accordingly record the answer on the question  submitted
\nby  the\t Tribunal in the negative.  The appellant  would  be
\nentitled to its costs in this Court.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Kettlewell Bullen And Co vs Commissioner Of Income-Tax, … on 1 May, 1964 Equivalent citations: 1965 AIR 65, 1964 SCR (8) 97 Author: S C. Bench: Shah, J.C. PETITIONER: KETTLEWELL BULLEN AND CO. Vs. RESPONDENT: COMMISSIONER OF INCOME-TAX, CALCUTTA DATE OF JUDGMENT: 01\/05\/1964 BENCH: SHAH, J.C. BENCH: SHAH, J.C. SUBBARAO, K. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-73944","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nKettlewell Bullen And Co vs Commissioner Of Income-Tax, ... on 1 May, 1964 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Kettlewell Bullen And Co vs Commissioner Of Income-Tax, ... on 1 May, 1964 - Free Judgements of Supreme Court & High Court | Legal India\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.legalindia.com\/judgments\/kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964\" \/>\n<meta property=\"og:site_name\" content=\"Free Judgements of Supreme Court & High Court | Legal India\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/LegalindiaCom\/\" \/>\n<meta property=\"article:published_time\" content=\"1964-04-30T18:30:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2015-10-06T02:41:41+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/i0.wp.com\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg?fit=512%2C512&ssl=1\" \/>\n\t<meta property=\"og:image:width\" content=\"512\" \/>\n\t<meta property=\"og:image:height\" content=\"512\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Legal India Admin\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@legaliadmin\" \/>\n<meta name=\"twitter:site\" content=\"@Legal_india\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Legal India Admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"52 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964\"},\"author\":{\"name\":\"Legal India Admin\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#\\\/schema\\\/person\\\/0bfdffe9059fb8bb24a86d094609c5ea\"},\"headline\":\"Kettlewell Bullen And Co vs Commissioner Of Income-Tax, … on 1 May, 1964\",\"datePublished\":\"1964-04-30T18:30:00+00:00\",\"dateModified\":\"2015-10-06T02:41:41+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964\"},\"wordCount\":9564,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#organization\"},\"articleSection\":[\"Supreme Court of India\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964\",\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964\",\"name\":\"Kettlewell Bullen And Co vs Commissioner Of Income-Tax, ... on 1 May, 1964 - Free Judgements of Supreme Court & High Court | Legal India\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#website\"},\"datePublished\":\"1964-04-30T18:30:00+00:00\",\"dateModified\":\"2015-10-06T02:41:41+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Kettlewell Bullen And Co vs Commissioner Of Income-Tax, … on 1 May, 1964\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#website\",\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/\",\"name\":\"Free Judgements of Supreme Court & High Court | Legal India\",\"description\":\"Search and read the latest judgements, orders, and rulings from the Supreme Court of India and all High Courts. A comprehensive database for lawyers, advocates, and law students.\",\"publisher\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#organization\"},\"alternateName\":\"Free judgements of Supreme Court & High Court of India | Legal India\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#organization\",\"name\":\"Judgements of Supreme Court & High Court | Legal India\",\"alternateName\":\"Legal India\",\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#\\\/schema\\\/logo\\\/image\\\/\",\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/wp-content\\\/uploads\\\/sites\\\/5\\\/2025\\\/09\\\/legal-india-icon.jpg\",\"contentUrl\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/wp-content\\\/uploads\\\/sites\\\/5\\\/2025\\\/09\\\/legal-india-icon.jpg\",\"width\":512,\"height\":512,\"caption\":\"Judgements of Supreme Court & High Court | Legal India\"},\"image\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#\\\/schema\\\/logo\\\/image\\\/\"},\"sameAs\":[\"https:\\\/\\\/www.facebook.com\\\/LegalindiaCom\\\/\",\"https:\\\/\\\/x.com\\\/Legal_india\"]},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#\\\/schema\\\/person\\\/0bfdffe9059fb8bb24a86d094609c5ea\",\"name\":\"Legal India Admin\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g\",\"url\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g\",\"contentUrl\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g\",\"caption\":\"Legal India Admin\"},\"sameAs\":[\"https:\\\/\\\/www.legalindia.com\",\"https:\\\/\\\/x.com\\\/legaliadmin\"],\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/author\\\/legal-india-admin\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Kettlewell Bullen And Co vs Commissioner Of Income-Tax, ... on 1 May, 1964 - Free Judgements of Supreme Court & High Court | Legal