TMI Blog1957 (2) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... ive from the 1st of July, 1947, to the 31st of December, 1951. Under this agreement the assessee company was entitled to receive a certain percentage of premiums paid to the insurance company as renewal commission . This agreement was terminated with effect from the 31st of August, 1950. A fortnight later, i.e., on the 14th of September, 1950, the assessee was reappointed chief agent of the insurance company on certain new terms which conformed to the provisions of the Insurance Act as amended in the year 1950. At the time of the termination of the 1949 agreement certain amounts as renewal commission were due to the assessee and the insurance company agreed to pay half of this commission in a lump sum which was calculated at ₹ 38,937 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company would not affect the nature of the payment under consideration in this case. In the alternative it was argued that this payment was receipt in the nature of capital receipt. In the present case it may be stated that we are concerned with the receipt of a certain amount by the assessee and, therefore, we have to look at it from the point of view of the recipient and not that of the payer. I proceed to deal with the first point raised by the learned counsel. Under the 1949 agreement the assessee was entitled to receive renewal commission. The payment of this commission was not dependent on the continuation or cessation of this agreement. This commission by the nature of things was payable during the continuation of the agreement an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission wholly or in part and therefore it cannot be said that the commutation in the present case was compensation for terminating the 1949 agreement. There is no suggestion that the assessee would not have agreed to the termination of the agency if the insurance company had not agreed to commute half of the renewal commission. The learned counsel for the assessee, however, relied on the decision in In re P.D. Khosla [1945] 13 ITR 436 , and characterised it as on all fours with the facts of the present case. I regret I am unable to agree with the learned counsel. The facts of that case were very different. Khosla had joined the Bharat Insurance Co. Ltd., on the 22nd June, 1936. The terms of his employment were that as manager of the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision in Godrej Co. v. Commissioner of Income-tax [1954] 25 ITR 108. That case also is easily distinguishable. In that case Godrej Co. were appointed as managing agents of Godrej Soaps Ltd., in 1933 for thirty years on certain terms. In 1946 the managing company found the terms of the managing agency rather onerous and asked the managing agents to lower its terms of remuneration on receipt of ₹ 7,50,000. The managing agents accepted this proposal. It was held by the Bombay High Court that the effect of the 1946 agreement was that the managing agents Godrej Co. were paid a lump sum in consideration of the assessee-company agreeing to serve the managing company on a reduced salary and this amount of ₹ 7,50,000 represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depends on the facts of each case which must be considered for determining whether a particular payment should be held to be chargeable as income under the Income-tax Act or not. It is, therefore, necessary to deal with the facts of the present case to determine in substance the nature of the payment made. It is clear that this renewal commission was payable from time to time to the assessee as it accrued in accordance with the terms of the 1949 agreement. On the 31st of August, 1950, the assessee was entitled to a certain amount of renewal commission which was payable in future and from time to time. The assessee wanted that half of this commission to which he was entitled should be commuted and paid to him immediately. As I have already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income for the purposes of income-tax must be held to be charge able to income-tax. The same view was taken by Lord Romer in Prendergast v. Cameron [1940] 23 Tax Cas. 122. It seems to me, therefore, that in the present case the substance of the transaction was merely payment of income or remuneration in a lump sum, and therefore, it must be held to be a revenue receipt. The learned counsel then argued that in this view of the matter the case in which persons receive lump sums in commutation of their pensions would become liable to income-tax on these amounts. It is, however, not necessary to deal with pension cases in this judgment, nor is it necessary to discuss the nature of pension and the effect of its commutation on the liability of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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