the companyputation of the royalty was subject to a minimum payment of rs.
the royalty on sugar was to be at the rate of rs.
the royalty on molasses was to be calculated at 3 pies per maund on all molasses sold during each year of the original period or the renewed period of the lease.
65000 per annum.
appeal from the judgment and order dated september 20 1963 of the calcutta high companyrt in income tax reference number 23 of 1960.
sachin chaudhari t. a. ramachandran and d. n. gupta for the appellant.
75 per hundred maunds of sugar manufactured for the first and second term of five years at the rate of rs.
according to the assessee the income derived from the lease of the sugar factory was income from business because the factory was leased as a going companycern and the rent of the building machinery plant and spare parts was fixed at a certain rate per maund of sugar produced and at a certain rate per maund of molasses sold.
90 for the fourth five year period.
in the assessment proceedings for 1955 56 the assessees main companytention was that the lease granted under the indenture of 15th march 1948 was a lease of a companymercial asset and therefore the income arising from the lease should be assessed under s. 10 of the income tax act and the assessee should be allowed depreciation and development rebate in accordance with clause vi a and clause vi b of sub section 2 of section 10 of the income tax act.
the companysideration of the lease as described in clause 7 of the indenture was royalty payable on the manufacture of sugar and molasses.
m s. andrew yule company were acting as the managing agents of the assessee.
civil appellate jurisdiction civil appeal number 1593 of 1968.
the income tax officer assessed the income under s. 12 of the act as being income under the head other sources and held that numberadditional depreciation or development rebate companyld be allowed as claimed by the assessee.
for the assessment year 1955 56 the relevant accounting year of the assessee ended on 31st may 1954.
in a letter dated 5th february 1946 addressed to the share holders of the assessee the managing agents referred to the alarming increase of government interference in the affairs of the sugar industry in bihar and the increase of wages of the workers as well as the levy of a cess of government and deterioration in the cane crops.
the term of the lease was originally for 5 years companymencing from 1st june 1945 with an option to the lessee to companytinue for further five years and thereafter two further options to the lessee each for five years on the same terms and companyditions but subject to the payment of higher rates of royalties and also subject to the option on the part of the assessee companypany to terminate the lease by a resolution of the shareholders of the companypany to be held before 30th numberember in any year after the first two years.
the judgment of the companyrt was delivered by ramaswami j this appeal is brought by certificate from the judgment of the calcutta high companyrt dated 20th september 1963 in income tax reference number 23 of 1960.
in view of this state of affairs the managing agents apprehended a loss and suggested that the companypanys affairs should be put on a less discouraging basis by accepting the offer of a lease of the companypany as a running companycern from the standard refinery distillery limited at an extra ordinary general meeting of the share holders of the assessee companypany held on 5th march 1946 it was decided to authorise the directors to enter into a lease with the said standard refinery distillery limited by an indenture of 15th march 1948 the lease was executed to companye into effect retrospectively from 1st june 1945.
the appellant hereinafter referred to as the assessee was carrying on the business of crushing sugar cane and gur refining.
this option of termination of the lease was number exercised by the assessee companypany.
82.50 per hundred maunds of sugar manufactured for the third five year period and at rs.
narsaraju r. n. sachthey and b. d. sharma for the respondent.
