The Income tax Officer rejected this claim and his decision was upheld on appeal by the Appellate Assistant Commissioner.
18,787.
The respondent was an employee of Dadajee Dhackjee and Co., Bombay hereinafter referred to as the firm .
84,540 as and by way of companymission pad to three employees of the firm including the respondent, the companymission being calculated at three per cent.
As already stated the respondents share of companymission disallowed to the firm in respect of the assessment year 1945 46 was Rs.
As the wifes share is to be included in the total income of the husband under Section 16 3 1 , the entire income of the firm was taken into companysideration in the assessment of the male partner.
In companynection with the assessment years 1944 45 and 1945 46, the respondent claimed that, as in the assessment of the firm during the years 1944 45 and 1945 46 two thirds of the companymission paid to him for Sambat years 1999 and 2000 had been disallowed and taxed in the hands of the firm, he was entitled to an exemption from income tax and super tax on the companymission so disallowed to the firm and on which the firm had paid the tax.
The Income Tax Officer next companysidered the claim of the firm for relief under Section 25 4 of the said Act, as the business of the firm had been taken over by a private limited companypany, Dadajee Dhackjee and Co. Ltd., as a going companycern with its assets and liabilities from the Sambat year 2001.
As the firm had been assessed under the Income tax Act, 1918 and as numberice was duly given on June 4, 1945 about the discontinuance of the business, the Income Tax Officer held that the firm was entitled to the relief claimed and accordingly allowed the same.
This claim was made on the strength of the Finance Department Notification NO.
Provided that such sums shall number be exempt from the payment of super tax unless they are paid to the assessee by a person other then a companypany and have already been assessed to super tax.
On application under section 66 I of the said Act, the Tribunal, on January 14, 1955, submitted a statement of case to the High Court raising the following question of law for the determination of the High Court Whether the assessee is entitled to relief granted by the Notification referred to above ?
8 dated March 24,1928.
The said numberification was expressed in the terms following The following classes of income shall be exempt from the tax payable under the said Act, but shall be taken into account in determining the total income of an assessee for the purposes of said Act Sums received by an assessee on account of salary, bonus, companymission or other remuneration for services rendered or in lieu of interest on money advanced to a person for the purposes of his business, Where such sums have been paid out of, or determined with reference to, the profits of such business and by reason of such moods of payment or determination, have number been allowed as a deduction but have been included in the profits of the business on which income tax has been assessed and charged under the head business.
After deducting Rs.
A further appeal to the Tribunal was also rejected, the Tribunal taking the view that the numberification companyld only apply in respect of the profits of a business on which income tax had been assessed and charged and that as the income of the firm had number been assessed and charged to income tax in the relevant year, the numberification had numberapplication.
On its total annual turnover in its Colour Department in addition to their respective salaries.
1,19,816 being the loss of the Motor Department from the profit of Rs.
As the firm was registered under Section 26A of the said Act, numberdemand was made on the firm in view of Section 23 5 a and the total income companyputed as aforesaid was distributed amongst the two partners who were husband and wife.
In companynection with the assessment of the firms income for the assessment year 1945 46, for which the accounting year was Sambat 2000 companyering the period between October 30, 1943, to October 17, 1944 , the Income tax Officer found that the profit and loss account of the Colour Department of the firm had been debited with Rs.
5,30,900 of the Colour Department, so arrived at, the total income of the firm was companyputed at Rs.
The reason given for this disallowance was that the amount paid as companymission was to the extent of 2/3 thereof, unreasonable and excessive, and number permissible under Section 10 2 xv .
The firm used to pay to each of its three employees, including the respondent, a companymission of one per cent.
878 F dated March 21,1922, as amended by Notification No.
On March 19,1949, the respondent submitted returns for the assessment years 1944 45, 1945 46,1946 47, 1947 48 and 1948 49.
Das, C.J. This is an appeal by special leave from the order of the High Court of judicature at Bombay passed on September 22, 1955, on a reference under section 66 I of the Indian Income tax Act XI of 1922, hereinafter referred to as the said Act made by the Income tax Appellate Tribunal whereby the High Court answered the question of law referred to it by the Tribunal in the affirmative.
