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INCOME TAX APPELLATE TRIBUNAL, MADRAS
D.S. Meenakshisundaram, S. RAJARATHAM, JJ.
Srinivasa Raghava Iyengar -Appellant
Versus
Income-tax Officer -Respondent
IT APPEAL NO. 1903 (MAD.) OF 1972-73
Decided On : 23-06-1981
Advocates Appeared:
P. Viswanthan,S. Renganathan
P. Viswanthan,S. Renganathan
ORDER
1. Have the plaintiffs acquired any right over the name Premier Fertilizers?
2. Are the plaintiffs manufacturing any fertilizer or marketing in the name of Premier Fertilizers?
3. Had the defendants any knowledge of the plaintiffs name when the defendant company was registered?
4. Are the plaintiffs entitled to an injunction restraining the defendants from using the name of "Premier Fertilizers Ltd." the name having been duly registered as a limited company in March 1961 with the consent of the Registrar of Companies?
The Court found in favour of the assessee on all the issues, inasmuch as it agreed with the assessee that the assessee had acquired right over the name "Premier Fertilizers" and that the use of this name by Premier Fertilizers Ltd., affected the assessee and that the facts that M/s Premier Fertilizers Ltd. were not aware of the assessee's business or that their name was registered with the Registrar of Companies were not enough to disentitle the assessee to the injunction. The injunction as prayed for the assessee was granted on 19th October, 1964 and the judgment' was confirmed by the first Addl. Judge of the City Civil Court in appeal suit No. 98 of 1965 on 11th April, 1966. M/s Premier Fertilizers Ltd. took up the matter further before the High Court, when a compromise was evolved. The Judgment decree of the High Court, which reproduced the memo of compromise is a short one and is reproduced as below:
"1. That is consideration of a sum of Rs. 25,500 (Rupees Twenty five thousand and five hundred only) which has already been paid to the Respondents (Plaintiffs) by the Appellants (Defendants), the Respondents (Plaintiffs) shall, as agreed by them, permit and shall have no objection to the style of Premier Fertilizers Ltd., concurrently with the Respondents (plaintiffs) continuing to use their name and style of Premier Fertilizers in connection with their business.
2.That both the Appellants (defendants) and Respondents (plaintiffs) shall however be at liberty to take proceedings and should any third party adopt the name and style of Premier Fertilizers or any imitations thereof; and
2.On the above facts, the ITO treated the receipt as income, rejecting the assessee's claim that it was either causal or a capital receipt. He was of the view that the amount was paid to compensate the assessee for loss of profit and that it was therefore a revenue receipt. The AAC concurred with the finding of ITO in the view that it was a business receipt, because it was received in connection with the protection of assessee's business and that the assessee had not lost any capital asset for gaining this amount. The assessee came up in second appeal before this Tribunal which accepted the assessee's
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S. Rajaratnam, Accountant Member -The assessee was a registered firm carrying on the business in manufacture and sale of fertilisers under the trade name "Premier Fertilisers" at Ootacamund since about 1943. In 1960 a company by name "Premier Fertilizers Ltd." with a share capital of about a crore of rupees with one of its branches at Ootacamund had started business. Since the name was the same, but for the addition of the word 'limited', the assessee apparently feared that its business will be affected and sought permanent injunction against Premier Fertilizers Ltd. from carrying on business in that name for the reason that the use of the name is likely to mistake or deceive the public into the belief that the "defendants" company is the same as that of the "plaintiff " Premier Fertilizer Concern. The assessee succeeded before the Sixth Assistant Judge, in the City Civil Court in the suit, which raised the following four issues:
1. Have the plaintiffs acquired any right over the name Premier Fertilizers?
2. Are the plaintiffs manufacturing any fertilizer or marketing in the name of Premier Fertilizers?
3. Had the defendants any knowledge of the plaintiffs name when the defendant company was registered?
4. Are the plaintiffs entitled to an injunction restraining the defendants from using the name of "Premier Fertilizers Ltd." the name having been duly registered as a limited company in March 1961 with the consent of the Registrar of Companies?
The Court found in favour of the assessee on all the issues, inasmuch as it agreed with the assessee that the assessee had acquired right over the name "Premier Fertilizers" and that the use of this name by Premier Fertilizers Ltd., affected the assessee and that the facts that M/s Premier Fertilizers Ltd. were not aware of the assessee's business or that their name was registered with the Registrar of Companies were not enough to disentitle the assessee to the injunction. The injunction as prayed for the assessee was granted on 19th October, 1964 and the judgment' was confirmed by the first Addl. Judge of the City Civil Court in appeal suit No. 98 of 1965 on 11th April, 1966. M/s Premier Fertilizers Ltd. took up the matter further before the High Court, when a compromise was evolved. The Judgment decree of the High Court, which reproduced the memo of compromise is a short one and is reproduced as below:
"1. That is consideration of a sum of Rs. 25,500 (Rupees Twenty five thousand and five hundred only) which has already been paid to the Respondents (Plaintiffs) by the Appellants (Defendants), the Respondents (Plaintiffs) shall, as agreed by them, permit and shall have no objection to the style of Premier Fertilizers Ltd., concurrently with the Respondents (plaintiffs) continuing to use their name and style of Premier Fertilizers in connection with their business.
2.That both the Appellants (defendants) and Respondents (plaintiffs) shall however be at liberty to take proceedings and should any third party adopt the name and style of Premier Fertilizers or any imitations thereof; and
3. That each party do bear his costs in this court. The Assessee had, therefore, received Rs. 25,000 from Premier Fertilizers. Ltd. on or near about 29th April, 1967, the date of memo of compromise. It is this amount, which is the subject-matter of the present dispute in the assessment for assessment year 1968-69."
2.On the above facts, the ITO treated the receipt as income, rejecting the assessee's claim that it was either causal or a capital receipt. He was of the view that the amount was paid to compensate the assessee for loss of profit and that it was therefore a revenue receipt. The AAC concurred with the finding of ITO in the view that it was a business receipt, because it was received in connection with the protection of assessee's business and that the assessee had not lost any capital asset for gaining this amount. The assessee came up in second appeal before this Tribunal which accepted the assessee's
