RANCHI ELECTRIC SUPPLY COMPANY LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THREE questions have been referred to us under the Indian Income-tax Act of which only the following two have been pressed :-

(2.) IN 1935 a licence was granted to the firm of Chunilal Ganpatrai to supply electric current to the town of Ranchi. IN 1937 the licensee applied to Government for permission to transfer the licensee to the Ranchi Electric Supply Company, Limited. That company had not yet been formed, but on the 27th April, 1938, its memorandum of association was signed by a number of persons, including members of the firm of Chunilal Ganpatrai. The object of the formation of the company was stated to be to acquire the licence granted to Chunilal Ganpatrai and to take over the supplying of electric current to the town of Ranchi. A certificate of incorporation of the company was granted on the 13th July, 1938. The licensee again applied to Government for leave to transfer the licence to the company. While this was pending a draft agreement was drawn up between the licensee and the company on the 28th August, 1938, approved by the companys Board of Directors and sent to Government. The agreement provided for the purchase by the company from Chunilal Ganpatrai, of the licence and business of supplying electric current to Ranchi. It contained the following clause :-

(3.) MEREDITH, J. - I agree.