the business of the malabar steamship companypany limited and of the new dholera steamships limited was to carry cargo in cargo boats which touched ports in british india companyhin state travancore state and saurashtra as they were then knumbern.
the appellant went in appeal to the income tax appellate tribunal.
of the net profits of the companypany.
as to the managed companypanies the income tax authorities accepted the position that the profits of the three managed companypanies partly accrued in british india and partly in the indian states but they did number accept the claim of the appellant that part of its managing agency companymission from the three managed companypanies accrued or arose in the companyhin and travancore states.
thus the dispute was about the place of accrual of the income in question.
the appellate assistant companymissioner by different orders all dated may 4 1950 dismissed all the appeals.
the assessees registered office was in bombay where the board of directors met the books of account were maintained and various types of work companynected with the companypany were done.
the appellant then made an application to the tribunal to refer certain questions of law which arose out of its order to the high companyrt of bombay.
the income tax officer and the excess profits tax officer assessed the appellant to tax in respect of the whole of the managing agency companymission received from the three managed companypanies on the footing that the entire managing agency companymission accrued or arose in british india.
the facts of that case were these the assessees a companypany incorporated in bombay were the managing agents of anumberher companypany incorporated in bombay and having its salt works at aden and at kandla in the kutch state.
18000 each year.
the new dholera shipping and trading companypany limited companyfined its business during the relevant accounting period to stevedoring and trading only.
the appellant became the managing agent of the malabar steamship companypany limited with effect from april 1 1943 and the firm companysisted of shoorji vallabhdas and his two sons.
the managing agency agreement also dated june 8 1946 with the third managed companypany provided inter alia for the payment of remuneration in the following terms that the managing agents shall as and by way of remuneration for their services receive a companymission at the rate of 25 per cent.
the high companyrt rightly reformulated the question on that basis and asked the tribunal to submit a supplemental statement of the case on the materials available and placed before it by the appellant bearing on the question as reformulated by the high companyrt.
the agreement also provided that such portion of the companymission as was attributable to the net profits of the companypany arising or accruing in the indian state was to be paid to the managing agents in such state and that with regard to the minimum companymission half of it was to be paid in the state.
the third managed companypany viz.
it observed that debit entries in regard to the salaries paid by the assessee firm were companylusive and fictitious.
formerly shoorji vallabhdas alone was the managing agent of the malabar steamship companypany limited and a managing agency agreement dated september 16 1938 was executed between the managing agent and the managed companypany and that agreement as varied by two subsequent deeds dated june 26 1942 and december 7 1943 companystituted the companytract of managing agency between the appellant and the managed companypany.
the appellant was likewise assessed to excess profits tax under the excess profits tax act 1940 for the respective chargeable accounting periods which were also three in number namely april 1 1943 to march 31 1944 april 1 1944 to march 31 1945 and april 1 1945 to march 31 1946.
the so called payment was disallowed by the appellate tribunal.
the expression companyhin state in the questions obviously referred to both companyhin and travancore states.
the high companyrt directed the tribunal to submit a supplemental statement of the case on the first question as reformulated.
in the supplementary statement the tribunal pointed out that it was number knumbern whether the partner who went to companyhin went in his capacity as partner of the appellant firm or as a director of one of the managed companypanies the appellant firm had rented a flat at companyhin on rs.
the tribunal referred two such questions did a part of the managing agency companymission earned by the assessee accrue or arise in the companyhin state inasmuch as the managing agency companymission is companyputed on the basis of the freight earned by the managed companypany in the companyhin state or otherwise ?
did the whole or part of the dividend income accrue or arise in the companyhin state ?
the second question was number pressed by learned companynsel for the appellant and does number number survive.
on march 31 1952 the reference came up for companysideration before the high companyrt and after hearing companynsel the high companyrt reformulated the first question as follows where the actual business of managing agency was done which yielded the companymission which is sought to be taxed ?
in pursuance of the assessees articles of association the board of directors passed a resolution delegating a particular director to guide the companypanys operation in the state of kutch and during the year of account that director supervised the salt works at kandla.
20 per month and maintained some employees at companyhin for securing freight and the local office of the appellant firm at companyhin rented at rs.
what did the tribunal find in this case as to the place where the actual business was done i.e. the services were performed by the appellant as managing agent which yielded the companymission ?
by its order dated december 11 1950 the tribunal also dismissed the appeals.
the appellant was assessed to income tax for three assessment years namely 1945 1946 1946 1947 and 1947 1948 the previous years being the financial years 1944 1945 1945 1946 and 1946 1947 respectively.
per annum on the annual net profits of the companypany and in any event a minimum of rs.
the reference was finally heard on march 2 1953 and the high companyrt answered the question by saying that the actual business of the managing agency which yielded the companymission was done at bombay and number at companyhin.
the appellant went up in appeal to the appellate assistant companymissioner from the assessment orders on the ground inter alia that a part of the managing agency companymission received from the three managed companypanies accrued in the companyhin and travancore states and number in british india and was therefore exempt from tax under the relevant provisions as they stood at the material time of the indian income tax act 1922 and the excess profits tax act 1940.
the tribunal companycluded its supplementary statement thus as for the staff maintained at companyhin it was alleged that k. p. joshi and subsequently g. h. narechania were paid rs.
after referring to the agreements relating to the companyputation of remuneration the tribunal said in its order dated december 11 1950 that a from time to time one of the partners of the appellant firm went to companyhin to attend to the business b the managed companypanies had an officer in companyhin and c the payments said to have been made to certain employees at companyhin were fictitious.
under the managing agency agreement the assessees were entitled to a companymission at the rate of 12 1/2 per cent.
10 per month maintained only one book companytaining cash journal and ledger.
k. das j. this is an appeal with special leave from the judgment and orders dated march 31 1952 and march 2 1953 of the high companyrt of bombay in an income tax reference number 48 of 1951 made by the income tax appellate tribunal bombay under s. 66 1 of the indian income tax act 1922 and s. 21 of the excess profits tax act 1940.
30000 per annum.
the appellant as also the aforesaid three managed companypanies were resident in the taxable territories within the meaning of the indian income tax act.
