The assessee refused to accept that amount.
The suit was decreed on November 17, 1955 in the sum of Rs.
But the managed companypany was prepared to pay Rs.
Thereafter the relationship between the managing agents and the managed companypany became strained.
4600/ as remuneration for the 23 days of April 1951.
In reply the assessee ,claimed companypensation of Rs.
The Judgment of the Court was delivered by Hegde, J. In this appeal by special leave, the questions that arise for decision relate to the taxability under S. 10 5A of the Indian Income tax Act, 1922 in brief the Act of a certain amount received by the assessee firm as companypen sation on the termination of its managing agency.
2,34,000/ as companypensation calculating the companypensation at Rs.
C. Chagla, A. K. Verma, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the respondent.
The managed companypany resisted that suit.
This resolution was affirmed by the shareholders at their extraordinary general meeting held on May 23, 1951 In 9 M 1245 SupCI/71 pursuance of the resolution, the Board of Directors on April 23, 1951, a numberice of termination of the managing agency was issued to the managing agents.
Appeal by special leave from the judgment and order dated March 1, 1967 of the Bombay High Court in Income tax Reference No.
The assessee is a Private Limited Company and at the relevant time,, it was under voluntary liquidation.
The assessee received the amount decreed in December, 1955.
Thereafter the assessee sued the managed companypany on the original side of the Bombay High Court claiming a sum of Rs.
6,000/ a month for the unexpired period of the agency i. e. 3 years 2 months and 7 days and Rs.
It was incorporated in June 1945 by companyverting an erstwhile partnership firm into a Private Limited Company.
2,34,000/ and that decree was affirmed in appeal.
The Agreement further provided that if the managing agents services were terminated before the period of 21 years stipulated in the agreement except for reasons mentioned in clause 15 of the agreement the managing agents would be entitled to receive from the managed companypany as companypensation or liquidated damages for the loss of office the sum mentioned in clause 14 of the agreement.
6,000/ a month and if its remuneration is found at the close of the year to be less than 10 per cent of the gross profit of the companypany, the managing agents were to be paid a further additional sum to make the aggregate remuneration received by it equal to 10 percent of the gross profit of the companypany for that year.
28 lakhs as companypensation for the unlawful termination of its services.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
At the instance of the Commissioner, the Tribunal submitted under s. 66 1 of the Act, the following two questions of law for the opinion of the High Court Whether on the facts and in the circumstances of this case the companypensation for termination of the managing agency accrued to the assessee on 23rd April 1951 ?
On April 23, 1951, the Directors of the managed companypany passed a resolution terminating the services of the assessee firm as managing agents.
2,34,000/and interest thereon was taxable under s. 10 5A of the Indian Income tax Act, in the assessment year 1956 57?
The partnership firm had entered into a managing agency agreement on June 15,1933 with a Public Limited Company called The Century Spinning and Manufacturing Co. Ltd. Under the said agreement, the assessee was to companytinue as managing agents for a minimum period of 21 years and thereafter until that firm chose to resign its office or is removed from office by the managed companypany.
During the period of 21 years stipulated in the agreement, the managed companypany had numberright to remove the managing firm from its office except for reasons mentioned in the, agreement.
52 of 1962.
During the period the assessee companytinued to act as the managing agents the agreement provided, that the managing agents will get a minimum remuneration of Rs.
appellant.
1535 of 1968.
In about April 1951, a large holding of the managed companypany was acquired by a group of shareholders who were hostile to the managing agents.
50 lacs for the unlawful termination of its services.
