9911796707
TMI Blog1998 (4) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... ee had filed a suit in C. S. No. 182 of 1972, for rendition of accounts which suit ended in compromise in terms of which the sum of Rs. 42,294 was paid in the hands of the assessee, a receipt of a capital nature and hence is not to be treated as the income of the assessee. The assessment year is 1976-77. The undisputed facts are that the assessee is a person doing business in garments who had started a branch at Bombay, in the name of Kala Niryat and had appointed one V. V. Raman, to manage it. The said Raman who was subsequently asked to set up a company in order to enable the assessee to receive the benefits of export of Indian handlooms, fabrics and garments, as under the Import Trade Control Policy of the Government of India as revis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt, Nellore, wherein a suit had been filed by a third party against Kala Niryat Private Limited and wherein a garnishee order has been obtained, and certain other benefits to which it is not necessary to advert. The assessee claimed before the Income-tax Officer that the amount of Rs. 75,000 less the legal expenses in the net amount received by the assessee being Rs. 42,294 was a capital receipt as that amount had not been paid to the assessee in lieu of profits, but only for preserving the business and further that the money had not been paid by Raman alone but by the firms run by his son and daughter who were also parties to the suit and who were parties to the compromise decree. That claim was rejected by the Income-tax Officer who he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r reliefs. The compromise decree in express terms provided for the transfer of all the shares of the company Kala Niryat Private Limited to the assessee without any further consideration and that too after meeting the liabilities of the said company by Raman and his wife. In addition to handing over the company to the assessee, the defendants were required to pay to the assessee a sum of Rs. 75,000. That amount was to be paid from out of the amounts deposited by the Indian Cotton Mills Federation in the court at Nellore in which court, a third party had filed a suit against the company, Kala Niryat Private Limited and had caused the Indian Cotton Mills Federation to deposit in that court the amounts which it was required to pay to Kala Niry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. IRC [1941] 24 TC 311 (C. Sess), wherein the facts were somewhat similar. In that case a seller of shares had obtained a decree against the purchaser setting aside the sale on the ground of fraudulent misrepresentation by the purchaser and the shares were retransferred to the seller. The purchaser was also directed to pay to the seller a lump sum which included the amount of the dividends received by the purchaser while the shares stood in his name. On those facts it was held by the court that the amount of dividends recovered from the purchaser was assessable as income of the decree-holder. The sum of Rs. 75,000 received by the assessee in terms of the compromise decree having regard to the circumstances in which that sum was paid to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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