# ' v. COMMISSIONER OF INCOME-TAX, KERALA

- **Citation:** [1967] 1 S.C.R. 423
- **Court:** Supreme Court of India
- **Decided:** 1966-09-20
- **Case number:** Civil Appeal No. 324 of 1965
- **Bench:** J. C. Shah, V. Ramaswami, V. Bhargava
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/v-commissioner-of-income-tax-kerala-3838
- **Pages:** 10

## Headnote

Jndmn Income-tax Act, 1922, s. 10(2) (xv)-PurchaSe of industrial
undertaking from Government-Agreement t<> pay percentage of net profits to Guvernment annually-Such payment whether revenue or capi.tal
expenditure.
The appellant company was formed with a view to taking over certain
industrial undertakings from the
Government of the erstwhile .State of
Travancore. Apart from the eash consideration for the said purchase the
appellant agreed to pay to the Government a certain percentage of its
net profits every year.
In proceedings under 'the Indian Income-tax: 'Act,
1922, for the assessment year 1958-59 the appellant claimed the amount
so pa.id to be expenditure allowable under s. 10(2) (xv). The High Court
in reference proceedings held against the appellant who thereupon came
to this Court. It was urged on behalf of the appellant that the annual
payment was in the nature of revenue expenditure because it was not
related to any part of the purchase price of the assets; on the other hand
the Government had undertaken certain obligations under the agreement
and the payment was in lieu of these. On behalf of the respondent it was
urged that the payment formed part of the consideration for the purchase.
HELD : (i) No single test of universal application can be discovered
for a solution of the question whether a particular ex.penditure is in the
nature of capital expenditure ot revenue expenditure.
The name which
the parties may give to the transaction which is the source of the receipt
and the characterisation of the receipt by them are of little conscquen_ce.
The court has to ascertain the true nature and character of the transaction
from the covenant.;; of the agreement tested in the· light
of surrounding
circumstances.
[427 D-E]
(ii) The percentage of the net profits payable by. the appellant c0m·
pany to the Government under the agreement was payable for an inde.
finite period wihout limitation; it was related to the annual profits which
flowed from the trading activities of the company having no rclatioD. to
the capital value of the assets; it was· also not tied up in any way to
any fixed sum agrood between the parties as part of the purchase price
of the three Government undertakings.
There was no reference to any
capital sum in this part of the agreement.
On the contrary the very
nature of the payment excludes the idea that any connection with the
capital sum was intended by, the parties.
It is true that the purchaser may buy a ·running concern and fix a
certain price and the price may be payable in a lump sum or .may be
payable by instalments. The mere fact that the capital sum is payable by
instalment speC;=ied over a certain length of time will not convert the nature
of that payment from the c@ital expenditure into a revenue expenditure,
but the payment of instalments in such a case would always have some
relationship to the actual price fixed for the sale of the particular undertaking. As there was no specific sum fixed in the present case as an additional amount of price payable in addition to the cash consideration and
payable in instalments or by any particular method the annual payment
423
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SUPREME COURT REPORTS
(1967] l S.C.R.
•
made to the .Government could not be held to be in the nature of capital
A
expenditure. It was revenue expenditure.
[428 A.CJ
Case-law referred 10.

## Text

J&
TRAVANCORE SUGARS AND CHEMICALS LTD.
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v.
COMMISSIONER OF INCOME-TAX,
KERALA
September 20, 1966
[J. C. SHAH, V. RAMASWAMI AND V. BHARGAVA, JJ.]
Jndmn Income-tax Act, 1922, s. 10(2) (xv)-PurchaSe of industrial
undertaking from Government-Agreement t<> pay percentage of net profits to Guvernment annually-Such payment whether revenue or capi.tal
expenditure.
The appellant company was formed with a view to taking over certain
industrial undertakings from the
Government of the erstwhile .State of
Travancore. Apart from the eash consideration for the said purchase the
appellant agreed to pay to the Government a certain percentage of its
net profits every year.
In proceedings under 'the Indian Income-tax: 'Act,
1922, for the assessment year 1958-59 the appellant claimed the amount
so pa.id to be expenditure allowable under s. 10(2) (xv). The High Court
in reference proceedings held against the appellant who thereupon came
to this Court. It was urged on behalf of the appellant that the annual
payment was in the nature of revenue expenditure because it was not
related to any part of the purchase price of the assets; on the other hand
the Government had undertaken certain obligations under the agreement
and the payment was in lieu of these. On behalf of the respondent it was
urged that the payment formed part of the consideration for the purchase.
