The Deputy Commissioner of Income tax then issued a numberice under s. 25 of the Travancore Income tax Act to the Companys Liquidator on the ground that the profits from the sale of the chemicals and paper for manufacture had escaped assessment.
The purchaser made a default in payment, and on August 9, 1943, a fresh agreement was entered .into by the parties, this time for a companysideration of Rs.
50 and another sale on October 30, 1943, to a stranger for Rs.
2 lakhs arising from this sale.
Appeal from the judgment and order dated January 27, 1960, of the Kerala High Court in T. R. Case No.
Meanwhile, the assessment of the Company for the, account year ending April 30, 1944, bad been companypleted by the Deputy Commissioner of Income tax, and the assessee Company had been assessed on an income of Rs.
1,15,259.
The purchaser was allowed sixty days for the payment of the balance of the price, Rs.
36,498 6 4.
The Memorandum of Association of the asseesee Company, however, empowered the Company to manufacture and deal in acids, alkalis and other chemicals.
It maybe pointed out that prior to the sale of chemicals to the purchaser, the only evidence of sale of chemicals by the assessee Company was of two transactions.
The assessee Company carried on its business of manufacturing matches till the account year ending, on April 30, 1941.
In the first transaction, there was a sale of chemicals on July 24, 1943,to an educational institution for Rs.
57,500 having been already paid at the time the agreement was entered into.
P. Desai J. B. Dadachan , O. C. Mathur and Ravinder Narain, for the respondent.
The Deputy Commissioner, however, relying, upon the Memorandum of Association, which allowed the assessee Company to manufacture and sell chemicals, and on the Directors report, held that the assessee Company was liable to income tax on a profit of Rs.
Before the Commissioner, the Liquidator admitted that the profit from the sale of the chemicals wits Rs.
1, 15,259.
It was agreed that the price would number include manufactured goods, chemicals and other raw materials or any other asset number shown in the agreement of sale.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
These were companytemplated by cl.
The Judgment of the Court was delivered by HIDAYATULLAH, J. In this appeal by the Commissioner of Income Tax Kerala filed with certificate of the High Court of Kerala, an important question of law was raised before the High Court, which was answered against the Department.
March 20.
Thereafter, the profits from the business became less and less due to War companyditions, and the assessee Company began to manufacture plywood chests for tea, paints and lemon grass oil.
5, 75,000.
The Commissioner of Income tax on appeal, however, reduced the assessable profits to Rs.
On May, 9, 1943, the assessee Company entered into an agreement with one Rao Sahib Natesa Iyer for the sale of the lands, buildings, plant and machinery of its match factory for Rs.
286 of 1961.
The Official Liquidator took up the position that the match manufacturing had been stopped, and that business had been wound up, and there thus only an appreciation of the capital assets and number a business profit, which, was liable to assessment.
The respondent, the West Coast Chemicals and Industries, Ltd. referred to as the assessee Company was incorporated in 1937 primarily with the object of acquiring and working the rights, title and interest in a match factory belonging to one A. V. Thomas at Medical.
3 of the Memorandum of Association.
N. Rajagopal Sastri and D. Gupta, for the Appellant.
14 of 1955.
In a companyfidential report made on August 1, 1944, to the shareholders, the Directors stated that the price obtained had shown a capital appreciation of about six times the companyt price, and the sale of chemicals had also resulted in a substantial profit.
7,35,000, and the sale included chemicals and paper for manufacture which had number been sold in the first instance.
