Government also undertook to purchase pharmaceutical products manufactured by the assessee at the Tincture Factory.
As regards the Tincture Factory, the book valuation was to be adopted for fixing the companysideration.
The 20 stipulation was reduced to 10 by a subsequent agreement.
Assessee respondent is a private companypany incorporated on October 16, 1952.
From the Judgment and Order dated 26.7.1971 of the Bombay High Court in Income Tax Reference No.
The existing distillery licence was agreed to stand recognised in the hands of the assessee for a period of five years after its termination.
der a deed of assignment dated December 30, 1952, the benefits of the agreement dated May 1, 1951, were assigned to the assessee and from January 1, 1953, under the assignment the respondent carried on the business as selling agents of Bharat Barrel.
The short facts relevant for appreciating the question for companysideration are these M s. Bharat Barrel Drum Manufacturing Co. Ltd., Bharat Barrel for short gave its sole selling agency to a firm Jalan Trading Co. by an agreement dated May 1, 1951, for two years with a right of renewal.
7,93,837, under s. 10 1 or alternatively under 8.
The Court found that it was an enduring benefit for the benefit of the whole business of the companypany.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
10 2 xv of the Act in determining its business profits which the Income Tax Officer and the two appellate authorities in due companyrse rejected.
C. Sharma, K.C. Dua and Miss A. Subhashini for the Appellant.
112 of 1963.
On the application of the assessee the dispute regarding admissibility of the claim w referred to the High Court.
The Judgment of the Court was delivered by RANGANATH MISRA, J. This appeal by special leave at the instance of the Revenue assails the decision of the Bombay High Court upon a reference under section 66 of the Income Tax Act, 1922 hereinafter referred to as the Act .
The agreement further stipulated payment to Government of 20 of the net profits earned by the companypany every year subject to a limit of Rs.
T. Desai, D.N. Misra and Mrs. A.K. Verma for the Respondent.
Government reserved the right to numberinate a director on the Board of Directors of the assessee companypany without voting powers.
In respect of the assessment year 1954 55, the respondent assessee claimed deduction of a sum of Rs.
1733 of 1973.
40,000 per annum and certain other payments were also undertaken.
Neither the Income Tax Officer number the two appellate authorities and number even the High Court went into the question as to whether the assessee was in fact separate from, and independent, of the partnership firm.
It agreed with the Tribunal that the assessee had acquired an asset of an enduring nature in lieu of the payment of the amount in dispute yet, the High Court held that the payment represented business expenditure and the claim of deduction was tenable under 8.
The Commissioner of Income Tax, on obtaining special leave, is in appeal before this Court.
From May 1, 1953, on the basis of the option for renewal exercised by the assessee an agreement was entered into between Bharat Barrel and the assessee in respect of the sole selling agency and with a renewal clause.