HELD : (i) No single test of universal application can be discovered
for a solution of the question whether a particular ex.penditure is in the
nature of capital expenditure ot revenue expenditure.
The name which
the parties may give to the transaction which is the source of the receipt
and the characterisation of the receipt by them are of little conscquen_ce.
The court has to ascertain the true nature and character of the transaction
from the covenant.;; of the agreement tested in the· light
of surrounding
circumstances.
[427 D-E]
(ii) The percentage of the net profits payable by. the appellant c0m·
pany to the Government under the agreement was payable for an inde.
finite period wihout limitation; it was related to the annual profits which
flowed from the trading activities of the company having no rclatioD. to
the capital value of the assets; it was· also not tied up in any way to
any fixed sum agrood between the parties as part of the purchase price
of the three Government undertakings.
There was no reference to any
capital sum in this part of the agreement.
On the contrary the very
nature of the payment excludes the idea that any connection with the
capital sum was intended by, the parties.
It is true that the purchaser may buy a ·running concern and fix a
certain price and the price may be payable in a lump sum or .may be
payable by instalments. The mere fact that the capital sum is payable by
instalment speC;=ied over a certain length of time will not convert the nature
of that payment from the c@ital expenditure into a revenue expenditure,
but the payment of instalments in such a case would always have some
relationship to the actual price fixed for the sale of the particular undertaking. As there was no specific sum fixed in the present case as an additional amount of price payable in addition to the cash consideration and
payable in instalments or by any particular method the annual payment
423
424
SUPREME COURT REPORTS
(1967] l S.C.R.
•
made to the .Government could not be held to be in the nature of capital
A
expenditure. It was revenue expenditure.
[428 A.CJ
Case-law referred 10.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 324 of 1965.
Appeal by special leave from the judgment and order dated
August 20,1963, of the Kerala High Court in l.T.R. Case No.
B
16 of 1962.
A, K Sen, G. L. Sanghi, and B. R. Aganrala. for the appellant.
S. T. Desai, S. K. Iyer and R. N. Sachrhey, for the respondent.
The Judgment of the Court was delivered by
Ramaswami, J.-The appellant is a limited company incorporated under the Travancore Companies Regulation' and is carrying
on business. in the State of Kerala, of manufacturing sugar, running a distillery and also a tincture factory. The appellant-company
was floated with a veiw to taking over the business assets of a company called 'Travancore Sugars Ltd. (which was being wound up
and in which the State Government held the largest number of
shares), the Government Distillery at Nagercoil and the business
assets of the Government Tincture Factory at Trivandrum. For
this purpose an agreement dated June 18, 1937 was entered into
between the .Government of Travancore and Sir William Wright on
behalf of Parry & Co. Ltd .. the Promoters of the appellant-company.
Under the said agreement the assets of all the three concerns were agreed to be sold by the Government of Travancore to
the appellant-company.
Clause 3 of the agreement provided that
the cash consideration for the sale of assets of the Travancore
Sugars Ltd.
shall be 3 · 25 lakhs rupees. Clause 4(a) provided
that the cash consideration for the sale of the Government Distillery shall be arrived at as a result of joint valuation by the Engineers
to be appointed by the parties.
Clause 5(a) stated that the cash
consideration for the sale of assets of the Government Tincture
Factory
shall be the value according to the books.
Under cl.
4(b) and (c) of the agreement the Government undertook to recognise the transfer of the licence from the licensees of the Distillery to
the appellant and to secure to it the continuance of the licence for
a continuous period of five years after the termination of the then
existing licence.
Under cl. 5(h) of the agreement the Government
agreed to purchase the pharmaceutical products manufactured by
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the appellant in the Tincture Factory, for its medical requirements.
Under cl. 6 of the agreement all books of account and connected · H
documents arc to be open to inspection by the authorised officers
of the Government.
Under cl. 10 the Government was entitled to
nominate a director on the Board of Directors of the appellant-
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TARAY. SUGARS & CHEM. v. CI.T. (Ramaswami, /.)
