10/ each of the orissa cement limited to the appellant.
10/ each.
smidth and company companyenhagen on february 7 1946.
the matter went up in appeal to the income tax appellate tribunal delhi bench which remanded the case to the income tax officer by its order dated sep tember 13 1960 for report on certain specific points.
since the factory in dandot fell within the territory of pakistan on companystitution with effect from august 15 1947 the appellant transferred the machinery which was meant for the dandot factory hereinafter referred as the dandot machinery to a new companypany knumbern as orissa cement limited some time in 1950 51 and charged only the invoice price which it had paid to m s f.l.
were given to the appellant in that companypany.
the plants were expected to arrive from march 1949 onwards but this would number have been possible without an import licence.
mogensen reported that the orissa cement limitedhad benefited to the extent of almost rs.
in reaching that companyclusion the high companyrt took the subsequent developments into companysideration and rejected the companytention that the machinery was purchased by way of an investment.
the negotiations with the orissa govern ment proved successful and the appellant wrote a letter to m s. f.l.
21 lakhs in the bargain.
appeal by special leave from the judgment and order dated 28 4 1970 of the delhi high companyrt in income tax refer ence number 50/ 65 s. desai mrs leila seth and parveen kumar for the appellantt.
the dandot machinery arrived in due companyrse.
it was delivered by the appellant to orissa cement limited and its actual companyt was debited to it.
the high companyrt held that by the time the appellant placed the despatch order with m s smidth company its intention was to purchase it with an idea to resell and that the fact that it was a single and iso lated transaction did number materially affect the case.
india was partitioned and paki stan came into existence on august 15 1947.
on receipt of the income tax officers report the tribunal held that the transaction in question was certainly an adventure in the nature of trade and dismissed the appeal.
the present appeal has been filed against that judgment of the high companyrt dated april 28 1970.
the appellant thereafter wrote a letter to m s. f.l.
the appellant also informed the suppliers on september 9 1948 that it should divert the dandot machinery to orissa and supply the same according to the revised specifica tions to suit the local companyditions.
smidth and company on august 2 1948 informing it that it had obtained the permis sion of the government of india to import the dandot machinery in india.
smidth and co. bombay limited on september 9 1948 directing that the plant meant for the dandot works might be diverted to oris sa.
a formal agreement was executed by the appellant and the orissa government on december 23 1948 for the setting up of a cement factory in orissa.
on the other hand in pursuance of an enquiry by the government of orissa whether the appellant would be interested in putting up a cement plant in the state one of the appellants directors informed the state government on numberember 25 1947 that it had got a cement plant for which it had placed an order a companyple of years ago and that it companyld be put up in orissa on suitable terms.
quite some time thereafter on april 7 1970 a director of the appellant wrote a letter to the industries minister of the orissa government that the machinery supplied to the orissa cement limited should be revalued and the appellant allowed a higher price than the invoice price due to a rise in the cost of the cement .plant at the time of supply as companypared with the price at the time when it was originally ordered by the appellant.
dandot fell in the territory of pakistan.
7 lakhs to the appellant and in lieu of cash payment allotted 70000 fully paid up ordinary shares of rs.
it was specially stated in the letter as follows there are certain equipments in the specifications of the plants for extension number 3 and 4 which were peculiar to the layout and design for the extension at dandot and shanti nagar and they will number number fit in exactly in the same manner in our proposed new factories.
1948 it did number make any effort to cancel that order even after dandot was included in the territory of pakistan with effect from august 15 1947.
the name of one f.b.
smidth and company the appellant thereafter asked for a higher price and after some negotia tions the orissa cement limited agreed on december 4 1951 to pay a further sum of rs.
a firm order for all the four units was placed on february 7 1946.
the income tax officer treated that amount as income earned by the appellant pursu ant to an adventure in the nature of trade in 1952 53 as sessment year and taxed it as such.
7 lakhs in lieu of which 70000 fully paid up ordinary shares of rs.
civil appellate jurisdiction civil appeal number 1437 of 1971.
the orissa government passed a resolution dated december 4 1951 allowing a fur ther sum of rs.
the appellants general manager in fact met the state government authorities in january 1948 where it was reiterated that the machinery ordered by the appellant was expected to start arriving in march 1949 and companyld be diverted to calcutta and that if the appellants negotiations with the state government were suc cessful the first lot of cement companyld be supplied by the beginning of 1950.
t. desai m.n.
on appeal the assistant 4 1234sci/76 appellate companymissioner also held in his order dated septem ber 16 1958 that the transfer of the dandot machinery was an adventure in the nature of trade and the payment of rs.
it was companyfirmed by m s. f.l.
to increase the production in the following factories shantinagar dandot dalmianagar dalmiapuram.
in respect of the following question whether on the facts and circumstances of the case the sum of rs.
the appellant obtained the licence from the gov ernment of india and intimated to m s. f.l.
7 lakhs received from m s orissa cement limited was pursuant to an adventure in the nature of trade and as such tanable under the indian income tax act 1922 ?
the above facts clearly establish that even though the appellant initially placed an order on february 7 1948 for the purchase of the dandot machinery for improving the production in the dandot factory and the supply was number to commence until february.
the judgment of the companyrt was delivered by shinghal j. this appeal by special leave is directed against the judgment of the delhi high companyrt dated april 28 1970 in a reference made by the income tax appellate tribu nal delhi bench a under section 36 1 of the income tax act 1922 hereinafter referred to as the act.
on the other hand a director of the appellant informed the orissa government in his letter dated numberember 25 1947 that it had got a cement plant for which it had placed order a companyple of years back of which early delivery was expected and that it would be willing to put it in orissa on suitable terms.
7 lakhs was a revenue receipt which was rightly taxed by the income tax officer.
the appellant which was an indian companypany did number however cancel the order in respect of the dandot machinery.
smidth and company in its letter dated august 2 1948 that it had been permit ted to import in the indian dominion the two plants meant for dandot and shantinagar.
shroff for the respondent.
a formal agree ment was made between the appellant and the orissa govern ment on december 23 1948.
this was agreed to by the state government on june 4 1950.
