Commissioner Of Income-Tax, Nagpur v. Rai Bahadur Jairam Valji And Others

Case: COMMISSIONER OF INCOME-TAX, NAGPUR versus RAI BAHADUR JAIRAM VALJI AND OTHERS [[1959] SUPP. 1 S.C.R. 110] (1959) llO SUPREME COURT REPORTS [1959) Supp. '95[8 ]question did not arise for consideration at that stage, M. c. v. s. did ~ot also consi~er any material to support their Ah .. achal• .vadar findmg. In the circumstances, the only reasonable Etc. course is to leave that question open so that it may v. be decided in appropriate proceedings. 1-he Slate of In the result, subject to the aforesaid observations, the appeals are dismissed but without costs. Mad.as .s. Othm Subba Rao ]. Appeals dismissed. Ootober 7. COMMISSIONER OF INCOME-TAX, NAGPUR v. RAI BAHADUR JAIRAM VALJI AND OTHERS (VENKATABAMA AIYAB, P. B. GAJENDBAGADKAB . and A. K. SABKAB JJ.) Income Tax-Capital or Revenue receipt-Compensation for premature termination of contract_..:.Whether trading reccipt-Liabi· lity to tax-Indian Income-tax Act, r922 (XI of r922). The respondent had been carrying on business in the produc-tion and supply of limestone since 1920, and under an agreement entered into with the Bengal Iron Company was supplying all its requirements of limestone and dolomite. Sometime later the Indian Iron and Steel Company took over all the assets and liabilities of the former company. Subsequently differences having arisen between the respondent and the Indian Iron and Steel Company they entered into an agreement on May 9, 1940, in settlement of all the disputes .between them whereby, inter alia, the respondent was to work a quarry of the company for a period of 25 years and to supply the limestone quarried there-from to the company according to its requirements and to get from the railway authorities facilities for transporting the lime-stone more economically; and it was agreed that till such facili-ties were given, the respondent was to be paid Rs. 4000/- every month. Under the agreement the respondent had the right to work other quarries of his own and supply limestone so quarried to other purchasers. The railway authorities having declined to grant facilities, it became impossible to carry out the agreement in the manner contemplated by the parties, who, thereupon, entered into a fresh agreement on August 2, 1941, terminating the agreement dated May 9, 1940, on certain terms. The agree-1958 ment provided inter alia (1) that the Company should pay "I~s. 2,50,000/- to the sellers as solatium besides the monthly instal- Commissio11er of merits of Rs. 4000/-", remaining unpaid under the contract dated Incotne-Ta" May 9. 1940, (2) that the company should purchase limestone v. from the respondent for a period of 12 years, and .(3) that the Jairam Valji respondent was to be appointed the loading contractors of the Company for loading iron ore. On a question as to whether the the sum of Rs. 2,50,000/- was liable to tax, the respondent claim-ed that it was not, being a capital receipt but the income-tax authorities held that it was a trading receipt and was income chargeable to tax. The High Court however held on a reference under s. 66(1), that the income was not chargeable to tax. and hence the present appeal. In support of the appeal, the respon-dent contended inter alia that (1) the contract dated May 9, 1940, was for a period of 25 years of which more than 23 years had still to run at the time of the settlement, and it was therefore an asset of an enduring character, capital in character, and the compensation paid therefor was a capital receipt. and (2) that the true character of the agreement was that it broug.ht into existence an arrangement which would enable the respondent to carry on a business and was not itself any business, and any pay-ment made for the termination of such an agreement was a capital receipt. Held, that the contract of May 9, 1940, was entered into by the respondent in the ordinary course of his business and that the sum of Rs. 2,50,000/- which was paid as solatium for the cancellation of that contract, was a revenue receipt and was chargeable to tax. Case: COMMISSIONER OF INCOME-TAX, NAGPUR versus RAI BAHADUR JAIRAM VALJI AND OTHERS [[1959] SUPP. 1 S.C.R. 110] (1959) 1958 उसस्तरपरविचारकेलिएप्रश्ननहींउठायागयाथा, उनकेसमर्थनकेलिएकिसीभीसामग्रीपरविचारनहींकियागयाथा एमसीवीएस। अरुणाचलकेनादरकीखोज।इनपरिस्थितियोंमें, एकमात्रउचिततरीकायहहैकिउसप्रश्नकोखुलाछोड़दियाजाएताकिवह आदि। उचितकार्यवाहियोंमेंनिर्णयलियाजाए। राज्यकीमद्रासऔरअन्यपरिणामतः, उपरोक्तटिप्पणियोंकेअधीन, अपीलोंकोखारिजकरदियाजाताहैलेकिनबिनाकिसीलागतके। सुब्बारावजे। याचिकाएंखारिजकरदीगईं। -आयआयुक्तकर, नागपुर 1958 .वी 7 अक्टूबर। रायबहादुरजयरामवल्जीऔरअन्य ( वेंकटटरामाअय्यर, पी. बी. गजेन्द्रगडकर औरए. के. सरकरजे.) -----आयकरपूंजीयाराजस्वरसीदअनुबंधकीसमयसेपहलेसमाप्तिकेलिएमुआवजाचाहेव्यापाररसीदकरकेलिएदेयताभारतीयआय-करअधिनियम, 1922 (1922 का11)।प्रत्यर्थी1920 सेचूनापत्थरकेउत्पादनऔरआपूर्तिमेंव्यवसायकररहाथा, औरबंगालआयरनकंपनीकेसाथकिएगएएकसमझौतेकेतहतसभीकीआपूर्तिकररहाथा। चूनापत्थरऔरडोलोमाइटटकीइसकीआवश्यकताएँ।कुछसमयबादइंडियनआयरनएंडस्टीलकंपनीनेपूर्वकंपनीकीसभीपरिसंपत्तियोंऔरदेनदारियोंकोअपनेहाथमेंलेलिया।तत्पश्चातप्रत्यर्थीऔरभारतीयलौहऔरइस्पातकंपनीकेबीचमतभेदउत्पन्नहोनेपरउन्होंने9 मई, 1940 कोअपनेबीचकेसभीविवादोंकेनिपटारेकेलिएएकसमझौताकिया, जिसकेतहत, अन्यबातोंकेसाथ-साथ, प्रत्यर्थीको25 वर्षोंकीअवधिकेलिएकंपनीकीएकखदानमेंकामकरनाथाऔरवहांसेखननकिएगएचूनापत्थरकीआपूर्तिकंपनीकोउसकीआवश्यकताओंकेअनुसारकरनीथीऔरचूनेकेपत्थरकोअधिकआर्थिकरूपसेपरिवहनकरनेकेलिएरेलवेअधिकारियोंसेसुविधाएंप्राप्तकरनीथीं; औरइसबातपरसहमतिबनीकिजबतकऐसेसुविधाजनकसंबंधनहींदिएजाते, तबतकप्रत्यर्थीकोरु।4000 / - हरमहीने।समझौतेकेतहतप्रत्यर्थीकोअधिकारथा वहखुदअन्यखदानोंमेंकामकरताहैऔरअन्यखरीदारोंकोचूनापत्थरकीआपूर्तिकरताहै।