425
company who would not be entitled to any voting power or to
interfere with the normal management of the company. Apart
from the eash c.onsideration referred to in the agreement, cl. 7 of
the said agreement provided for futher · payments as folows:
"(7). The Government shall be entitled to twenty per
cent of the net profits earned by the company in every year
subject however to a maximum of Rupees forty thousand
per annum, such net profits for the purposes of this
clause fo be ascertained by deduction of expenditure from
gross income and also after-
(i) provision has been made for depreciation at not less
than the rates of allowances provided for in the income-tax law for the time being in force, and
(ii) payment of the Secretaries &
Treasurers' remuneration."
By another agreement dated January 28, 194 7 the following. clause
was substituted for the above cl.
7 of the original agreement:
"The· Government shall be entitled to ten per .centum of
the net profits of the Company in every year. For the purpose of this clause net profits means the amount for whic'i the
Company's audited profits in any year are assessed to Incometax in the State of Travancore."
For the assessment year 1958-59 (the corresponding previous
year being ·May 1, 1956 to April 30, 1957) the amount payable to
Government finder the aforesaid cl. 7 came to Rs. 42,480/-. The
appellate
Assistant Commissioner disallowed the claim of the
appellant for deduction of this amDunt on the ground that it was
virtually mere· sharing of profits after they came into existence.
The appellate Assistant Commissioner relied upon the decision in
The Pondicherry Railway Company v. CJ.T.(') in disallowing this
item of expenditure. The appellant preferred an appeal against
the. order of the appellate Assistant Commissioner to the Incometax Appellate Tribunal which held that the case came within the
prindple of the decision in British Sugar and. Manufacturers Ltd.
v. Harris. Inspector of Taxes(2) and that the payment of commission was an expendi(.J.lre made in order to earn profits of the
business and. not an ·expenditure paid out of earned profits. In
the result the Tribunal allowed the appeal by the Company. At. the
instance of the respondent the Tribunal
referred the following
question of law to the High Court .of Kerala:
"Whether on the facts and in the circumstances of the
case, the payment of Rs. 42,480/-
by the assessee to the
Travancore Government under the agreements' dated
(I) 5 I.T.C. 363.~58 I.A. 239.
(2) [1939] I.T.R. 101.
426
SUPREME COURT REPORT.S
[1967] I S.C.R.
18-6-1937 and 28-1-1947 was allowable under sec. JO of
the Income-tax Act?"
By its judgment dated August 20, 1963, the High Court held that
the payment of the aforesaid amount constituted capital expenditure and was not allowable under s. J0(2)(xv)of the Income Tax
Act.
In this view the High Court felt it unnecessary to go into the
merits of the respondent's contention that the payment represented
only a division of profits.
The present appeal is brought, by
special leave, from the judgment of the High Court of.Kera!! dated
August 20, 1963.
On behalf of the appellant Mr. Asoke Sen submitted that the
payment of Rs. 42,480/- was not ca!)ital expenditure but was expenditure of revenue nature which· was allowable under s. 10(2)
(xv) of the. Act.
It was pointed out that the annual payments
under cl. 7 were not part of the purchase price of the assets.
Reference was made to els. 3, 4(a) and 5(a) of the agreement and it
was said that separate and full considerations were provided for the
purchase of the assets of Travancore Sugars Ltd., the Government
Distillery and the Government Tincture Factory. In addition to
selling these assets the Government undertook obligations enume-
.rated in els.
4(b) and (c) and 5(b) already referred to.
It was
contended that the appellant agreed to make annual payments to
Government in consideration ·or these obligations. On behalf of
the respondent the opposite view-point was presented and it was
said that the preamble to the agreement dated January 28, 1947
indicated that the purchase was not merely for the cash consideration recited but also for the payment provided by cl. 7.
Reference
was made to the following portion of the preamble of the agreement dated January, 28, 1947.
·
"WHEREAS on 18th June 1937 an agreement (hereinafter called 'the principal agreement') was entered into
between M. R. Ry. Rao Rahadur
Rajyasevanirata N.
Kunjan Pillai Avl., Chief Secretary to Government acting
for and on behalf of the said Government of His Highness
the Maharaja ofTravancore of the one part and Sir William
Wright, Kt., C.B.E., of Messrs. Parry & Co. Ltd., Madras,
acting for and on behalf of the said Messrs.
Parry & Co.
