| Case ID |
37056032-db78-45c4-beb3-3e13173c2c98 |
| Body |
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| Case Number |
IT REFERENCE No. 29 OF 1969 |
| Decision Date |
Aug 08, 1973 |
| Hearing Date |
|
| Decision |
The Tribunal held that the amounts of Rs. 2,400 and Rs. 11,656 were capital receipts. The court emphasized that the nature of a receipt is determined at the time it is received, and if it is a deposit for the faithful performance of a contract and has no relation to trade receipts, it cannot be treated as income. The amounts received were characterized as loans from the sub-distributor, not trade receipts, and thus not taxable as income. The decision was made in favor of the assessee. |
| Summary |
In the case of Commissioner of Income tax v. Motor and General Finance Ltd., the Delhi High Court examined the nature of certain receipts under the Income-tax Act. The case revolved around the classification of amounts received by the assessee from a sub-distributor as either capital or revenue receipts. The court concluded that the deposits made were for ensuring the faithful performance of a distribution agreement and were thus classified as capital receipts. The judgment highlighted the principles that determine the nature of receipts, emphasizing that the character of a receipt is fixed at the time of its receipt and that deposits intended to secure performance are not considered as income. This case is significant for businesses dealing with distribution agreements and the tax implications of various receipts. Key terms include 'capital receipts', 'business income', 'distributorship', and 'income tax implications'. |
| Court |
Delhi High Court
|
| Entities Involved |
Commissioner of Income tax,
Motor and General Finance Ltd.
|
| Judges |
P.N. Khanna,
M.R.A. Ansari
|
| Lawyers |
B.N. Kirpal,
G.C. Sharma,
Randhir Chawla,
S.R. Gupta,
L.C. Goyal
|
| Petitioners |
Commissioner of Income tax
|
| Respondents |
Motor and General Finance Ltd.
|
| Citations |
1974 SLD 408 = (1974) 94 ITR 582
|
| Other Citations |
Morley v. Tattersall [1938] 22 TC 51,
Bombay Dyeing & Manufacturing Co. Ltd. v. State of Bombay [1958] SCR 1112,
Kohinoor Mills Co. Ltd. v. CIT [1963] 49 ITR 578 (Bom.),
CIT v. Sandersons & Morgans [1970] 75 ITR 433 (Cal.),
Bijli Cotton Mills (P.) Ltd. v. CIT [1971] 81 ITR 400 (All.),
Jay's-thee Jewellers Ltd. v. Commissioners of Inland Revenue [1947] 29 TC 274 (KB),
Davies v. Shell Company of China Ltd. [1951] 32 TC 133,
K.M.S. Lakshmanier & Sons v. CIT & Excess Profit Tax [1953] 23 ITR 202,
Punjab Distilling Industries Ltd. v. CIT [1959] 35 ITR 519,
Punjab Steel Scrap Merchant Association Ltd. v. CIT [1961] 43 ITR 164 (Punj.)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
28(i)
|