LexTHE NATIONAL STEEL WORKS LTD. versus COMMISSIONER OF INCOME-TAX, BOMBAY
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• 2 s.c.n.. SUPREME COURT REPOR'l'S 93'1 had become futile. I, therefore, hold that the Regula- tions in so far as they purport to· regulate the mines situate in West Bengal have not been validly made under the Act inasmuch as a. condition pre- cedent imposed. by s. 59. of the Act on the exercise ofthe Government's power to make a regulation was not complied with. In the result, I direct the issue of a writ of prohibition against respondents 1 to 4 res training them from proceeding with · the criminal case launched against the petitioners. The petitioners will have their costs. · ' "' BY ComtT : In view of the majority opinion of the Court the Writ Petition fails and is dis- missed. THE NATIONAL STEEL WlJRKS LTD. . v. COMMISSIONER OF INCOME-TAX, BOMBAY (S. K. DAS, J. L. KAPUR,. A. K. SARKAR, M. HrnAYATlJLLAH and RAGHUBAR DAYAL, JJ.) Income-tax-Agreement by qunla·holder to aupply steel to manufacturer at a certain royalty fl'r to" -Receipt of lump aum in lieu of royaUy-Asaessm1mt on amounl received-'-!/ according lo Zaw-Oapital receipt and revenue receipt-Distinction-'- Indian Income·tax Act, 1922,(11of1922), s, 66A (2). The assessee company was receiving quota of coal and steel from the Government but had no factory. It entered into a partnership with a penon who had a factory but no quota. The latter agreed to pay a royalty of Rs. 50 per ton of steel supplied to the firm under the quota. A few years later,. .that agreement was modified and the assessee agreed to receive a lump sum of Rs. 60;000 in consideration of waiving the· roy- ~~ . . ' •• 1968 Kalipada Chowdhur,,11 · . v. U 11ion of India Bubba Ra• J, 1968 M'!JI 3 • 1967. National Skf,l w ... ls Lid. v. Co ·mi1•ioner of lmome4CJJ1:, Bomb•' R.glitd"' Dap J. 038 SUPREME OOURT REPORTS [1963] In as&essing the income-tu on the as1e5SCC, the Income- tax Officer brought the amount of Rs. 60,000 to tax. When the matter went to the High Court, that court held that the amount was a revenue receipt, and hence liable to tax. On appeal to this Court, Held, that the amount of Rs: 60,000 represented capital· ised profits of the assesscc company on account of its transfer- ring or scllin&' the steel which the asscsscc company purchased under the authority given by the quota allowed to it. The asscsscc company purchased the goods In its own name and delivered them to the partnership. The sum of Rs. 60,000 represented the capitalised value of the profits the assesscc company was to have on supplying all the steel it had under the quota at net price. No right to the quota itself was transferred, and hence it could not be said that the sum of Rs. 60,000 was paid in lieu of the transfer of the rights in the quota of steel. The description of the amount as goodwill in consideration of waiving royalty from partnership account did not convey the real nature of the amount. There was no question of goodwill in waiving a royalty. CIVIL APPELLATE JURISDICTION: Civil Appeal No. 544of1961. Appeal from the judgment and order dated July 1, 1959, of the Bombay High Court in Inoome- tax Referenoe No. 58 of 1958. C. B. Agarwala, A. D. Mathur for K. P. Gupta, for the appellent. K. N. Rajagopala 8a8tri a.nd D Gupta for ree- pondent. 1962. May 3. The Judgment of the the Court. was delivered by R.&GHUBAR DAYAL, J.-Thie is a.n appeal under e. 66 A (2) of the Indian Income. Tax Aot. The appellant, the Nations.I Steel Works Ltd., Bombay, a limited liability company, hereinafter referred to as the 888elleee, oarried on the bueineea of a •Rolling Mill' prior to the partition of the country in the territory now in Pakistan. It was a member of the Steel Rolling Mille Aasocia.tion 0f •• -; ' 2 s.o.R. SUPREME OOURT REPORTS 939 India and as such was receiving a quota of coal and steel from the Government of India. After the Partition, its registered office was shifted to Bombay. It. had no factory there for carrying on the business of a rolling mill. Though possibly not .entitled to receive the quota of coal.and steel, it however continued its membership of the Steel Rolling Mills Association of India and continued to receive the quota of coal and steel. In order to u\ilise the coal and steel so received, it entered into a partnership with one K. l'. Irani who had put a factory in Bombay called the New Era Iron & Steel Works but had no quota of steel and coal. The agreement of ·partnership entere
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