Ltd., of the other part, whereby the said Government should
sell and the company should purchase the assets including.
the lands of the Travancore Sugars Ltd.; with the buildings,
out-houses. machinery and other things attached thereto
and more particularly described in the Schedule 'A' annexed to the said principal agreement, the factory known as
the Government Distilleries situate at Nagcrcoil in South
Travancore with lands, buildings, machinery and other
things attached thereto and more particularly described
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TARAY. SUGARS & CHEM. v. c.1.T. (Rama.rwami, i)
427
A
in the Schedule 'B' annexed to the principal agreement,
and all the assets of the factory known as the Government
:fincture Factory situated at.Trivandrum and more particulafly described in the Schedule 'C' annexed to the principal agreement for the cash consideration in the said principal agreement mentioned and also in consideration inter
B
a/ia that the Government should be entitled to 20 % (twenty
per cent) of the said net profits earned by the Company in
every year subject however to a maximum of. Rs. 40,000/-
per annum, such net profits for purposes of the said agreement to be ascertained after the deductions set out in clause
7 of the said agreement."
C
It is often difficult, in any particular case, to decide and determine whether a particular expenditure is in the nature of capital
expenditure or in the nature. of revenue expenditure. It is not easy
to distinguish whether an agreement is for the payment of price
sti1lulated in instalments or for making annual payments ih the
nature of income. The court has to look not only into the doD
cuments but also at the surrounding circumstances so as to arrive
at a decision as to what was the real nature of the transaction from
the commercial point of view. No single test of universal application can be discovered for a solution of the question. The name
which the parties may give to the transaction which is the source
of the receipt and the characterization of the receipt by them are
E
of little consequence. The court has to ascertain the true nature
and character of the transaction from the covenants of the agreement tested in the light of surrounding circumstances. Examining the transaction from this point of view it is clear in the present
case that the consideration for the sale of the three undntakings in
favour of the appellant was: (I) the cash consideration mentioned in
the principal agreement, viz.,
els. 3, 4(a) and 5(a), and (2) the
F
consideration that Government shall be entitled to twenty per
cent of the net profits earned by the appellant in every year subject
to a maximum of Rs. 40,000/· per annum.
With regard to the
second part of consideration there are three important points to
be noticed. In the first place, the payment of commission of twenty
per cent on the net profits by the appellant in favour of the GovemG
ment is for an indefinite per.iod and has no limitation of time attached to it. In the second place, the payment of the commission is
related to the annual profits which flow from the trading activities
of the appellant-company and the payment has no relation to the
capital value of the assets. In .the third place, the annual payment
of' 20 per cent commission every year is not related to or tied up,
H
in any way, to any fixed sum agreed between the ·parties as part of
the purchase price of the three undertakings. ·There is no reference
to any capital sum in this part of the agreement. On the contrary,
the very nature of the payments excludes the idea that any connec
MlSSupCI/66-19
SUPllBME COURT llEPOllTS
[I 967] 1 s.c.R.
tion with the capital sum was intended by the parties. It is true that
the purchaser may buy a running concern and fix a certain price
and the price may be payable in a lump sum or may be payable
by instalments.
The mere fact that the capital sum is payable by
instalments •pread o'er a certain length of time. will not convert
the nature of that payment from the capital expenditure into a revenue expenditure, but the payment of installl)ents in such a case
would al"'.ays have some relationship to the actual price fixed for
the sale of the particular undertaking.
As we have already mentioned, there is no specific sum fixed in the present case as an additional amount of price payable in addition to the cash consideration and payable
by instalments or by any particular method.
In view of these facts we are of opinion that the payment of the
annual sum of Rs. 42,480; in the present case is not in the nature of
capital expenditure but is in the nature of revenue expenditure 3nd
the judgment of the High Court of Kera la on this point must he
0verruled. The view that we have expressed is home out by the
decision of the Court of Appeal in Commissioners of Inla11d Re1enue
v. 36/49 Holdings. Ltd. (111 Liquidation)('). In that case, an un<lertaking was sold and the price consisted of fixed amount and a
certain commission payable for an indefinite period. The con,idcration in the particular agreement which the Court of Appeal
had to consider, which was in addition to the fixed amount payable
by the purchaser to the vendor, was 1 shilling for each bicycle not
being mechanically propelled bicycle without deduction and £I for
each mechanically propelled bicycle without deduction, and this
was to be paid on the turnover by the purchasing compnay.
This
sum of I shilling and £1 was to be paid without any limitation of
time, and this sum was not related to any special sum as being
part of the price to be paid by the purchaser to the vendor.
In the
course of his judgment, Lord Greene, \faster of the Rolls observed
as follows at page 182 of the report.
