N. Rajagopal Sastri and D. Gupta, for the respondent.
J. Kolah, Dwarkadas, S. N. Andley J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellants.
Appeal from the judgment and order dated February 11, 1957, of the Bombay High Court in Income tax Reference No.
2,20,433.
The agreement further was that the assessee Company would companye in as managing agents of the Mills Company in place of the Nemani group and would be entitled to the emoluments of the managing agents as from April 1, 1944.
The case of the assessee Company was that for the assessment year 1946 47 it was liable to pay tax only on the companymission of Rs.
May 3.
67,959.
The Judgment of the Court was delivered by K. DAS, J. This is an appeal on a certificate granted by the High Court of Bombay, under s. 66A 2 of the Indian Income tax Act, 1922.
53 of 1956.
The Cotton Agents Limited, Bombay, are a limited liability companypany registered under the Indian Companies Act and will be called the assessee Company in this judgment.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
Messrs. Shivnarayan Surajmal Nemani called the Nemani group also held a block of shares of the Mills Company along with its managing agency.
This companytention of the assessee Company was number accepted by the departmental taxing authorities but the Tribunal decided in its favour.
The short facts are these.
Sometime in 1944 some differences arose between the assessee Company and the Nemani group these differences were referred to one Govindram Seksaria, who decided that the Nemani group should sell its block of shares to the assessee Company at an agreed price, It was further decided that a sum of Rs.
It held a substantial number of shares of the New Swadeshi Mills of Ahmedabad, Ltd. hereinafter called the Mills Company .
This arrangement was approved by the share holders of the Mills Company by a resolution dated January 4, 1945, and came into effect immediately.
The assessment year was 1946 47, and the year ending with Diwali, 1945 October 18, 1944, to November 4, 1945 was the accounting year.
100 of 1.959.
5,00,000 be paid by the assessee Company to the Nemani group as the price of the, managing agency rights.
5,00,000 paid by the assessee Company to the retiring managing agents included the purchase price of the managing agency companymission which had accrued in the hands of the retiring agents.
67,959 which it had earned by working as managing agent of the Mills Company and it was number liable to pay tax on the sum of Rs.
The managing agency companymission from April 1, 1944, to December 31, 1944, amounted to Rs.