रेलवेअधिकारियोंद्वारासुविधाएंदेनेसेइनकारकरनेकेबाद, पक्षोंद्वाराविचारकिएगएतरीकेसेसमझौतेकोपूराकरनाअसंभवहोगया, जिन्होंने2 अगस्त, 1941 कोएकनयासमझौताकिया, जिसमें(1) एस. सी. आर. सर्वोच्चन्यायालयरिपोर्टकोसमाप्तकरदियागया। कुछशर्तोंपर9 मई, 1940 कासमझौता।1958 कीसहमतिमेंअन्यबातोंकेसाथ-साथ(1) प्रावधानकियागयाथाकि"कंपनीकोरु। 2,50,000 / - मासिककिश्तकेअलावाविक्रेताओंकोमुआवजेकेरूपमेंरु।4000 / - " , आय-करदिनांक9 मई, 1940केअनुबंधकेतहतअवैतनिकरहना, (2) किकंपनीकोचूनापत्थरV खरीदनाचाहिए। 1 प्रत्यर्थीसे12 वर्षकीअवधिकेलिए, और(3) किजयरामवालजीप्रत्यर्थीकोप्रत्यर्थीकेलोडिंगठेकेदारनियुक्तकियाजानाथा लौहअयस्ककीलोडिंगकेलिएकंपनी।इससवालपरकिक्या रु. कीराशि।2,50,000 / - करकेलिएउत्तरदायीथा, प्रतिवादीकादावा-एडकियहएकपूंजीरसीदनहींथी, बल्किआयकरथीअधिकारियोंनेमानाकियहएकव्यापारिकरसीदथीऔरआयथी करसेप्रभार्य।हालांकिउच्चन्यायालयनेएकसंदर्भपरफैसलासुनायाएसकेतहत।66 ( 1 ) , किआयकरसेप्रभार्यनहींथी, और इसलिएवर्तमानअपील।अपीलकेसमर्थनमें, जवाब डेंटटनेअन्यबातोंकेसाथतर्कदियाकि(1) 9 मई, 1940 काअनुबंध25 सालकीअवधिकेलिएथा, जिसमेंसे23 सालसेअधिककीअवधिकेलिएथा। अभीभीनिपटानकेसमयचलनेकेलिए, औरइसलिएयहथा एकस्थायीचरित्रकीसंपत्ति, चरित्रमेंपूंजी, और इसकेलिएभुगतानकियागयामुआवजाएकपूंजीरसीदथी, और(2) कि समझौतेकावास्तविकस्वरूपयहथाकिइसेलागूकियागयाथा एकऐसीव्यवस्थाकाअस्तित्वजोप्रतिवादीकोसक्षमबनाएगी व्यवसायचलानाऔरयहअपनेआपमेंकोईव्यवसायनहींथा, औरइसतरहकेसमझौतेकीसमाप्तिकेलिएकियागयाकोईभीभुगतानएकथा पूँजीरसीद। मानागयाकि9 मई, 1940 काअनुबंधकियागयाथा प्रत्यर्थीअपनेव्यवसायकेसामान्यपाठ्यक्रममेंऔरवह रु. कीराशि।2,50,000 / - जिसकेलिएऋणकेरूपमेंभुगतानकियागयाथाउसअनुबंधकोरद्दकरना, एकराजस्वरसीदथीऔर करसेप्रभार्य। मेंकिएगएअनुबंधकेबीचएकअंतरहै व्यवसायकासामान्यपाठ्यक्रमऔरएकएजेंसीअनुबंध।जबकियहहोसकताहै उत्तरार्द्धकोकेवलकरनेकेलिएएकरूपरेखाकेरूपमेंमाननासंभवहैव्यवसाय, पूर्वस्वयंव्यवसायकागठनकरताहै, औरइसलिए, पूर्वप्रकारकीसमाप्तिकेलिएभुगतानकियागयामुआवजाअनुबंधकोराजस्वमानाजानाचाहिए, जबकिमुआवजेकाभुगतानकियाजानाचाहिएउत्तरार्द्धकीसमाप्तिकेलिएचरित्रमेंपूंजीहोसकतीहै।इससेरसीदकेस्वरूपमेंकोईफर्कनहींपड़ेगा,जबयहकिसीव्यापारिकअनुबंधकोरद्दकरनेकेलिएक्षतिपूर्तिहै,चाहेउसकेप्रदर्शनमेंएकहीअभिनयशामिलहोयाएकश्रृंखला।एकअवधिमेंफैलेहुएकार्य।मामलाकानूनकीसमीक्षाकीगई।वानडेनबर्गसलिमिटेडबनाम।क्लार्क, [1935] ए. सी. 431, प्रतिष्ठित। :सिविलअपीलीयक्षेत्राधिकारसिविलअपीलसं।109 1954 का।निर्णयसेविशेषअनुमतिद्वाराअपीलऔरपूर्वनागपुरका21 अप्रैल, 1950 काआदेश 1949 . 135।विविधमेंउच्चन्यायालय।कादीवानीमामलासं 112 सर्वोच्चन्यायालयकीरिपोर्ट[1959] पूरक। 1958 आर. गणपतिअय्यरऔरआर. एच. ढेबर, अपीलकेलिए लांटट। आयआयुक्त-करराधाविनोदपाल, जे. एम. ठाकरऔरआई. एन. श्रॉफ उत्तरदाताओं। .वी जयरामवालजी Case: COMMISSIONER OF INCOME-TAX, NAGPUR versus RAI BAHADUR JAIRAM VALJI AND OTHERS [[1959] SUPP. 1 S.C.R. 110] (1959) :सिविलअपीलीयक्षेत्राधिकारसिविलअपीलसं।109 1954 का।निर्णयसेविशेषअनुमतिद्वाराअपीलऔरपूर्वनागपुरका21 अप्रैल, 1950 काआदेश 1949 . 135।विविधमेंउच्चन्यायालय।कादीवानीमामलासं 112 सर्वोच्चन्यायालयकीरिपोर्ट[1959] पूरक। 1958 आर. गणपतिअय्यरऔरआर. एच. ढेबर, अपीलकेलिए लांटट। आयआयुक्त-करराधाविनोदपाल, जे. एम. ठाकरऔरआई. एन. श्रॉफ उत्तरदाताओं। .वी जयरामवालजी 1958. 7 अक्टूबर।न्यायालयकानिर्णयथाद्वारावितरितकियागया. . वेंकटटरामावेंकटटरामाअय्यरजेयहअय्यरजेकेखिलाफएकअपीलहै।-एसकेतहतसंदर्भ।66 ( 1 ) भारतीयआयकरअधिनियम(1922 का11), जिसेइसकेबादअधिनियमकेरूपमेंसंदर्भितकियागयाहै, और हमारेदृढ़संकल्पकेलिएजोमुद्दाउठायाजाताहैवहहै चाहेरु. कीराशिहो।2,50,000 2 अगस्त, 1941 कोरेस्पॉनडेंटटद्वाराप्राप्तआय-करकेलिएप्रभार्यहै।जबकि, विभागकेअनुसार, राशिमें प्रश्नएकराजस्वरसीदहैजिसेप्रभार्यआयमेंशामिलकियाजानाचाहिए, प्रत्यर्थीकेअनुसारयहपूंजीरसीदहैजोकरकेलिएउत्तरदायीनहींहै।अपीलीयन्यायाधिकरणनेआयकरअधिकारीऔरअपीलीयसहायकआयुक्तकेनिर्णयोंकीपुष्टिकरतेहुएकहाकिविचाराधीनराशिएकव्यापारिकरसीदथी, औरआयकाआकलनकियाजानाचाहिए।प्रत्यर्थीकेआवेदनपरउसनेनिम्नलिखितप्रश्नकाउल्लेखकिया उच्चन्यायालयकेनिर्णयकेलिएः " चाहेमामलेकीपरिस्थितियोंमेंरुपयेकीराशि।2,50,000 निर्धारितीद्वारा9 मई1940 केअनुबंधकीसमयपूर्वअवधि-केलिएहर्जानेयामुआवजेकेरूपमेंप्राप्तआयकाआकलनभारतीयआयकरकेअर्थमेंसक्षमहै। "।अधिनियम इससंदर्भकोसेनऔरदेव, जे. जे. नेसुना।, जिन्होंनेन्यायाधिकरणसेअसहमतहोकरअभिनिर्धारितकियाकिराशि सेरु.2,50,000 प्रत्यर्थीकेहाथोंमेंएकपूंजीरसीदथी, औरयहकियहकरलगानेकेलिएउत्तरदायीनहींथी।अपीलार्थीनेतबएसकेतहतएकआवेदनदायरकिया।66 ( ए) इसन्यायालयमेंअपीलकरनेकेलिएप्रमाणपत्रकेलिएअधिनियमके(2), लेकिनजिसेखारिजकरदियागयाथा, विद्वानन्यायाधीशोंनेयहमानतेहुएकिइसविषयपरकानूनअच्छीतरहसेतयकियागयाथा।इसकेबादअपीलार्थीनेकलाकेतहतविशेषअनुमतिकेलिएइसन्यायालयमेंआवेदनकिया।136 , औरवहीमंजूरकियागयाथा, औरइसलिएयहअपील। ( 1 ) एस. सी. आर. सर्वोच्चन्यायालयकीरिपोर्ट113 यहसवालअक्सरअदालतोंकेसमक्षनिर्धारणकेलिएसामनेआयाहैकिक्यारसीदपूंजीहैयाआय।विभिन्ननियमोंकोप्रश्नकेसमाधानकीकुंजीप्रस्तुतकरनेकेरूपमेंप्रतिपादितकियागयाहै, लेकिनअक्सर 1958 -आयआयुक्तकरवी। उच्चतमअधिकारियोंद्वारादेखागयाहैकिजयरामवालजीद्वाराकिसीभीएकपरीक्षणकोअचूकयाकिसीएकपरीक्षणकेरूपमेंनिर्धारितकरनासंभवनहींहै वेंकटटरामाअय्यरजे। प्रश्नकेनिर्धारणमेंनिर्णायकमानदंड, जोअंततःविशेषमामलेकेतथ्योंपरनिर्भरहोनाचाहिए, औरप्रश्नपरअसरडालनेवालेअधिकारीकेवलउनमामलोंकोइंगितकरनेकेरूपमेंमूल्यवानहैंजिन्हेंनिर्णयतकपहुंचनेमेंध्यानमेंरखाजानाचाहिए।वैनडेनबर्गसलिमिटेडबनाम।क्लार्क(1)।हालाँकि, इसकायहकहनानहींहैकिसवालएकतथ्यहै, क्योंकिजैसाकिडेविस(एच. एम. टैक्सइंस्पेक्टटर) बनाममेंदेखागयाहै।दशेलकंपनीऑफचाइनालिमिटेड(2) " येपूंजीऔरआय, व्यापारिकलाभयाव्यापारनहोनेकेबीचकेप्रश्नहैं।लाभ, ऐसेप्रश्नहैंजो, हालांकिवेप्रत्येकमामलेकेपक्षीयतथ्योंपरबहुतहदतकसंदेहनहींकरसकतेहैं, उनतथ्योंसेकानूनकानिष्कर्षनिकालनाशामिलकरतेहैं।रस्टटप्रूफमेटटलविंडोकंपनी, लिमिटेडबनाममेंलॉर्डग्रीन, एम. आर. केअवलोकनभीदेखें।अंतर्देशीयराजस्वआयुक्त(3)।ऐसाहोनेपर, हमेंपहलेवर्तमानमामलेकेतथ्योंकीजांचकरनीचाहिए, औरफिरविचारकरनाचाहिएकिक्याउनतथ्योंपरऔरलागूसिद्धांतोंकेआलोकमें, 1 रु.2,50,000 प्रत्यर्थीद्वाराप्राप्तपूंजीयाराजस्वरसीदहोतीहै। प्रत्यर्थीएकव्यापारीहैजिसकीव्यापारिकगतिविधियाँकईमाध्यमोंसेचलतीहैं।वहएकरेलवेठेकेदारहै; वहएकचावलमिलऔरएकचीनीकारखानाचलाताहै; वहचूनापत्थरऔरडोलोमाइटटकाआपूर्तिकर्ताहै।हमइनकार्यवाहियोंमेंइनव्यवसायोंमेंसेअंतिमकेसाथचिंतितहैं।