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1958 (10) TMI 3 - SC - Income TaxWhether the commission payable to the managing agents under this agreement is to be ten per cent. of the profits of the assessee without deduction of the excess profits tax payable by it on its profits or after deduction? Held that:- nothing turns on the fact that at the date the agreement under consideration was made, the Excess Profits Tax Act had not come on the statute book nor perhaps been thought of, and, therefore, could not have been in the contemplation of the parties. If the net profits are the divisible profits, everything necessary to be excluded to arrive at the divisible profits has to be deducted whether it was in the contemplation of the parties or not. It is easy to imagine instances. Suppose after the agreement the Government imposed a licence fee on the payment of which alone the business could have been carried on and that licence fee was not in the contemplation of the parties when the agreement had been made. None the less it has clearly to be deducted in finding out the divisible profits. In the result we would answer the question framed in the affirmative. Appeal allowed.
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