Between April 1, 1947, and December 31, 1947, the amount of companymission at the rate of 10 per cent.
as already agreed.
By another agreement, the companymission earned by the managing agent for the calendar year 1950 was reduced by Rs.
The appellant is the Commissioner of Income tax, Bombay, and the respondent, Messrs. Shoorji Vallabhdas and Co. referred to hereinafter as the assessee firm .
In 1947, the assessee firm floated two private limited companypanies, called Shoorji Vallabhdas Ltd. and Pratapsingh Ltd. The assessee firm desired to substitute these two companypanies as the managing agents of the shipping companypanies, one for each, and on November 20, 1947, expressed its desire to resign from the managing agency and to have the private limited companypanies appointed on the same terms.
That agreement took place during the previous year, and the resolution of the board of directors of the managed companypany was also in the previous year.
Later, at the annual general meetings of the two managed companypanies held in December, 1948, the companymission was reduced from 10 per cent.
1,36,903 Malabar Steamship Co. Ltd. and Rs.
The case was, however, certified as fit under section 66A 2 , and the present appeal has been filed.
It appears, therefore, that the offer companytained in the letter of the assessee firm was accepted.
Under these agreements, the assessee firm was entitled to receive as its companymission, 10 per cent.
of the freight received.
of the freight charged.
They suggested that the companymission should be either 10 per cent.
of freight for the current year as also for the future years.
1 lakh.
The case was then laid before the President, who agreed with the Judicial Member.
of the freight was Rs.
As a result, the assessee firm gave up 75 per cent.
The High Court agreed with the view of the President, and answered the first question in the negative, and declined to answer the second.
We are companycerned with the assessment year 1948 49, companyresponding to the previous year ending March 31, 1948.
The assessee firm was the managing agents of several shipping companypanies including the Malabar Steamship Co. Ltd., and the New Dholera Steamships Ltd. With the Malabar Steamship Co. Ltd. the assessee firm had entered into an agreement on September 16, 1938 modified on December 7, 1943 , and with the New Dholera Steamships Ltd. on June 8, 1946.
According to the President, even though the actual reduction took place after the year of account was over, there was, in fact, an agreement to reduce the companymission even during the currency of the account year, and the larger income neither accrued number was received by the assessee firm.
The assessee firm companysisted of three partners, Shoorji Vallabhdas and his two sons, Pratapsinh and Vikramsinh.
As a result, the assessee firm made an offer as follows That whilst we will companytinue to insist on our right to receive the full managing companymission, however, in order to put the companypany on a firm financial basis, and because we are interested both as shareholders and managing agents in the prosperity of the companypany, we shall voluntarily agree to a reduction in the managing agency companymission both in respect of the current year as also in future years as may be mutually agreed between the board and ourselves or between the companypany and ourselves to the extent of 2 1/2 per cent of the total freight.
of the profits of the managed companypany or 2 1/2 per cent.
In accordance with the opinion of the President, the assessment was reduced by deleting the extra companymission from the companyputation.
A similar procedure was followed in the case of the New Dholera Steamships Ltd., though all the documents are number in the record.
1,71,885 from the Malabar Steamship Co. Ltd. and Rs.
The decision of the Bombay High Court was approved by this companyrt in Commissioner of Income tax v. Chamanlal Mangaldas Co. In Commissioner of Income tax v. Chamanlal Mangaldas Co., the assessee was also the managing agent of a companypany, and under the agreement was entitled to receive companymission at a certain rate.
This letter was companysidered by the board of directors of the Malabar Steamship Co. Ltd., and they invited the assessee firm to make an offer to reduce the managing agency companymission to 2 1/2 per cent.
On December 30, 1947, extraordinary general meetings of the two managed companypanies were held, and the two private limited companypanies were appointed as the managing agents from January 1, 1948.
Two shareholders of the Malabar Steamship Co. Ltd. objected to the rate of companymission, and wrote a letter on November 27, 1947, in protest.
2,56,815 from the New Dholera Steamships Ltd. These amounts were credited in the books of account of the assessee firm to itself with a companyresponding debit to the shipping companypanies.
Hidayatullah, J. This is an appeal on a certificate of fitness under section 66A 2 of the Indian Income tax Act by the High Court of Bombay, against its judgment dated October 1, 1958.
of its earnings during the relevant years of account, which amounted to Rs.
of the freight to 2 1/2 per cent.
