Let us number have a look at the facts.
The Government instructed the Company to take up the manufacture of Leyland Commercial Vehicles.
From April 1954, the Company ceased to assemble Austin Cars in view of the ,Government decision and engaged itself in the manufacture of Leyland Commercial Vehicles.
The assessee was a public Limited Co., originally known as Ashok Motors Ltd. It was incorporated on September 7, 1948.
The Articles of Association of the Company authorised it to carry on various businesses, such as manufacturers, assemblers, dealers, hirers, repairers of motorcars, motorcycles, motor buses, lorries, trucks etc.
The managing agents were to be paid at the rate of Rs.
The Minister is stated to have assured that the Government would arrange for the required capital in India but that responsibility would be in the nature of companytingent liability and that it would accept such a liability only if the Managing Agency is abolished.
Appeal by certificate from the judgment and order dated February 8, 1968 of the Madras High Court in Tax Case No.
It also participated in the proceedings of the Tariff Corn mission.
In the companyrse of the discussion, the Union Minister suggested to the Company to invite Leylands to provide capital as and when required till their holding bore to the existing paid up capital in the ratio of 40/45 to 50155 per cent subject to a maximum of half a million pounds.
During the year 1952, the Government of India referred the question of establishing an Automobile Industry in India to the Tariff Commission.
2,50,000/. The Company paid the said sum during the accounting year ended on December 31, 1955, relevant to the assessment year 1956 57.
Thereafter the Commissioner moved the High Court under s. 66 2 and at the instance of the High Court, the Tribunal stated the case and submitted the aforementioned question of law to the High Court.
The Company prepared and submitted a companyprehensive memorandum to the Tariff Commission for the manufacture of Leyland Trucks.
In particular it authorised the Company to import into India Austin Cars and other Austin products, to assemble Austin products from their companyponents, to undertake the progressive manufacture in India, of such parts of Austin products as can under suitable provisions for such manufacture be manufactured thereto, supply Austin products and parts to accredited distributors for resale to the public in India and to provide adequate facilities for the prompt servicing of Austin products in India.
93 of 1964.,
The Company was asked to rise the remaining capital in India.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
The progress of the scheme was reviewed by all the Directors on January 24, 1955 when the Union Minister for Commerce and Industry was also present.
The Tribunal refused to state the case taking the view that its findings are findings of fact.
Swaminathan, D. P. Mohanthy and S. Gopalakrishnan, for the respondent.
The Directors pointed out to the Minister that they had already taken steps to terminate the services of the managing agents on payment of companypensation.
Initially the business of the Company companysisted in the assembly ,and sale of Austin cars and Leyland Trucks.
2,50,000/ made by the respondent assessee which will hereinafter be referred to as the companypany for the termination of managing agency is an allowable deduction in companyputing the total income of the companypany for 1956 57.
The Judgment of the Court was delivered by HEDGE, J. The Commissioner of Income tax Madras is appealing against the decision of the Madras High Court in a Reference under s. 66 2 of the Indian Income tax Act, 1922 to be hereinafter referred to as the Act after obtaining certificate of fitness from the High Court.
The Income tax Officer as well as the Appellate Assistant Commissioner rejected the claim of the Company that it was a Revenue expenditure but the Tribunal in appeal upheld the companytention of the Company Aggrieved by the decision of the Tribunal, the Commissioner, demanded a case to be stated for obtaining the opinion of the High Court on the question Whether on the facts and in the circumstances of the case the payment of Rs.
1989 of 1969.
The Company appointed Car Builders Limited, as their manag ing agents under an agreement dated October 18, 1948 for a term of 14 years from the date of its registration.