प्रत्यर्थीनेपाराघाटटमेंएकखदानकाअधिग्रहणकियाथाऔरवहस्वयंउसपरकामकररहाथाऔरउसमेंसेनिकालेगएचूनापत्थरकोबंगालआयरनकंपनीलिमिटेडनामकएककंपनीकोबेचरहाथा।5 जनवरी, 1935 कोउक्तकंपनीने(1) [1935] ए. सी. 431 सेचूनापत्थरऔरडोलोमाइटटकीअपनीसभीआवश्यकताओंकीखरीदकेलिएप्रत्यर्थीकेसाथएकसमझौताकिया।( 2 ) ( 1951 ) 32 टैक्सकैस।133 , 151 . 15 114 सर्वोच्चन्यायालयकीरिपोर्ट[1959] पूरक। Case: COMMISSIONER OF INCOME-TAX, NAGPUR versus RAI BAHADUR JAIRAM VALJI AND OTHERS [[1959] SUPP. 1 S.C.R. 110] (1959) Section: CONCLUSION Held, that the contract of May 9, 1940, was entered into by the respondent in the ordinary course of his business and that the sum of Rs. 2,50,000/- which was paid as solatium for the cancellation of that contract, was a revenue receipt and was chargeable to tax. There is a distinction between a contract entered into in the usual course of business and an agency contract. While it may be possible to regard the latter as merely a framework for doing business, the former constitutes the business itself. and, therefore, compensation paid for the termination of the former kind of contract must be held to be revenue, whereas compensation paid for the termination of the latter might be capital in character. It would make no difference in the character of the receipt, when it is compensation for cancellation of a trading contract, whether its performance is to consist of a single act or a series of acts spread over a period. Case law reviewed. Van Den Berghs Ltd. v. Clark, [1935] A.C. 431, distinguished. CIVIL APPELLATE JURISDICTION: Civil Appeal No. 109 of 1954. Appeal by special leave from the judgment and order dated April 21, 1950, of the former Nagpur High Court in Misc. Civil Case No. 135 of 1949. 112 SUPREME COURT REPOH1'S [1959] Supp. R. Gmiapathy Iyer and R. H. Dhebar, for t.he appe1- Co1nmissioner of ]ant. f,,come-Tax v. the respondents. ]airum Valji Radhavinod Pal, J, M. Thakar and I. N. Shroff, for the respondents. 1958. October 7. The Judgment of the Court was delivered by VENKATARAMA AIYAR J.-This is an appeal against the judgment of the High Conrt of Nagpur in a referpnce under s. 66(1) of the Indian Income-tax Act (XI of 1922), hereinafter referred to as the Act, and the point that is raised for our determination is whether a sum of Its. 2,50,000 received by the respon-dent on Angust 2, 1941, is chargeable to income.tax. While, according to the Department, the amount in question is a revenue receipt liable to be included in the chargeable income, according to the respondent it is capital receipt not liable to tax. The Appellate Tribunal held, affirming the decisions of the Jncome-tax Officer and the Appellate Assistant Commissioner, that the amount in question was a trading receipt, and was income liable to be assessed. On the application of the respondent, it referred the following question for the decision of the High Court: V enkalar,1ma Aiyar } . " Whether in the circumstances of the case the sum of Rs. 2,50,000 rec'Pived by the assessee as damages or compensation for the premature termina• tion oft he contract of 9th May UJ40 is income assess-able within the meaning of the Indian Income-tax Act." The reference was heard by Sen and Deo, JJ., who held, disagreeing with the Tribunal, that the sum of Rs. 2,50,000 was a capital receipt in the hands of the respondent, and that it was not liable to be taxed. The appellant then filed an application under s. 66(A)(2) of the Act for a certificate to appeal to this Court, but that was dismissed, the leamed judges holding that the law on the subject was well settled. The appellant thereafter applied to this Court for specialleave under Art. 136, and the same was granted, and hence this appeal. (I) S.C.R. SUPREME COURT REPORTS Case: COMMISSIONER OF INCOME-TAX, NAGPUR versus RAI BAHADUR JAIRAM VALJI AND OTHERS [[1959] SUPP. 1 S.C.R. 110] (1959) (I) S.C.R. SUPREME COURT REPORTS The question whether a receipt is capital or income has frequently come up for determination before the courts. Various rules have been enunciated as furnish-ing a key to the solution of the question, but as often observed by the highest authorities, it is not possible to lay down any single test as infallible or any single criterion as decisive in the determination of the ques-tion, which must ultimately depend on the facts of the particular case, and the authorities bearing on the q11estion are valuable only as indicating the matters that have to be taken into account in reaching a deci-sion. Vide Van Den Berghs Ltd. v. Clark (1). That, however, is not to say that the question is one of fact, for, a.s observed in Davies (H. M. Inspector of 'l'axes) v. The Shell Company of China Ltd. ([2]) "these questions between capital and income, trading profit or no tracl-ing profit, are questions which, though they may depend no doubt to a very great extent on the parti-cular facts of each case, do involve a conclusion of law to be drawn from those facts". Vide also the observa-tions of Lord Greene, M. R. in Rustproof Metal Window Co.,. Ltd. v. Commissioners of Inland Revenue ([3]). That being so, we must first examine the facts of the present case, and then consider whether on those facts and in the light of the applicable principles, the sum of Rs. 2,50,000 received by the respondent is a capital or a revenue receipt. The respondent is a businessman whose trading activities run in several channels. He is a railway contractor ; he runs a rice mill and a sugar factory; he is ·a supplier of limestone and dolomite. It is with the last of these businesses that we are concerned in these proceedings. The respondent had acquired a quarry at Paraghat and had been himself working it and selling limestone quarried out of it to, among others, a Company called the Bengal Iron Company, Ltd. On January 5, 1935, the said Company entered into an agreement with the respondent for the purchase of all its requirements of limestone and dolomite from (1) [1935] A.C. 431. (2) (1951) 32 Tax Cas. 133. 