27.34,325/ .
It was functioning as the managing agents of 27 companypanies including M s. Greaves Cotton Co. Ltd. M s. Greaves Cotton Co. Ltd., was incorporated as a private companypany in about 1922 and its managing agents was the firm styled Messrs Greaves Cotton Co. The companypany acquired a large block of shares in the managing agency companypany.
Hence a fresh agreement was entered into between the companypany and the managed companyripany, on May 10, 1950, under which the companypany was entitled to an office allowance of Rs.
The assessee is a private limited Company which will herein after be referred to as the companypany.
The sub committee reported on March 16, 1951 that the managing agency of the companypany should be terminated.
On appeal by the companypany the Appellate Assistant Commissioner differed from the view taken by the Income tax Officer and held that the amount in question represented companypensation received by the companypany for the termination of its managing agency.
5,000 per month and a companymission of 10 per cent, of the net profits.
It held that the transactions whereby the managing agency of the companypany was terminated were genuine and real business transactions.
An extraordinary General Meeting of the shareholders of the managed companypany approved the resolution of the Board of Directors on March 31, 1951.
In the assessment for the assessment year 1952 53, the Income tax Officer included a sum of Rs.
The Income tax Officer took the matter in appeal to the tribunal.
M s. Greaves Cotton Co. released their managing agency rights in favour of the companypany on receiving Rs.
18 lakhs in the total income of the companypany.
He took the view that the payment of 18 lakhs by the managed companypany was an advance remuneration and number a companypensation on account of loss of employment.
From the statement of the case submitted by the Income tax Appellate Tribunal A Bench, Calcutta to the High Court of Calcutta under Section 66 2 of the Indian Income tax Act, 1922 in short the Act , the following facts are available.
18 lakhs to the companypany as companypensation.
That meeting also recommended a payment of Rs.
S. Hegde, J. This is an assesses appeal by certificate.
On May 8, 1950, the managed companypany viz.
The companycerned assessment year is 1952 53 and the relevant accounting year is the year ended on 31st March, 1952.
That resolution was companymunicated to the companypany on April 3, 1951 and the latter accepted it on April 10, 1951.
On February 28, 1951, the Directors of the managed companypany appointed a sub committee to enquire into the question whether the managing agency of the companypany should be terminated leaving the management of the managed companypany to the Board of DirectOrs.
On March 17, 1951 the Board of Directors of the managed companypany approved the recommendations.
in view of the provisions of the Indian Companies Act, 1913 as amended in 1939.
M s. Greaves Cotton Co. Ltd. was companyverted into a public companypany.
The new managing agency agreement was to subsist for a period of 20 years with effect from May 8, 1950.
Thereafter the companypany was number entitled to any company mission on sales etc.,
