1,05,575 instead of Rs.
1,00,000 less than the companymission calculated at the rates mentioned in the original agreement.
The tribunal decided in favour of the Managing Agent and on a case being stated to the High Court the questions of liability to income tax were decided in favour of the Managing Agent and the Commissioner of Income Tax has companye in appeal to this Court by special leave.
In this case also the question was whether that Rs.
The income tax authorities held that the entire sum of Rs.
2,05,575 but only Rs.
In C.A. No.
2,05,575, had been taken away as from the first January, 1950, and it was number a voluntary relinquishment on the part of the managing agents and, therefore, the amount which was subject to taxation on this account was Rs.
1,05,575 3 0 M s. Chamanlal Mangaldas Co.s companymission account credited dated 31 12 1950.
1,00,000 out of the companymission due according to the original agreement was number income in the hands of the managing agents which was liable to taxation.
1,05,575 3 0 only is credited to the account of agents.
162 of 1958 the managing agents were appointed by an agreement dated September 7, 1940, under which they were to receive from the managed companypany a companymission at the rate of 3 1/2 on the sale price of all companyton yarn and companyton cloth manufactured and sold by the companypany and a companymission of 3 1/2 on the sale proceeds of all material yarn and fabrics manufactured from wool, jute and silk and other fibres sold by the companypany and a companymission of 10 on the profits made by the companypany from its ginning or pressing operations.
In both these appeals the question for decision is whether there was a voluntary relinquishment on the part of the managing agents of a part of the income, i.e., Rs.
On March 17, 1951, there was a supplemental agreement embodying the terms of this resolution and on April 8, 1951, the Directors by a resolution fixed a sum of remuneration at Rs.
1,05,575.
The two members of the Tribunal approached the question from a different point of view but both were of the opinion that Rs.
210 of 1958 the facts are very similar.
Commission from 1 1 1950 to 31 12 1950 calculated on your sales of Rs.
58,73,557 at 3 1/2 Rs.
On December 31, 1950, in the books of the Company the following entry was made Rs.
The respondents in the two appeals will in the judgment be called the managing agents and the companypany of which they are the managing agents will be referred to as the companypany of which they are the managing agents will be referred to as the managers companypany.
The appellant in both the appeals is the Commissioner of Income tax and in C.A. No.
1,05,575.
The agreement between the managing agent and the managed companypany was dated May 9, 1947, by clause 3 of which the managing agent was to be paid for services as secretaries and treasurers and agents a companymission of 3 on the gross sale proceeds of all yarn and cloth manufactured in the companypanys mills provided that if there was number sufficient profit in any financial year to enable a distribution of a dividend of Rs.
Read as an integrated whole it means that the right to receive the companymission was at the end of the year because 1 the companymission was payable on all companyton yarn and cloth manufactured and sold by the Managed Company so also the companymission on yarn etc.
This resolution was accepted by the Managing Agents by a letter of the same date.
On appeal the Income tax Appellate Tribunal by an order dated February 9, 1954, held that as a result of the agreement between the managing agents and the managed companypany the right of the managing agents to claim full remuneration, i.e., Rs.
162 of 1958 the companymission was payable on the sale price of all companyton yarn and cloth sold and on the sale proceeds of all material yarn and fabrics manufactured from other fibres and sold by the companypany and 10 on the net profits from ginning or pressing operations.
In Civil Appeal No.
3,63,226 equal to Rs.
On a Reference being made to the High Court it was held that the income of the assessee companypany was number Rs.
5,11,875.
2,05,575 was taxable income having accrued as companymission during the previous year and that Rs.
In both these appeals the clause in regard to companymission has to be read as one integrated whole.
100,000, which was the difference in both cases between the companymission payable under the original agreements and the companymission calculated on the modified agreements.
1,00,000 was also subject to income tax.
4,11875 instead of the companymission calculated at the old rates which worked out at Rs.
1,00,000 was a mere voluntary surrender which companyld number affect the taxability of the whole amount of companymission accruing to the managing agents.
62,36,802 less returns inwards etc.,
162 of 1958, the respondent is the assessee Chamanlal Mangaldas Co., a registered firm, who are the managing agents of Girdhardas Harivallabhadas Mills Ltd., Ahmedabad, and in C.A. No.
2,05,575 3 0 but as per resolution passed by the board of directors on 8 4 1951, companymission of Rs.
The High Court proceeded on the basis that there was numberaccrual of income as companytended by the Commissioner of Income tax who has companye in appeal to this Court by special leave.
On December 28, 1950, a resolution was passed varying the agreement in regard to the payment of companymission and adding a proviso to it applicable to years 1950 and 1951, that if the directors having regard to the results of the working of the managed companypany were of the opinion that a lesser remuneration should be paid to the managing Agent for any of the two years the Directors shall have the right to fix such lesser remuneration either by way of a lump sum or at a reduced percentage rate and the Managing Agent shall be bound to accept the same.
In these appeals, as in C.A. No.
1,20,000 on the total paid up capital the managing agent was to give up out of the companymission an amount up to 1/3 of the companymission to enable the distribution of that amount of dividend to the shareholders.
145 of 1958, which we have decided today, the question has to be determined on that basis.
On March 17, 1951, a supplemental agreement was entered into between the Managing Company and the Managing Agents whereby a proviso was added to the Managing Agency Agreement embodying the terms of the resolution of December 28, 1950, which had been agreed to by the Managing Agents.
manufactured by the Managed Company from other fibres and sold by the Managed Company and all sales companyld only be determined at the end of the year 2 the percentage on total profits companyld only be determined at the end of the year 3 the liability to companytribute towards the dividends also companyld only be determined at the end of the year.
A meeting of the Board of Directors of the Managed Company by a resolution dated April 8, 1951, resolved that the Managing Agents should accept a companymission of Rs.
210 of 1958, the respondent is Mangaldas Girdhar Das Parekh Ltd., a private limited companypany, which is the managing agent of Rajnagar Spinning Weaving and Manufacturing Co. Ltd., Ahmedabad.
On December 28, 1950, the directors of the managed companypany passed a resolution modifying the terms of the managing agency agreement in regard to the companymission and added a proviso that for the years 1950 and 1951 if the directors of the companypany having regard to the result of the working were of the opinion that a lesser remuneration than that given in the agreement should be paid to the managing agents then the directors shall have the right, in their absolute discretion, to fix such lesser remuneration payable either by way of lump sum or at a reduced percentage rate.
Kapur, J. These are two appeals against two judgments and orders of the High Court of Bombay on two references made by the Income tax Appellate Tribunal.
In C.A. No.
