20,000 in respect of each of the appellants was a taxable receipt.
The assessees appealed to the Tribunal and four companytentions were raised by them.
Some negotiations between the parties followed but numberfresh agreement was signed .
He, however, held that the sum of Rs.
alternatively, the said receipt was number liable to be included in the total income of the recipient by reasons of Section 4 3 vii .
Appeal from the judgment and ordered dated June 23, 1959, of the Bombay High Court in Income tax Reference No.
On March 8, 1954, the Company sent a letter to the Firm informing the Firm that the agreement would companye to an end from June 30, 1954.
N. Rajagopal Sastri and R. N. Sachthey, for the respondent.
By the termination of the agreement this right to acquire the stock in trade on favourable terms was lost but there was numbercapital loss as the business of selling bulbs companytinued.
They were it was companypensation paid for termination of agreement which companystituted the frame work of the Firms business.
On May 28, 1954, the two assessees and the Manager of the Firm met the representatives of the Company to discuss the new agreement.
V. Viswanatha Sastri, S. P. Mehta, J. B. Dodachanji, C. Mathur and Ravinder Narain, for the appellants.
One of the firms was called the Precious Electric Co. and the other was named J. Pirojsha Co. In June, 1938, Precious Electric Co. entered into an agreement with M s. Philips Electrical Co. India Ltd. by which the Company demarcated a territory for the Firm, undertaking to sell and deliver electric bulbs therein exclusively to the Firm.
332 of 1961.
It is fair to inforce that as long as the Company and the Firm found the arrangement profitable the agreement would have companytinued.
The judgment of the Court was delivered by HIDAYATULLAH, I. This is an appeal on a certificate granted by the High Court of Bombay against the judgment and order of the High Court dated June 23, 1959.
December, 11.
It was further agreed that if the Company sold any goods directly to the buyers in the territory the Company would pay to the Firm companypensation amounting to 5 of the net amount of invoices companyering such sales.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
By a letter which formed an annexure to the agreement the Company agreed to sell electric bulbs to the Firm at ex warehouse prices subject to a companymission of 12 21 on the gross invoice amount and the Firm was allowed a further discount of 2 on the net invoice prices to companyer breakage or fault in manufacture.
The facts of the case are as follows Before the year 1938, the two appellants and one Jehangir Irani were carrying on business in electric goods including electric bulbs under two firm names.
The Tribunal did number accept these companytentions but at the request of the firm referred three questions for the decision of the High Court.
In addition to other companyditions to which we need number refer at this stage there was a clause for termination of the agreement.
The minutes companyered arrangements for the period of transition, the stocks and the staff of the firm.
The appellants are two assesses whose cases were companysolidated before the Tribunal and hence a single appeal.
The clause provided that the agreement would be deemed to have been made as from July 1, 1938, and would companytinue unless determined by either party by giving to the other party three months prior numberice by registered letter of such partys intention to determine the agreement on the June 30, 1939 or any subsequent June 30.
This agreement companytinued for a period of sixteen years.
51 of 1958.
the payment is made to individual partners and number to the firm as such and does number represent a receipt in the companyrse of firms business.
By an annexure to the agreement, which was in the form of a letter, the terms of business between the Firm and the Company were laid down.
Nothing much came of the discussion and since the Bombay branch of the Company was taking over the business of selling bulbs in the territory, a working scheme for the period immediately following the termination of the existing agreement was reached.
This was recorded in the shape of minutes which were signed by the represen.
The Firm on its part undertook to sell only Philips bulbs in the territory and to prevent re exportation of the bulbs by third parties.
tatives of the Company and by the two partners of the Firm.
The Company sent a draft of a new agreement which was intended to take the place of the earlier agreement.
The appellate Assistant Commissioner to whom the assessee appealed held that provisions of s. 10 5A did number apply to the facts of the case on the ground that the appellants were number agents of the Company from which payment had been received and the amount received was number companypensation as numberlegal damage had been caused to them by the Company.
An assessment was also made on the third partner but we are number companycerned with that assessment.
