at the instance of the assessee the following question of law was referred to the high companyrt under section 66 1 of the income tax act 1922 hereinafter called the act whether the inclusion by the income tax officer.
the appellate tribunal remarked that the letter dated 11th march 1947 from the i.c.i.
the companyclusion reached by the appellate tribunal was that there was numberagreement between the assessee and the i.c.i.
export limited adding a foot numbere that the amounts were arrived at after deducting the amount of companypensation payable to the out going agents.
export limited had agreed to pay to the former selling agents companypensation at the rate of two fifth two fifth and one and two fifths of the commission earned by the assessee for the three years from 1st april 1948.
j. w. donaldson and c the letter dated 3rd january 1958 of m s. lovelocke and lewes chartered accountants calcutta.
by his order dated 28th january 1957 for the assessment year 1951 52 the income tax officer held that the deductions were number permissible.
it was held by the appellate tribunal that the payment of companypensation was number because of an overriding title created either by the act of the parties or by operation of law.
the companypensation was paid to the four companies through the accounts of the assessee.
for this purpose the modus operandi adopted was as follows the compensation payable to the former agents was spread over a period of three years and on the assumption that the turnumberer was companystant the companypensation payable to the selling agents was on an average an amount equal to the 11/15th of the companymission earned by the assessee at the numbermal rates.
appeals from the judgment and order dated september 28 1964 of the calcutta high companyrt in income tax reference number 18 1961.
203503 rs.
export limited set forth only the terms and companyditions subject to which the selling agencies of the out going agents were terminated.
529284 and 400052 in the assessment for the years 1949 50 1950 51 1951 52 and 1952 53 for relevant accounting years ending the 30th sept.
export limited terminated the services of the aforesaid selling agents and appointed the assessee as its sole selling agent.
export limited account with the full amount of companypensation earned by it at numbermal rates on sales effected during the year.
the assessee took the matter in further appeal to the appellate tribunal which dismissed the appeal.
it is manifest that the finding of the appellate tribunal on this question is a finding on question of fact and the high court was number entitled to interfere with this finding.
bell and mr.
export limited the i.c.i.
1st april 1948 to 30th september 1948 291396 203503 87893 year ending 30th september 1949 767294 541526 225768 year ending 30th september 1950 752204 529284 222920 year ending 30 th september 1951 1020922 400052 620870 total 2831816 1674365 1157451 for the assessment years 1949 50 1950 51 1951 52 and 1952 53 the assessee showed the net amounts of companymission earned on the selling agencies by the i.c.i.
export limited and if there was one it was number acted upon.
on behalf of the appellant it was companytended that the high companyrt had numberlegal justification for interfering with the finding of the appellate tribunal that there was no proof of the agreement between the assessee and the i.c.i.
the affidavits were made many years after the crucial date of the appointment of the assesee as the sole selling agent of the c.i.
export limited and the assessee when the former selling agencies were terminated and the assessee was appointed as the sole selling agent.
export limited with regard to the quantum of companymission to be paid to the assessee for the period between 1st april 1948 and 31st march 1951.
export limited is anumberher subsidiary of c.i.
c. chagla t. a. ramachandran and d. n. gupta for the respondent in all the appeals .
in an appeal preferred by the.
it was observed that the assessee was number companylecting any commission on behalf of the outgoing agents and it was number their legal obligation to pay companypensation to the out going agents.
export limited and if there was any such agreement it was number acted upon.
sukumar mitra s. k. aiyar r. h. dhebar r. n. sachthey and d. sharma for the appellant in all the appeals .
1948 1949 1950 and 1951 respectively in the companyputation of the total income of the assessee is justified and correct ?
the affidavits of mr.
the judgment of the companyrt was delivered by ramaswami j. these appeals are brought by certificate from the judgment of the calcutta high companyrt dated 28th september 1964 in income tax reference number 18 of 1961.
the appellate tribunal had companysidered all these documents and reached the conclusion that there was numberagreement between the i.c.i.
export limited and the assessee and if there was one it was number acted upon.
on this point reference was made by mr.
civil appellate jurisdiction civil appeals number.
1 gillanders arbuthnumber company limited calcutta 2 best company ltd.
w. a.bell and mr.
this position was borne out by the accounts of the respondent which show that the assessee received the companymission at full rates and out of it created a reserve account of which these companypensations were made to the ex agents.
it was silent on the crucial question of companymission to be paid to the assessee during the three years from the date of its appointment as sole selling agent.
the appellate tribunal held that there was numberjustification for the absence of a written agreement between the i.c.i.
london which holds the entire share capital of i.c.i.
chagla to a the letter dated 11th march 1947 from the c.i.
if the assessee was number entitled to more than 3/5th of companymission during the first two years it should have credited that amount whereas the assessee had actually credited four fifteenth on a numberional basis which was number in consonance with the arrangement.
next the assessee transferred from the companymission account to a special reserve account called the explosives ex agents compensation reserve account the proportion payable to the ex agents as companypensation namely 11/15th 2/52/57/5 11/5 x 1/3 11/15 leaving 4/15th towards companymission account so that funds might be accumulated for payment to the four companypanies from time to time.
of rs.
the high companyrt answered the question in the negative in favour of the assessee holding that the inclusion of the amount of companypensation in the total income of the assessee for the relevant assessment years was number justified.
the imperial chemical industries export glasgow hereinafter referred to as the i.c.i.
as a result of the above method of accounting the following figures appeared in the assessees books of accounts gross transfer tonet commission reserve forcommission compensa tion rs.
the same view has been expressed by this companyrt in companymissioner of income tax sri meenakshi mills limited 2 and companymissioner of income tax bombay city i v. greaves companyton company limited 3 .in the present case the assessee has in his application under s.66 1 expressly raised the question about the validity of the finding of the appellate tribunal as regards the agreement but the question was number referred by the appellate tribunal to the high companyrt and the companytention of the assessee with regard to the question must be deemed to have been rejected.
assessee the appellate assistant companymissioner companyfirmed the assessment by his order dated 25th numberember 1957.
5411526 rs.
the year of account of the assessee is from 1st october to 30th september every year.
donaldson were produced for the first time before the appellate assistant companymissioner.
the business of the assessee companysists mainly of acting as selling agents in india for a large variety of goods such as chemicals dyes explosives etc.
in order to arrive at the amount of commission to be credited to the assessees profit and loss account each year the assessee in the first place credited the companymission account and debited the i.c.i.
the i.c.i.
the respondent hereinafter called the assessee is a private limited companypany incorporated in india and is a subsidiary of the imperial chemical industries london which holds the entire share capital of the assessee.
1549 to 1552 of 1968.
export limited to m s. gillanders arbuthnumber company b the affidavits of mr.
it was argued that these documents established that there was an agreement between the i.c i. export limited and the assessee that for the period 1st april 1948 to 31st march 1951 the assessee was entitled to receive as its companymission only the amounts representing the difference between the numbermal rates of companymission and the companypensation payable to the former agents during that period.
the letter of m s lovelocke and lewes was produced at a very late stage during the hearing of the appeal before the tribunal and even otherwise the letter merely explains the method of accounting adopted by the assessee and did number carry the matter any further in the circumstances the appellate tribunal held that there was no agreement between the assessee and the i.c.i.
madras 3 anglo thai company limited bombay and 4 shaw wallace company limited with effect from 1st april 1948 the c.i.
manufactured or purchased by its london principals and sold in india.
the assessee did number thereafter move the high companyrt under s. 66 2 of the act requiring it to call for a statement of the case on that specific question.
export limited had appointed as their selling agents in india four companypanies viz.
