DIPAK KUMAR SEN, J. - (1.) ASSAM Consolidate Tea Estates Limited, the assessee, is a non-resident sterling company incorporated in the United Kingdom. On April 1, 1957, another sterling company was incorporated also in the United Kingdom under the name and style of ASSAM Consolidate Tea Estates (India) Limited as a 100 per cent subsidiary of the assessee. An agreement was entered into by and between the assessee and the subsidiary on April 1, 1957. It was recorded in the said agreement, inter alia, that the subsidiary had been incorporated with the principal object of acquiring the undertaking and business of the assessee of its tea estates situated in India with all assets and liabilities thereof.
(2.) THE other terms and conditions of the said agreement were, inter alia, that (a) the assessee would sell and transfer and the subsidiary would purchase and take over on and from April 1, 1957, the tea estates of the assessee in India known as Bhamun, Hesam, Hingrijan, Khowang and Tinkong Estates; (b) THE consideration for the said sale would be, subject to adjustment as provided, a sum of �6,77,000. (c) THE said consideration of �6,77,000 pounds would be satisfied to the extent of �4,77,000 by the issue to the assessee of �4,77,000 pounds ordinary shares of �1 each of the increased capital of the subsidiary credited as fully paid-up at par and �2,00,000 by the issue to the assessee of fully paid-up redeemable Unsecured loan stock of the subsidiary of �2,00,000 bearing interest at the rate of 6 per cent per annum. (d) THE said consideration would be subject to adjustment in respect of items mentioned in Part III of the Schedule to the said agreement according to the amounts of such items in the books of account as if the date of sale and such adjustment would be effected by payment in cash by the parties inter se as required. Pursuant to the aforesaid, the assessee transferred and conveyed to the subsidiary the said tea estates and the subsidiary issued to the assessee shares of the former as agreed. The subsidiary also issued in favour of the assessee, the said redeemable unsecured loan stock under an instrument dt. April 16, 1957. It was recorded in the said instrument, inter alia, that by a resolution of the board of directors of the subsidiary dt. April 16, 1957, unsecured loan stock carrying interest at the rate of 6 per cent per annum had been created. It was further recorded that (a) the said stock was limited to �2,00,000, (b) the stock would be issued to such persons and at such time or times and on such terms as the directors of the subsidiary would determine provided that the public would not be invited to subscribe for the said stock nor any application would be made to any stock exchange in the United Kingdom for permission to deal with the said stock or that such stock would be quoted in the stock exchange, (c) the stock would be transferable in multiples of �1. The assessee was assessed to income-tax for the asst. yrs. 1966-67, 1967-68, 1968-69 and 1969-70, the relevant accounting years ending on 31st December of the calendar years 1965, 1966, 1967 and 1968, respectively. The ITO found that the only income of the assessee in India was the interest received by the assessee from its subsidiary from the said redeemable unsecured loan stock. It was contended by the assessee that the interest received against the said stock was not the assessee's income accruing or arising in India. The ITO did not accept the said contention and following the assessments of the assessee made in the earlier asst. yrs. 1959-60 to 1964-65 treated the said interest as income of the assessee arising or accruing in India and brought it to tax.
(3.) BEING aggrieved by the assessment, the assessee preferred a consolidt. appeal against the said assessments for the said assessment years before the AAC. The AAC found that against the earlier assessments for the said asst. yrs. 1959-60 to 1964-65, the assessee had also preferred appeals before the AAC. Those assessments were, however, confirmed by the AAC. The assessee had preferred further appeals before the Tribunal against the order of the AAC and the Tribunal by its order dt. January 8, 1973, had accepted the contentions of the assessee and allowed the appeals holding that the income of the assessee arising out of the interest payable on the unsecured redeemable loan stock was not assessable under s. 9(1)(i) of the IT Act, 1961. Following the said decision of the Tribunal, the AAC allowed the appeals of the assessee against the subsequent assessments. Being aggrieved, the Revenue preferred a further appeal before the Tribunal against the order of the AAC. The Tribunal followed its earlier order in the case of the assessee in respect of the earlier assessment years and dismissed the appeals of the Revenue. The Tribunal noted that no fresh materials had been brought to light in the subsequent assessment years.;