The assessee Company then approached the Tribunal for making a reference to the High Court and the Tribunal accordingly referred the following two questions to the High Court for its opinion Whether on the facts and in the circumstances of the case, the Tribunal rightly held that the sums of Rs.
under Section 10 1 xv and Section 10 2 xv of the Income tax Act.
The special leave having been granted, the appeal is number before us.
37,157/ and Rs.
37,157/ and Rs.
2,50,000/ and the assessee Company agreed to pay 6 interest on the advances to be made by the agents and further agreed to pay 2 companymission on the net proceeds of sales of goods in India.
37,157/ and Rs.
37,157/ and Rupees 73,787/ for the assessment year 1957 58 as a deduction under the provisions of Section 10 2 xv of the Income tax Act, 1922.
73,787/ were chargeable to tax in the hands of the assessee Company in the assessment years 1956 57 and 1957 58 respectively ?
73,787/ as 50 companymission on the net profits of the worsted plant in the Course of two years, namely, assessment years 1956 57 ending on March 31, 1956 and 1957 58 ending on March 31, 1957.
M s. Panipat Woollen and General Mills Co. Ltd. hereafter referred to as the assessee Company had two Departments 1 for spinning of yarn from raw and waste wool and 2 for spinning of yarn from imported wool tops.
The selling agents M s. Saligram Premnath advanced a sum of Rs.
and the Tribunal was wrong in disallowing the same.
73.787/ .
The case of the assessee was that the two amounts mentioned above being in the nature of companymission paid to the selling agents would be deemed expenses incurred by the Company in Order to earn profits and would, therefore, fall within the ambit of Section 10 2 xv of the Income tax Act.
What is more was that the agents agreed to a deduction of 50 of the loss incurred by the assessee Company from their remuneration.
The High Court by its Judgment dated January 20.
7 lakhs from the Industrial Finance Corporation.
The plant went into production in September 1952.
1922, in the assessment years 1956 57 and 1957 58 respectively ?
The assessee Company went up in appeal to the Appellate Assistant Commissioner who accepted the plea of the assessee Company and held that the payment was a permissible deduction is it was incurred for the purpose of the assessees trade in Order to facilitate the business of the assessee.
It is said that the assessee company was running at a companystant loss as a result of which in 1952 the assessee Company decided to instal a plant for manufacture of worsted yarn from imported wool tops by raising a loan of Rs.
Before expiry of this agreement, another agreement was entered into by the assessee Company with the agents on October 20, 1955, under which the agents were to get 6 interest on all the advances made by them, 1 1/4 companymission on net sales and 50 companymission on net sales of the worsted plant.
The assessee Company appointed M s. Murlidhar Chiranjilal as the sole selling agents for the worsted yarn on payment of 2 companymission.
Whether on the facts and in the circumstances of the case, the Tribunal rightly disallowed the assessee Companys claim for deduction of the payment of Rs.
Subsequently on December 15, 1953.
6,26,847/ and Rs.
The Income tax Officer, however, disallowed the deduction and held that the deduction claimed was actually a division of profits after the profits had companye into existence and had been ascertained, and therefore companyld number be claimed as a valid deduction Tinder the provisions of the Act.
The Tribunal further held that the agreement dated October 20.
1922 hereafter referred to as the Act.
The Revenue then went up in appeal before the Tribunal which after companysidering the facts and the law on the subject upheld The companytention of the Revenue and held eat the sums in question were number legal deductions as companytemplated under Section 10 2 xv of the Act but amounted to application of profits after they were earned.
1955, amounted to a joint venture for the distribution of profits between the assessee Company and the selling agents after the profits were ascertained.
Thereafter the appellant moved the High Court for grant of lave to appeal to the Supreme Court which having been rejected the appellant filed a petition for special leave.
the assessee Company entered into an agreement with M s. Saligram Premnath under which the latter were appointed as the sole selling agents on certain specified companyditions, the important of which being that the agents were to finance the assessee Company to the extent of Rs.
There were a number of other companyditions with which we shall deal later.
8,71,573/ and received Rs.
Murtaza Fazl Ali, J. These are appeals by the Revenue by special leave against the Order of the High Court of Punjab and Haryana dated January 20, 1970, answering the questions referred to the High Court by the Tribunal in favour of the assessees respondents and against the Revenue.
Weaving operations were, however, carried on in bath these Departments.
The second Department which carried on the operations of spinning of yarn from imported wool tops, was started some time in the year 1952.
One of the Departments was known as M s. Panipat Woollen Mills, Kharar while the other one was known as M s. Navin Woollen Mills.