151. (3) (1947) 29 Tax Cas. 243, 266. Cotnniissio11er of Income-Tax v. ]airam Valji Venkatarama 4iyar ]. 114 SUPREME COURT REPORTS [1959] Supp. the latter at rates specified therein, and these rates " were subsequently modified by another agreement b h · d d D b 2 93 I etween t e parties at_e . ec~m er 1, l 5. n 1936 the Company went mto hqmdation, and its assets and liabilities were taken over by another Company called the Indian Iron and Steel C9mpany, Ltd. under a scheme of amalgamation dated September 8, 1936. This Company continued to purchase limestone and dolomite from the respondent for some time, but later on, finding that the rates were uneconomic owing to increase in the railway freight, it dec:ided to purchase its requirements from other sources, and by notice dated May 29, 1939, informed the respondent accord-ingly. Thereupon, the respondent filed Suit No. 211 of 1940 in the High Court of Calcutta for specific performance of the contract dated January 5, 1935, as modified on December 21, 1935, and for an injunction restraining the Indian Iron aud Steel Company, Ltd. from purchasing limestone or dolomite from any person other than the plaintiff, and on March 13, 1940, an injunction in those terms was actually issued against the Company. r958 Commissioner o, . . b Income-Tax v. Jafram Valji Venkata.ama Aiyar f. Case: COMMISSIONER OF INCOME-TAX, NAGPUR versus RAI BAHADUR JAIRAM VALJI AND OTHERS [[1959] SUPP. 1 S.C.R. 110] (1959) 15 114 सर्वोच्चन्यायालयकीरिपोर्ट[1959] पूरक। 1958 बादमेंउसमेंनिर्दिष्टदरोंपर, औरइनदरोंकोबादमें21 दिसंबर, 1935 कोपक्षोंकेबीचएकअन्यसमझौतेद्वारासंशोधितकियागयाथा।1936 मेंकंपनीपरिसमापनमेंचलीगई, औरइसकीपरिसंपत्तियोंऔरदेनदारियोंको8 सितंबर, 1936 कीसमामेलनयोजनाकेतहतइंडियनआयरनएंडस्टीलकंपनीलिमिटेडनामकएकअन्यकंपनीद्वारालेलियागया।इसकंपनीनेकुछसमयकेलिएप्रत्यर्थीसेचूनापत्थरऔरडोलोमाइटटकीखरीदजारीरखी, लेकिनबादमेंयहपातेहुएकिरेलवेमालढुलाईमेंवृद्धिकेकारणदरेंआर्थिकनहींथीं, उसनेअन्यस्रोतोंसेअपनीआवश्यकताओंकोखरीदनेकाफैसलाकियाऔर29 मई, 1939 कीसूचनाद्वाराप्रत्यर्थीकोस्पष्टरूपसेसूचितकिया।तत्पश्चात, प्रत्यर्थीनेविशिष्टउद्देश्योंके1940 211 लिएकलकत्ताउच्चन्यायालयमेंकामुकदमासंख्यादायरकिया। केआयुक्त -आयटटक्स जयरामवालजी वेंकटटरामा अय्यरजे। 5 जनवरी, 1935 केअनुबंधकानिष्पादन, जैसाकि21 दिसंबर, 1935 कोसंशोधितकियागयाथा, औरइंडियनआयरनएंडस्टीलकंपनीलिमिटेडकोकिसीभीकंपनीसेचूनापत्थरयाडोलोमाइटटखरीदनेसेरोकनेवालेनिषेधाज्ञाकेलिए। वादीकेअलावाअन्यव्यक्ति, और13 मार्च, 1940 को, उनशर्तोंमेंएकनिषेधाज्ञावास्तवमेंजारीकीगईथी कंपनीकेखिलाफ। इसकेबाद, कंपनीऔरप्रत्यर्थीनेअपनेबीचसभीविवादोंकेनिपटारेकेलिएएकसमझौताकियाऔरइसे9 मई, 1940 केएकदस्तावेजमेंशामिलकियागया।चूंकियहवहदस्तावेज़हैजोरुपयेकेभुगतानकास्रोतबनाताहै।2,50,000 प्रत्यर्थीकेलिए, इसकीशर्तोंकोकुछविस्तारसेसंदर्भितकरनाआवश्यकहै।इससमझौतेकेतहत, प्रत्यर्थीको25 सालकीअवधिकेलिएगंगापुरनामकस्थानपरकंपनीकीएकखदानकाकामकरनाथाऔरवहांसेखननकिएगएचूनापत्थरकीआपूर्तिउसकीआवश्यकताओंकेअनुसारकंपनीकोकरनीथी।यहकहाजानाचाहिएकियहखदानकुल्टीकेपासस्थितथी, जहांकंपनीअपनागलानेकाकामकरतीथी, औरजाहिरहैकिअगरइसकेलिएआवश्यकचूनापत्थरगणपुरसेप्राप्तकियाजासकताहैतोयहकामकरनेकेखर्चकोकमकरदेगा।हालाँकि, गंगापुररेलवेस्टेशनपरमालकेपरिवहनकेलिएकोईसुविधानहींथी। खदान, औरइसलिएयहव्यवस्थाकीगईकिअधिकारियोंकोगंगापुरमेंएकसाइडिंगकेनिर्माणकीअनुमतिकेलिएस्थानांतरितकियाजानाचाहिए, औरइसकीलागतवहनकीजानीचाहिए(1) एस. सी. आर. सर्वोच्चन्यायालयकीरिपोर्ट 115 1958 18 कंपनीद्वारा।यहउम्मीदकीजारहीथीकिपक्षलेनेकेकामकोपूराकरनेमेंमहीनेलगेंगेऔरइसबातपरसहमतिबनीकिउसअवधिकेदौरानप्रतिवादीकोरु।4,000 हरमहीने।इसकेबाद, प्रत्यर्थीकोरुपयेकीदरसेभुगतानकियाजानाथा।2-9-0 जयरामवालजीप्रतिटटनचूनापत्थरजोइसमेंभराजासकताहै आयकरआयुक्त .वी कंपनीद्वारारेलवेवैगनोंकीव्यवस्थाकीजाएगी।खदानकाकामपूरीतरहसेप्रतिवादीकेहाथोंमेंछोड़दियागयाथा।वहवहथाजो ! उत्खननकेलिएआवश्यकमशीनरीऔरउपकरणखरीदें।उन्हेंअपनेस्वयंकेश्रमिकोंकोनियुक्तकरनाथाऔरसभीआवश्यकअधिसंरचनाएँस्थापितकरनीथीं।खदानसेचूनापत्थरउठाएजानेकेबाद, उसेइसेसाफकरनाथाऔरइसेव्यापारयोग्यबनानाथा, औरउसकेबादइसेवैगनमेंलोडकियाजानाथा।समझौतेमेंदोखंडहैंजिनकासंदर्भदियाजासकताहै।सी. एल.केतहत।6 , प्रत्यर्थी"कंपनीकोऐसीअन्यमात्रामेंचूनापत्थरकीआपूर्तिकरनेकेलिएसहमतहुआ, यदिकोईहो, तोकंपनीकुल्टीकेअलावाआदेशदेसकतीहै।"समझौतेकेखंड13 मेंआदेशदियागयाथाकिप्रत्यर्थीसमझौतेकेउप-आग्रहकेदौरान,20 कंपनीकीखदानसेमीलकेक्षेत्रकेभीतरकिसीभीखदानकेकामकेलिएकिसीअन्यअनुबंधव्यवसायमेंसंलग्ननहींहोगा, लेकिनयहइसपरंतुककेअधीनथाकिप्रत्यर्थीउससेसंबंधितऔरउसकेद्वाराआयोजितकिसीभीखदानमेंकामकरनेकेलिएस्वतंत्रथा। 1 वर्णनकोजारीरखनेकेलिए, रेलवेअधिकारीगंगापुरमेंएकसाइडिंगऔरखदानकेलिएएकलूपलाइनकेनिर्माणकेलिएसहमतनहींथे, औरइसलिएपक्षोंद्वाराविचारकिएगएतरीकेसेसमझौतेकोपूराकरनाअसंभवहोगया।इसस्थितिमें किपक्षकारएकसाथआएऔर2 अगस्त, 1941 कोएकनयासमझौताकियाऔरइसीकेसाथहमइसअपीलमेंसीधेतौरपरचिंतितहैं।सहमतिपत्रमेंकहागयाहैकिकंपनीने9 मई, 1940 केअनुबंधमेंनिर्दिष्टअपनीखदानोंकोचलानेमेंकठिनाईमहसूसकरतेहुएकुछशर्तोंपरउक्तअनुबंधकोसमाप्तकरनेकाप्रस्तावरखाऔरउसपरसहमतिबनी।समझौतेकीशर्तेंहैं(1) किकंपनीको"रु।2,50,000 रुपयेकीमासिककिश्तोंकेअलावाविक्रेताओंकोमुआवजेकेरूपमें।4,000 " , 9मई, 1940 केअनुबंधकेतहतअवैतनिकरहना; (2) 116 सर्वोच्चन्यायालयकीरिपोर्ट[1959] पूरक। 1958 किकंपनीकोसभीचूनापत्थरलेलेनाचाहिए कुल्टीमेंइसकीभट्टियोंकेलिएप्रतिवादीसेपूछताछकीगई नियमऔरशर्तोंपर12 सालकीअवधिकेलिएआयुक्तनेआयनिर्धारितकी-एकसमझौतेमेंतार; (3) किप्रत्यर्थीको .वी जयरामवालजीकोकंपनीकालोडिंगठेकेदारनियुक्तकियाजाए। कीअवधिकेलिएमनोहरपुरमेंसभीलौहअयस्ककोलोडकरनेकेलिए वेंकटटरामा1 जनवरी, 1942 से12 साल, एकअलगसमझौतेमेंनिर्दिष्टशर्तोंऔरअनुबंधोंपर।इससमझौतेकेअनुसार, प्रतिवादीकोएकराशिकाभुगतानकियागयाथा रु.2,50,000 औरदोसमझौतोंसेसंबंधित चूनापत्थरकीखरीदऔरलौहअयस्ककीलोडिंग मनोहरपुरकोभीफांसीदीगई।