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1960 (2) TMI 6 - SC - Income TaxWhether the commission accrued on the proceeds of every single sale or it accrued only when the assessee firm exercised its option to charge its commission on the total sale proceeds or on the weight of the yarn sold? Whether the managing agents were to get the amount of commission after the whole profit was determined at the end of the year? Held that:- On a proper construction of the contract, it is obvious that the managing agents were to be paid at the end of the year. They had the option of receiving a percentage on total sales or three pies per pound and this was exercisable at the end of the year. There was also a liability to pay back a portion of the commission in certain contingencies which also could be determined only when the accounts were made up for the year. It is thus clear that there was no accrual of any commission till the end of the year. On this construction of the contract it cannot be held that the commission had accrued as and when the sales took place and that as a result of their agreeing to the modification of the agreement the managing agents had voluntarily relinquished a portion of their commission. On the other hand under the original agreement the managing agents were entitled to receive commission only at the end of the year and before then the agreement was varied modifying its terms as from the beginning of the accounting year. Appeal dismissed.
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