HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Income-tax, Hyderabad-Deccan v. Vazir Sultan & Sons
Civil Appeal No. 340 of 1957
[1959] Supp. (2) SCR 375 ·
Indian Income-tax Act, 1922: sections 2(4), 10, 66(1)
Sources & disclosures includedDownload original judgment / order
3-judge bench · N. H. Bhagwati · B. P. Sinha · J. L. Kapur
Assessment years: 1951-52
01 · Facts of the case
A cigarette distributor’s 1931 Hyderabad agency was extended beyond Hyderabad in 1939. The outside territory was withdrawn in 1950 while the original agency continued. Out of O.S. Rs.2,26,263 compensation, Rs.6,920 was payable to another distributor; the referred receipt was Rs.2,19,343.
Source: Primary report: SCR 378–380
02 · Discussion by the Hon’ble Court
Bhagwati and Sinha JJ treated the agency rights as fixed capital forming the profit-making apparatus, rather than contracts traded in the ordinary course. Partial sterilisation could be capital even where rights were terminable at will. Kapur J dissented: continued Hyderabad business and mere territory contraction suggested compensation replacing future commission rather than destruction of business structure.
Source: Primary report: SCR 385–406
03 · Judicial decision
By majority, the referred Rs.2,19,343 was a capital receipt. The nature of the asset in the recipient’s business, rather than the mere label agency or enforceability of compensation, controlled the classification.
Source: Primary report: SCR 391–397
04 · Outcome / in whose favour
Revenue’s appeal was dismissed with costs throughout in accordance with the majority. Kapur J would have allowed it.
Source: Primary report: SCR 406
05 · AKHB REVIEW POINT
Document whether the surrendered right is the earning apparatus or a trading contract. Preserve the 2:1 division and avoid stating that all agency termination compensation is capital. Modern specific charging provisions and later treatment require separate verification.
Source & verification
Download original judgment / order · Open cited source rendition
Complete 32-page Supreme Court Reports scan. Any adjoining report fragments remain in the unchanged original and are excluded from this analysis.
Statutory scope
Historical legislation expressly identified in this note. This is not a decision under the Income-tax Act, 1961 or the Income-tax Act, 2025. Verify enacted wording, commencement, transition and subsequent judicial treatment independently before modern reliance.
Later treatment
Source checked 2026-10-23. Subsequent treatment and present-law applicability have not been comprehensively checked.
Page references identify the supplied PDF; paragraph references identify the judgment unless stated otherwise.
AI disclosure & professional disclaimer
This AKHB research note uses AI assistance and a preserved full-primary review, with refreshed exact original-byte verification. Independent human review is not represented.
General legal and tax research only; not legal or tax advice. Verify the complete judgment, applicable statutory version and subsequent treatment before reliance. AKHB REVIEW POINT is editorial analysis, not the Court’s holding.