देयशेषराशि रुपयेकेमासिकभुगतानकाखाता।4,000 मेंप्रदानकियागया Case: COMMISSIONER OF INCOME-TAX, NAGPUR versus RAI BAHADUR JAIRAM VALJI AND OTHERS [[1959] SUPP. 1 S.C.R. 110] (1959) नियमऔरशर्तोंपर12 सालकीअवधिकेलिएआयुक्तनेआयनिर्धारितकी-एकसमझौतेमेंतार; (3) किप्रत्यर्थीको .वी जयरामवालजीकोकंपनीकालोडिंगठेकेदारनियुक्तकियाजाए। कीअवधिकेलिएमनोहरपुरमेंसभीलौहअयस्ककोलोडकरनेकेलिए वेंकटटरामा1 जनवरी, 1942 से12 साल, एकअलगसमझौतेमेंनिर्दिष्टशर्तोंऔरअनुबंधोंपर।इससमझौतेकेअनुसार, प्रतिवादीकोएकराशिकाभुगतानकियागयाथा रु.2,50,000 औरदोसमझौतोंसेसंबंधित चूनापत्थरकीखरीदऔरलौहअयस्ककीलोडिंग मनोहरपुरकोभीफांसीदीगई।देयशेषराशि रुपयेकेमासिकभुगतानकाखाता।4,000 मेंप्रदानकियागया 9 मई, 1940 केसमझौतेकाभीविधिवतभुगतानकियागयाथा।अब, इनतथ्योंपर, सवालयहहैकिक्यारु।2,50,000 प्रत्यर्थीद्वाराप्राप्तपूंजीयाराजस्वथा। लागूहोनेवालेसिद्धांतोंपरचर्चाकरनेसेपहले ऊपरबताएगएतथ्योंसेनिपटटनाआवश्यकहै कीओरसेमामलेकेतथ्योंपरविवादउठायागयाउत्तरदाता।डॉ. राधाबिनोदेपाल, जोउपस्थितहुएउसकेलिए, तर्कदियाकिपूराकरनेकेउद्देश्यसे5 जनवरी, 1935 केसमझौतेमें, प्रत्यर्थीनेपूंजीगतप्रकृतिकेकार्योंकोनिष्पादितकियाथाजैसेकिआवासों, आवासोंऔरइसीतरहकानिर्माण, औरथा4 रुपयेसेअधिकखर्चकिएगए।उसपरलाखोंखाता, कियहसबफेंकनापड़ाजबपाराघाटटमेंखदानकोछोड़नापड़ा, औरराशिसेरु.2,50,000 वास्तवमेंएकप्रतिपूर्तिथीऊपरकेरूपमेंउसकेद्वाराखर्चकीगईराशिऔरइसलिएएकपूँजीरसीद।यदितथ्योंद्वाराबताएगएथेप्रतिवादी, कानूनमेंस्थितिकोईसंदेहकेरूपमेंहोगा?उसकेलिएविरोधकिया।लेकिनक्यायेतथ्यहैं?आय-स्थापितकरकेसमक्षअपनेबयानमेंअधिकारी, प्रत्यर्थीनेकेवलयहकहाकिराशिविचाराधीनअवधिकेलिएविचारकेरूपमेंभुगतानकियागयाथा1940 केनहीं, बल्कि1935 केअनुबंधकाउल्लेखऔरन्यायाधिकरणद्वारायहइंगितकियागयाहैकिप्रत्यर्थीनेऐसाकियाथा। इसदावेकीपुष्टिभीनहींकरतेहैं।वहाँकोईनहींथा। आरोपहैकिपूंजीगतव्मेंकियागयाथा 1935 केअनुबंधकानिष्पादन, औरकि प्रश्नगतराशिकाभुगतानइसकेलिएमुआवजेकेरूपमेंकियागयाथा; (1) एस. सी. आर. सर्वोच्चन्यायालयकीरिपोर्ट 117 नहीइससवालकाकोईसबूतहै।विलेखमें, जबयहयादकियाजाताहैकिपाराघाटटपरखदानकोअनुबंधकीतारीखसेपहलेछोड़दियागयाथा 1958 -आयआयुक्तजयरामवालजीवेंकटटरामाअय्यरजे। 9 मई, 1940 कोउसअनुबंधकोरद्दकरनेकेलिएमुआवजेकेरूपमेंभुगतानकीगईकिसीभीराशिकाउसखदानकेसंदर्भमेंकिएगएखर्चोंसेकोईसंबंधकैसेहोसकताहै, इसकीकल्पनाकरनामुश्किलहै।हमेंयहमानलेनाचाहिएकिरुपयेकीराशि।2,50,000 फेंकेगएखर्चोंकेमुआवजेकेरूपमेंभुगताननहींकियागयाथाऔरउसखातेमेंइसेपूंजीरसीदनहींमानाजासकताहै।अब, अपीलार्थीकीओरसेतर्कहै कि9 मई, 1940 काअनुबंधप्रत्यर्थीद्वाराअपनेसामान्यपाठ्यक्रममेंकियागयाथा। व्यवसाय, किरुपयेकीराशि।2,50,000 उसअनुबंधकोरद्दकरनेकेलिएसहायताकेरूपमेंस्वीकारकियागयाथा, किभुगतानवास्तवमेंउसलाभकाप्रतिनिधित्वकरताहैजोप्रतिवादीकरसकताथा, यदिअनुबंधकियागयाथा, औरइसलिएयहएकराजस्वरसीदहै; औरइसविवादकेसमर्थनमेंकईअधिकारियोंकोउद्धृतकियागयाथा।अबहमउनमेंसेअधिकमहत्वपूर्णकाउल्लेखकरेंगे।लघुब्रदर्समें।लिमिटेडवी.अंतर्देशीयराजस्वआयुक्त(1), तथ्ययहथेकिअपीलकर्ताकंपनीजोचलरहीथी जहाजनिर्माताओंकेरूपमेंव्यवसायनेदोस्टीमरबनानेकेलिएएकअनुबंधकियाथाऔरबादमें, £ 1,00,000 कीराशिकीप्राप्तिपरइसेरद्दकरनेकेलिएसहमतहुए।सवालयहथाकिक्यायहपूंजीथीयाराजस्वरसीद।रॉलेटट, जे. नेअभिनिर्धारितकियाकियहकेवलएकचालूसंस्थामेंएकरसीदथीऔरराजस्वथी, औरइसकीपुष्टिअपीलन्यायालय, लॉर्डहैनवर्थ, एम. आर. द्वाराकीगईथी, जिसमेंकहागयाथाकिउनकेसमक्षऐसाअनुबंधसामान्यव्यवसायमेंशर्तोंपरबदलायासमाप्तकियाजानाउत्तरदायीथाऔरअनुबंधकेतहतअधिकारोंकेनिपटारेमें£ 1,00,000 काभुगतानव्यवसायकेसामान्यपाठ्यक्रममेंअपीलकर्ताओंऔरउनकेग्राहकोंकेबीचकियागयाएकसमायोजनथा।सरगैंटट, एल. जे. औरलॉरेंस, एल. जे. केनिर्णयमेंभीइसीतरहकीटिप्पणियांपाईजातीहैं।वर्तमानमामलेकेतथ्योंपरयहध्यानदियाजासकताहैकि5 जनवरी, 1935 केसमझौतेको21 दिसंबर, 1935 कोसंशोधितकियागयाथाऔरइसकेसंदर्भमेंउत्पन्नहुएविवाद। ( 1 ) ( 1927 ) 12 टैक्सकैस।955 . : 118 सर्वोच्चन्यायालयकीरिपोर्ट[1959] पूरक। 1958 9 मई, 1940 केसमझौतेद्वारातयकियागयाथा, जो आयुक्तको, बदलेमें, 2 अगस्त, आयकर1941 केसमझौतेद्वाराप्रतिस्थापितकियागयाथा।9 मई, 1940 औरअगस्तकेसमझौते 2 , 1941 , इसलिएउचितरूपसेसमायोजितकहाजासकताहै वी, जयरामवालजीव्यवसायकेसामान्यपाठ्यक्रममेंकिएगएविचार। .अंतर्देशीयराजस्वआयुक्तबनाम।द वेंकटटरामा नॉर्थफ्लीटटकोलएंडबैलास्टटकं. लिमिटेड(1), प्रतिवादी अय्यरजे। कंपनीजोएकचाकखदानकीमालिकथी एकखरीदारकेसाथएकअनुबंधमेंप्रवेशकिया दसकीअवधिकेलिएचाककीनिश्चितमात्राकीआपूर्ति वर्षोंसे।कुछसमयबाद, खरीदारबननाचाहताथा अनुबंधसेमुक्तकरदियागया, औरप्रतिवादीसहमतहोगया £3,000 कीप्राप्तिपरइसकीसमाप्तितक।केलिएबिंदु निर्णययहथाकिवहपूंजीथीयाराजस्व। Case: COMMISSIONER OF INCOME-TAX, NAGPUR versus RAI BAHADUR JAIRAM VALJI AND OTHERS [[1959] SUPP. 1 S.C.R. 110] (1959) r958 Commissioner o, . . b Income-Tax v. Jafram Valji Venkata.ama Aiyar f. Thereafter, the Company and the respondent enter-ed into an agreement in settlement of all the disputes between them, and the same was embodied in a docu-ment dated May 9, 1940. As it i~ this document that forms the source for the payment of Rs. 2,50,000 to the respondent, it is necessary to refer to the terms thereof in some detail. Under this agreement, the respondent was to work a quarry of the Company at a place called Gangapur for a period of 25 years and to supply the limestone quarried therefrom to the Com-pany according to its requirements. This quarry, it should be stated, was situated near Kulti where the Company carried on its smelting operations, aud obviously it would reduce the working expenses, if limestone required therefor could be got from Gan-gapur. There were, however, no facilities in Gangapur railway station for transporting the goods from the quarry, and so it was arranged that the authorities should be moved for permission to construct a siding at Gangapur, and that the cost thereof should be borne by the Company. It was expected that it would take z[9]ss 18 months before the siding could be completed, and Comniissioner of it was agreed that during that period the respondent Income-1·ax was to be paid Rs. 4,000 every month. Thereafter, v. the respondent was to be paid at the rate of Rs. 2-9-0 