SooperKanoon Citation | sooperkanoon.com/342869 |
Subject | Direct Taxation |
Court | Mumbai High Court |
Decided On | Nov-18-1988 |
Judge | S.P. Bharucha and ;T.D. Sugla, JJ. |
Reported in | [1991]188ITR293(Bom) |
Acts | Income Tax Act, 1961 - Sections 28 |
Appellant | Commissioner of Income-tax |
Respondent | Himalayan Tiles and Marbles Pvt Ltd. |
S.P. Bharucha, J.
1. This reference is made at the instance of the Revenue.
2. When it reached hearing yesterday, Mr. C. N. Mistry a partner of Mulla and Mulla, Craigie, Blunt and Caroe, applied to us for discharge of his firm as advocates of the assessee. He gave us copies of letters written by the advocate to the assessee and the acknowledgments thereof. The letters asked for instructions but Mr. Mistry stated that no instructions had been given. It was then noticed that the appearance of the advocates was not shown on board and the matter was adjourned till today to enable Mr. Mistry to ascertain whether an appearance had, in fact,. been filed. Mr. Mistry now states that investigation into his papers reveals a duplicate copy of the vakalatnama but it is not signed. We cannot, therefore, give the advocates a discharge. But, we must, in these circumstances, proceed on the footing that service of the reference has been duly effected upon the assessee and that the assessee has full knowledge that it is ripe for hearing but has wilfully remained absent.
3. The following question is raised in the reference :
'Whether, on the facts and in the circumstances of the case, the said sum of Rs. 28,461 was chargeable as profit from an adventure in the nature of trade?'
4. It is not necessary to refer to the facts in details because the issue is covered by the judgment of this court in the assessee's own case, CIT v. Himalayan Tiles and Marbles P. Ltd. : [1975]100ITR177(Bom) .
5. The assessee took over from one H. L. Gupta his claim as sole proprietor of the assessee's concern before it was taken over by the assessee, against Messrs. A. V. Thomas and Co. (India) Ltd., Madras, in respect of which a suit was pending in this court. It also took over the claim of Gupta against the Union of India in respect of which an arbitration was pending before a counsel of this court. In respect of such take over, the assessee paid Gupta a sum of Rs. 57,716 made up of Rs. 9,010 in respect of the first claim and Rs. 48,706 in respect of the second claim.
6. Upon the second claim, the arbitrator gave an award in favour of the concern and against the Union of India in the sum of Rs. 1,20,000. This was credited by the assessee in its books for the year relevant to the assessment year 1959-60, after setting off there against the amount of Rs. 48,706 paid to Gupta. The Income-tax Officer gave the assessee an allowance of Rs. 10,534 in respect of the legal expenditure incurred by it in the course of arbitration proceedings and taxed and balance amount of Rs. 61,340 as profit accruing to the assessee from an adventure in the nature of trade. The Income-tax Officer's decision was upheld by the Appellate Assistant Commissioner but revised by the Income-tax Appellate Tribunal. The reference therefrom was heard and decided by this court and the judgment is, as aforesaid, reported in CIT v. Himalayan Tiles and Marbles P. Ltd. : [1975]100ITR177(Bom) . The question whether the balance amount of Rs. 61,340 could be assessed in the hands of the assessee as income from an adventure in the nature of trade was answered in the affirmative and in favour of the Revenue.
7. The suit that was pending in this court against Messrs. A. v. Thomas and Co. (India) Ltd. was settled for the sum of Rs. 62,000 in the year relevant to the assessment year 1964-65. As against it, an amount of Rs. 33,548 was adjusted, leaving a balance of Rs. 28,461 which is the subject matter of the question before us. The Income-tax Officer treated this amount as a profit accruing to the assessee from an adventure in the nature of trade. Following the earlier judgment of the Tribunal, his order was upset both by the Appellate Assistant Commissioner and the Tribunal. Following the decision of this court in CIT v. Himalayan Tiles and Marbles P. Ltd. : [1975]100ITR177(Bom) , the question arising therefrom in this reference must be answered in the affirmative and in favour of the Revenue.
8. No order as to costs.