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TMI Blog1973 (4) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... essee in 1958 was a capital receipt not liable to tax ? " Because the learned counsel for the parties in the course of addresses often disagreed on the questions of facts we can do no better than relate the facts as agreed upon between the parties before the Tribunal and extract them from the statement of the case. The assessee is an individual, a thikanedar of the State of Sikar, now in the State of Rajasthan. He had the paramount right to levy excise duty within the limits of his thikana. After the formation of the States and their integration with the Union of India, it was decided by the Government of Rajasthan to take over the excise administration of all the States including the thikana of the assessee. This decision was taken in or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preceding the date of resumption of his jagir. The assessee accordingly received a sum of Rs. 62,204 for the period from July 18, 1952, to February 16, 1954. The assessment year concerned is 1958-59, for which the relevant previous year was the financial year ending on the 31st of March, 1958. A question arose before the Income-tax Officer whether the sum of Rs. 62,204 was a revenue, receipt liable to tax or not. The Income-tax officer by his order dated 30th October 1958, found that it was a revenue receipt liable to tax. On appeal by the assessee the Appellate Assistant, Commissioner by his order dated January 30, 1959, confirmed the conclusion, The assessee took the matter up to the Tribunal which came to the conclusion on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the source of income was completely wiped out and, therefore, the sum of Rs. 62,204 was a capital receipt and not a revenue receipt. It would have been another matter, added the learned counsel, had the interruption been of a temporary nature without extinguishing the source. He placed reliance on Glenboig Union Fireclay Co. Ltd v. Commissioners of Inland Revenue, Commissioners of Inland Revenue v. New Castle Breweries Ltd., Ensign Shipping Co. Ltd. v. Commissioners of Inland Revenue is Collins v. FirthBrealey Stainless Steel Syndicate Ltd, Rustproof Metal Window Co. Lid. v. Inland Revenue Commissioners Van den Berghs Ltd. v. Clark and Commissioner of Income-tax v. Shamshe Printing Press , and he laid particular emphasis on Senairam Doongar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Lord Justice Clark said in the Californian Copper Syndicate case , is difficult to define and each case must be considered according to its facts." There has, however, been one test which has been consistently applied for the purposes of determining whether the receipt falls under the head of capital or revenue. The first case that we might notice in this connection is Glenboig Union Fireclay Co. Ltd. v. Commissioners of Inland Revenue, where Lord Buckmaster made observations that have been repeatedly quoted in subsequent cases. He observed that if the capital asset of the company has been " sterilised and destroyed and it is in respect of that action that the sum " was paid then the compensation payable in such circumstances would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are to employ an age old simile that if the compensation is for the hen that lays the egg and not for the egg itself then it cannot be but capital. The short but interesting question that emerges for our consideration in the light of these tests in the circumstances of the case before us is as to what was the nature of Rs. 62,204 which was paid to the assessee. A recall of the circumstances, even if it amounts to repetition, would be conducive to clarity. It was in 1948 that the superior political power of Jaipur State terminated the right of the assessee to levy excise within the four corners of his own dominion and in lieu of the liquidation of this right certain payments were designed to be made to him. The steps of history thereafter wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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