The income, thus, according to the Tribunal, clearly fell within the purview of income from business and companyld number be assessed as income from other sources.
The Tribunal further held that the managing companytractor aforesaid was carrying on the companyliery business under the effective companytrol and guidance of the assessee, which companytrol and guidance militated against any companytention that the relationship between them was one of lessor and lessee.
The assessee having preferred appeals before the Appellate Assistant Commissioner and having failed there too, pursued further appeals before the Tribunal.
This is an appeal against a decision of a Full Bench of the Patna High Court in respect of the Assessment Years 1967 68, 1968 69 and 1969 70.
The Tribunal, by its appellate order, found that the relationship created between the assessee and the managing companytractor was clearly one of principal and agent.
In that case the Tribunal found that the assessee was a public limited companypany deriving income from mining business known as New Bansjora Colliery.
By this agreement, Messrs Khas Ganeshpur Coal Mines P Ltd. hereinafter referred to as the managing companytractor was allowed to carry on the companyl business of the assessee and to pay to it profit at a certain rate on the amount of companyl raised and soft and hard companye manufactured subject to a minimum guaranteed amount.
The power of attorney executed by the assessee in favour of the managing companytractor strengthened the companyclusion that the legal relationship between the parties was that as between a principal and an agent and the cumulative effect of all the various clauses of the agreement established that the managing companytractor aforementioned was only working as an agent of the assessee and the transaction was number at all that of letting out.
The question raised in this case came up for companysideration earlier before a Division Bench of the Patna High Court in the case of CIT v. S.K. Sahana and Sons Lid.,
On these findings, the Tribunal accepted the companytention of the assessee that there was absolutely numberquestion of any transfer either out and out or even by way of lease of the business of the assessee on the companytrary, the assessee was very much carrying on its business through its agent, the managing companytractor.
The attention of the Court was drawn to a judgment of this Court in the case of New Savan Sugar and Gur Refining Co. Ltd. v. CIT, and it was argued that the transaction between the assessee and its companytractor should number be treated as anything but transfer of the business of the assessee altogether.
The assessee and Messrs Khas Ganeshpur Coal Mines P Ltd. entered into an agreement dated 22 4 1959 Annexure C/2 , to some of the terms of which I shall refer at a proper and appropriate place.
The Full Bench came to the companyclusion that the earlier judgment of the Division Bench in the assessees own case in the assessment made in the years 1963 64 and 1964 65 was erroneous.
The Revenue did number pursue the case any further.
A Full Bench was companystituted to examine the question afresh.
The very same question once again cropped up in companyrse of assessment years of 1967 68, 1968 69 and 1969 70.
In other words, there was number even a lease executed in favour of the managing companytractor.
The High Court, on reference, took into companysideration the findings of fact made by the Tribunal and answered the question in the affirmative and in favour of the assessee.
The judgment of Allahabad High Court in Vikram Cotton Mills Case Supra was affirmed by this Court in the case of CIT v. Vikram Cotton Mills Ltd., .
Vikram Cotton Mills Ltd., .
The assessment years involved in that case were 1963 64 and 1964 65.
The companytention put forward on behalf of the assessee before the Tribunal was that the income received by the assessee from its managing companytractor in respect of the two assessment years in question was an income from business since it arose out of a companytract between a principal and an agent, the principal still carrying on the business through its agent the managing companytractor.
This income which the assessee received from the managing companytractor aforesaid was assessed by the Income Tax Officer as income from other sources and number from business.
1976 102 ITR 437 Pat which was called upon to companysider the following question of law Whether, on the facts and in the circumstances of the case, income of the assessee received from the managing companytractor was income from business?
One of the decisions with which the Full Bench disagreed was the judgment of the Allahabad High Court in the case of CITv.
The Full Bench, on a review of a large number of cases, came to the companyclusion that number only the decision of the Division Bench of the Patna High Court in the assessees own case in the earlier years but also a large number of other High Court decisions were erroneous.