"The true nature of a sum payable to a recipient for
purposes such as the present is to be ascertained from all
the circumstances relevant to that matter. The true nature
of the sum is not necessarily its nature in law, but its nature
in business or in accountancy whichever way one likes to put
it, because from the legal point of view there may he no
difference whatsoever as bet,veen the parties between a capital and an income sum.
It may he totally irrelevant to
the legal relationships into which they are proposing to
enter. When, however, the tertius gaudens, in the shape of
the Revenue, appears on the scene, that .matter which as
between the parties may have been a matter of not the slightest importance becomes immediately a matter of very great
importance, and it is necessary to examine the circumstances
(i) [19431 25 T.C. 17-3.--
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TARAY. SUGARS & CHEM. v. c.1.T. (Ramaswami, J.)
429
. of each. individual case, including any documents which
require to be construed, in ·order to ascertain what is the
character to be attributed to the payment."
The same view was taken by the Bombay High Court in Commissioner of Income-tax, Bombay City v. Kolhia Hirdagarh Co. Ltd.,
Bombay('). In that case, there was an agreement between the proprietor of a colliery and C by which it was agreed to promote the
assessee company for the purpose of acquiring and carrying on
the colliery. The purchase price was fixed at rupees one lac which
was to be discharged by the payment of a sum of Rs. 75,000 - in
cash and the allotment of fully paid shares of the face value of
Rs. 25,000/- to the vendor. It was also agreed that the vendor should
be paid the minimum annual dividend of four annas for every t<Jn
of coal raised from the colliery and if there was any deficit in any
year the company would make up such deficit.
Under the draft
Articles of Association of the company the vendor was to get,
in respect of the consideration for shares, 500 preference shares of
Rs. 50/- each and a fixed cumulative preferential dividend equivalent to four· annas per ton of coal raised and railed in each year.
The vendor approved the draft articles and in a letter stated that
he should get four annas per ton permanently on all coals despatched
from the colliery every year, without any hindrance whatsoever,
irrespective of any loss or gain to the company. The assesseecompany was incorporated and the formal agreement of sale was
entered into between it and the vendor. Subsequently it was found
impossible to pay to the vendor a fixed dividend and therefore a
fresh agreement was executed . under which the vendor agreed
to give up all the dividends to which he was entitled and to
permit the company to convert the preference shares into
ordinary shares.
In consideration of this, the company agreed
to pay a commission to the vendor at the rate of four annas per
ton of steam and rubble coal and three annas per ton of slack coal
raised from the colliery and sold and rented by the company from
the colliery. The question arose whether the sum representing the
commission paid by the assessee company io the vendor under the
terms of the agreement was a revenue expenditure. It was held by
the Born bay High Court that as the payment made by the assessee
company was a payment made for an indefinite period, a payment
made in relation to the turnover of the company and not in relation to its profits, and as the payment had no bearing to any
specific sum fixed as part of the price for the purchase of the
undertaking; it was in the nature of a revenue payment and not a·
capital payment.
On behalf of the respondent Mr. S. T. Desai ref~rred to the
d~cision of the Judicial Committee in Minister of National Revenue
(1) 17 I.T.R. 545.
430
SUPREME COURT REPORTS
(1967] l S.C.R.
v. Catherine Spooner('). In that case, the assessee had sold all her
right, title and interest in some land which she owned in freehold
to a company in consideration of a certain sum in cash, of certain
shares in the company and an agreement to deliver to her 10 per cent
of oil produced from the land. The transferee company, after it
had commenced operations, struck oil and raised some of it in the
year of account, but did not deliver to the assessee any part of the
oil produced. The .transferee company sold the whole of it and
paid over JO per cent of the gross proceeds to the assessee which she
accepted in satisfaction of the royalties reserved to her under the
agreement. The question arose whether the amount which the
lady received in lieu of the oil was 'annual profit or gain from any
other source', and the Appellate Court in Canada held that it
was not so, but was a capital receipt. On appeal the Judicial
Committee agreed with the Appellate Court .in Canada that the
ease was not without its difficulties, but in the end they said that
they were not prepared to differ from the view of the transaction
which an eminent Judge like Newcombe, J. had taken and with
which all his colleagues had agreed. The decision of the Judicial
Committee turned on special facts of that case, viz., that the lady
had bargained to receive her share in oil and that there could be no
profit or gain out of the transaction of that kind. The case was an
exceptional one and the ratio' of that decision cannot be applied to
the present case where the facts are manifestly different.
