37,157/ 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 he claimed as a valid deduction under the provisions of the Act.
73,787/ for the assessment year 1957 58 as a deduction under the provisions of s. 10 2 xv of the Income tax Act, 1922.
8,71,873/ and received Rs.
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.
Appeals by special leave from the judgment and order dated the 20 1 1970 of the Punjab and Haryana High Court at Chandigarh in I.T. Reference No.
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 s. 10 2 xv of the Income tax Act, 1922 hereafter referred to as the Act.
The special leave having been granted, the appeal is number before us.
73,787/ , under sec.
37,157/ and Rs.
Thereafter the appellant moved the High Court for grant of leave to appeal to the Supreme Court which having been rejected the appellant filed a petition for special leave.
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 as it was incurred for the purpose of the assessees trade in order to facilitate the business of the assessee.
10 2 xv of the Income tax Act, 1922, 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 companyrse of two years, namely, assessment years 195 57 ending on March 31, 1956 and 1957 58 ending on March, 31, 1957.
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 companymission on net sales and 50 companymission on net sales of the worsted plant.
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.
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.
37,157/ and Rs.
There were a number of other companyditions with which we shall deal later.
622 623 of 1971.
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.
CIVIL APPELLATE JURISDICTION Civil Appeals Nos.
The selling agents M s. Saligram Premnath advanced a sum of Rs.
What is more was that the agents agreed to a deduction of 50 of the loss incurred by the assessee Company from their remuneration.
N. Goyal, for the respondent The Judgment of the Court was delivered by FAZAL ALI, J. These are appeals by the Revenue by special leave against the order of the High Court of Punjab 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.
The appeal arises in the following circumstances.
The Tribunal further held that the agreement dated October 20, 1955 amounted to a joint venture for the distribution of profit, between the assessee Company and the selling agents after the profits were ascertained.
B. Ahuja and S. P. Nayar, for the appellants.
73,787/ were chargeable to tax in the hands of the assessee Company in the assessment years 1956 57 and 1957 58 respectively?
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 that the sums in question were number legal deductions as companytemplated under s. 10 2 xv of the Act but amounted to application of profits after they were earned.
37,157/ and Rs.
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.
10 l and Sec.
6,26,847/ and Rs.
The assessee Company accordingly in its return for the year 1956 57 claimed the amount of Rs.
7 lakhs from the Industrial Finance Corporation.
The second Department which carried on the operations of spinning of yarn from imported wool tops was started some time in the year 1952.
M s. Panipat Woollen 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.
2 of 1965.
The assessee Company appointed M s. Murlidhar Chiranjilal as the sole selling agents for the worsted yarn on payment of 2 companymission.
Weaving operations were, how ever carried on in both these Departments.
The plant went into production in September 1952.
Subsequently on December 15, 1953 the assessee Company entered into an agreement with Mis 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.
