9911796707
TMI Blog1959 (7) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... as of steel and coal. The assessee, therefore, entered into an agreement of partnership with one K.R. Irani who had put up a factory in Bombay styled as New Era Iron Steel Works, but who had himself no quota of steel and coal. Under the terms of the agreement the partnership was to continue so long as the quota system relating to steel was continued in the Dominion of India or till the expiry of the lease of the factory premises whichever was the later date. By clause 12 of the partnership agreement it was provided that the assessee, in consideration of taking K. R. Irani as a partner in the partnership, was to receive a sum of ₹ 50 per ton on all steel received by the partnership from the assessee. By clause 13 it was provided that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of ₹ 10 per ton. By sub-clause (b) it was provided that the cess charges payable to the Steel Re-rolling Mills Association of India would be paid by the partnership till the partnership subsisted. By sub-clause (c), which is material, it was provided : Mr. K.R. Irani hereby agrees to pay a lump sum of ₹ 60,000 as goodwill in consideration of waiving the royalty from the partnership account on the quota of re-rollable scrap materials received after 30th June, 1954. By sub-clause (d) it was agreed that the amount of ₹ 60,000 be debited to the capital account of Mr. K.R. Irani in the books of account of the partnership, bearing interest at 6% per annum from 1st July,1954. The Income-tax Officer brought the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order they observed that in substance by the modified agreement the assessee had agreed to supply the goods at cost price in future to the partnership against receipt of the amount of ₹ 60,000 from K.R. Irani. This, in the view of the Tribunal, was a payment made in lump for the services to be rendered from year to year to the partnership by the assessee and was accordingly a revenue receipt. The Tribunal has, at the instance of the assessee, referred the following question : Whether the sum of ₹ 60,000 received by the assessee-company from K.R. Irani is a revenue receipt and liable to income-tax? We are unable to agree with the Tribunal that there was under the original or the modified agreement any service to be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already referred to clauses 5A and 5B which were added to the original agreement by the agreement of modification. There was an express provision made that the leasehold interest and the licence for supply of electricity were to be treated as partnership property even though they stood in the name of K. R. Irani and the New Era Iron Steel Works respectively. It is evident that when there was an intention to transfer the assets which belonged to the individual partners to the partnership, an express provision was made in that behalf. In sub-clause (c) there is no covenant that the quota was to be treated as belonging to the partnership. Again there is nothing in the relevant clauses which purports to convey the quota rights of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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