EX SOLDIERS MOTOR TRANSPORT CO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of the Ex-soldiers Transport Co., Dehra Dun (hereinafter referred to as the assessee), the Income-tax Appellate Tribunal, Allahabad (hereinafter referred to as the Tribunal), has submitted a statement of case and referred to us the following question of law for our opinion under section 66(I) of the Indian Income-tax Act, 1922 (hereinafter referred to as the Act) :

(2.) THE assessee carries on the business of plying motor-buses, trucks and lorries and was assessed to tax for the assessment year 1950-51 in the status of an individual. In the accounts of the accounts of the assessee for the relevant year there were credit entire of Rs. 10,000. THE Income-tax Officer called upon the assessee to explain those entire. THE assessee explained by saying that that amount represented the sale proceed of the sale of permits to third persons granted to the assessee under the provisions of the Motor Vehicles Act. THE case set up by the assessee was that this amount did not represent revenue receipts but income of a capital nature. THE Income-tax Officer rejected the pleas of the assessee holding that the receipts of Rs. 10,000 was incidental to the business of transport carried on by the assessee an was thus revenue income liable to tax. He, therefore added the sum of Rs. 10,000 to the other incomes of the assessee and made an assessment of the tax on the total. THE assessee failed an appeal before the Appellate Assistant Commissioner who allowed the same on the finding that the purchasers of the permit who had paid Rs. 10,000 to the assessee had acquired a trading licence which is an advantage for an enduring benefit to the trade and this the sum of Rs. 10,000 was in the nature of capital receipt. Against the order of the Appellate Assistant Commissioners, the Income-tax Officer filed an appeal before the Tribunal which was allowed on the finding that the sum of Rs. 10,000 was in the nature of revenue receipt liable to be taxed. THE assessee then made an application under section 66(1) of the Act which was allowed and in this manner the reference has been made to us and the question of law referred for our opinion.