Jairam Valji per ton of limestone which might be loaded in the Venkatarama railway waggons to be arranged for by the Company. Aiyar J. The working of the quarry was left entirely in the hands of the respondent. It was he that was to purchase the machinery and the appliances necessary for quarrying. He was to engage his own workmen and put up all the requisite superstructures. After the limestone was raised from the quarry, he was to get it cleaned and rendered merchantable, and it was thereafter to be loaded in the wagon. There are two clauses in the agreement to which reference might be made. Under cl. 6, the respondent agreed "to supply to the Company such other quantities of limestone, if any, as the Company may order besides Kulti require-ments ". Clause 13 of the agreement enjoined that the respondent was not to engage, during the sub-sistence of the agreement., in any other contract busi-ness for the working of any quarry within an area of 20 miles from the Company's quarry, but this was subject to the proviso that the respondent was free to work any quarry belonging to and held by him. To continue the narration, the railway authorities did not agree to the construction at Gangapur of a siding and a loopline to the quarry, and so it became impossible to carry out the agreement in the manner contemplated by the parties. It is in this situation that the parties came together, and on August 2, 1941, entered into a new agreement and it is with this that we are directly concerned in this appeal. The agree-ment recites that the Company feeling difficulty in working their mines referred to in the contract dated May 9, 1940, made a proposal for termination of the said contract on certain terms, and that was agreed to. The terms of the agreement are (1) that the Company should pay "Rs. 2,50,000 to the sellers as solatium besides the monthly instalments of Rs. 4,000 ",remain. mg unpaid under the contract dated May 9, 1940 ; (2) 116 SUPREME COURT REPORTS [1959] Supp. Case: COMMISSIONER OF INCOME-TAX, NAGPUR versus RAI BAHADUR JAIRAM VALJI AND OTHERS [[1959] SUPP. 1 S.C.R. 110] (1959) 2 , 1941 , इसलिएउचितरूपसेसमायोजितकहाजासकताहै वी, जयरामवालजीव्यवसायकेसामान्यपाठ्यक्रममेंकिएगएविचार। .अंतर्देशीयराजस्वआयुक्तबनाम।द वेंकटटरामा नॉर्थफ्लीटटकोलएंडबैलास्टटकं. लिमिटेड(1), प्रतिवादी अय्यरजे। कंपनीजोएकचाकखदानकीमालिकथी एकखरीदारकेसाथएकअनुबंधमेंप्रवेशकिया दसकीअवधिकेलिएचाककीनिश्चितमात्राकीआपूर्ति वर्षोंसे।कुछसमयबाद, खरीदारबननाचाहताथा अनुबंधसेमुक्तकरदियागया, औरप्रतिवादीसहमतहोगया £3,000 कीप्राप्तिपरइसकीसमाप्तितक।केलिएबिंदु निर्णययहथाकिवहपूंजीथीयाराजस्व। रसीद।यहमानतेहुएकियहबादवालाथा, रॉलेटट, जे।देखागयाःअगरअनुबंधउनराशियोंकोआगेबढ़ादेताहरसालमुनाफाहोताऔरअबउन्हेंएककम्यूटेशनद्वारादर्शायाजाताहै, जहाँतककिसंबंधितहै, बिंदुद्वारानिष्कर्षनिकालागयाप्रतीतहोताहैशॉर्टकामामला(2) "।निर्धारितीकीओरसेआग्रहकीगईदलीलोंमेंसेएकयहथाकिअनुबंधएकअवधिकेलिएएकपूंजीथीपरिसंपत्ति, किबादकेसमझौतेकाप्रभाव3, 000 पाउंडकेभुगतानपरइसेसमाप्तकरनासारमेंथा।एककेलिएअनुबंधकेअप्रचलितहिस्सेकोनिर्दिष्टकरनाविचार, औरयहकियहएकपूंजीरसीदहोगीजॉनस्मिथएंडसनबनाममेंनिर्धारितसिद्धांतपर।मूर(3)।इसविवादकोदूरकरतेहुए, रॉलेटट, जे।देखागयाः " इनअनुबंधोंकोबेचानहींजारहाहै।वेहैं।वास्तवमेंइसउद्देश्यकेलिएबुझायाभीनहींजारहाहै।क्याहोरहाहैकिउनकेतहतलाभहैलियाजारहाहै; केसंबंधमेंकुछलियाजारहाहैउनकालाभ।यहीस्थितिहै।यहराशिअनुबंधोंपरकंपनीकेलाभकाप्रतिनिधित्वकरताहै,उन्हेंअनुबंधोंकेरूपमेंमानाजाताहैजोकाल्पनिकरूपसेहैंकमायाहैयालाभकमानेजारहेहैं।औरजॉनस्मिथएंडसनबनाममेंनिर्णय।मूर(3),प्रतिष्ठितकियागया।( 1 ) ( 1927 ) 12 टैक्सकैस।1102 .( 2 ) ( 1927 ) 12 टैक्सकैस।955 .( 3 ) ( 1921 ) 12 टैक्सकैस।266 . सी(1) एस. सी. आर. सर्वोच्चन्यायालयकीरिपोर्ट 1958 जॉनस्मिथएंडसनवी.मूर(1), यहकहाजासकताहै -किनिष्पादकोंनेआयकरआयुक्तकेलिएवसीयतकर्ताकेबेटेकोकोयलेकीआपूर्तिकेलिएकुछबकायाअनुबंधबेचेपक्षांतर, औरयहअभिनिर्धारितकियागयाकिद्वाराकियागयाभुगतान .वी अनुबंधोंकीखरीदकेलिएबेटाअपनेजयरामवाल्जीकेहाथोंमेंएकपूंजीगतखर्चथा।भुगताननहींकियागया एकपक्षद्वारादूसरेकेसाथअनुबंधरद्दकरनेमें वेंकटटरामा अय्यरजे। समझौतेकालेकिनउसकेतहतअपनेअधिकारोंकेअसाइनमेंटटकेलिएएकपक्षकोअनुबंधकेलिएएकअजनबीद्वारा।जेसी.रॉबिन्सनएंडसंसबनाम।द अंतर्देशीयराजस्वआयुक्त(2), अपीलार्थीनेधागेकीबिक्रीकेलिएदोअनुबंधकिएथे।द. खरीदारनेअनुबंधोंकोरद्दकरदियाऔरदावोंकेनिपटारेमें£12,500 काभुगतानकिया।अपीलार्थीकातर्कथाकियहभुगतानलेन-देननहींथा।उसकेव्यापारसेहोनेवालीप्राप्तियालाभ।इसतर्ककोअस्वीकारकरतेहुए, जे. रॉलेटटनेकहाः " मुझेऐसालगताहैकिइसकाकोईकारणनहींहै अनुबंधकेउल्लंघनकेलिएउससंबंधमेंप्राप्तराशिवहराशिनहींहैजोउसव्यवसायकीप्राप्तियोंकाहिस्साहैजिसकेलिएवहअनुबंधकियागयाथा। उपरोक्तनिर्णयोंकेआलोकमेंवर्तमानमामलेकेतथ्योंकीजांचकरतेहुए, विचारकरनेयोग्यप्रश्नयहहैकिक्या9 मई, 1940 काअनुबंधप्रत्यर्थीद्वाराअपनीव्यस्तताकेसामान्यक्रममेंकियागयाथा।यदिऐसाथा, तोअनुबंधकीअवधिकेलिएभुगतानकीगईराशिकोएकव्यापारमानाजानाचाहिए। रसीद।यहपर्याप्तरूपसेस्थापितहैकिप्रतिवादीचूनापत्थरकेउत्पादनऔरआपूर्तिमेंव्यवसायकररहाहै।रिकॉर्डसेपताचलताहैकिवहलगभग1920 सेबंगालआयरनकंपनीलिमिटेडकोचूनापत्थरऔरडोलोमाइटटकीआपूर्तिकररहेथेऔर1935 4 1940 . 211 केअनुबंधकेवलउसव्यवसायकोआगेबढ़ानेकेलिएकिएगएथे।पैरादेखें।केवादसंमेंपहलेसेहीनिर्दिष्टवादमें।9 मई, 1940 काअनुबंधउनअनुबंधोंकेतहतअधिकारोंकेनिपटारेकेलिएकियागयाथा।यहध्यानदियाजानाचाहिएकि2 अगस्त, 1941 केसमझौतेकेतहत, जिसकेतहतउन्हेंरु।2,50,000 , उन्होंनेचूनापत्थरकीआपूर्तिकेलिएएकअनुबंधभीहासिलकिया 12 वर्षकीअवधि।इनतथ्योंपर, (1) (1921) 12 करकैसबनानाअसंभवहै।266 .( 2 ) ( 1929 ) 12 टैक्सकैस।1241 . 120 सर्वोच्चन्यायालयकीरिपोर्ट[1959] पूरक।1958 इसकेअलावाकिसीभीनिष्कर्षपरपहुँचेंकिविचाराधीनअनुबंधप्रत्यर्थीद्वाराअपनेव्यवसायकेसामान्यपाठ्यक्रमकेआयुक्तद्वाराकियागयाथा।नीचेदिएगएन्यायालयमेंविद्वानन्यायाधीशआय-तासकामाननाहैकिनिर्धारितीजयरामवाल्जीकाव्यापारीनहींथा, हालांकिवहचूनापत्थरकाआपूर्तिकर्ताथा।यहहमेंएकअलगवेंकटटरामाभावकेबिनाएकअंतरप्रतीतहोताहै।