TMI Blog1960 (2) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... hat they would have received had the terms of the managing agency agreements not been varied. Appeals dismissed. - - - - - Dated:- 19-2-1960 - Judge(s) : J. L. KAPUR., M. HIDAYATULLAH., S. K. DAS JUDGMENT The judgment of the court was delivered by KAPUR, J.--These are two appeals against two judgments and orders of the High Court of Bombay on two references made by the Income-tax Appellate Tribunal. The appellant in both the appeals is the Commissioner of Income-tax and in C.A. No. 162 of 1958, the respondent is the assessee Chamanlal Mangaldas Co., a registered firm, who are the managing agents of Girdhardas Harivallavdas Mills Ltd., Ahmedabad, and in C.A. No. 210 of 1958, the respondent is Mangaldas Girdhar Das Parekh L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same date. On March 17, 1951, a supplemental agreement was entered into between the managed company and the managing agents whereby a proviso was added to the managing agency agreement embodying the terms of the resolution of December 28, 1950, which had been agreed to by the managing agents. A meeting of the board of directors of the managed company by a resolution dated April 8, 1951, resolved that the managing agents should accept a commission of Rs. 1,05,575 instead of Rs. 2,05,575 ; in other words that they should be paid Rs. 1,00,000 less than the commission calculated at the rates mentioned in the original agreement. On December 31, 1950, in the books of the company the following entry was made : "Rs. 1,05,575-3-0 M/s. Chaman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income of the assessee company was not Rs. 2,05,575 but only Rs. 1,05,575. The High Court proceeded on the basis that there was no accrual of income as contended by the Commissioner of Income-tax who has come in appeal to this court by special leave. In Civil Appeal No. 210 of 1958 the facts are very similar. The agreement between the managing agent and the managed company was dated May 9, 1947, by clause (3) of which the managing agent was to be paid for services as secretaries and treasurers and agents a commission of 3% on the gross sale proceeds of all yarn and cloth manufactured in the company's mills provided that if there was not sufficient profit in any financial year to enable a distribution of a dividend of Rs. 1,20,000 on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e managing agents of a part of the income, i.e., Rs. 1,00,000 which was the difference in both cases between the commission payable under the original agreements and the commission calculated on the modified agreements. In these appeals, as in C.A. No. 145 of 1958, which we have decided today, the question is one of construction of the terms of the contract and the question has to be determined on that basis. In both these appeals the clause in regard to commission has to be read as one integrated whole. In C.A. No. 162 of 1958 the commission was payable on the sale price of all cotton yarn and cloth sold and on the sale proceeds of all material yarn and fabrics manufactured from other fibres and sold by the company and 10% on the net profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the managing agency agreement containing the terms as to commission was also to be determined at the end of the year. The agreement was one integrated and indivisible whole. In this appeal the commission was at 3% on the sale of all yarn and cloth manufactured by the managed company and the total commission was only determinable and would accrue when the year was over. Further the right to receive the commission arose after the profits were determined because only then could it be decided as to what amount, if any, the managing agents would have to contribute under the proviso to clause 3. Counsel for the appellant relied on the entry in the books of account of the company where the words used are "amount accrued Rs. 5,11,875", but ..... X X X X Extracts X X X X X X X X Extracts X X X X
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