TMI Blog1955 (9) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... sment year 1945-46 and in the assessment order out of ₹ 84,540, paid as commission to its employees by the company ₹ 56,360 was disallowed. The total income of the company was assessed at ₹ 4,11,084. In other words, as the assessment order stood, Dadajee Dhackjee Co. was charged to tax in respect of ₹ 56,360 although it had paid that amount as commission, because that was not considered as a permissible deduction. The assessee therefore in his own assessment claimed exemption from tax on ₹ 18,787, which represented his one-third share of ₹ 56,360, and he made this claim on the basis of the notification issued by the Finance Department on the 21st of March, 1952. That notification exempts from tax sums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was liable to tax. This contention was accepted by the Tribunal and the assessee has come on this reference. The Advocate-General has argued that both the conditions laid down in the Finance Department notification are not satisfied. He points out that the commission was paid on the turnover of the employer company and not out of profits. That is clearly an untenable contention. The mode of computation of the commission of the assessee was undoubtedly 1 per cent, of the turnover. What the Finance Department notification requires is that the source out of which this commission is paid is the profit of the employer and there is ho finding before us that in fact this commission was not paid out of the profits. One has only to look at the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Advocate-General himself relies, which is section 55. That is a section dealing with super-tax, which lays down that, in addition to the income-tax charged for any year, there shall be charged, levied and paid for that year in respect of the total income of the previous year super-tax as mentioned in that section. Therefore, in this section a clear distinction is drawn between charging, levying and paying. If that be the true position, when we turn to the assessment order, there is no doubt that there has been an assessment of the total income at ₹ 4,11,084, and in this assessment ₹ 56,360 is included as income which should bear tax. Once the assessment is made, the income becomes liable to pay income-tax under section 3, acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessed and which has been charged. The only ground that the Tribunal has in its judgment given for accepting the contention of the department is that the assessee was not assessable to tax by reason of section 25 (4). That, with respect, is a clearly erroneous view of the matter. The assessee was not bound to make an application under section 25 (4). He might not have made an application in which case the position would have remained the same except that the department would have proceeded to the next stage, that of levying the tax, but because he did apply under section 25 (4) and the application was granted the department stopped at the second stage of charging and did not proceed to levy the tax or compel the assessee to pay the tax. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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