इसकेअलावा, न्यायाधीशअय्यरकेवर्तमानउद्देश्यकेलिएयहपूरीतरहसेमहत्वहीनहोगाकिक्याप्रतिवादीचूनापत्थरकाविक्रेताथायाआपूर्तिकर्ता, क्योंकिदोनोंकेविचारसे, वहव्यवसायऔरविचाराधीनअनुबंधकोजारीरखेगा। उसव्यवसायकेसंचालनमेंप्रवेशकियाजाएगा।हमेंयहभीदेखनाचाहिएकियहकथनकिप्रतिवादीकेवलएकआपूर्तिकर्ताथा, लेकिनचूनापत्थरकाव्यापारीनहींथा, सहीनहींलगताहै। तथ्योंपरसटीक।सी. एल. केतहत।13 9 मई, 1940 केसमझौतेकेअनुसार, प्रत्यर्थीकोअपनीखुदकीअन्यखदानोंमेंकामकरनेकाअधिकारथा, औरसाक्ष्यसेपताचलताहैकिउसनेचूनापत्थरकीआपूर्तिकीथी। अन्यखरीदार। निम्नलिखितन्यायालयकेनिर्णयकेसमर्थनमें, Case: COMMISSIONER OF INCOME-TAX, NAGPUR versus RAI BAHADUR JAIRAM VALJI AND OTHERS [[1959] SUPP. 1 S.C.R. 110] (1959) Section: FACTS 116 SUPREME COURT REPORTS [1959] Supp. that the Company should take all the limestone re-quired for its furnaces "'t Kulti from the respondent Com"'i"iln&ome-Tax [0]"" of for a period of 12 .J vears on terms and conditions snt v. out in an agreement; (3) that the respondent was to J•iram Valji be appointed the loading contractors of the Company for loading all iron ore at Monoharpore for a period of Yenllalarama 12 years from January 1, 1942, on the terms and con-Aiyat ]. ditions specified in a separate agreement. Pursuant to this agreement, the respondent was paid a sum of Rs. 2,50,000 and the two agreements relating tu the purch11.se of limestone and the loading of iron ore at l\Ionoharpore were also executed. The balance due on account of monthly payment of Rs. 4,000 provided in the agreement of May 9, 1940, wa~ also duly paid. Now, on these facts, the question is whether the sum of Rs. 2,50,000 received by the respondent was capital or revenue. Before discussing the principles applicable to the facts as stated above, it is necessarv to deal with a contention raised on the facts Of the case Oil behalf of the respondent. Dr. Radha Binode Pal, who appeared for him, argued that for the purpose of carrying out the agreement dated January 5, 1935, the respondent -had executed works of a capital nature such as con-struction of quarters, tenements and the like, and had incurred expenses exceeding Rs. 4 lakhs on that account, that all this had to be thrown away when the quarry at Paraghat had to be abandoned, and the sum of Rs. 2,50,000 was really a reimbursement of the amount spent by him as above and was therefore a capital receipt. If the facts were as stated by the respondent, the position in law would no doubt be as contended for by him. But have those facts been established ? In his statement before the Income-tax Officer, the respondent merely stated that the amount in question was paid as consideration for the termina-tion of the contract of 1935 and not of 1940, and it is pointed out by the Tribunal that the respondent did not substantiate even this assertion. There was no allegation that capital expenses had been incurred in the execution of the contract of 1935, and that the amount in question was paid as compensation therefor; (I) S.C.R. SUPREME COURT REPORTS nor is there any evidence on that question. In deed, when it is remembered that the quarry at Para-ghat had been abandoned before the contract dated May 9, 1940, was entered into, it is difficult to imagine how any amount paid as compensation for the cancel-lation of that contract can have any connection with expenses incurred with reference to that quarry. \Ve m~st hold that the sum of Rs. 2,50,000 was not paid as compensation for expenses thrown away and cannot be held to be a capital receipt on that account. Case: COMMISSIONER OF INCOME-TAX, NAGPUR versus RAI BAHADUR JAIRAM VALJI AND OTHERS [[1959] SUPP. 1 S.C.R. 110] (1959) उसव्यवसायकेसंचालनमेंप्रवेशकियाजाएगा।हमेंयहभीदेखनाचाहिएकियहकथनकिप्रतिवादीकेवलएकआपूर्तिकर्ताथा, लेकिनचूनापत्थरकाव्यापारीनहींथा, सहीनहींलगताहै। तथ्योंपरसटीक।सी. एल. केतहत।13 9 मई, 1940 केसमझौतेकेअनुसार, प्रत्यर्थीकोअपनीखुदकीअन्यखदानोंमेंकामकरनेकाअधिकारथा, औरसाक्ष्यसेपताचलताहैकिउसनेचूनापत्थरकीआपूर्तिकीथी। अन्यखरीदार। निम्नलिखितन्यायालयकेनिर्णयकेसमर्थनमें, प्रत्यर्थीकेविद्वानवकीलनेनिम्नलिखितकाआग्रहकिया विवादः ( 1 ) 9 मई, 1940 काअनुबंध25 वर्षोंकीअवधिकेलिएथा, जिसमेंसे23 वर्षोंसेअधिकसमयतकसमझौताहोनाबाकीथा, औरइसलिएयहएकस्थायीचरित्र, पूंजीचरित्रकीसंपत्तिथीऔरइसकेलिएभुगतानकियागयामुआवजाथा। एकपूँजीरसीद। ( 2 ) समझौतेकावास्तविकस्वरूपयहथाकिइसनेएकऐसीव्यवस्थाकोअस्तित्वमेंलायाजोप्रतिवादीकोव्यवसायकरनेमेंसक्षमबनाएगीऔरयहस्वयंकोईव्यवसायनहींथाऔरइसतरहकेसमझौतेकीसमाप्तिकेलिएकियागयाकोईभीभुगतानएकपूंजीरसीदहै।( 3 ) अनुबंधकेअनुसारजोव्यवसायकियाजानाथावहएकविशेषचरित्रकाथा, किचूनापत्थरऔरडोलोमाइटटकेलिएकोईसामान्यबाजारनहींथा, किविचाराधीनअनुबंधव्यावहारिकरूपसेप्रतिवादीकापूराव्यवसायथाऔरउसव्यवसायकोबंदकरनेकेलिएभुगतानकियागयामुआवजाएकराजस्वरसीदनहींहोगी, बल्किएक. पूंजीगतसंपत्तिकेनसबंदीकेकारणएकपूंजीगतरसीदहोगी।डॉराधाबिनोदेपालकातर्कहैकिइसकीविशेषताएँहैं। ( 1 ) एस. सी. आर. सर्वोच्चन्यायालयकीरिपोर्ट 121 1958 ऊपरबताएगएअनुबंधोंमेंमौजूदनहींथेजो अपीलार्थीआयुक्तकेलिएउद्धृतनिर्णयोंमेंविचारकेलिएआया, औरइसलिएवेअलग-अलगहैं, -आयक्सजयरामवालजीवेंकटटरामाअय्यरजे। औरउन्होंनेइसमामलेकेतथ्योंपरलागूअन्यअधिकारियोंपरभरोसाकिया।इनतर्कोंऔरउनकेसमर्थनमेंउद्धृतआधिकारिकसंबंधोंपरअबविचारकियाजानाचाहिए।( 1 ) यहरुपयेकीरसीदहै।2,50,000 एकपूंजीरसीदइसकारणसेकियहमुआवजेकेलिएथी ?आय-किसीऐसेअनुबंधकानिपटानजिसकाजीवनकालइससेपहलेलंबाथाप्रत्यर्थीकातर्कहैकिकरकानूनमेंनिश्चितपूंजीऔरपरिसंचारीपूंजीकेबीचएकअच्छीतरहसेपरिभाषितअंतरहै। जॉनस्मिथएंडसनवी.मूर) (1), किजहाँकोईअनुबंधहैजिसकाप्रदर्शनहोनाहै : यहएकबारऔरहमेशाकेलिएनहींबल्किवर्षोंकीअवधिमेंफैलाहुआहै, यहएकनिश्चितपूंजीकीप्रकृतिमेंहैऔरइसके-लिएभुगतानकोपूंजीरसीदमानाजानाचाहिए।रिलायंसकोआयआयुक्तकरबनाममेंनिर्णयोंपरइसविवादकेसमर्थनमेंरखागयाहै।शॉवालेसएंडकंपनी() औरबार, क्रॉम्बीएंडकंपनी। लिमिटेडवी.अंतर्देशीयराजस्वआयुक्त(3) औरकेलसालपार्सन्सएंडकंपनीमेंकुछटिप्पणियां।अंतर्देशीयराजस्वआयुक्त(1) औरआयकरऔरअतिरिक्तलाभकरआयुक्त, मद्रासबनाम।दसाउथइंडियापिक्चर्सलिमिटेड, कराईकुडी(3)। -आयकरआयुक्तबनाम।