DALMIA CEMENT LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THESE references under S. 256(1) of the INCOME TAX ACT, 1961, have been ade by the Tribunal, Delhi Bench, as the questions referred by it arise out of the order of the Tribunal dated September 29, 1972, in IT Appeals Nos. 4639 and 4640 of 1970 -71 in respect of the asst. yrs. 1964 -65 and 1965 -66. The Tribunal has referred the following questions to this Court for its opinion : For 1964 -65:

(2.) WE may state a few relevant and material facts giving rise to the present references. The questions are in respect of the two assessment years but they essentially relate to the question as to whether the profits arising during the aforesaid two years are taxable in the hands of the applicant company. There were two cement factories situated in Shanti Nagar and Dandot in Pakistan. By an agreement dated July 24, 1962, the assessee - company agreed to sell and transfer to one Mr. Maneckji its properties and assets in Pakistan represented by the two cement factories. The assessee - company agreed to sell and Shri Bruch Maneckji agreed to purchase :

(3.) CLAUSE 3 further provides the mode of payment of the purchase price. Clause 19 of the agreement provided that the transfer of the subject -matter of the agreement shall be completed on or before December 31, 1962, and, unless otherwise mutually agreed in writing, the agreement shall expire on that day. It also made a provision that the agreement or the subject - matter thereof may be transferred to any body corporate formed and controlled by Mr. Maneckji, if so required and the company shall be bound to effect the transfer as if such body corporate were a party to the agreement. The completion of the transaction is subject to the approval of the Governments and Governmental agencies of both India and Pakistan. On November 2, 1962, a supplemental agreement was entered into between the assessee - company and Maneckji and cl. 3 thereof provides as under :