We may,
however, refer to the decision in Jo11es,._ Commissio11ers of Inland
Revenue(2) where property was conveyed in consideration of periodical payments, the payment being a share of the profits of the business.
Jn. that ease, a person sold his interest in certain inventions
and letters patent for £750 in cash and a percentage, called a royalty, payable for ten years on the sale of all machines constructed
under the patent. Of the sum of £750, £300 was paid in cash, but
the payment of the balance was secured by providing that it would
have to be pajd by way of 5 per cent on the sale of the machines.
It was conceded by the Revenue that this 5 per cent was not to be
included in computing
the total income of the transferor. A
question having arisen with regard to the further 10 per cent. RowJatt, J. obserwd as follows:
"The property was sold for a certain sum, and in addition the vendor took an annual sum which was dependent
upon the volume of business done; that is to say, he took
something which arose or fell with the chances of the
business. When a man docs that he takes an income-it is
in the nature of income."
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The principle of this case applies to the persent case where the
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facts are closely parallel.
(I) (t933J A.C. 684.
(2)
(19201 1 K.B. 711.
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It is not, however, possible for us to finally determine this
appeal because the High Court has not dealt with the other
questions arising in this reference. Even if the payment of the
commission to the Governmerlt ·by the assessee ·is not capital but
revenue payment, certain other questions arise for consideration in
this case. In the first place, it has to be determined whether the appellant is right in his argument that the payment of the commission is
tantamount to diversion of profits by a paramount title. In this
connection reliance was placed on behalf of the appellant upon the
decision ill' Raja Bajoy Singh Dudhuria v. Commissioner of Income
Tax Bengal(') in which the assessee succeeded to the family ancestral
estate on the death of his father. Subsequently his step-mother
brought a suit for maintenance against him in wmch a consent
decrte was made directing the assessee to make a monthly payment
of a fixed sum to his step-mother and declaring that the maintenance
was a _pharge on the ancestral estate in the hands of the assessee.
In computing his income, the assessee claimed that the amounts
paid by him to the step-mother under the decree should be excluded.
It was held by the Judicial Committee that the sums paid by the
assessee to his step-mother were not 'income' of the assessee
at all and that the decree of the court by charging the appellant's
whole resources with a specific payment to his step-mother had to
that extent diverted his income from him and had directep: it to
his step-mother, and to that extent what he received for her was not
his income. It was not a case of the application by the appellant
of part of his income in a particular way; it was rather the allocation of a sum out of his revenue before it became income in his
hands.. Reliance was also placed on the decision 9f this Conrt
in Poona Electric Supply Co. Ltd.'· v. Commissioner of lncomeTax. Bombay City(2) in which a distinction was drawn between real
profits ascertained on commercial principles and profits fixed by
statute for a specified ·purpose. In the second place, the respondent has contended that the transaction should be treated as a joint
venture with an agreement to share profits between the appellant
and the Government. In the third place, the High Court has to
examine whether the requirements of s. 10(2)(xv) have been satisfied in this case. On behalf of the respondent the argument was
presented that the payment of commission was a payment out of
the profits of the appellant on condition of profits being earned and
that it was not a payment made to earn profits. Reference was
made to the decision of the Judicial Committee in Pondicherry
Railway Co. Ltd. v .. Commissioner of lncome-tax.(3) The opposite
view-point was presented on behalf of the appellant and it was
argued that the payment of the commission was a payment wholly
and exclusively laid out for the purpose· of business and reference
was made to the decision of the Judicial Committee in Indian Radio
(I) [1933] l.T.R. 135.
(2) 57 l.T.R. 521.
(3) 5 I.T.C. 363.
432
SUPREME COURT REPORTS
(1967) I S.C.R.
and Cable Communications Co. Ltd. v. Commissioner of Jncometax(•) and to the decision of the Court of Appeal in British Sugar
Ma1111facturers Ltd. v. Harris (lnsp<ctor of Taxes).(2)
It is necessary that the High Court should consider all these
aspects of the case before furnishing an answer to the question of
law referred to it.
For these reasons we allow this appeal. set aside the judgment
of the High Court of Kentla dated August 20, 1963 and remand
the case for being reheard and dealt with in accordance with the
directions given in this judgment. The parties will bear their own
costs upto this stage.
G.C
(1)
(1937j 5 l.T.R. 270.
(2) [1939] I.T.R. IOI.
Appeal al/01red.
a