India","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.legalindia.com\/judgments\/kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964","og_locale":"en_US","og_type":"article","og_title":"Kettlewell Bullen And Co vs Commissioner Of Income-Tax, ... on 1 May, 1964 - Free Judgements of Supreme Court & High Court | Legal India","og_url":"https:\/\/www.legalindia.com\/judgments\/kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964","og_site_name":"Free Judgements of Supreme Court & High Court | Legal India","article_publisher":"https:\/\/www.facebook.com\/LegalindiaCom\/","article_published_time":"1964-04-30T18:30:00+00:00","article_modified_time":"2015-10-06T02:41:41+00:00","og_image":[{"width":512,"height":512,"url":"https:\/\/i0.wp.com\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg?fit=512%2C512&ssl=1","type":"image\/jpeg"}],"author":"Legal India Admin","twitter_card":"summary_large_image","twitter_creator":"@legaliadmin","twitter_site":"@Legal_india","twitter_misc":{"Written by":"Legal India Admin","Est. reading time":"52 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.legalindia.com\/judgments\/kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964#article","isPartOf":{"@id":"https:\/\/www.legalindia.com\/judgments\/kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964"},"author":{"name":"Legal India Admin","@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/person\/0bfdffe9059fb8bb24a86d094609c5ea"},"headline":"Kettlewell Bullen And Co vs Commissioner Of Income-Tax, … on 1 May, 1964","datePublished":"1964-04-30T18:30:00+00:00","dateModified":"2015-10-06T02:41:41+00:00","mainEntityOfPage":{"@id":"https:\/\/www.legalindia.com\/judgments\/kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964"},"wordCount":9564,"commentCount":0,"publisher":{"@id":"https:\/\/www.legalindia.com\/judgments\/#organization"},"articleSection":["Supreme Court of India"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.legalindia.com\/judgments\/kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.legalindia.com\/judgments\/kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964","url":"https:\/\/www.legalindia.com\/judgments\/kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964","name":"Kettlewell Bullen And Co vs Commissioner Of Income-Tax, ... on 1 May, 1964 - Free Judgements of Supreme Court & High Court | Legal India","isPartOf":{"@id":"https:\/\/www.legalindia.com\/judgments\/#website"},"datePublished":"1964-04-30T18:30:00+00:00","dateModified":"2015-10-06T02:41:41+00:00","breadcrumb":{"@id":"https:\/\/www.legalindia.com\/judgments\/kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.legalindia.com\/judgments\/kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.legalindia.com\/judgments\/kettlewell-bullen-and-co-vs-commissioner-of-income-tax-on-1-may-1964#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.legalindia.com\/judgments\/"},{"@type":"ListItem","position":2,"name":"Kettlewell Bullen And Co vs Commissioner Of Income-Tax, … on 1 May, 1964"}]},{"@type":"WebSite","@id":"https:\/\/www.legalindia.com\/judgments\/#website","url":"https:\/\/www.legalindia.com\/judgments\/","name":"Free Judgements of Supreme Court & High Court | Legal India","description":"Search and read the latest judgements, orders, and rulings from the Supreme Court of India and all High Courts. A comprehensive database for lawyers, advocates, and law students.","publisher":{"@id":"https:\/\/www.legalindia.com\/judgments\/#organization"},"alternateName":"Free judgements of Supreme Court & High Court of India | Legal India","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.legalindia.com\/judgments\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.legalindia.com\/judgments\/#organization","name":"Judgements of Supreme Court & High Court | Legal India","alternateName":"Legal India","url":"https:\/\/www.legalindia.com\/judgments\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/logo\/image\/","url":"https:\/\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg","contentUrl":"https:\/\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg","width":512,"height":512,"caption":"Judgements of Supreme Court & High Court | Legal India"},"image":{"@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/LegalindiaCom\/","https:\/\/x.com\/Legal_india"]},{"@type":"Person","@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/person\/0bfdffe9059fb8bb24a86d094609c5ea","name":"Legal India Admin","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g","caption":"Legal India Admin"},"sameAs":["https:\/\/www.legalindia.com","https:\/\/x.com\/legaliadmin"],"url":"https:\/\/www.legalindia.com\/judgments\/author\/legal-india-admin"}]}},"modified_by":null,"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/posts\/73944","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/comments?post=73944"}],"version-history":[{"count":0,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/posts\/73944\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/media?parent=73944"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/categories?post=73944"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/tags?post=73944"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}