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2002 DIGILAW 4 (PNJ)

Commissioner Of Income-tax v. Metro Motors

2002-01-02

JAWAHAR LAL GUPTA, N.K.SUD

body2002
Judgment Jawahar Lal Gupta, J. 1. The Tribunal has referred the following question for the opinion of this court : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the payment of annual lease to the company in lieu of transfer of assets is not an expense of capital nature ?" The assessee is a registered firm. It filed its return of income for the assessment year 1978-79. It had taken over the business from M/s. Metro Motors for a consideration of Rs. 1 lakh. It had also agreed to pay annual lease money of Rs. 5,000. The Assessing Officer initially allowed the expense of Rs. 5,000 per year to the assessee. Later on, an order of enhancement was passed and the expense of Rs. 5,000 per year was disallowed. The assessee appealed. The Tribunal accepted the claim of the assessee. It found that as the amount of Rs. 5,000 was being paid "in addition to the outright payment of goodwill in a sum of Rs. 1 lakh, the annual lease rent was admissible to the assessee." 2. The solitary contention raised by Mr. R. P. Sawhney, learned counsel for the Revenue, is that the amount of Rs. 5,000 was being paid annually in lieu of the goodwill and not on account of transfer of assets. Thus, the view taken by the Tribunal is not tenable. 3. The contention raised by counsel cannot be accepted. It has been found as a fact that the assessee had paid an amount of Rs. 1 lakh to Metro Motors Private Limited "as goodwill". Still further, nothing has been produced on record to show that there was any payment except the annual lease money of Rs. 5,000 for transfer of assets. In fact, the Tribunal has rightly found that the annual lease of Rs. 5,000 was in lieu of transfer of assets. Even the question as raised by the Revenue in its application for reference was "whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the payment of annual lease to the company in lieu of transfer of assets is not an expense of capital nature ?" Nothing has been pointed out to show that the annual payment of Rs. 5,000 was in lieu of the goodwill. 4. 5,000 was in lieu of the goodwill. 4. No other contention has been raised. 5. In view of the above, we find that the view taken by the Tribunal is a possible one. It is not contrary to law. Thus, the question is answered against the Revenue. Since no one has put in appearance on behalf of the assessee, we make no order as to costs.