9911796707
TMI Blog1993 (3) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee would be entitled to no commission. Under clause 15 of the agreement, it was stated that the period of the agreement would be five years but the Polish Company retained the right to terminate the agreement by giving 45 days' notice in the event of the assessee infringing any of the essential terms and conditions of the agreement. In such an event, it was also provided that "Termination of this Agreement, if any, will not affect in any respect the fulfilment of the contracts concluded between the parties in execution of the Agreement". Yet another agreement was also entered into in February, 1961, under which the assessee was granted sole distributorship in respect of other additional items. In pursuance of the said agreement, the assessee placed orders for 2,340 units of tractors during the period February 11, 1958 to June 27, 1960. However, by the time 586 tractors had been imported, serious trouble developed between the parties, i.e., between the assessee and the Polish company. One Dass Motors of Delhi to whom 75 of the tractors had been supplied lodged a claim against the assessee alleging mechanical and operational defects in the tractors supplied to it. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preciation of the matter available on record and considering the various agreements including the litigation, the amount of Rs. 93,450 cannot be treated as a revenue receipt and it should be treated as a capital receipt. According to the assessee, since the assessee had lost its monopolistic right of purchase and sale of tractors manufactured by the Polish company in the territory of India, it had affected its profit-making apparatus and, therefore, the amount received on giving up such monopolistic right was a capital receipt. In support of its submission, the assessee had relied on the decision of the Supreme Court in the case of P. H. Divecha v. CIT [1963] 48 ITR 222 (SC), and the decision of this court in the case of Bombay Burmah Trading Corporation Ltd. v. CIT [1971] 81 ITR 777. In his elaborate and well reasoned order, the Appellate Assistant Commissioner rejected the assessee's contention as, according to him, the assessee received the amount in dispute for disposing of its stock-in-trade which was either on the high seas or was to be imported from Poland. In this connection, the Appellate Assistant Commissioner had discussed in great detail the import licence obtained by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same should be held to be a capital receipt and, therefore, should not have been included in the total income of the assessee. He, once again, relied on the reported decisions which were cited before the lower authorities with a view to impress upon us that the lower authorities have not appreciated the assessee's case in the proper perspective, inasmuch as, according to him, the ratio laid down in the reported decisions is clearly applicable to the facts and circumstances obtaining in the present case. We may mention that the cases referred to by him were Bombay Burmah Trading Corporation Ltd. v. CIT [1988] 169 ITR 148 (Bom), P. M. Divecha v. CIT [1963] 48 ITR 222 (SC) and CIT v. Automobile Products of India Ltd. [1983] 140 ITR 159 (Bom). We have carefully gone through each of these reported decisions and we do not intend to discuss the same in detail as we find that the facts and circumstances obtaining in the instant case are clearly distinguishable from the facts and circumstances obtaining in the reported cases. In Bombay Burmah Trading Corporation Ltd. [1988] 169 ITR 148 (Bom), the assessee had to stop its business in Siam during the Second World War. After the war was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent by giving 45 days' notice in the event of the assessee infringing any of the essential terms and conditions of the agreement. Once the Polish company was informed about the complaints of the purchasers of the tractors, it was of the view that the purchasers were not satisfied due to the assessee's dealing with them and not due to the defects in the tractors as alleged by the purchaser. This could be borne out from the fact that there was litigation between the assessee and the Polish company. In the case of Automobile Products of India Ltd. [1983] 140 ITR 159 (Bom) also, the facts are quite different from the facts obtaining in the instant case. In that case, the assessee was carrying on business in assembling cars which was subsequently discontinued and in 1953, the licence given under the Industries (Development and Regulation) Act, 1951, was also cancelled. In December, 1955, the assessee obtained an industrial licence to manufacture diesel engines in collaboration with a foreign company. One of the conditions of the agreement was that the assessee should have an installed capacity for the manufacture of 3,000 Meadows diesel engines. The assessee entered into a collaboration ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
