Travancore Sugars And Chemicals Ltd vs Commissioner Of Income-Tax Kerala on 20 September, 1966
We agree with these observations. The tests indicated
by this Court in Travancore Sugars & Chemicals were not
intended to be of general application but were given to
bring into bold relief the special aspects of the case as
the learned Judges themselves stated. The High Court
committed a mistake In importing these reasonings as tests
of general application to be applied to the facts of the
present case though the facts were indeed quite different.
As already pointed out, there was a definite sum of cash
consideration in Travancore Sugars Chemicals' case and the
special features were taken into account. In the dispute
before us the High Court was categorically found that a
capital asset had been acquired under the arrangement.
Admittedly, the assessee was a new company and it had no
other business. It acquired under the contract stipulating
to pay 75% of its annual net profits, the right to carry on
the business on a long term basis subject to the renewal of
the agreement.