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1953 (1) TMI 2 - SC - Income TaxWhether on a true construction of Rule 5 of Schedule II of the Excess Profits Tax Act the expression 'so far as the contrary is shown' applies only to sub-clause (a) or also to sub-clause (b) ? Whether the managing agency commission payable by the company to its managing agents for the year 1943 is borrowed money for the purposes of Rule 2A or a debt for the purposes of Rule 2 of Schedule II to the Excess Profits Tax Act ? Held that:- A loan imports a positive act of lending coupled with an acceptance by the other side of the money as a loan. The relationship of borrower and lender cannot ordinarily come about by mere inaction. The clause in the Articles of Agreement quoted above was relied on for the purpose of showing that there was such an agreement in the case. We are unable to construe the provisions in that way. They merely give the managing agents a right to receive their commission at a certain time. If the money is not paid in time it lies with the assessee as a debt due to the agents. We agree with the High Court that it is a debt under Rule 2 and not a borrowing under Rule 2A. Appeal dismissed.
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