9911796707
TMI Blog1986 (10) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... in regard to inclusion of Rs. 10,62,970 in the income. The first ground raised by the revenue is to object to the deletion made by the Commissioner (Appeals). The facts are in the following way : 3. Caltex Petroleum Corpn. (CPC) is a company incorporated in the United States of America. Caltex (India) Ltd. (CIL) is a subsidiary of CPC incorporated in the Bahamas Islands. CIL was carrying on through its undertaking in India the business of marketing and distributing petroleum products. Caltex Oil Refining (India) Ltd. (CORIL) was an Indian company, the equity shareholdings of which were fully held by the foreign company (CPC). CORIL was carrying on the business of refining crude oil and producing petroleum products in India. On 22-11-1976 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The accounting year of CIL was calendar year. CIL had made profit of Rs. 10,62,970 in 1976 up to the date of take over (29-12-1976). The operating results of marketing division carried on by CORIL for two days after 30-12-1976 was included in the profit and loss account of CORIL on account of integrated operation after the take over. In the return for 1977-78, CORIL (assessee) claimed Rs. 10,62,970 to be a capital receipt in part 4 of the return of income. The ITO rejected this. In the appeal, the Commissioner (Appeals) held that the amount as not taxable in the hands of the assessee. Objecting to the same, the revenue has raised the first ground in this regard. 8. Referring to certain material portions in the assessment : (a) the meth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance) provided that the GOI may direct by notification that the right, title and interest and the liabilities of CIL be vested in a Government company as may be specified in the notification, if the GOI was satisfied that a Government company is willing to comply with the terms and conditions which it may deem fit to impose---see section 9(1). (d) In case right, title and interest and the liabilities of CIL should vest in a Government company as contemplated in section 9(1), then all the rights and the liabilities of the GOI in relation to CIL shall be deemed to have been acquired by that Government company---see section 9(2). (e) If the vesting should take place in the Government company as foreseen in section 9(1), then the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assets and the liabilities of CIL in CORIL. In the annual report of the assessee for the year ended on 31-12-1976, there is a note in Schedule G that the assets and liabilities of CIL have been incorporated in the accounts of the assessee at their book value as on 31-12-1976. There is a further note that the profit and loss account of the assessee for the year ending 31-12-1976 includes the business results of the marketing division which was previously being operated by the erstwhile CIL for two days from 30-12-1976. For the result of the marketing operations of CIL for the period prior to 29-12-1976, no provision had been made 13. It is a fact that the profits earned by CIL on account of its marketing operation for the period from 1- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not bear scrutiny. The complexion of the amount received by the assessee from the GOI does not depend upon the treatment it had been given by the assessee in its books of account or how it has been stated in the annual report for 1976. The theory of gift is to be stated only to reject it. There is hardly any basis to spell out a gift. Principally, the effect of few provisions in the Acquisition Act and the notification dated 30-12-1976 are the deciders. Both the subsidiary company, CORIL and CIL were taken over by the GOI with effect from 30-12-1976 and this is clear result of sections 3 and 5. Since the Government had acquired 100 per cent equity share holdings of CORIL, this continued to exist, but as a Government company, operating its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 9(1). Precisely for this reason the GOI transferred all the title, right and interest and the liabilities of CORIL (Government company) on and from 30-12-1976 though, technically, it appears that there was a prior vesting in the Central Government earlier to the transfer. 15. Section 9(3) reads that the provisions of sections 5, 6 and 7 of the Acquisition Act, shall, so far as may be, apply in relation to such Government company as they apply to the Central Government and for the purposes of references therein, the 'Central Government' shall be construed as 'Government company'. A reading of section 6(2) in the context of the Government's notification dated 30-12-1976 should, in view of section 9(3), should be in a manner that r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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