REMFRY AND SAGAR Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) These are four writ petitions filed by the petitioner seeking quashing of the notices issued under section 148 of the Income Tax Act, 1961 ("Act', for short) and all proceedings consequent thereto.

(2.) The petitioner is a law firm specialising in intellectual property and corporate laws. It was founded in 1827 by one Henry Oliver at Calcutta. In the year 1957 certain Englishmen took over the firm. By deed dated 04.04.1973 these gentlemen by names Holloway and Silver Stone transferred the firm absolutely to Dr. V. Sagar, a lawyer. The transfer took effect from April, 1973 and the entire practice of the firm became that of Dr. Sagar. On 18.10.2000 a company, i.e. Remfry & Sagar Consultant Pvt. Ltd. was incorporated and one of its objects was that the goodwill of the firm Remfry & Sagar would vest in it in perpetuity.

(3.) On 01.06.2001, Dr. Sagar executed a gift deed by which the goodwill of the name "Remfry & Sagar" was transferred to the private limited company. For stamp duty purposes the gift was valued at Rs. 45 crores. Since a limited company cannot practice the legal profession, on 05.06.2001 Dr. Sagar entered into partnership with four other partners for carrying on legal practice. On the same day i.e. 05.06.2001 an agreement (hereinafter referred to as "licence agreement") was entered into between the company and the firm constituted by Dr. Sagar and four others, which is known as Remfry & Sagar and which is the petitioner in all the writ petitions, under which a licence was granted to the petitioner for use of the goodwill and name of Remfry & Sagar subject to payment of licence fee @ 25% of the amount of the bills raised. The agreement would later appear to have been amended on 14.01.2002 but that is inconsequential for our purpose.