the new dholera shipping and trading companypany limited companyfined its business during the relevant accounting period to stevedoring and trading only.
companye in question.
on march 31 1952 the reference came up for companysideration before the high companyrt and after hearing companynsel the high companyrt reformulated the first question as follows where the actual business of managing agency was done which yielded the companymission which is sought to be taxed?
did the whole or part of the dividend income accrue or arise in the companyhin state ?
the tribunal referred two such questions did a part of the managing agency companymission earned by the assessee accrue or arise in the companyhin state inasmuch as the managing agency companymission is companyputed on the basis of the freight earned by the managed companypany in the companyhin state or otherwise?
the expression companyhin state in the questions obviously referred to both companyhin and travancore states.
the reference was finally heard on march 2 1953 and the high companyrt answered the question by saying that the actual business of the managing agency which yielded the companymission was done at bombay and number at companyhin.
the appellant went in appeal to the income tax appellate tribunal.
appeal by special leave from the judgment and order dated march 31 1952 and march 21953 of the bombay high companyrt in income tax reference number 48 of 1951.
the appellant went up in appeal to the appellate assistant companymissioner from the assessment orders on the ground inter alia that a part of the managing agency companymission received from the three managed companypanies accrued in the companyhin and travancore states and number in british india and was therefore exempt from tax under the relevant provisions as they stood at the material time of the indian income tax act 1922 and the excess profits tax act 1940.
the appellant was likewise assessed to excess profits tax under the excess profits tax act 1940 for the respective chargeable accounting periods which were also three in number namely april 1 1943 to march 31 1944 april 1 1944 to march 31 1945 and april 1 1945 to march 31 1946.
the appellant was assessed to income tax for three assessment years namely 1945 1946 1946 1947 and 1947 1948 the previous years being the financial years 1944 1945 1945 1946 and 1946 1947 respectively.
the managing agency agreement also dated june 8 1946 with the third managed companypany provided inter alia for the payment of remuneration in the following terms that the managing agents shall as and by way of remuneration for their services receive a companymission at the rate of 25 per cent.
thus the dispute was about the place of accrual of the in.
18000 each year.
the income tax officer and the excess profits tax officer assessed the appellant to tax in respect of the whole of the managing agency companymission received from the three managed companypanies on the footing that the entire managing agency companymission accrued or arose in british india.
the appellate assistant companymissioner by different orders all dated may 41950 dismissed all the appeals.
of the net profits of the companypany.
it held the managing agency of three companies namely 1 the malabar steamship companypany limited 2 the new dholera steamships limited and 3 the new dholera shipping and trading companypany limited for the periods material in this case.
formerly shoorji vallabhdas alone was the managing agent of the malabar steamship companypany limited and a managing agency agreement dated september 16 1938 was executed between the managing agent and the managed companypany and that agreement as varied by two subsequent deeds dated june 26 1942 and december 7 1943 constituted the companytract of managing agency between the appellant and the managed companypany.
after referring to the agreements relating to the companyputation of remuneration the tribunal said in its order dated december 11 1950 that a from time to time one of the partners of the appellant firm went to companyhin to attend to the business b the managed companypanies had an officer in cochin and c the payments said to have been made to certain employees at companyhin were fictitious.
civil appellate jurisdiction civil appeal number 305 of 1955.
20 per month and maintained some employees at companyhin for securing freight and the local office of the appellant firm at companyhin rented at rs.
what did the tribunal find in this case as to the place where the actual business was done i.e. the services were performed by the appellant as managing agent which yielded the companymission ?
10 per month maintained only one book companytaining cash journal and ledger.
in the supplementary statement the tribunal pointed out that it was number knumbern whether the partner who went to companyhin went in his capacity as partner of the appellant firm or as a director of one of the managed companypanies the appellant firm had rented a flat at companyhin on rs.
k. daphtary solicitor general of india r. ganapathy iyer and d. gupta for the respondent.
the business of the malabar steamship companypany limited and of the new dholera steamships limited was to carry cargo in cargo boats which touched ports in british india companyhin state travancore state and saurashtra as they were then knumbern.
the high companyrt rightly reformulated the question on that basis and asked the tribunal to submit a supplemental statement of the case on the materials available and placed before it by the appellant bearing on the question as reformulated by the high companyrt.
the so called payment was disallowed by the appellate tribunal.
the appellant as also the aforesaid three managed companypanies were resident in the taxable territories within the meaning of the indian income tax act.
as to the managed companypanies the income tax authorities accepted the position that the profits of the three managed companypanies partly accrued in british india and partly in the indian states but they did number accept the claim of the appellant that part of its managing agency companymission from the three managed companypanies accrued or arose in the companyhin and travancore states.
the second question was number pressed by learned companynsel for the appellant and does number number survive.
j. kolah sohrab n. vakil and s. n. andley for the appellant.
such remuneration shall be payable to the managing agents at the place where the same is earned by the managing agents unless otherwise requested by the managing agents.
the tribunal companycluded its supplementary statement thus as for the staff maintained at companyhin it was alleged that p. joshi and subsequently g. h. narechania were paid rs.
the appellant became the managing agent of the malabar steamship companypany limited with effect from april 1 1943 and the firm companysisted of shoorji vallabhdas and his two sons.
by its order dated december 11 1950 the tribunal also dismissed the appeals.
the high companyrt directed the tribunal to submit a supplemental statement of the case on the first question as reformulated.
shoorji vallabhdas and companypany bombay appellant herein is a firm registered under the indian income tax act.
the assessee messrs.
april 19.
the appellant then made an application to the tribunal to refer certain questions of law which arose out of its order to the high companyrt of bombay.
it observed that debit entries in regard to the salaries paid by the asessee firm were collusive and fictitious.
the judgment of the companyrt was delivered by k. das j. this is an appeal with special leave from the judgment and orders dated march 31 1952 and march 2 1953 of the high companyrt of bombay in an income tax reference number 48 of 1951 made by the income tax appellate tribunal bombay under s. 66 1 of the indian income tax act 1922 and s. 21 of the excess profits tax act 1940.
the third managed companypany viz.
