9911796707
TMI Blog1968 (10) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... stions have arisen under the following circumstances: The assessee, Messrs. H. G. Gupta & Sons, Delhi, is a registered firm deriving income from managing agency and financing business. The assessment year under reference is 1954-55 and the corresponding previous year is the year ending on March 31, 1954. The assessee-firm was appointed as managing agent to Messrs. H. G. Gupta & Sons Ltd., under an agreement, dated January 6, 1948. By that agreement, Lala Hans Raj Gula, the managing partner of the managing agency-firm (assessee), was appointed as the permanent chairman of the board of directors of the managed company. The remuneration of the managing agent was fixed by clause 2 of the agreement which included, inter alia, " 15% commission o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l consideration. He, accordingly, included the sum of Rs. 25,000 in the total income of the assessee firm. Against the said assessment order of the Income-tax Officer, the assessee firm preferred an appeal to the Appellate Assistant Commissioner, and contended that, on a correct interpretation of clause 2(b) of the managing agency agreement, the assessee firm was entitled to a minimum commission of Rs. 25,000 only when the profit of the managed company exceeded Rs. 25,000 that since in the relevant year the managed company made a profit only Rs. 5,571 before charging any commission payable to the assessee firm, no commission had at all accrued to the assessee firm, and that, therefore, the said amount ought not to have been included in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(b) of the agreement, the assessee firm was entitled to Rs. 25,000 as commission and that there was no actual waiver in respect of the sum of Rs. 25,000 by the assessee firm, and, therefore, there could not be any question of the said sum being allowed as a deductible expenditure under section 10(2)(xv) of the Income-tax Act, irrespective of the fact whether it was on grounds of commercial expediency or otherwise. Therefore, the assessee firm, by an application under section 66(1) of the Indian Income-tax Act, 1922, required the Tribunal to refer the two questions of law, already set out above, to this court. The Tribunal, agreeing that the two questions of law did arise out of its order, dated May 31, 1963, referred the said questions to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee firm, and that, therefore, no commission had accrued to the assessee firm and was, in fact, paid to the assessee firm. On the other hand, Shri A. N. Kirpal, the learned counsel for the Commissioner of Income-tax, contended that the words " minimum profit " used in clause 2(b) of the agreement meant that, under clause 2(b) of the agreement, the assessee firm was entitled to a minimum commission of Rs. 25,000 and the same had accrued to the firm in the year in question. In our opinion, the contention of Shri Kirpal is correct. On a plain reading of clause 2(b) of the agreement, it is apparent that the expression " minimum profit " used in the clause refers to the minimum amount of commission which the managing agency firm (as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee firm in the accounting year in question. Our answer to the first question referred to is that the sum of Rs. 25,000 was assessable in the hands of the assessee firm as its income. The second question referred to us relates to the contention of the assessee that the sum of Rs. 25,000 should be allowed as deductible expenditure under section 10(2)(xv) of the Act. This question would arise only if there was a conscious waiver of the sum, on considerations of commercial expediency by the assessee-firm. On a consideration of the facts and circumstances of the case, the Appellate Tribunal held that there was no actual waiver in respect of the sum of Rs. 25,000 by the assessee firm. This is a finding of fact, and in view of the same, the que ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
