Commissioner Of Income-Tax, Nagpur vs Rai Bahadur Jairam Valji And Others on 7 October, 1958
In Commissioner of Income-tax vs. Rai Bahadur Jairam
Valji [(1959) Supp. 1 S.C.R. 110, 113], it was laid down as follows: -
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1 - 10 of 19 (0.79 seconds)The Commissioner Of Income-Tax, Madras vs Chari And Chari Ltd on 9 April, 1965
In the case of Commissioner of Income-tax vs. Chari and
Chari Ltd. (supra), the same principles were reiterated and re-
emphasized, but on the facts of the case, the Supreme Court came to
the conclusion that the compensation paid for the loss of agency was
a capital asset in view of the fact that there was no evidence to show
that by reason of extinction of the managing agency any enduring
asset was lost to the respondent (Chari and Chari Ltd.), or its trading
organization was adversely affected. It was held that the receipt is
„revenue‟ and not „capital‟ in nature for the reason that even after the
ITA No.183/2008 Page 17 of 31
surrender of one of the agencies, the company carried on its business
as before within the framework of the business, it being a necessary
incident of business that the existing agencies may be terminated and
fresh agencies may be taken.
Wales vs Tilley. on 18 May, 1942
"21. The next question is whether the
compensation paid is severable. If the
compensation paid was in respect of two distinct
matters, one taking the character of a capital
receipt and the other of revenue receipt, we do
not see any principle which prevents the
apportionment of the income between the two
matters. The difficulty in apportionment cannot
be a ground for rejecting the claim either of the
Revenue or of the assessee. Such an
apportionment was sanctioned by courts in
Wales v. Tilley [1942] 25 Tax Cas.
T. Sadasivam vs Commissioner Of Income-Tax, Madras. on 6 May, 1955
41 and T.
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Sadasivam v. Commissioner of Income-tax,
Madras [1955] 28 ITR 435(Mad) . In the
present case apportionment of the compensation
has to be made on a reasonable basis between
the loss of the agency in the usual course of
business and the restrictive covenant. The
manner of such apportionment has perforce to be
left to the assessing authorities."
Gillanders Arbuthnot And Co., Ltd vs The Commissioner Of Income-Tax, ... on 1 May, 1964
In Gillanders Arbuthnot and Co. Ltd. vs. The Commissioner
of Income-tax, Calcutta, (1964) 53 ITR 283 (SC) the facts of the
case were somewhat akin to the facts in the case of Best & Co. Pvt.
Ltd. (supra). The agency was terminated and by way of
compensation, the Imperial Chemical Industries (Exports) Ltd. paid
for the first three years after the termination of the tenancy 2/5ths of
the commission accrued on its sales in the territory of the appellant‟s
agencies computed at the rates at which the appellant had formerly
been paid and in addition in the third year full commission for the sale
affected in that year at the same rates. The Imperial Chemical
Industries (Exports) Ltd. had intended to take a formal undertaking
from the appellant to refrain from selling or accepting any agency for
explosives or other competitive commodities, but no such agreement
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in writing was taken or insisted upon. The question arose whether the
amounts received by the appellant for those three years were of the
nature of „capital‟ or „revenue receipt‟. A three-Judge Bench of the
Supreme Court held that the amounts paid were of the nature of
income and, therefore, assessable to tax on the following reasoning: -
Commissioner Of Income-Tax vs Shaw Wallace & Co. Ltd. on 24 July, 1980
In the judgment in Kettlewall
Bullen and Co.‟s case [1964] 53 ITR 261 (SC)
we have explained that the judgment of the
Judicial Committee in the Commissioner of
Income-tax v. Shaw Wallace and Co. L.R. 59
IndAp 206 was not intended to, and did not lay
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down that in every case, cancellation of an
agency resulted in loss of a source of revenue or
that amounts paid to compensate for loss of
agency must be regarded as capital loss.
Kettlewell Bullen And Co vs Commissioner Of Income-Tax, Calcutta on 1 May, 1964
In Kettlewell Bullen and Co. vs. Commissioner of Income-
tax, Calcutta (1964) 53 ITR 261, the Supreme Court after analysis of
a large number of cases falling on the two sides of the dividing line
came to the conclusion that a satisfactory measure of consistency in
principle is disclosed therefrom and laid down the following test:-
The Commissioner Of Income Tax And ... vs The South India Pictures Ltd., ... on 14 March, 1956
"30. Therefore, when a question arises whether a
payment of compensation for termination of an
agency is a capital or a revenue receipt, it would
have to be considered whether the agency was in
the nature of capital asset in the hands of the
assesses, or whether it was only part of his
stock-in-trade. Thus, in Barr Crombie & Sons
Ltd. v. Commissioners of Inland Revenue the
agency was found to be practically the sole
business of the assesses, and the receipt of
compensation on account of it was accordingly
held to be a capital receipt, while in Kelsall's
case the agency which was terminated was one
of several agencies held by the assesses and the
compensation amount received therefore was
held to be a revenue receipt, and that was also
the case in Commissioner of Income-tax v.
South India Pictures Ltd.
Commissioner Of Income-Tax vs Manoranjan Pictures Corporation (P) ... on 10 April, 1997
23. This Court, in the case of Commissioner of Income-tax vs.
Manoranjon Pictures Corporation, 288 ITR 202 (Del.) made the
following pertinent observations: -