JUDGMENT

Braund, J. - This is a case stated u/s 66, Income Tax Act, by the Income Tax Appellate. Tribunal. The facts are extremely simple. The assessees were a joint Hindu family which carried on a family business at Aligarh of publishing and selling books. It dealt, if not exclusively at any rate to some extent, in school and college books and it was its practice to make agreements with authors to produce a book for the assesseea which the assessees in due course would publish.

2. What has happened in the present case is that two gentlemen named Gopi Lal Mathur and Anand Narain Mathur were the authors of a school book entitled the "Hindustani Reader". This book was published by the assessees and is appears that the Education Department of the United Provinces Government prescribed the book as a text book for use in the provincial schools. This was in or about the year 1937. For these reasons, in the course of the next three years, the sales of the book were substantial and it was claimed by the authors that they were entitled to three years' royalties amounting in all to approximately thirteen thousand rupees. This was disputed by the assessees and in 1941 or thereabouts, which is the accounting year in this case, an agreement was reached between the assessees and the authors. It is the character of this agreement which gives rise to the first and the more important of the two questions with which we have to deal.

3. The assessees have claimed that the agreement arrived at in settlement of their disputes with the authors was nothing more nor less than a payment to the authors of a compromise sum for the three years' royalties already accrued together with a further sum also estimated by way of compromise to clear up their liability finally for royalties for the remaining two years of the current agreement. The sum agreed upon was nine thousand and five hundred rupees; and the assessees, therefore, say that this sum of nine thousand and five hundred rupees laid out in this way during the accounting year ought to be treated as if it were simply a revenue payment of royalties and accordingly ought to be allowed as a set-off against their gross income for the purpose of assessing taxable income.

4. The opposite view put forward by the Income Tax Department was that the payment of the nine thousand and five hundred rupees was not a commutation of past and future royalties. The assessees have been compelled to admit before us, and it is fair to say that they have admitted very frankly, that they themselves in the early stages of these proceedings referred to the agreement reached, not as a commutation of royalties, but as a "purchase of the copyright", of the book in question. The line, therefore, that the Department took was that the nine thousand and five hundred rupees was nothing more nor less than the consideration which was paid by the assessees for the out and out purchase of the copyright of the book, thereby, of course, putting an end to all questions of royalties.

5. At that point we turn to the findings' of the Income Tax Tribunal. These are contained in paras. 5 of its judgment dated 27th September 1943. They point out that this point as to the nine thousand and five hundred rupees being merely a commutation of royalties was never taken until the case reached the Income Tax Tribunal, it having been, if not conceded, at last never denied at any earlier stage that what the transaction really was an out and out transfer of copyright. The Tribunal says, not without some reason, that it was then too late for the assessees so completely to shift their ground. Even if that were not technically so, it would at least be the case that it was too late for the assessees to advance a new story altogether with any expectation of being believed. The Tribunal finds, therefore, that it was a purchase of the copyright and was not merely a payment of past and future royalties.' They have not actually said so in so many words in para. 5 of the