TMI Blog1969 (2) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... he Imperial Chemical Industries (Export) Glasgow [hereinafter referred to as the I.C.I. (Export) Ltd.] is another subsidiary of I.C.I. London which holds the entire share capital of I.C.I. (Export) Ltd. The I.C.I. (Export) Ltd. had appointed as their selling agents in India four companies, viz., (1) Gillanders Arbuthnot and Co. Ltd., Calcutta, (2) Best and Co. Ltd., Madras, (3) Anglo-Thai Co. Ltd., Bombay, and (4) Shaw Wallace and Co. Ltd. With effect from 1st April, 1948, the I.C.I. (Export) Ltd. terminated the services of the aforesaid selling agents and appointed the assessee as its sole selling agent. The I.C.I. (Export) Ltd. had agreed to pay to the former selling agents compensation at the rate of two-fifths, two-fifths and one and two-fifths of the commission earned by the assessee for the three years from 1st April, 1948. The compensation was paid to the four companies through the accounts of the assessee. For this purpose the modus operandi adopted was as follows: The compensation payable to the former agents was spread over a period of three years and on the assumption that the turnover was constant, the compensation, payable to the selling agents was, on an average, an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee when the former selling agencies were terminated and the assessee was appointed as the sole selling agent. It was observed that the assessee was not collecting any commission on behalf of the outgoing agents and it was not their legal obligation to pay compensation to the outgoing agents. If the assessee was not entitled to more than 3/5ths of commission during the first two years, it should have credited that amount whereas the assessee had actually credited four-fifteenths on a notional basis which was not in consonance with the arrangement. The conclusion reached by the Appellate Tribunal was that " there was no agreement between the assessee and the I.C.I. (Export) Ltd. and " if there was one it was not acted upon ". It was held by the Appellate Tribunal that the payment of compensation was not because of an overriding title created either by the act of parties or by operation of law. At the instance of the assessee the following question of law was referred to the High Court under section 66(1) of the Income-tax Act, 1922 (hereinafter called the Act): 'Whether the inclusion by the Income-tax officer of Rs. 2,03,503, Rs. 5,41,526, Rs. 5,29,284 and Rs. 4,00,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of the I.C.I. (Export) Ltd. The affidavits did not mention the amount of commission to be paid to the outgoing agents and the affidavits were also not consistent with the entries in the books of accounts of the assessee. The letter of M/s. Lovelocke and Lewes was produced at a very late stage during the hearing of the appeal before the Tribunal and even otherwise the letter merely explains the method of accounting adopted by the assessee and did not carry the matter any further. In the circumstances, the Appellate Tribunal held that there was no agreement between the assessee and the I.C.I. (Export) Ltd. and if there was any such agreement it was not acted upon. It is manifest that the finding of the Appellate Tribunal on this question is a finding on a question of fact and the High Court was not entitled to interfere with this finding. It is well established that the High Court is not a court of appeal in a reference under section 66 (1) of the Act and it is not open to the High Court in such a reference to embark upon a reappraisal of the evidence and to arrive at findings of fact contrary to those of the Appellate Tribunal. It is the duty of the High Court while hearing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rary viewpoint was urged on behalf of the appellant. It was pointed out that the assessee was acting as the agent of the <?xml:namespace prefix = st2 /> I.C I. (Export) Ltd. for the payment of compensation to the ex-agents and the payment was made not in the character of a trader but in the character of the agent of its principal. The contention of the appellant was that the assessee got the right to sell goods after 1st April, 1948, and for getting that right the assessee parted with a portion of its commission for the first two years after 1st April, 1948, and paid very much more than the commission earned in the third year. This position was borne out by the accounts of the respondent which show that the assessee received the commission at full rates and out of it created a reserve account of which these compensations were made to the ex-agents. We have, already referred to the finding of the Appellate Tribunal that no agreement between the assessee and the I.C.I. (Export) Ltd. has been proved. In the absence of proof of the exact terms and conditions of the agreement it is not possible to accept the argument of the assessee that the amount paid as compensation to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... properties in the hands of the Raja by the court. The Raja sought to deduct this amount from his assessable income, which was disallowed by the High Court at Calcutta. On appeal to the Judicial Committee Lord Macmillan observed as follows: " But their Lordships do not agree with the learned Chief Justice in his rejection of the view that the sums paid by the appellant to his step-mother were not 'income' of the appellant at all. This in their Lordships' opinion is the true view of the matter. When the Act by section 3 subjects to charge 'all income' of the individual, it is what reaches the individual as income which it is intended to charge. In the present case the decree of the court by charging the appellant's whole resources with a specific payment to his step-mother has to that extent diverted his income from him and has directed it to his step-mother ; to that extent what he receives for her is not his income. It is not a case of the application by the appellant of part of his income in a particular way, it is rather the allocation of a sum out of his revenue before it becomes income in his hands. " Another case of the Judicial Committee is reported in P. C. Mullick ..... X X X X Extracts X X X X X X X X Extracts X X X X
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