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TMI Blog1971 (5) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... JUDGMENT SANKAR PRASAD MITRA J.- This is a reference under section 66(1) of the Indian Income-tax Act, 1922. The assessment year is 1945-46. On the 21st March, 1944, the assessee paid Rs. 6,50,000 to Messrs. F.W. Heilgers Co. Ltd., the managing agents of Churulia Coal Co. Ltd. The amount was paid as consideration for the purchase of the Churulia Coal mine. This colliery was worked till 15th August, 1944. On 1st May, 1944, the assessee paid a sum of Rs. 7,500 to the said F. W. Heilgers Co. Ltd., as consideration for the purchase of the mines, veins, seams or seam strata layers, and beds of fireclay in the land of the mine called " Churulia Mine ". On the 13th July, 1944, a company called the New Churulia Coal Co. Ltd. was incor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ireclay mining rights sold to them-Rs. 1,10,000. From the above facts the Tribunal was of the view that the assessee purchased both the colliery and fireclay rights attached to the colliery for the purpose of transferring the same to the New Churullia Coal Co. Ltd. The Tribunal has said that the mine was situated at the village, Churulia, and for that reason the company carrying on the mining operations in that area was named Churulia Coal Co. Ltd. The said Churulia Coal. Co. Ltd. received a sum of Rs. 6,50,000 from the assessee as consideration for the sale of the mine. About four months after the receipt of this money, says the Tribunal, a new company was incorporated in the name of New Churulia Coal Co. Ltd. on the 13th July, 1944. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beds of fireclay in the land, the Tribunal is of opinion, cannot be detached from the purchase of coal mine and the purchase of these rights must be considered as incidental to the purchase of the coal mine and, therefore, the sale of those rights was also incidental to the sale of the coal mine. In view of these facts the Tribunal concludes that the assessee carried out the transactions for no purpose except that of regale at a profit. The following question has been referred to this court : " Whether, on the facts and in the circumstances of the case, the surplus amounting to Rs. 1,01,854 arising from the sale of the fireclay rights was taxable under the Indian Income-tax Act, 1922 ? " Mr. Debi Pal, learned counsel for the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t were profits belonging to four different persons. In other words, the purchase or sale of the fireclay rights was not the purchase or sale by the assessee at all. Alternatively, the assessee contended that these were not assessee's profits but were capital receipts. It seems to us that faced with these submissions on behalf of the assessee the tax authorities had to examine closely various transactions that the assessee had entered into from time to time including the transactions relating to the purchase and sale of the coal mine and the fireclay rights and on an appreciation of the totality of these transactions the authorities below have come to the conclusion : (a) that the purchase and sale of fireclay rights were purchase and sale o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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