शॉवालेसऔर कं. (3), प्रतिवादीकंपनीकईवर्षोंसेदोतेलकेवितरणएजेंटोंकेरूपमेंकार्यकररहीथी। कंपनियाँ।1927-28 में, इनकंपनियोंनेअपनीखुदकीवितरणव्यवस्थाकरनेकाफैसलाकियाऔरप्रत्यर्थीकीएजेंसीकोसमाप्तकरदियाऔरउसकेलिएमुआवजेकाभुगतानकिया।सवालयहथाकिक्यायहराशिप्रत्यर्थीकेहाथोंमेंराजस्वरसीदथी।प्रिवीकाउंसिलनेयहमानाथाकियह यहएकपूंजीरसीदथी, क्योंकियहक्षतिपूर्तिकाप्रतिनिधित्वकरतीथी।व्यवसायबंदकरनेकेलिएभुगतानकियाजाताहै, नकिअर्जितलाभकेलिए इसेआगेबढ़ानेमें।बार, क्रोम्बीएंडकंपनीलिमिटेडबनाम।अंतर्देशीयराजस्वआयुक्त(3), तथ्ययहथेकि(1) (1921) 12 करमामले।266 .( 2 ) ( 1932 ) एल. आर. 59 आई. ए. 206 ( 3 ) ( 1945 ) 26 टैक्सकैस।406 .( 4 ) ( 1938 ) 21 टैक्सकैस।603 . ( 5 ) [ 1956 ] एस. सी. आर223 16 122 सर्वोच्चन्यायालयकीरिपोर्ट[1959] पूरक। 1958 25 मई, 1937 केएकसमझौतेकेतहत, लैंटटकेअपीलआयुक्तकोएकशिपिंगकाप्रबंधकनियुक्तकियागयाथा।आय-15 सालकीअवधिकेलिएकरकंपनी, औरसमझौतेकीशर्तोंमेंसेएकयहथीकिअगरकंपनीजयरामवालजीकोपरिसमापनमेंलेजातीहै, तोकंपनीकेलिएपूरापारिश्रमिक शेषअवधिकाभुगतानतुरंतकियाजानाथा।नवंबरमें वेंकटटरामा में5,1942, कंपनीपरिसमापनमेंचलागया, औरएक ऐवरजे। £16,306 16s कीराशि।11डी।अपीलार्थीकोलगभग8 वर्षोंकीअवधिकेलिएउसकेपारिश्रमिककेरूपमेंभुगतानकियागयाथाजोअभीभीचलरहाथा।यहपूछेजानेपरकिक्यायहराजस्वरसीदकेरूपमेंकरयोग्यथा, यहअभिनिर्धारितकियागयाकिवस्तुतःअपीलार्थीकंपनीकीपूरीपरिसंपत्तियोंमेंप्रबंधएजेंसीशामिलथी, इसपरसहमतिव्यक्तकीगई। इसकेविलुप्तहोनेकेलिएभुगतानएकपूंजीरसीदथीऔरइसलिएयहकरयोग्यनहींथा।भेदकरतेहुए केलसालकेमामलेमेंनिर्णय(1) जहांएकएजेंसीसमझौतेकीसमाप्तिकेलिएभुगतानकिएगएमुआवजेकोराजस्वरसीदमानागयाथा, लॉर्डप्रेसिडेंटटनॉरमैंड यहदेखागयाः( पृष्ठ411 पर)। " यहाँहमसमझौतेकेअंतिमवर्षमेंलाभकमानेकीसंभावनाकेसमर्पणकेबदलेमेंएकभीभुगतानकेसाथकामनहींकररहेहैं, बल्किएकसमझौतेकेसमर्पणकेलिएभुगतानकेसाथकामकररहेहैं, जबकिअभीभीएकपर्याप्तअवधिथी-वास्तवमें, समझौतेकीअवधिकेआधेसेअधिक-चलानेकेलिए। "प्रभु।मोनक्रीफनेइसनिष्कर्षसेसहमतहोतेहुएकहाकिअबतकयहभविष्यकापूर्वभुगतानहै। Case: COMMISSIONER OF INCOME-TAX, NAGPUR versus RAI BAHADUR JAIRAM VALJI AND OTHERS [[1959] SUPP. 1 S.C.R. 110] (1959) In deed, when it is remembered that the quarry at Para-ghat had been abandoned before the contract dated May 9, 1940, was entered into, it is difficult to imagine how any amount paid as compensation for the cancel-lation of that contract can have any connection with expenses incurred with reference to that quarry. \Ve m~st hold that the sum of Rs. 2,50,000 was not paid as compensation for expenses thrown away and cannot be held to be a capital receipt on that account. Now, the contention on behalf of the appellant is that the contract dated May 9, 1940, was one entered into by the respondent in the ordinary course of his business, that the sum of Rs. 2,fi0,000 was paid admit-tedly as solatium for the cancellation of that contract, that the payment really represents the profits which the respondent could have made, had the cont.ract been performed, and that it is therefore a revenue receipt; and a number of authorities were quoted in support of this contention. \Ve shall now refor to the more important of them. In Short Bros. Ltd. v. The Commissioners of Inland Revenue (1), the facts were that the appellant Company which was carrying on business as shipbuilders had entered into a contract to build two steamers and later on, agreed to its cancel-lation on receipt of a sum of £ 1,00,000. The ques-tion was whether this was a capital or revenue receipt. Rowlatt, J., held that it was merely a receipt in a going concern and was revenue, and that was affirmed by the Court of Appeal, Lord Han worth, M.R., observ· ing that such a contract as the one before him was liable in the ordinary course of business to be altered or terminated on terms and the payment of £ 1,00,000 in settlement of the rights under the contract was an adjustment made between the appellants and their clients in the ordinary course of business. Similar observations are to be found in the judgment of Sar-gant, L. J. and Lawrence, L. J. It may be noted on the facts of the present case that the agreement of January 5, 1935, was modified on December 21, 1935, and the disputes which arose with reference thereto .(1) (1927) 12 Tax Cas. 955· Comtnissioner of I nconie-T ax v. J airam Valji Venkatarama Aiyar ]. , 118 SUPREME COURT REPORTS [1959] Supp. were settled by the agreement of May 9, 1940, which was, in turn, replaced by agreement replaced by agreement dated August 2, 1941. The agreements dated May 9, 1940, and August 2, 1941, could therefore be properly said to be adjust-ments made in the ordinary course of business. '95[8 ] Comm;,,;0 ,.,, of was, in turn, replaced by agreement replaced by agreement dated August 2, In,ome-Tax v. Jafrum Valji Venkatarnma Aiya' 1. In The Commissioners of Inland Revenu.e v. 'l'he Northfieet Coal and Ballast Co., Ltd.('), the respondent Company which was the owner of a chalk quarry had entered into a contract with a purchaser for the supply of certain quantity of chalk for a period of ten years. After some time, the purchaser wanted to be relieved from the contract, and the respondent agreed to its termination on receipt, of£ 3,000. The point for decision was whether that was a capital or a revenue receipt. In holding that it was the latter, Rowlatt, J., observed: · "If the contract had gone forward those sums would have come into profits every year and now that they are represented by a commutation, so far as that is concerned, the point seeq1s to be concluded by Short's case(')". One of the contentions urged on behalf of the assessee was that the contract being for a term war; a capital asset, that the effect of the subsequent agreement terminating it on payment of£ 3,000 was in substance to assign the unexpired portion of the contract for a consideration, and that it \v